The Doctor Bill: A Deeper Look Behind The Scenes
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In my analysis of the latest Doctor Bill submission, A Place To Tinker, I remarked on how impressed I was that a family practice doctor managed to have a sizeable net worth and income at the early age of 34.
I inquired if he was willing to share the story of how he was able to attain this current financial state despite going through the typical delay and expense of a medical education that leaves most doctors in the red early on.
Thankfully, “Doctor Flagston” kindly complied and submitted the following details.
I appreciate you and Johanna taking the time to evaluate this potential expense.
I can also give you the back-story on my situation as you have asked:
Although I did have student loans, they were not at the national average because of a few breaks:
- A wife who worked 3 jobs while in medical school to help offset cost.
- Parents who helped offset the cost.
- Applying for and getting scholarships while in medical school.
- Being frugal.
We were able to pay off all loans by the end of PGY1.
I had a “financial planner” right out of residency, which I do think helped in some ways; however, he sold me a whole-life policy (my biggest financial blunder to date) 3 years ago.
I didn’t know anything about finances until I decided to start educating myself about 1 year ago when he suggested I purchase a whole-life policy for my wife and 3 children at the time.
I found WCI online and haven’t looked back yet.
Obviously, I fired this person and just recently bit the bullet and cashed out the whole-life policy.
By my estimations I ended up losing about $25k (my stupid tax).
As mentioned in your questions, we bought a $531k home 4 years ago on a 30-year physician loan with $0 down at a 4.25% rate.
My plan is to finish paying this off in the next 15 years.
We got this house with plans to renovate and make it our own in a few phases.
We have already finished the majority of the planned renovations (pool, upstairs renovation, and wine cellar) to make this our forever home with no plans to leave.
We love the area and I love my job; however, we have no family here.
This last planned renovation (the 2-story workshop/guest room) meets a couple of needs.
Woodworking is my biggest hobby and I spend several hours/week doing this.
Having my own shop would be a game-changer and something I certainly plan on “retiring to” when that day comes.
I have no idea if this will end up generating an income but my plans do not depend on this.
The guest room fills the need of extra space for when my or my wife’s large families come visit (as we have quickly run out of room in our current home with 4 kids).
Despite the renovations already made, and potentially one coming, we have continued to meet our financial goals including maxing out retirement accounts, back-door Roth IRA for both, and saving at least 20% gross.
It is a little difficult to answer the savings question simply because it has been pretty different over the last few years with the renovations and a climbing salary – but we have always saved more than 20%.
I just passed my 5-year anniversary in hospital-based private practice in a group of 7 docs.
My starting salary was 150k.
After my first full year I grossed 260k.
I subsequently grossed 380k, then 460k, then 500k, and should be on pace to bypass 500k this year.
We currently work with a 1A model (revenue – expenses) and I am able to do well by being efficient seeing 25-30 patients a day while working in an office that spends lots of time evaluating expenses thoroughly.
I currently work 4 and ½ days per week, no weekend, and an overnight phone call for the entire medical group maybe twice/year.
Of course things can change but I have never felt burned-out in my 5 years.
I have quite an easy time leaving work at work – which is far from my #1 priority of my family.
However, since I emailed you initially, we have been informed of a potential change to our compensation plan – switching to an RVU based model with quality care built-in.
Although I’m not sure exactly how this will impact my income, I still think I will sit in a good spot because there will still be incentive to be productive and I already have a very low expense per patient charge (due to not ordering unnecessary tests/imaging).
However, our group ancillary income (split evenly amongst all 7 docs from labs, xray, ultrasound) will likely change and be a negative impact to this model.
Because of these changes, I am more hesitant to move forward with the 2-story addition until I at least know what a full year under this new model looks like.
Again, thanks for the feedback and I am also interested in seeing how medicine evolves over the next 5-10 years; however, I certainly don’t worry much because we have such an amazing job that will always provide a top level income and stability.
It is remarkable when you have a true teammate in a spouse that helps you attack debt the way this doctor was able to do so.
Working 3 jobs and being the sole breadwinner while her husband was in medical school is truly astonishing and helped set up the doctor and the family’s financial future nicely by being able to be debt free while in the first year of residency
That head start in debt reduction was instrumental for the subsequent financial life the doctor is enjoying now.
Doctor Flagstone is also making a very wise decision and waiting to see how this latest compensation model change will affect his income before committing to the desired 2 story garage addition he initially asked Johanna and I to analyze.
Everything in the financial world is fluid.
Circumstances change and what might be right at one point may not work out later because of something unexpected.
Hopefully there will be stability in this doctor’s income with the new payment model that will allow him to stay on this trajectory.
Best of luck and thank you for providing my readers and I additional insight on your story.
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Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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