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Starting From Zero – Rebuilding Wealth

To address my financial fears I sometimes do a little mental exercise and figure out how I would get back to a healthy net worth if I had to start from zero financially. I imagine myself with no investments and no savings – a net worth of zero.

Rebuilding My Wealth

I have the advantage of being comfortable living a frugal lifestyle. I don’t have any debt going into that zero net worth state, so I wouldn’t have to start from a negative net worth. Paying down debt is so goddamn exhausting. And the money which could grow so rapidly in an investment account only goes towards paying off account fees and interest rates.

Another advantage is that I have figured out my risk tolerance with the help of my financial advisor. I have learned which investments suit my temperament well and which to stay away from.

The hardest part for me back in the day was being willing to give up my swanky lifestyle. Spending money on food and expensive clothes and last-minute vacations was a big reason why I couldn’t save much money. Even now, I don’t want to go back to that hardcore frugality. But honestly, if it’s only for 5 years, fuck it, I’ll do it.

Wrangling Spending

To be a doctor you really have to juggle a lot of balls at the same time. You’re not just clocking in and out. I have no idea how my colleagues manage a household with a family and a mortgage and taxes and their jobs.

Back in the day I couldn’t keep track of all the random bills which would show up without warning. The annual property tax, the business license, medical license, fees for CME courses, that membership you pay for every 3 years, the random repair expense for the house or car.

It probably took 2 years of budgeting to finally tease out all the random expenses which were adding up to thousands of dollars. I would set aside $5,000 and then have a transmission rebuilt for $2,500. Or a dental procedure for $1,200. It was demoralizing. I would just give up – I’d stop saving for months on end because it seemed futile.

I’m a beast now when it comes to my spending, budgeting, and predicting unexpected expenses. I don’t let others dictate how much I should spend. I can say no when friends want to take a trip to Philippines or invite me for their 40th birthday bash in Vegas.

Income Source

The first thing I would do is get the hell out of an employee position. I would either work as an independent contractor or open my own walk-in clinic or urgent care. This allows me far more control of my taxes.

In the past, a huge barrier to overcome was a very complicated tax system where I really had no idea how much of my income is mine, how much I owed to the IRS, and how much I could get back. This made it a little less motivating to want to save, just to get hit with a $15,000 tax bill at the end of the year.

As a sole proprietor or independent contractor I can also write off a lot more against my income, including my health insurance premiums. It makes little sense to work for an employer to get health insurance and a 401k and pay nearly 50% in income taxes.

I can construct my own individual 401k and buy my own health insurance policy. I can set up my own pension plan or cash balance plan.

Strict Budgeting

If I had to start from zero tomorrow then I would probably find a telemedicine job online or work for a local urgent care where I can do some overtime. The income would be relatively easy to come by as a physician.

I’ve done the whole leaky bucket thing before; I would work my ass off at Kaiser Permanente, and whatever I earned, I would turn around and spend—never believing that I could outspend my income. How the fuck did I manage to spend $20k a month?! I did that for 2-3 years before I couldn’t get any more credit cards.

Now I budget and will probably budget until I die because I’m not inherently frugal. I’m still using YNAB, though I’m a little more lax about it. Starting from zero means I would need to take my categories down to 4-5 individual ones and set a very strict budget every month. No dining out, no coffee runs, no bar hopping with buddies.

Edit: Dr. Mo, from the future. It’s 2023 and I don’t budget any longer. Apparently, it’s a phase all of us go through until you feel on autopilot.

Living Location

During my wealth accumulation phase, I was living in San Diego – not a bad place to live for someone who wants a good balance of high income and low overhead. There are a lot of cheap living options. My studio only cost me $825/month. I could have rented a 1-br for $1,250.

What I like about busier places like SD or LA or Las Vegas is that there are a lot of opportunities for extra work. I can work in a Primary Care clinic, an Urgent Care, or even the ER. There are many moonlighting opportunities because there are many medical groups out there.

I would choose my living location based on taxes and cost of housing. So for me it would be either WA or NV. Both of these state have zero income tax, along with plenty of work opportunities for an Urgent Care doctor.


I would house hack. I like that word and have learned a lot about it in the past few years. I would buy a 3-bedroom and rent out the other 2 rooms. I’m going to be mostly working anyways, why not have others help me pay off the mortgage?

For less than $300k I should be able to buy something nice. I can then pay this off over the next 5 years and it will make for a good rental income property in the future.


Part of my income will go towards the down payment for the rental income property. The rest will go towards building up a $25,000 emergency funds. Nothing makes you feel more wealthy than having a healthy stack of cash set aside.

Once I have this out of the way, I would put 70% of my income toward savings and investments. Because I would have the real estate investment, I would be comfortable investing in some index funds – something simple like a total US stock index fund.

Taking more risk for more return would make very little sense when your savings are down to zero. Instead, it’s better to build up about $100k in real estate equity, another $150k in index funds, and then consider branching out towards some REITs or maybe individual stocks.

