BiggerPockets Money Podcast

BiggerPockets Money Podcast 133: Retiring Early Doesn’t Have to Be All-or-Nothing: “The Art of Subtraction” with Doc G

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Doc G wanted to be a doctor since he was eight years old. He went to medical school, started his career and quickly realized he actually didn’t like all the parts about being a doc—and didn’t know how to leave the profession. Something he’d wanted for 20 years suddenly wasn’t so awesome anymore.

Cue The White Coat Investor. He’d written a book and asked Doc G to read it and review it for his medical blog—and suddenly Doc G saw a way out!

This way out didn’t have the expected results, however. Instead of jubilation, Doc G was thrown into a spiral of anxiety and depression. Something he’d wanted his whole life—this thing he’d identified with so strongly for so long—and the thought of walking away from such an enormous part of his life was terrifying because now he had a way to do it. It was suddenly real.

Having always saved at least 50% of his income, Doc G went to his accountant, who was unfamiliar with early retirement and sort of threw out a number he needed to save to retire. His financial advisor was a bit more helpful, asking questions like, “How much do you spend in a year?” Not knowing, Doc G threw out a number, which turned out to be really close to what his accountant said he needed. But he was still unsure.

So he did what anyone in the FIRE community would do—he started reading everything and anything he could get his hands on. He realized he had enough money to stop doing those things he didn’t like, so he started practicing what he calls, “the art of subtraction.” He removed the things that did not make his heart sing, so that he could focus on those things he DID enjoy.

And his plan worked. He now can spend his working hours doing the things he loves to do and does not have to do the things he doesn’t. He has focused more time on non-doctor side projects like writing and podcasting, where his enjoyment runs sky high (even though the paychecks do not).

As his side projects bring more joy, walking away from the physician thing gets easier and easier.

Making plans for retirement is great, but today Doc G shares how to plan your transition into retirement, which can be even more important!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Mindy:
Welcome to the BiggerPockets Money Podcast show number 133, where we interview Doc G from The Earn & Invest Podcast and talk about transitioning to a life of nontraditional employment or even no employment and the struggles that come with leaving a job that defines you, but does not make you happy.

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Doc G:
So, no, I don’t think everyone can do it exactly the way I did it. What I think most of our messages who are interested in personal finance is maybe you can’t do exactly what we did, but maybe you can take pieces of what we did to make your life better, and that’s the way I look at it.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and with me as always is my always adaptable co-host, Scott Trench.

Scott:
I just love the evolution of your introductory adjectives, Mindy. Thank you so much.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else, and show you that by following the proven path, you can put yourself on the road to early financial freedom and get money out of the way, so you can lead your best life.

Scott:
That's right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or simply change your identity and how you think about your profession and your worldview, we'll help you build a position capable of launching yourself towards those dreams.

Mindy:
Scott, I love Doc G. Not only is he just a really nice generous person, but this episode today is really helpful to people who are thinking about transitioning into a life of no longer traditional employment. At my house we joke and I call my husband unemployed, but I think some people may not identify with that or may feel a lot of judgment in that. And it doesn’t come from a place of judgment, it comes from a place of you technically don’t have full-time employment or any employment, at least in our case. And there are some steps that you need to follow. There are some things you need to think about in order to have a smooth transition.
And I think that a lot of people don’t recognize this yet because they’re not there. But there are a lot of things that you can do to set yourself up for a really smooth transition, but you don’t know what you don’t know. So Doc is here today to tell us all those things that you don’t know.

Scott:
That’s right. I think Doc G is one of the most thoughtful, introspective, and philosophical minds in the FI community in a lot of ways. Everything he does he has… You can just tell how much time and energy and emotion and thought he has poured into the why behind where he is today, what’s going on, how he’s going to manage his money, and how he can make this more approachable for more people, especially on the mental side of things, and the identity problems or challenges that FI brings up for a lot of working professionals.

Mindy:
You said it really, really great Scott. Thoughtful, that is exactly what is kind of the overarching theme of this whole episode is thoughtfulness and really considering your options and considering the choices that you have before just jumping in with both feet. So it’s basically the opposite of me and my personal philosophy of fly by the seat of my pants sort of thing.

Scott:
Yeah. I think a lot of times I’m very pragmatic or straight to the point, those types of things. And so I think Doc really brings a lot of things to challenge or make you think about as a part of this journey.

Mindy:
He does. Well, this episode is a nice long one. So before we bring Doc in, let’s hear a note from today’s show sponsor.
Doc G from Earn And Invest Podcast, welcome back to the BiggerPockets Money Podcast. For those of you who are listening, Doc G played the role of Mindy in episode 99 when he co-hosted with Scott, from the CampFI Joshua Tree, if I recall correctly.

Doc G:
Yeah, it was a lot of fun. Those are big boots to fill. And so I did my best to try to be Mindy-esque but I was not nearly as funny or entertaining.

Mindy:
My feet aren’t that big. So Doc G is here to talk about afterlife. Not that afterlife. He’s going to talk about transitioning from being employed to not being employed. Do we call ourselves unemployed, Doc?

Doc G:
So I don’t because I still do some contracting.

Mindy:
Okay.

Doc G:
But I also feel like part of my thought process is that you’re generally constantly working, whether it’s working on your house or working for a job. The question is, are you being paid for it or not? So I almost feel like I’m always employed at something.

Mindy:
Okay. So Doc left his position as a physician, and I don’t mean to rhyme, but Doc G is just a clever name. Doc, you were an actual doctor. What was your specialty?

