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The Complete Every Mistake In The Book Series:
“One house, One Spouse, One Job”
That is one of the basic tenets of financial teachings by the FIRE (Financial Independence, Retire Early) community and its rationale is wonderfully summarized here by WCI. Even if one’s goal is not to retire early, it is wise to follow.
So please continue to follow this story as young, naive Xrayvsn proceeded to commit financial cardinal sin by breaking each and every component of this primary FIRE doctrine.
Mistake #3 (One Job):
When I graduated medical school near the top of my class I had the ability to pretty much choose any specialty I wanted to go into. I had rotated through many specialties but there was a draw towards surgery.
I believe I went into that specialty for the wrong reasons. My family and friends considered surgeons prestigious. In fact I took it a step further and said I wanted to be a cardiothoracic surgeon because it even upped the prestige.
My mother in fact would brag to her friends that her son was going to be a heart surgeon.
I ended up matching at my first choice and in my head I was well on the way to get the girls and money as a young up and coming surgeon.
I was set and already envisioned the life ahead.
Soon reality began to set in. The portrayals of surgeons on TV failed to mention what a truly demanding lifestyle, both in training and as an attending, a surgeon faced.
I am not a morning person and yet I was going into the hospital and doing the rounds on patients before the OR started at hours that morning people would complain about.
And just because you got in early did not mean you left early. This was before the 2003 federal regulations that required residents to do a maximum of “only” 80 hours in a work week. I logged some rotations in my 2nd year that totaled over 120 hrs/week for 3-4 weeks straight.
Approaching the second year of general surgery residency (PGY2) I noticed a change in my personality.
I no longer had a semblance of my former self (the one that was happy go lucky) and often became terse and abrupt with any personal interactions with family members and friends.
The nail in the coffin was that I began to realize the attendings I was training under did not have a significant improvement in lifestyle either. When there was an emergency surgery in the middle of the night, they too would be dragged in to perform it.
I made the heart-wrenching decision that the surgical life was not for me.
“Don’t cling to a mistake just because you spent a lot of time making it”- Aubrey de Graf
I felt embarrassed to even mention it to my family members who just a few years ago I was boasting to about being the next big heart surgeon.
My mother didn’t help at all when I said I wanted to change my career path and become a radiologist and she replied, “Is that still even a doctor?”
To her defense, sometimes after discussing a fluoroscopy study with a patient directly the patient would reply, “Thanks, but when will the doctor look at it?”
I applied and got into a radiology residency program and although I had already completed two years of residency, I could only get credit for one. I completed four more years in Radiology and then proceeded to finish a year of fellowship in Interventional radiology.
Estimated Hit to Net Worth:
1) Conservatively estimating 1 year of potential attending salary lost by not going directly into Radiology in the first place: $220k
2) Moving expenses likely tacked on an additional $5k
Superpower Take-home points:
- Do not succumb to Sunk Cost Fallacy
- Although this example is meant to provide an example of a mistake, I also like to think it also exemplifies a decision that markedly changed my life for the better
- Rather than continue finishing the 5 year surgical program I was currently in because I already finished 40% of the training already (the sunk cost) and be miserable, I made the difficult decision of “cutting bait” and pursue an endeavor that has brought me far more happiness than I ever could have achieved in a profession I was ill suited for.
- Although this example is meant to provide an example of a mistake, I also like to think it also exemplifies a decision that markedly changed my life for the better
In the grand scheme thing of things the next mistakes are relatively minor but I would be amiss to not include it in my trial by fire financial education.
Mistake #4:
A)
In my 3rd year of radiology residency (PGY IV) on one of the rotations I was in I was essentially one on one with an attending radiologist.
During our down time he spoke of how he was reading up on investing and said that he was confident that he could make money investing based on his newfound knowledge.
To be honest I was so naive I am not even sure what the product he was investing in but to the best of my ability, I think it was in futures (vaguely recall it might have been in grains).
He showed graphs of how these investments had amazing returns and then asked if I would like to invest as well. He said he had a brokerage account and that if I wanted in, I should give him $1,000 and he would deposit it and invest it for me.
I’m shaking my head as I type this now, but younger Xravysn just bought into this without question and without doing further research.
To make matters worse, I didn’t even have $1,000 extra to invest at the time and used a credit card access check to come up with the entire amount.
Later in the year I asked this attending whatever happened to our investment and he said “Oh, we lost it all.” Again I implicitly trusted him. Not once during the process did I see the brokerage transactions confirming my initial investment or the eventually total loss (if indeed that did occur).
B)
I blew another wonderful opportunity to turbocharge my retirement accounts by choosing not to defer any money throughout my residency, forgoing the great retirement vehicle called the ROTH IRA (which allows one to put after tax money into a retirement account which would then grow tax free).
Given my lower income tax rate as a resident this would have been a great opportunity to have income tax arbitrage (put money in at a lower tax rate and withdraw it tax free when I would presumably be at a much higher tax rate).
Alas, when I finally did decide to fund a ROTH IRA (my fellowship year which also was the last year of opportunity to fund a ROTH as I would soon eclipse the maximum income restrictions), I again did not do any research but listened to my CPA who referred me to a financial advisor that promptly put me into a 5% front loaded mutual fund with a fairly high expense ratio (I believe approaching 0.8%)
Estimated Hit to Net Worth:
- 4A: $1,000 initial investment plus $30 check fee and subsequent interest. Again a guess but likely $1,100 before it was paid off.
