Here’s my latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
Today’s post is special because it comes from a fellow blogger, PoF from Physician on FIRE. I think you’ll really enjoy this!
My questions are in bold italics and his responses follow in black.
Let’s get started with a statement from PoF…
Opening Comments from PoF
Hello, ESI Money! I love what you’re doing here. Earn, Save, Invest? That’s a Pinterest-worthy recipe. I’ll pin it right next to the buffalo chicken dip. Great stuff!
I’ve been impressed with your content and intrigued by your millionaire series, as I imagined your readers have been, as well. I read a few of them and felt compelled to share my story. While it may not be the sexiest path (I earned, saved, and invested), it may be of interest to others who have the salary but have yet to realize that second comma.
Now, on with the personal questions.
How old are you (and spouse if applicable, plus how long you’ve been married)?
Do you always lead with this one? Shouldn’t you ask something more innocuous, like how much do I weigh?
I’m 41; she’s 34. We’ll be celebrating our tenth wedding anniversary this summer. That’s right — a millionaire with a younger bride. How original.
Do you have kids/family (if so, how old are they)?
We do! Our boys are six and eight years old. Those two are the best of friends and mortal enemies, depending on the day (or even the time of day). They are a lot of fun, a lot of work, and I can’t imagine life without them.
What area of the country do you live in (and urban or rural)?
We live Up North in our nation’s midsection in what most would consider to be a rural area. The fact that I live within a few miles of Best Buy, Costco, Home Depot, and Target make it seem less rural to me, but it’s all about perspective. This town is the city to people from smaller towns all around, and it’s an escape from the city for people who live in a true metropolitan area.
To me, it’s the best of both worlds.
What is your current net worth? What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
Are you always this forward? (Editor’s note: Yes. 😉)
Here’s the breakdown as of February, 2017
Total: $2,874,000
- Taxable: $1,153,000
- Roth: $678,000
- Tax Deferred: $412,000
- 529 Plans: $157,000
- Microbreweries: $37,000
- HSA: $19,000
- Cash: $18,000
- Primary Home: $300,000
- Second Home: $100,000
We are essentially debt free, but use credit cards for the convenience and rewards points. Nearly all of our investments in the taxable and tax deferred accounts are Vanguard index funds — you can see the full breakdown of our portfolio here, with a 2016 performance update here.
I am a minority owner in one microbrewery that opened up in 2011 and a debtor to another opening this year. I have written agreements with both to provide me with free beer. I have found them to be wonderful investments, and quite liquid in the most literal sense. Hooray, beer!
In addition to the funds listed above, we control $185,000 that we have donated to our donor advised funds. It’s no longer our money, but we get to decide which charities receive it and when.
What is your job (type of work and level)?
I’m an anesthesiologist, working in a community hospital and a surgery center. I spend my days talking to patients and their families about their health history and pending procedure, and ensuring their safety and comfort to the best of my ability.
The role of a physician anesthesiologist is not so much to induce sleep and wake patients up (although those are job requirements), but more importantly to minimize the risk of very bad things happening to patients undergoing surgical and diagnostic procedures. It’s our job to protect the heart, lungs, and brain, which is usually fairly straightforward, but can be quite challenging depending on the baseline condition of the patient and the complexity of the procedure being performed.
What is your annual income?
Anesthesiologists are among the more highly paid specialists, although certainly not the highest. According to a recent survey of physicians, the average anesthesiologist earns $356,000 (before paying a six-figure sum in taxes).
I would rather not give specifics, but where I live, all the women are strong, all the men are good looking, all the children are above average, and so are physician salaries. Geographic arbitrage in full effect.
How did you grow your income so high (if over $100k per year)?
Short story: I became an anesthesiologist.
Long story: I excelled in high school and earned scholarships. I got a lot of A’s, did a lot of volunteering, and dominated standardized exams in college to gain entrance to medical school. I worked hard on rotations and did well enough in medical school to match to a respected residency program in my chosen specialty.