Doc G:
So I did my training in internal medicine, and I had various jobs over time. I worked as an employed physician, being a primary care doctor where I would see adults in the office, in the hospital, and eventually went into my own practice where I did the same, as well as going to see patients in the nursing home. So pretty much anything nonsurgical that adult goes through, I had my hand in treating.

Mindy:
And then you were just able to walk away and it was great. So how’s your life now?

Doc G:
My life is good, but the transition wasn’t 100% smooth. So I would say that that transition that you just glossed over in one sentence actually took many years to get from fully employed to where I am today.

Mindy:
Okay. So let’s talk about that. I am assuming that you didn’t start off on your path to be a physician and be like, “I’m going to retire early.” You were planning on just working forever, right?

Doc G:
So my father was a physician and he was a prominent oncologist. Very, very well respected, and I wanted to be just like him. And then I was eight years old, he died and I was stuck in that eight year old kind of boy mind. And I looked up to my father so much, this idea of being a physician just like him stuck in my head. So my thought process was that I was going to become a physician, go through medical school, residency, start practicing, and it was going to be Nirvana. So it never even entered my mind that maybe after doing it for a few years, I wouldn’t want to be a physician anymore. Throughout childhood, that was the end-all, be-all.

Mindy:
So when did you start feeling like maybe this isn’t the end-all, be-all?

Doc G:
It happened actually fairly quickly. I can trace a few traumatic moments, which in some senses probably are a little bit post-traumatic stress disorder type. So I was in residency and I had a few episodes. I remember one very clearly where I was alone taking care of patients in the ICU at midnight and one of my patients went into respiratory distress and we fumbled to get him on a ventilator. It was this really traumatic event and the patient eventually died. And at 2:00 in the morning, his family comes in and I, the second year resident, fresh into my MD degree, was sitting with this group of seven family members telling them that their loved one just died. It was very, very sad. And then the next day I got a bunch of phone calls.
The family that had come in that I had talked to was his new family and his new wife. Apparently they didn’t get along with his children, and so no one told his daughters that he had died. So they called the next day and, of course, it was me who had to get on the phone with them. The guy was already gone, right? He had already gone to the morgue, was already to the funeral home. I had to tell them that their father died over the phone, and it was just the most traumatic thing for me. And imagine this, it was traumatic for me. Can you imagine how traumatic it was for these poor women who had to learn about their father dying this way? That changed the trajectory of my life. And I knew then that there was something broken in our system.
And as I went out and practiced, I found that I was in more and more of these positions that were emotionally and ethically awkward, like where I knew the right thing to do, but I didn’t feel empowered by the system to do it. And so I saw the bad points about medicine more and more as I practice, and there were still parts that I loved about it. The moments of being in the room with patients and helping them and counseling them, but that became less and less of my time and more of it became those things I didn’t like. So the cracks started and I got to this point actually in my life where I was like, I don’t want to do this nearly as much anymore as I do. Maybe I don’t ever want to do it again, but I couldn’t see a way out.

Scott:
How old were you when that happened, that horrible ICU you experienced with the family? That was your second year of residency, but how old about?

Doc G:
Yeah. I must have been about 27, 28.

Scott:
So that was 20 years following kind of your dream it sounds, the death of your father when you were inspired to become a doctor basically. And I want to kind of highlight this because I think it’s very powerful. That journey to becoming a doctor is not like you make a decision on a whim, right? This is a journey that begins, I think, in middle school for most doctors maybe, if not earlier, because you have to have top grades sustained throughout that entire experience. Can you walk us through, if that was true for you, if you feel like you invests in pursuit of that particular goal for a majority of your childhood and early adult life? Is that accurate?

Doc G:
I think there are a group of us who do, and I would say the majority do. So my guess is about 75% of people are just like me. They have this kind of dream. Maybe they had a family experience. Maybe they had a family member who got sick and a doctor came in and made things better and it sticks with them. So for about 75% of us, I’d say it really becomes part of your identity. And not only your personal identity, but it also becomes part of the identity of your family and friends who watch you go through these struggles. And if you’re lucky enough to succeed at college and make it into medical school, everyone is now bought into this idea of this is who you are.
Now, there is that other 25% who weren’t planning on becoming physicians and then decided they liked science in college or didn’t have anything better to do and decided to go to medical school and then eventually fell in love with it. But the majority of us, as you were saying, it’s really a long time coming where it becomes who we are, not just what we do.

Scott:
And so how does that work mentally? What were you going through when you kind of began to realize that it might not be for me after having invested like that in that journey?

Doc G:
So I had found that my love affair with medicine was getting less and less strong over the years. I was stressed out. I was burnt out. I was getting to the point where my personality changed. My wife used to say how funny I was when she first met me. I was always making jokes, and I was very quick to smile and laugh. And over the years that faded away and I could see it in myself. I would say the first point was when my son was born. So when I held my son in my arms after his first few moments of life, I became acutely aware that all these walls I had built up through medicine, all these ways I was trying to protect myself weren’t going to work if I was to be a good father.
I knew immediately that wasn't going to work, so I was already starting to disassemble these walls that were trying to protect me. But instead, they were just taking all that sadness and keeping it inside. But after that, like I said, I didn't really know that there was going to be a way out. So I kept on searching, how can I extract from this profession, and yet still make a living and still hold on to that identity that I had built my life around of being a physician? And as I was in the midst of creating these systems, buying real estate, taking on medical side hustles that were less stressful, doing other ways of making money, but doing it in a way I like to do it, something major happened and it happened in 2014.
I got a call from a guy named Jim Dahle, who you might know as The White Coat Investor. He had just written a book, and I was blogging at that time about medicine. I had been writing medical blogs since about 2005. And so I had a moderate following and he had just come out with this book and was hoping that I could read it and review it on my blog. I had never heard of the guy. I knew nothing about finances. I had pretty good financial behavior because my parents had good financial behavior, so I took after them. But he sent me this book, The White Coat Investor, and I read it in about three or four hours and it changed my life and also changed my trajectory in quite a bit of ways.
It made me realize that if I wanted to escape medicine, I could. He gave me the financial vocabulary to understand where I stood and where I needed to be. But the funny thing is, instead of feeling jubilant that I had found my escape hatch, it actually spun me into quite a bit of anxiety and depression that lasted for months and months afterwards.

