You’ve probably heard of the Starbucks latte effect.
As the theory goes, small changes, multiplied and compounded over time, can end up becoming big savings.
For example, if you drink 1 Starbucks latte for $3.50 every day for 250 work days a year, then over 10 years, you’ll have spent tens of thousands of dollars on Starbucks coffee. Cut the Starbucks coffee from your life, and you could buy a nice car …
Should you give up your Starbucks latte?
Yup, I won the lottery! $785 million dollars. Pinch me because I must be dreaming. I am a physician finance blogger; I would not recommend buying a lottery ticket. But I did. So screw all the people who said it was a waste of $2.
So here I am, the big time winner: What to do now? Well, that is what this post is about.
(In reality, I did not win the …
What would you do if you won the lottery? Here’s one physician’s plan.
In my post, “Use it Or Lose It,” I talked about the awesome benefits of the Roth IRA. You do have to pay taxes on the money now, but it grows tax-free, and you can withdraw the money after age 59.5 without owing any taxes. It’s the only way to win the tax game. It is 100% your money, forever!
In comparison, money in a traditional IRA, traditional 401k, …
How to choose between a traditional and Roth 401(k)
An unusual thing happened to me today; I was awakened by my phone alarm. Ever since I stopped practicing medicine ten months ago, I have rarely needed to set an alarm to get up. Today when my alarm sounded, Carolyn commented that when she woke up, she thought we were in Spain.
Last Spring, we were traveling through Spain on a two-week bus tour. Each day we had to have our …
This retired physician is truly free
It’s just after six o’clock on a Sunday morning in December. The barn animals have fresh hay and warm water. My wife and the dogs are asleep. The cats are gathered around me as I sit down to write. One of them has jumped up in my lap and is pawing and clawing my jeans.
The fire is roaring in the wood stove, but the 1790 room is still cold. I …
It’s a shame so many doctors want to leave medicine
Hopefully, you’ve realized when all of your accounts are taxed; if not, here is a quick refresher.
On the surface, the taxable account looks like a bad deal compared to the others:
So basically it’s a lose-lose-lose scenario when it comes …
How to make your taxable accounts a winning situation
“A hobby is an activity, interest, enthusiasm, or pastime that is undertaken for pleasure or relaxation, typically done during one’s own time.”
– Wikipedia
“A job is often defined as a regular activity pastime performed in exchange for payment.”
– Wikipedia
If you search “hobby” on Wikipedia, you’ll be presented with a lengthy list of the most common ones: everything from magic to beekeeping to vehicle restoration. But if you look at these “hobbies” …
For some happy doctors, medicine is a hobby
You did it! You worked, you saved, you conquered.
Your investments add up to 25 times your expenses, or 30 times, or whatever your magic number is. You have achieved financial independence (FI), however you have chosen to define it.
What’s that low rumbling sound I hear?
Is that a bear coming out of hibernation?
I won’t pretend to know when it’s coming, but I promise you I haven’t seen my last bear market. It could start …
Can a bear market take away your financial independence?
A common question from readers is what to do about an account that contains a bunch of high expense ratio mutual funds or individual stocks.
The reason for having such an account varies from person to person. Maybe it was the only funds available to them in their 401(k) portfolios. Perhaps they collected a bunch of individual stocks and actively-managed mutual funds over the years based on tips from magazines or …
What to do if you have high expense ratio mutual funds
Learning to budget is scary. After all, it means you have to say NO to unnecessary purchases and keep your eye on long-term goals at the expense of short-term pleasure. There are a variety of ways to budget, ranging from the restrictive and somewhat impractical “envelope system” to the more vague and potentially ineffective “wing it” system. I’d like to present a balanced approach to budgeting that …
How to create a household budget: a physician’s simple approach
With a society living on credit, a government deep in debt, eight years of desensitization during training (something unique to doctors), rising tuition, and falling pay — it’s no wonder doctors are having a major problem with debt. Where will it end? Debt has become the norm. Will Rogers summed up this pattern of high consumption on borrowed money nicely: “Too many people spend money they haven’t earned to buy …
Debt is like poorly fitting shoes on numb feet
Pop quiz: Fill out the chart above.
If this was too easy for you, move along, this isn’t the post you’re looking for. If you’re slightly unsure, either follow along or skip to the end. I’m going in order.
Retirement accounts
There are so many to “choose” from it seems slightly overwhelming at first. You really don’t get that many choices: If you’re self-employed, you …
Pop quiz: Do you know the tax implications of your retirement accounts?
I first heard the term “accredited investor” over coffee with a friend who happened to be a financial advisor. He was excited about a real estate deal he was involved in. My interest piqued, I asked him how he finds access to these deals. He said he’d be happy to introduce me to the operators, but I needed to be an accredited investor first.
I had no idea what that meant, …
What does it mean to be an accredited investor?
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“Can I look at that book?” said the man next to me in an accent I would soon learn to be Pakistani. I had placed the book face down on the park bench intentionally. In a busy, public place, I didn’t want to broadcast that I was reading The Doctors Guide to Smart Career Alternatives and Retirement.
The back cover contained enough information to pique the polite man’s interest. “Sure,” I said. …
How physicians can retire early without regret
Many of us take for granted that we should be paying next to nothing for our index funds.
Vanguard, Fidelity, and Schwab offer great index funds with very low expense ratios.
But there are many other providers of index funds. And unfortunately, they do not charge the low expense ratios we have come to expect from Vanguard, Fidelity, and Schwab.
Interactive Brokers and no transaction fee index …
Watch the expense ratios: Not all index mutual funds are cheap
Being in a high income, high-risk field I often think of asset protection. The lawsuit may not come from medical work, but from an auto accident or someone slipping on my front step. All of these can lead to suits, and as a high-income earner, we all have a target on our back. The last thing I want to do is work hard to save money to then have it …
Physician asset protection: Is it a good idea to pay down debts?
The high-pitched wail of the pneumatic saw cutting through the tibia, and the little bits of tissue the blade flung onto the surgeon’s gown were not enough to get to me the first time I saw a surgery, during my senior year in high school. It was the smell. Sliding down the wall in the corner of the operating room, wondering if lunch would stay put, I began to question …
Did medical school desensitize doctors to debt?
The fall is over, and winter has come, which means I have just wrapped up a busy season of medical school interviews. Most interviews are conducted in a similar fashion with an hour of introduction, speeches by the dean, presentations of facts I already knew from the website, and finally the interviews.
Within the first hour, I understand the reason: “We are the best medical school at (fill in the blank).” …
The first rule of medical school interviews: Don’t talk about cost
That’s right folks, I am talking about two types of money saving maneuvers:
Save money on purchases
‘Tis the season for giving, but ’tis also the season for buying. Make sure you are doing everything you can to save …
Take advantage of these 2 ways to save money
178 measures.
This is what we’re up to — the collected compilation of quality and performance metrics for our ambulatory care network, across all the different divisions.
Where did these come from, who decided this is what we should measure, does anyone really have any idea if measuring these things reflects the true quality of the care our patients receive?
That’s a lot of questions all at once, and I’m not sure we’re …
Do quality metrics really improve patient care?
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