After finishing residency on June 30th, I started working immediately on Monday, July 3rd. I took little time off my first few years, and I worked locum tenens jobs during some of my vacation time. I even took time off from locums jobs to work more locums. I lived and worked like a resident for a while, and it set me up for a great future.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
It’s my day job, which is also a night job every fifth night on average. Investment returns in a really good year could approach or exceed my earnings from working, though.
The closest thing to an inheritance I’ve received was in the form of a college fund set up when my grandfather passed away. It helped me finish medical school with a high five-figure debt when the average debt for med school grads was a six-figure number.
What is your annual spending and what are the main expenses you have?
That is a great question to ask, because it is the key to our wealth. Many families with income like our would spend double or triple what we do.
In 2016, we spent $62,000. We tracked everything using Mint.com, which makes recording expenses mostly automatic and easy. A full breakdown of our spending can be found here. We are debt-free (no mortgage) so our top spending category was food & dining, followed by automobiles, health and fitness, and then home, utilities, and travel.
When we are responsible for purchasing our own health insurance, I expect that category to shoot to the top. Travel would be higher on the list if we hadn’t used points for free travel and had CME travel reimbursed by my employer. I project spending closer to $75,000 a year in early retirement. That will rise with inflation, but should eventually decrease when our boys are on their own. Which happens at what age? 22? 27? Please don’t say 30!
How did you accumulate your net worth? Also, please share any mistakes you’ve made along the way that others can learn from.
I wish I could give you the “one simple trick” or other clickbaitish catchphrase to give you a shortcut to millions. All I’ve done is put in some time in a high-income position. Early on, I spent far too much money building a home in a town that, it turns out, couldn’t support a hospital. I also invested rather haphazardly, and untangling those investments taught me a few things about taxes and charitable giving.
I am happy to take the market’s returns. While it’s certainly possible to beat the market by picking individual stocks or sectors, most investors underperform. I’m also not interested in the emotional aspects of constantly evaluating whether to buy, sell or hold a particular investment. All that woulda, coulda, shoulda would get to me. I don’t quite have a three-fund or four-fund portfolio, but my holdings are not far from it.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
For me, the key has been keeping a huge gap between my earnings and my spending. My family is quite happy to live on $60,000 to $70,000 a year. Studies show rapidly diminishing returns in terms of happiness above that level. With paid off homes and a low cost of living area, that amount of money can go pretty far.
While we might get a little more enjoyment out of a lot more spending, it’s not worth extending my career for years or decades to afford it. Even if you love your job, you’re still trading your freedom, time, and expertise for money.
What are you currently doing to maintain/grow your net worth?
I’ve already worked one more year after achieving financial independence. I’m on OMY #2 and will likely take what we’ll call an extended and perhaps permanent sabbatical in 2018. Throughout that time and after, I will continue to share my insights and experiments on my website, which is starting to generate some income.
Do you have a target net worth you are trying to attain?
If our investments can maintain their value over the next year and a half, I expect to have a net worth of $3 million or more before taking our “sabbatical.” Not all of that is earmarked for retirement; the 529 Plans are for the boys’ education, and we’ll continue to need a place to live, for example. $2.5 million in retirement assets should be more than sufficient for us.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
Retire early? Yes! I can almost taste it.
We’ll do some slow travel as a family. Our first adventure will likely be a motorhome tour of the continental United States. We’d also like to explore Oceania, Europe, and perhaps a true Spanish immersion experience, spending a year in a Spanish speaking nation.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
Also, nobody cares about your money more than you. Keep your investments simple, avoid excessive fees (because fees will cost you millions) and educate yourself. This site is a great place to get started.
photo credit: barbourians One Million Dollars via photopin (license)
J. Money says
*Goes to convince all his friends to start a brewery and enact the free beer clause*
Physician on FIRE says
You’re my friend.
J. Money Ale Company?
Cheers!
-PoF
Erik @ The Mastermind Within says
PoF is funny – are you always this forward? 🙂
Thanks for sharing your interview – this series is fantastic to learn from for non-millionaires.
Physician on FIRE says
Thank you, Erik!
Best,
-The Comedian Within
Paul @ ABL says
Excellent post. Nice to see a doctor who does let expenses grow with income. Curious to see the “one more year” dynamic play out because it’s got to be tough to turn off that tap, but at some point more money doesn’t help happiness.