Scott:
Why is that? Why was there a negative perception or anxiety or depression?

Doc G:
Because all of a sudden it was real. So theoretically, I had thought medicine is stressing me out. It’s exhausting me. Maybe this isn’t what I was meant to do with my time and my life. But it was the only identity I knew. It was an identity so thoroughly wrapped not only in my father, but just in who I was, in how people around me saw me. That to all of the sudden decide I’m going to step away from this thing that had defined me since eight years old, it was really traumatic. And it was one of those difficult things where you have your eye on the ball for so many years. And just about when you’re there and you get the ball in your hands, you realize that you didn’t really want the ball in the first place.
And after years of feeling that way, it was a lot to take in and say, “Okay, well, who am I now? What is my purpose in life? How do I identify if I’m not going to be this anymore?”

Mindy:
I think it’s really important to note that while this happens to physicians, I know several physicians who are in a similar position as you are, this isn’t just physicians. This isn’t just attorneys. It isn’t just people who have this like identity around their job. It’s for people who have been in a career genre or whatever for so long. I was a graphic designer. I hated being a graphic designer. Every day I would wake up and be like, “Man, I hope today isn’t the day that everybody discovers I have no idea what I am doing.” For 13 years, that was my life and it was not happy at all. And then I got fired, which was a blessing, and then I transitioned into something else.
And every day I woke up and I’m like, “I know what I’m doing. I have confidence. I feel good.” So this story really resonates with me because I went through that too. It’s hard to leave something that you have all this experience in. It’s hard to leave something that you’ve wrapped your mind and body and soul around. And I am not at all claiming that my life was like yours as a physician. I never saved anybody’s life with my graphic designs, which are all terrible.

Doc G:
Maybe you did. Maybe you did.

Mindy:
No, it was never anything that good. But I think it’s really important for people who are listening and, “Oh, I’m not a doctor, so this doesn’t apply to me.” It does apply to you if you’re unhappy in your current position and you want to be happy, because I don’t want to spoil your story, but you’re now really happy, right?

Doc G:
I am.

Mindy:
So there’s a happy ending, but let’s get to it.

Scott:
So in 2014, you read this book by The White Coat Investor, right? And it sounds like at that point you had a reasonably stable financial position. You are reasonably disciplined and practically building wealth. Is that right? Is that the beginning of the money journey in your eyes?

Doc G:
It is. I had started getting to that point where I was seriously considering leaving medicine or cutting back. So I went to my accountant and I said, “Well, how much money do you think I really need to not work again?” And she said 10 million. And I said, “Where do you come up with 10 million?” She’s like, “10 million is a good number.” I said okay, so I went to my financial advisor and I said, “Well, what do I really need to retire?” And he was a little bit better. He pulled out all these Monte Carlo simulations and put a lot of thought into it. But he asked me one important question which I totally flopped on the answer and he never questioned me further on. And he’s like, “Well, what do you want to spend a year?”
Now, I had never tracked my spending. We were not big spenders, and we made lots of money. So we never tracked our spending because we always saved at least 50%, if not more, of what we brought in. So when he asked me, “Well, what do you want to spend a year? “I said, “$250,000, maybe 300,000 a year.” I had no idea. I had no idea even what I was spending. And so when he did his Monte Carlo simulations, of course, it was like, “Yeah, you still got a ways to go. That’s a lot of spending,” but he never questioned or said, “Why don’t we look at your budget and go through and see what you actually do spend. Let’s look at the last calendar year and see what your necessities and non-necessities are.”
So I had this idea that I wanted to get out and to finish, but I had none of the vocabulary or understanding, for instance, what financial independence is, what enough is. And within three hours… Because I was fairly financially savvy. I was investing. I was a landlord by then. I was doing a lot of good things. My parents really did imprint on me some really good behaviors. I was frugal in a sense. That when I got that book and I read it, after three hours of reading this, it was like everything went off in my brain. I was like, okay, I get this now. I know exactly how much I need and I've surpassed that. I have my numbers here. I understand what the 4% rule of thumb is. I understand what 25 times is.
I understand how I need to change that to fit my life and I’m there. So it was an immediate understanding. It wasn’t a process because I financially understood a lot was going on. I just didn’t have the right words and formulas to make it all fit together. So it was a turn on the dime change and my brain wasn’t ready emotionally for all that knowledge to click at once. And I think that’s a big reason. I wasn’t prepared to confront this idea immediately of leaving medicine, and that’s why it was so traumatic. And that’s why it became a process from having the knowledge to emotionally getting myself straight enough to get to that end point of finding happiness in a post-physician life or career.
It’s really easy to use money or your job as a foil to asking the difficult questions in life, right? So I could always say, “What are you going to do with your life? I’m going to be a physician,” and that was such an easy answer. It really allowed me not to think more deeply about, well, but what really makes my heart sing? What are the things that I find essential? And eventually I realized, and I had been realizing this for years, that creating and communicating and writing and things like podcasting and public speaking, those were the things that make my heart sing, but I never would face them because somewhere in my brain, I said two things. One, I said, “Well, you’re a physician. You never have to think about that.”
The other is, “You can never make a living doing those things.” So that cut off that conversation in my head, and therefore, I was afraid to go there and think about the harder things.