- 4B: Assuming invested maximum ROTH (1998-2001 at $2,000/yr and 2002 at the new limit of $3,000/yr) would have had $11,000 of principal money. Estimating a 6% rate of return from 2003-2018 this would have worth around $26,000 + loss from front loading
Superpower Take-home points:
- If you do not understand a financial product stay away from it.
- People in positions of supposed trust can still betray you or not have your best interests in mind (the only person who has that is YOU)
- If there is a very predictable salary path (such as the leap from a resident’s salary to an attending’s salary), take advantage of retirement vehicle opportunities that will be lost due to income threshold limits imposed (Roth IRA).
The series, “I Made Every Mistake In The Book,” continues with Part III.
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I love these type of posts. They are proof of concept posts-I can screw up and still be ok! Well done.
Thanks Doc G! My blog is in its infancy and it is a struggle to get subscribers/followers but hopefully with persistence it will pay off. Please stay tuned because I have 3 more posts in this series (I have made way too many financial mistakes in my life unfortunately before I “saw the light”, and the last 2 in the series are the worst of all (the last post I add all the estimated hit to net worth #’s I used and it was truly eye opening) By the way I love your blog and your writing style. Definitely will… Read more »
I’ve made plenty of mistakes in my residency years. The good thing was the sum of money was still relatively small compared to the higher earning years. Going from surgery to Rads – I’m glad you saw the light!
Unfortunately the first three of these posts in my financial mistake series (altogether 5)pale in comparison to my last 2 mistakes which will be published in the upcoming weeks. The last 2 mistakes which were related brought me to the financial brink and forced me to reassess myself and bring me where I am today. And yes, Radiology has been an amazing fit for me compared to surgery and that was probably the best decision I have ever made.
A lot of non-docs do not understand the pecking order of medicine. It is not based on money. Interesting post. I am glad you changed. It might of been a wise career move since I think jobs and income have declined for CV surgery. They were definitely at the top when I was a resident.
I agree, when I was graduating medicine, general surgery was ultra-competitive (I graduated ’97). This current crop of medical students I believe place a premium on lifestyle more than anything (and to be honest, I can’t fault them for that at all, it is the best way to protect against burnout if you have a decent lifestyle). That is why the E-ROAD (Emergency Medicine, Radiology, Ophthalmology, Anesthesiology, and Dermatology) are the most desired residencies now. I am definitely glad I made the switch for sure because of the dramatic improvement to my lifestyle.
Hello Xrayvsn, My husband is a surgeon and has a wonderful lifestyle. No one wants to hear it but it’s very true. The anesthetist works before he starts his day and leaves well after him. I reached FI the first year he finished his training. He has practiced over a decade after that. He cares not a wit about FIRE. He loves what he does. We were always able to sculpt our lifestyle by taking 1 month off each summer since he started practice. He takes about 10-12 weeks off a year. Even with all that they asked him to… Read more »
Thank you so much for the comment. That is fantastic your husband has carved out an enjoyable lifestyle in a specialty that is notoriously known for the opposite. And I am glad he loves what he does, that makes all the difference in the world and prevents burnout that is starting to become an epidemic in our profession. Is your husband academic or private practice? It is interesting you mentioned that Anesthesiology has even longer hours than surgeons. The medical school students often refer to E-ROAD (Emergency Medicine, Radiology, Ophthalmology, Anesthesia, and Dermatology) as the lifestyle specialties. Well thank you… Read more »
It was never popular when I tell anesthesia residents that the only way they would have a better lifestyle would be to actually NOT work. But youth never allows themselves to hear certain messages. Besides, we didn’t really want to “out” what a great lifestyle my husband had as a surgeon. He is in private practice and we are in Canada thus our medical systems are likely very different. But surgeons are known to have bad lifestyles here as well. The energy of your writing is quite contagious. Keep it up. These blogs foster a healthy outlet. And if we… Read more »
Wow, I think you are my first international commentator 🙂 (and this may be the answer to a trivial pursuit/jeopardy question in the future 🙂 ). Very cool knowing that this blog has crossed the borders already 🙂 I’m international! LOL. Well I hope you do subscribe to this blog, the last 2 posts in this financial mistakes series are quite a doozy and set me back financially quite a bit (but I have since overcome this). Thanks again for the encouragment.
Ah, the old “they are my mentor, they must have my best interests at heart”….. Yeah, I’ve been burned by that, as well. It seemed to take forever for me to learn that the only person who really cares about my well-being is me. (sometimes, I wonder if that is an internal reluctance to accept responsibility…if we allow others to “act in our best interests” we are handing over responsibility….) I did two different residencies. I really enjoyed the first one, but as life changes I found I needed to go back and do a second one. The biggest single… Read more »
You hit the nail right on the head and something that it took me way too long to realize. No one has my best interest financially than me. Everyone else would like to transfer some of my pile to theirs and even with fiduciary rules in place who knows if they are being followed. It’s like asking a murderer on the stand do you swear to tell the truth and nothing but the truth in court and they say yes. If that’s the case then each trial should really last 1 question (did you do it?). Taking time to learn… Read more »
Mistakes can still be corrected. It is never to late to correct your mistakes. Admitting your mistake is the road to the right path.
I agree. The biggest mistake is to not learn from previous ones.
Thank you!