Physician on FIRE says
You don’t say? Each of those OMYs does pad the nest egg a good amount, but you’re right — at some point I’d just be working for money I don’t need, or working for reasons other than money.
At this point, I don’t think my wife will let me work more than a couple more years. We’ve too many exciting adventures waiting for us!
Cheers!
-PoF
George says
Thanks for sharing, fun read! I know an anesthesiologist just like you – working insanely hard now so they can retire in their mid to late 40s, and other than travel, living on a tiny budget. As someone who is married to a physician, I can attest that living like you are still a resident goes a long way to savings.
Physician on FIRE says
Very cool, George. My extra hard working days are behind me. Some days are exhausting, but the career is on cruise control at this point. I’m actually considering cutting back on hours as a transition to full retirement from medicine.
Best,
-PoF
Pat Gannon says
Tremendous blog with great info…..I am a ‘early’ retired clinical pharmacist (38yrs)…retired 3 yrs ago…currently 64….am still a college Biology Professor ….been doing this 33 yrs (side gig) but most enjoyable…..teach some courses online and others face-face……total worth 1.75 million…houses and cars all paid for …no credit card debt….spend about $55,000-60,000 as well…..2 kids in early 30’s …2 grandkids….would have loved to have a 457b….but not possible….Two questions
1. How close do you come when ‘topping’ off 15% income Trad IRA to Roth conversions….
2.How do you work an HSA given you income???
Thanks….PG
Physician on FIRE says
Sounds like a great life, Pat!
1. I’m still working, so I won’t be doing any Roth conversions for at least another year or two. At that point, I’ll be draining my non-governmental 457(b) over five years or so at $3,000 to $4,000 a month. I may convert up to the 25% bracket (or whatever the next bracket will be) or leave the tax deferred money alone.
2. Up to $6,750 per family. Tax deductible contribution, tax-free withdrawal when used for healthcare. Can’t beat that.
Cheers!
-PoF
Max Your Freedom says
Fantastic accomplishments PoF, you have quite a bit to be proud of! Love the microbrewery investment, sounds like a great hobby to get more involved in once you unplug for good.
Physician on FIRE says
Thanks, Max. The brewery investments are great! The one that is open not only gives me free beer, but also has free popcorn! I love free!
Full Time Finance says
I love the details on the Microbrewery PoF. I somehow missed that post on your site. Some friends of ours have a stake in a local brewery. They provided a keg of custom beer for our wedding. Unfortunately, the brewery imploded about a year ago after about 10 years of operation. I gather they are making another run of it this year in a new location. It’s an interesting if saturated market.
Physician on FIRE says
Bummer, FTF.
Both of the breweries I’m involved with are in very small towns (under 5,000). They’ll be the only game in town. The first one is already producing over 5,000 barrels a year, or more than 31 gallons per capita.
Cheers!
-PoF
Coopersmith says
Excellent post and you deserve kudos. Very entertaining.
I wish my brother who is a plastic surgeon was this wise. My brother will probably work until the day he dies as he live high on the hog. The what he called “investments” have probably lost more money than I have ever saved. He has tried to start two art galleries that have failed, a classic car restoration shop that he closed after his prize possession was stolen along with truck and trailer and took a $200k hit. Numerous other high risk and high loss potential ventures which he asked if I wanted to invest in and I said no, and boy was I glad.
He is a very talented plastic surgeon but not the best investor.
Tawcan says
Great post and great interview. Thanks for sharing all the info PoF.
Physician on FIRE says
De nada.
Physician on FIRE says
Thank you, Coopersmith.
Your brother’s story is not at all uncommon in our profession. If he had put it all into one simple index fund (or several), he’d probably be a lot better off. There’s no need to try to find that needle-in-a-haystack investment when you can buy the whole haystack.
Cheers!
-PoF
Physician on FIRE says
I meant to nestle this comment this snugly under Coopersmith’s comment, but failed miserably. Imagine that it were up there.
Thank you kindly,
-PoF
Coopersmith says
LOL… it’s ok as my wife is not the best at this sort of stuff so I am use to it.