Mindy:
But you’re financially independent. You don’t have to make a living on this because you already have all the money. What do we say, Scott? Get money out of the way so you can go on to lead your best life. But that’s very interesting. I have a husband who is a software programmer or was, software developer, whatever. He wrote computer stuff, and he left his job. So I’m fascinated by this story because I’m on the opposite side of this. I’m the wife that is like, “Quit your job. You hate it. Quit your job. You hate it,” and he’s like, “Oh, I don’t know if I want to.” And for him it was a bit of a different situation, but still similar. Why would I leave this job where I’m making such good money? His dad was a union electrician in Chicago growing up.
So in the winters, they’re all laid off. That’s a very clear pattern. You have lots of work in the spring, summer, and fall and nothing in the winter. And he was constantly seeing his parents saying, “Hey, dad got laid off again.” And it was very difficult for him to walk away from a job that paid so well just on a whim. Who am I to walk away from all this money? But he was not happy and it didn’t make his heart sing. And he’s very similar. He does the writing and that makes his heart sing. So you are in a position where you figured out how to do financial independence. You know you have the money to do financial independence. You didn’t just quit and walk away the next day.
How did you transition yourself into that walking away? And when I say walk away, I mean, from like traditional 40-ish hours a week employment. You said you still do a little bit of stuff, which is great. That’s a great way to keep your identity without all the stress and the stuff that you hate. But how did you start that transition once you figured out what it was and that you could do it?

Doc G:
So I did three major things that really got me from this idea of leaving the job that was no longer bringing me happiness to getting there. The first is I read an insane amount. I pretty much devoured every financial independence blog, economic book I could find. So I just started devouring information. That was the first step because I wanted to make sure that this framework that I was thinking of building was good construction, that it would hold regardless of what happened. The next step is something I do whenever I’m making big changes in my life, I started writing. So I started a blog, DiverseFi.com. I tend to write publicly, and I wrote about my thought process.
And it became an online diary of where I was at the time, but it also committed me to taking action on these things that I was writing about because now I was putting it out there in public. I was saying, “This is what I’m doing, and this is where my life was heading.” And it made me…

Doc G:
… I’m doing, and this is where my life was heading and it made me accountable. And then the last thing I did is as opposed to just saying I quit and walking out the door, I looked at my profession, and I said, “Well, there are parts of my identity that I really do value that came from being a physician. It’s not an all or nothing phenomenon. There are parts of me who are very wrapped up in being a physician.” So as opposed to just leaving the job, I started using the art of subtraction. I said, “Okay, what do I hate most about my job?” At the time, I was doing home-based visits, and they were very stressful. I was getting called at Friday night at 10:00 PM with an emergency and I’d have to run out at 10 and maybe drive an hour to get to someone’s house to deal with their issue or go the next morning. So the first thing I did was get rid of that outpatient home-based practice that I was doing. And for a good year, that relieved the tension enough where I was feeling pretty good.
But then I was realizing I was still getting called at all hours of the night, I was still working 60 hours a week, I was still feeling stressed and I was doing a lot of nursing homework. So I said, “Okay, let’s subtract the next thing.” I got rid of the nursing home. At that point I was doing some consulting for hospice company. I said, “Well, I’ll do a little more of the consulting for the hospice company and I won’t have any more practice and I won’t do any nursing homework.” That was great for a while, but then I started getting tired of the weekends and the night calls, and I said, “Okay, I’m going to change this fully to being a consultant and I’m not going to do any weekends, I’m not going to do any on call and I’m not going to do any nights.” So what I was left with was the ideal part of my job. I actually don’t even see patients anymore.
What I do is I head up teams of nurses, social workers, chaplains, certified nursing assistants and I help them take care of groups of patients in hospice, in their homes or in nursing homes or in hospitals. So I get pages and calls all the time during the day because I’m helping them take care of patients, I’m writing orders, but mostly what I’m doing is I’m interacting with these salt-of-the-earth people who found it their life calling to help people die. So I’ve surrounded myself with good, high quality people who bring joy to my life. I can still practice this trade I learned by helping people at one of the most difficult times in their life, that I got rid of everything I don’t like, which is the nights, the weekends, the stress, the fear.
So I was able to really bring it down to what I most valued and limit my work life, at least my employee life as a physician, to that space. That became very, very livable. It gave me tons of time to do anything else I wanted to pursue, which is part of the reason I started my podcast. It’s part of the reason I started doing more public speaking until of course, coronavirus, which made that difficult. So it gave me so much flexibility. I was seeing my kids more than ever, I could drop them off at school, I could pick them up every day, I was there every single dinner. So these were good things I could do that I could never do before.

Scott:
This creation of your ideal work environment, I imagine it had some pretty significant income consequences, is that correct?

Doc G:
It did, and that was part of the identity shift for me too. So at the top of my career, I was making almost seven figures. I really identified with the high-wage earner, the person who ran a successful business, all of these things. But then I also came to the conclusion, it’s a conclusion I keep on coming to over and over again, there’s no award for having more than enough. When you hit enough, you’re not any happier when you have enough times two or enough plus a hundred. It doesn’t really do much for you. So I could keep on sacrificing my happiness, my calmness, my ability to do other things with my time by accumulating more than enough, but I just realized it wasn’t going to make my life any better. It wasn’t going to give me any extra. And yet, the time that I freed up by having enough infinitely made my life better.