The Goal of Financial Independence

If I had to start over from scratch, I still think that I would aim to be financially independent. My goal would be to generate some sort of ongoing income that can sustain my living expenses. As of 2019, it seems that index funds can offer such a promise. So can real estate, so can dividend investing, SPIA’s, etc.

My aim in regard to financial independence is to figure out when I want to be financially independent. I would then save enough money and invest it so that it will grow to be that sum by whatever time in the future.

$150,000 invested now at an annual interest rate of 6% would grow to nearly $500,000 in 20 years. As long as I’m willing to remain productive and earn some sort of income, I can let this money ride, maybe even add to it a little from time to time.

Rate of Growth

So, let’s say I have zero dollars saved up and just started going back to work as a per diem. I’m earning my 1099 income as an independent contractor, maybe doing work for 2-3 different medical groups as an Urgent Care physician.

I could very easily gross about $10,000 per month from these urgent care gigs. I would then do another $4,500 a month of telemedicine which equates to 2 days of work for the entire month since my hourly income from telemedicine is somewhere in the $250/hr range.

I would continue with Just Answer work as a medical expert because that’s even more income as a sole proprietor, maybe around $2,500/month.

Finally, I should be able to earn around $3,000/month doing healthcare consulting. Since I already have the skill it’s easier to continue with it. If I didn’t then I’m not sure I would put the effort into it – I’d focus on doing more per diem work.

That’s a gross income of around $20,000/month, or $240,000 per year. I would be left with about $200,000 after taxes. I would max out my individual 401k from the employee portion at $19,000 and add another $30,000 of employer contributions.

My living expenses should be somewhere around $3,000/month at this stage in my life. Leaving me with another $7,000/month which I can contribute towards savings in a private brokerage.

Compounding Returns

If I invest this $11,000 every month for the next 5 years at a rate of 6% average compounding annual returns, I would expect to have around $800,000 in my retirement account by the end of this 5-year period.

Some of the money might go towards the real estate. Some months I might earn more money and either pay down the mortgage or add more to my investments. Either way, the money will get invested and it will grow rapidly. I know this from experience.

Accumulating Wealth

I’ve made a lot of financial mistakes but have also made some good one. You never hear of the person who saved diligently and invested conservatively and went broke. You might read sensationalist headlines that stocks won’t return shit in the future. Or that the old 4% is the new 3% or the new 2% or 1% or that the returns will be negative going forward.

  1. save more than you spend
  2. don’t let get debt get in the way of investing
  3. start by investing conservatively and push your risk gradually
  4. high risk = higher returns = higher chance of financial ruin
  5. real estate is a tiny part of the equation, tiny
  6. get financial guidance especially if you don’t think you need it
  7. wealth without budgeting is possible, but budgeting nearly guarantee wealth
  8. your net worth grows at an exponential and not linear rate
  9. poverty is the norm and 99% of those around you will keep you from saving
  10. individual stocks are super sexy to invest in but time consuming – index funds are the opposite
  11. those who write about real estate investing claim they spend 2 hours a month on it, those who invest in real estate spend 2 hours per day
  12. automatic investing is one click away

5 replies on “Starting From Zero – Rebuilding Wealth”

1. Yes
2. Yes, but avoid debt unless you have a good plan
3. Maybe pick an asset allocation and stick with it
4. Not really. If you don’t sell stocks in a downturn, there’s not that much risk. Not keeping up with inflation (ie “safe” investments) is a much bigger risk long term.
5. What? Many fortunes have been made in real estate. Leverage is key, the tax benefits are insane, and the majority of truly wealthy people have significant money in investment real estate. I have to disagree.
6. Caveat emptor. There is little regulation in this field in the US and many fraudsters. Educate yourself. No one cares about your money as much as you do.
7. Sure
8. Yes
9. No one can keep you from anything. Only you can do that.
10. Not only that, all the evidence shows you will do better long term.
11. Yes, especially in the acquisition phase.
12. This.

I see the wealthy doctors who invest in real estate; the strong savers, the frugal types who can set money aside for down payments and property repairs. I haven’t yet met the doctor who got wealthy off of real estate. I read about it but, for better or worse, I limit my investing reality to real world examples with whom I can interact. I hear you can get 25% returns investing in real estate and even infinite returns:

Any physician (or person) who is going to achieve wealth is going to have to be good at saving. Whether they save and spend it on remunerative RE investments or put it in the stock market seems to me irrelevant. Who are the docs achieving wealth without saving, whether it’s used for repairs or to further invest in the market? I just don’t see the difference- you can find bad RE investments and bad stock investments.

RE is one of the great engines of wealth creation for everyone, I don’t think docs are any different.

Pretty interesting article, since none will teach you anything about investing when you start working 🙂

It’s a shame because there is so much opportunity to create happier physicians in the workforce by helping them feel more secure about their investments and finances. The spread isn’t as wide in European countries where investment options are a little more limited and more regulated. But here in the US where the fiduciary standard is rather low, the wrong kind of investing can mean the difference of 1-2 million by the time you’ve spent 2-3 decades investing.

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