Live Free MD says
Incredible success for only 41 years old. Thank you for the inspiration and cheers to great beer.
Physician on FIRE says
Cheers to you, LFMD. Paying off $400,000 of debt is no small feat. http://www.livefreemd.com/how-i-paid-off-400k-worth-of-debt/
I’m sure you’ll be in similarly great shape when you’re a young man of 41 years.
Cheers!
-PoF
Arrgo says
I imagine it will be tough to walk away from that kind of income. 41 is still young so working a few more years might be a good idea if you can stand it to bank a bit more. It will probably be hard to get back in once you leave. Although it seems like you should probably be set even if you left sooner.
Physician on FIRE says
I wrestle with this on a regular basis. I might be good for a couple more years. Freedom beckons, though.
Cheers!
-PoF
Ray says
Looking at your post on your spending for 2016, I see you spent $7K for groceries for a family of four. I also have a family of four (with similar child ages) but we spend a LOT more than that. I’m not really sure how it happens (my wife sets the menu and does the shopping and cooking).
Physician on FIRE says
A combination of Costco, Aldi, and occasionally buying mostly sale items at the nearest grocery store. Note that beer is a separate category. 😉
At this point, we could stand to be less frugal when it comes to food, but when you’ve lived a certain way for so many years, it’s tough to fork out $4 for a box of Triscuits.
Cheers!
-PoF
Mike H says
Congratulations PoF. I follow your blog as well and it’s great to see that there is a group of doctors who are financially savvy. I work as an administrator in a large private hospital in SE Asia, and probably make the same income as you do. I see many doctors who earn big but they need to have high status so aren’t too wise with their income. They spend a lot on items that depreciate and chase some pretty poor investments. It seems like their attitude is not to care since they are willing to work for several decades more. I think they like the high social status that goes with the job, here in SE Asia doctors enjoy a very high reputation in society.
It seems like you are doing just fine. I am 3 years older than you with a NW about 40-50% higher and annual spending a bit more than you too- I’m thinking of working another decade or so and then hanging it up early.
-Mike
Apex says
PoF,
You seem to have gone to some effort to describe your location in vague enough terms to conceal its location. However, I do believe I pass through it many times a year. Trying to model your vagueness, it is commonly referred to by us in the “true metropolitan area” as more of an area than a town. Having its own couple of minor suburbs that start with the same letter as the town itself. It has many lakes including one named after a common fish to the area that sits just behind the surgery center that you quite probably work at. However that is a pretty minor lake in comparison to the most prominent one sharing its name with part of a bird’s name and where many of the major resorts sit. Its not exactly the fictional city that you alluded to in your story but it does have regional connections to it out there on the edge of the prairie.
Physician on FIRE says
Bla Bla Bla.
You’ve got the gull to come here and try to knock me off my perch of anonymity?!?
For shame!
-PoF
Apex says
And witty. Touche’
FS says
For your Spanish immersion, I recommend Costa Rica. Most stable country in Latin America, no standing army. Many Ticos speak some English, and love to practice their English while you practice your Spanish. Caribbean & Pacific beaches, rainforest, active volcanos, white water rafting, and more. And best of all: !Pura Vida!
Physician on FIRE says
Gracias, mi amigo!
I’ve spent a week there. It wasn’t nearly enough. It’s high on the list.
¡Salud!
-PoF
Ten Factorial Rocks says
Great interview POF! Finally ESI got you to share your net worth, which needless to say, is very impressive for a 41 year old. But I have to remind myself you are an “above average” anesthesiologist and must therefore have above average assets even for a doctor. Your humor is something I always relish. A good looking doctor with a great sense of humor and impressive net worth? Well, Mrs. POF hit the jackpot indeed! ?
Physician On FIRE says
And I remind her of that several times a day. 😉
I feel like I hit the jackpot with her, too. Smart, good-lookin’, fun, and more frugal than me.
Cheers!
-PoF
Lily | The Frugal Gene says
This goes without saying but POF is my hero and who I want to be when I grow up someday 😉
Reed says
Any book specifically written from physicians’ point of view for FIRE? I know about chapter in The Millionaire Next Door.