Mindy:
So we keep talking about you, and we’re only interviewing Doc G, but what about Mrs. G? Does she work? What did she think about all of this?

Doc G:
So this has been a learning process for Mrs. Doc G too. We have evolved together. So she came from an immigrant family who had very little, they lived fairly close to the poverty line in most of her childhood, so her identity became wrapped up in getting a job and earning enough money and living a lifestyle very different than she grew up in. So when we got to this place where I was a successful physician, making a good salary… She works for a computer consultant company where she does human resources, and she’s been at the same company for over 20 years so she’s built up promotions and a salary, so when I first brought this up to her obviously there was a disconnect. She could see how unhappy I was in my life, how I no longer felt connected to being a physician. She even saw how my personality had changed over the years. On the other hand, she had a strong sense of needing safety. An income to her meant safety.
So that was something we spent a lot of time talking about and dealing with. I had always done the finances before, so we spent a lot of time looking at our finances together. But at some point it came down to, she looked at me and said, “You are not happy and you tell me you fully believe we have enough, and I trust and have faith in you. So as much as, emotionally, this is difficult for me, I think it’s important that you don’t pursue a path in life that makes you unhappy.” So it wasn’t the most easy transition for her, originally. I’ve actually spent the last few years trying to get her to leave her job because she loves parts of her job, but she’s your typical Sunday night anxiety person who is dreading work the next morning or the person who when we go on vacation for a week vacation, and it’s Monday of the first week, she’s already thinking a little bit of sadness because she knows it has to end. So I’ve been talking to her a lot about leaving her job.
I think she’s actually very comfortable with the finances, but now she has to start that process of taking her identity back too and separating it from this job and the sense of wealth that was so important to her.

Mindy:
So this is very interesting, when Carl left his job, he was full time and he was having a lot of anxiety, “Oh, I’m going to ask them if I can just go part time.” As soon as he asked to go part time, they’re like, “Sure, we don’t care.” He had all this anxiety built up to asking about it, but then once he stepped back, once he used the, what did you call it, the art of subtraction, he was able to subtract and they were just happy to keep whatever parts of him they could, because he had worked on this project for 10 years and had a lot of knowledge about all the different things. I’m wondering if your wife could use the art of subtraction and take away the parts that she doesn’t like because she’s been there for 20 years and just keep the parts that she does like, because being in a job that you enjoy what you’re doing is really rewarding. I got to say, after being locked out for a whole lot of months, it’s kind of nice to have a little bit of a break.

Doc G:
So she can definitely do that and she could leave her company and within six months start consulting, or even work for placement companies that would place her for shorter terms where she could do 10 or 15 hours a week, as opposed to doing the full 40 hour work week. I’ll tell you the one thing that she has come to having a big problem with, which there’s never an easy answer for, is healthcare. So right now in our current job, our whole family gets healthcare from it. It’s a very good healthcare policy. My son has had some recent problems and there have been some hospitalizations and things, so the one thing really, I think, holding her back, the riddle that’s the hardest for her to feel comfortable with is healthcare.
Now, I look at our finances and say, “Okay, let’s allot this much money every year for healthcare and I think we’ll still be fine”, but she gets stuck on that. But I think it’s a number of things and I think eventually I would love her to also have the opportunity to do what I do. She is amazing at so many different things and has so many different interests, I feel fairly certain if she was worried about income, that if she pursued one of her interests, it eventually would turn into an income stream anyway, but it’s a process. For me, I came across this stuff in 2014 when I was burnt out in medicine. It took me all the way, probably to 2019, to really build my work life into what I wanted it to be. She’s now at more of the beginning of the process. So it’s going to take her a while, I think, to emotionally settle these things out so that they’re comfortable, but I think she also knows that she needs a change somewhere deep down inside.

Scott:
We keep mentioning this, this art of subtraction, which I think is a wonderful way of turn a phrase and really powerful concept, I just want to go back to, is that a privilege of the rich? Is that a privilege of the byproduct of the years in which all three of us, for example, have spent a disciplined period of time saving a large percentage of our income, investing for the very longterm, those types of things, so that you were able to subtract out those parts of the job and offer those same options as a family to your wife, in this circumstance? I guess, could you compare yourself for us to other folks in your income and age bracket at the time? Do you think they would have the same options as you to subtract out the parts of the job that they don't like?

Doc G:
So I am definitely a child of privilege in so many ways. I was born to two professional adults whose skin color did not stop them from doing anything they wanted, who didn’t have physical or mental disabilities who got in their way. I grew up in a very middle class family with parents who knew how to get things done. They started businesses. They knew how to side hustle. I definitely was privileged. My parents paid for my medical school. I mean, I can’t tell you how many ways I benefited from being born at the right time and the right place to the right family. So, no, I don’t think everyone can do it exactly the way I did it.
What I think most of our messages are, who are interested in personal finance, is maybe you can’t do exactly what we did but maybe you can take pieces of what we did to make your life better. That’s the way I look at it. So every person is individual, everyone comes from different circumstances, and those circumstances give them a unique set of hurdles that they have to try to get over. Some of my hurdles were smaller. Some of my hurdles were bigger. I definitely feel like I was placed in the right place at the right time, which allowed me to jump over those hurdles and I am very aware of the fact that many people don’t. So maybe there are parts of my story which can help people in smaller ways. Maybe they can transition from one job to another job, which subtracts something but maybe adds something new which they like doing. I think if we take pieces of all of our truths and put them together, they can be instructive hopefully, to people in many different situations.

Mindy:
Yeah. I'm sorry, I think that's very helpful. I don't mean this in the context of privileged background, those types of things, I mean is the fact that you were disciplined with money relative to your income and overall circumstances that led to that, whatever, but the fact that you constructed a large net worth relative to the spending that you needed to spend to be happy, was that a major factor in your ability to then subtract out those parts of your job you didn't like, voluntarily reduce your income? How does that apply to your peer set, the folks that were also earning high six-figure, approaching seven-figure incomes? Could they do the same thing or are they spending too much to do that, basically?

Doc G:
So yeah, I think there are a few things. I certainly couldn’t have done what I did if I hadn’t built a very strong financial base. So if I were looking at a young person coming out now and they were to say, “Look, I want to do something similar, but I don’t have any powder in the powder keg. I haven’t built anything up.” I think you have two choices, and I always say this to people who are interested in financial independence specifically, you can either front load the sacrifice, which is find a good job that pays you well, work your butt off at it and make lots of money and save like a mad man so that 10 years out, maybe when you’re in your early 30s, you can then stop and use that money to buy your freedom. I believe that’s what Carl and Mindy did. It certainly is a little bit of what I did. That’s one way.
Or the other way is you can start as a young person and find jobs that fulfill your needs where you don’t have to subtract everything out and realize you might make less money doing it. So it may take longer to get to that point where you feel as financially stable, yet you’ll enjoy yourself quite a bit more. I think both ways are very reasonable ways to go at it. Scott, I know a lot of people do that with real estate. They don’t want to live those lives where they’re sitting at a desk, working for someone else, doing things they don’t like. A lot of them tend to like or be interested by real estate, so they say, “Hey, I can hustle, get into real estate, and I can find a way to do this in such a way that it will support my lifestyle and then build from there.” So I think that goes counter to this idea that “I’m going to sit in a cubicle and really gut it out for the next 10 years and make lots of money so that I can then live off of my stock portfolio”, for instance.

Scott:
Yeah. I think it’s a power, in a literal sense, the word power, power over your life, power over the environment that you sacrifice, you forego if you do not aggressively accumulate wealth for a period of years with a disciplined approach. I just always want to point that out, that your ability to do that, I think, was a result of basic discipline finances for a number of years, leading up to the moment when you did happen to discover FI. A lot of people lack that basic discipline. And so when they discover FI, they’re starting from a position of zero or much less power, unable to realize those things. In that case, it’s a mental journey and a financial journey, the resources aren’t there and that there is that mindset or identity shift problem. So anyways, just my observation.

Mindy:
So I’m going to step on a soap box here and say that Scott’s question was, is the art of subtraction a privilege of the wealthy? Yes, but not wealthy. It’s a privilege of the financially independent or the people who are getting close to financial independence. I don’t think that’s anything to apologize for because while I was working and didn’t have kids and my husband was working, we were not out there spending every dime we had. I didn’t have the new car, I didn’t have the nice house, I had the crappy house because I was working on fixing it up because that’s just what we do. That’s my identity as a flipper, but I didn’t have the lavish vacations and I didn’t have all the fancy clothes and the brand new iPod and the brand new iPhone and all these things because that’s not what I find value in. So I am a natural saver. I can’t spend every dime I have. Why would you do that? I mean, unless you’re buying home improvement supplies to make your house better. Right now, we are currently saving 0% of our income because it’s all going into the house, but that’s an investment. So technically, I guess I’m saving most of my income because I’m investing it into my house, which will eventually be nice.
But so I don’t think that people who are listening to this and saying, “Oh, well, that’s just because he’s a doctor. That’s just because he’s a rich.” No, he was still saving 50% of his income. If he’s making six figures and he’s spending those same six figures, he is living paycheck to paycheck. It doesn’t matter how much money is coming in. It matters how much is going out or how much is being saved. I think at almost every level of income, you can save something. We back on… God, I don’t even remember what episode it was. Was it episode five, I think, Scott? Or six with Sarah Wilson, go Budget Girl. Is that her name?

Scott:
Yes. I don’t remember what episode it was, but I remember her story.

Mindy:
Yeah. She was making $30,000 a year and paid off $33,000 in student loan debt in three years. That's a very impressive story because she's making basically what she needs to live and she's still paying like a third of her salary every year on her debt.

Scott:
She just bought a house heck.

Mindy:
And she just bought a house heck. Yay, Sarah.

Scott:
Two and a half years later, Sarah, right?

Mindy:
So is the art of subtraction a privilege of the wealthy? No, it’s a privilege of the people who are disciplined with their finances. You don’t have to be wealthy to be disciplined with your finances is where I was going with that.

Doc G:
A lot of people, they say, “Well, can anyone reach financial independence?” It talks to this privilege, whether if you were born to a way where it’s easier for you than others, and my answer always to that is I don’t know if everyone can reach financial independence and I don’t know if that’s even important. I think what’s important about these conversations is everyone can do a little bit better and make their lives a little bit better whether you reach true financial independence, whether you reach total subtraction of everything you don’t like at work. These are incremental steps. That’s why I think they apply to just about everyone, regardless of where you start.

Scott:
Why give absolute power over your earnings and your financial stability to a boss, right? Is another way to look at it if you’re working right now. It just doesn’t make any sense. You have that power to reclaim that say over your life and whether you want to subtract out certain parts of your job.

Doc G:
Now, one thing I’ve definitely learned is that if you rely on a boss for your safety or a company for your safety in the future, you’re going to be unhappy because even in my short career of whatever 20 years, I’ve seen over and over, that businesses do what businesses need to do. They rarely, in the end, do what you need to get done. So if you truly want to be at someone else’s command all the time, the easiest way is to stay employed your whole life.

Mindy:
Yeah. Okay, so some of the things that you sent me notes about, when we were talking about getting this show together, were some of the associated issues with leaving a job and leaving a paycheck. I really am on the exact opposite side of this… I mean, we’re both on the same page, but I’m on the opposite side. One of the issues was that for the first time, your wife makes more money than you do. I don’t have any issue with that. I don’t have any issue with making more money than my husband does because for so long, he made more than I did. I mean, he was making four times as much as I was making and I never felt bad about that. Of course I wanted to make more money, but I never really felt bad about that.
This also goes to the next one, no longer feeling like the primary provider of the household. Of course my husband makes more. I have a very 1950s mentality, I’m sorry ladies that are listening, who are like, “Oh, you should not feel this way” but I grew up in my dad works, my mom doesn’t and my dad makes money and my mom doesn’t. Yes, she’s still running the household, she’s raising the kids and that’s a valid thing. I’m not trying to dismiss that at all. Just talking from a money level, my dad always made more so it never bothered me that my husband made more because that’s my experience in life. And now that he doesn’t work, it doesn’t bother me that I make more. Now, it’s… How do I say this without sounding so wrong? But I’m paying him back. But I’m not paying him back, we don’t keep score, it’s just this is what he did for a while. I was a stay-at-home mom, I made zero and he was making all the money. And now we are in a position where he doesn’t have to work anymore, so he doesn’t. I love my job. I get to do it. It sounds like your wife kind of loves her job, does she have any resentment for you not working?

Doc G:
I don’t think she has resentment. Certainly at the beginning there was fear that there wouldn’t be enough. As those fears have become laid, I think she doesn’t worry as much. And then there’s also pride. So she’s like, “I built this career. I’ve climbed high on the corporate ladder. I now have this big income since I’ve slowed down.” It’s a nice feeling for her to be the major wage earner in the family, so there is some empowerment there.
I have a funny story because my father was the economic driver of our household. He was a physician. My mother had never written a check the day he died. In her life. And it just so happens that the kids had gotten old enough that she had decided she wanted to become an accountant like her father and had been just about to graduate business school with an MBA when my father died. So my childhood started with a very typical male household-wage-earner vision. And then my mom became the major wage earner of the household and started her own business and was incredibly successful. So I grew up in a very female-centered household. So it wasn’t hard for me to have a spouse who makes more money than me. What was-

Doc G:
… have a spouse who makes more money than me. What was hard is I had all these strange conceptions of gender and what it means to be a man. And so I had to confront some of these very old archaic ideas of what manliness is. And part of my conception from childhood, even with this very strong mother figure, is that men made lots of money. That men were the sole provider, that protected their family and provided them for what they need. As I evolve as a person and grow older, I realized that that also has to do with emotional needs. And that there are other parts to being that strong man, that thing that I embrace without having to do with money. But being emotionally stable and helping together with my wife set a course for our family.
So it was strange to me to deal with that, but not in the typical way. I know there are many people who, as men, would have trouble with their wife making more. That itself wasn’t, it was more these strange conceptions that I grew up with.

Mindy:
My husband calls it wife-fi. He is wife-fi so that his wife still works and he doesn’t. And I think there’s some people who get offended when he says that, but we’re fine with it. I love my job. I can’t say that enough. I feel guilty when I go to work and the kids are fighting and he’s got to deal with that. And I’m like, “I’m going to go have fun at my job.” I have never loved a job like I love this one. And it is fun for me to do so I don’t resent him not working at all. He hated his job. I’ve had jobs that I hated and it’s not fun to get up in the morning. And Sunday night you’re like, “Oh, I got to go to work tomorrow.”
And I bounce out of bed. Yay. I start early. I love my job. My kids are sleeping late, I’m on working because it’s fun for me. So I think you said a very powerful thing, you together with my wife are working towards planning out our family’s future. And when you’re first on the financial path of when you’re first figuring this all out, communication is key because you don’t know what your wife is thinking unless she tells you. And we do have some ways of very subtly telling you, slamming pots and pans. But you don’t know unless she tells you. And she doesn’t know what you’re thinking unless you tell her. So you have to have open communication to talk about this.
But I think it’s interesting that you are also providing emotional support. And that is so powerful. That is such a huge help when you are going through something, just having somebody to talk to. And it’s not resentful, you don’t resent her because she’s working. She doesn’t resent you because you don’t work. But you can’t get to that point unless you have the conversation.

Doc G:
Yeah, I get to know all her office politics. I know everyone she works with. I know all the political scheming that’s going on. I know all the major projects. I’m all into it.

Mindy:
Oh, I got to say with bigger pockets, we don’t have that. And that is so awesome to not have.
Okay. Another thing was stopping something you were good at and praised for because it wasn’t making you happy. And the pursuit of happiness is something I think that gets really pushed to the side. “Oh, you don’t need to be happy, you need to work. You’re a doctor, you’re a physician. That’s the best. Why would you want to be happy? You’re saving lives.” Or helping near the end of them. So I think it gets missed a lot that working in a position where you’re just like, go, go, go, go, go. And you never have any fun. And it’s always a drain. It takes a lot to walk away from that. And it doesn’t sound like it would take a lot to walk away from that. So many people are like, “Oh, I’m going to be fired so I can quit my job.” And it’s not about quitting your job. It’s about finding something that makes you happy. So let’s talk about that.

Doc G:
I had a very difficult realization a number of years ago. Being a physician is probably the thing I am best at in the world. And that’s like my talent. It’s something I’m really good at. Not trying to be egotistical. I was really good at this. And coming to terms with the fact that something I was really good at was not making me happy, and that may be something I was much poorer at, I’m not nearly as good of a writer as I am a physician. I’m not nearly as good of a podcaster as I am a physician, that I’m going to transition myself to doing those things because they make my heart sing more, because I wake up excited, because I wake up in the middle of the night writing ideas down because I want to get at it the next day.
Being a physician never did that to me. I woke up in the middle of the night being a physician because I had anxiety about something I had to do the next day. I now wake up in the middle of the night with great ideas and plans. But it’s hard. It’s hard to go from something you’re good at and being praised at to go to something that maybe you’re good, but not as good at, or maybe something you’re mediocre at. And that’s a hard transition. But if I want to live my best life, I can’t keep on doing things that cause me pain and anguish and take away my time when I don’t need to.

Mindy:
Anxiety is a real downer. That’s not the word I was going to use, but then I remember we’re family friendly. Anxiety is a really tough. And if you’re waking up in the middle of the night, feeling like, “Oh, I can’t breathe. I can’t breathe. I have so much anxiety,” it doesn’t matter how good you are at something. If you can’t breathe. I did this bike ride for the American Lung Association a thousand years ago. And their motto was, “If you can’t breathe, nothing else matters.” If you wake up in the middle of the night soaked in sweat and your chest is constricted and you can’t breathe, it doesn’t matter how good you are at whatever it is that is causing the anxiety.

Doc G:
Yeah, what I’ve also realized, which is a very strange realization is that those types of episodes have gone away 95%, but I still occasionally wake up anxious. And I now realize, I think that’s just part of the human condition. It’s a lot less than I was when I was stuck in that job that was stressing me out. But just occasionally anxiety comes up, and I’ve now almost embraced it as, “Yeah, that’s how I’m feeling today. It is what it is.” Turn on some classical music, relax.

Scott:
I can never … I’m not a good philosopher on this. But I’ve tried and I don’t know how it works or how it doesn’t with happiness, sadness, those types of things. I feel like at all points in my life, I’ve had these periods where I’ve been very happy and periods where I’ve been very stressed or anxious, even though the situations have been the same. It’s just kind of an interesting …
An article on this, I learned all my life lessons from this guy apparently, but Mr. Money Mustache wrote a good article on hedonic adaptation for happiness adaptation and he exposed me to some concepts that he didn’t invent, but they’re universal where you just become adapted to your current reality over a period of seven or eight weeks or something like that. Where folks who win the lottery are no more happy after that than they were prior. Or that folks who become physically disabled become no more unhappy in the six or seven weeks following that disability. While there’s certainly a period of unhappiness immediately following the injury, those happiness levels tend to coalesce around something.
And we had talked about all of this [inaudible 00:53:43]stuff and it’s an issue for me wondering like, “Hey, how much happier are people ultimately ending up?” Is that not a function of just how you choose to perceive that day? Just how your body and how your feelings are going to be reacting to certain environments? Or is there truly certain states of prolonged, lasting, better … I don’t know. And this [inaudible 00:54:07]the question for you, Doc G because you seem much happier.

Doc G:
I can tell you in my own life, what I’ve realized is you can think yourself to about 80% more happy. So you can get to that 80% mark by changing the way you think, maybe going to therapy, maybe doing whatever you need to do to get your life into a good place.
The other 20%, I think is more habit and physical stuff. So I can’t stop myself from occasionally waking up anxious, even if I don’t know why. But I can listen to classical music. I can meditate. I can exercise. I can take whatever stimuli I see in the world that induce that unhappiness or anxiety and remove them. So I think what’s with me … And lastly, I can accept, especially those things I can’t change, but I can accept my own imperfection.
So I think if you get your mental self there, that 80%. And then start working on that other physical stuff, habit, routine, exercise, meditation, acceptance. That’s about as good as I figured out how to get it. So I don’t know. Am I the happiest guy in the world? No. I certainly have bad times and grumpy times, et cetera. But I find that I’m a lot happier than I was a few years ago.

Mindy:
And that’s what this is all about, being happy and living your best life. And you can’t live your best life when you’re all bummed all the time.
Okay, so number four, the very real risk of losing my skills and licensure and the inability to turn back if I need or want to. You are in a field where you have to be licensed. How frequently are you getting relicensed or re-upping your license?

Doc G:
I think currently … keeps changing. And that’s why I’m saying I think. I think it’s every two or three years we get … if you want to stay board certified for me, internal medicine, it’s every 10 years. If I want to stay board certified in hospice, it’s every four years. So there’s continuously licenses and tests and things you need to do just to stay certified. Then there’s the other part that as you go further without … so I haven’t seen patients. I mostly help the nurses take care of patients. When you stop seeing patients, you lose your physical exam skills, you lose your diagnostic acumen. The thought processes, because there’s so much, the less you do it, the less good you are at it.
The last thing is, if you decide to stop medicine and stop paying for malpractice insurance, after about two years of being uninsured, it becomes incredibly hard to get re-insured. So malpractice companies don’t want to reinsure you if you’ve had a significant break. And so all of those things make leaving medicine scary. Because if you really want to … if you’re like, “I’ve had it, I don’t want to do this anymore. I don’t want to re-certify. I don’t want to take more of the tests. I don’t want to pay for malpractice insurance.” If you do that, there’s a very real risk that somewhere down the road, if you are then broke and need to go back and work, it’s going to be very hard to reenter the medical profession.

Mindy:
Oh, that’s interesting. So I have a friend named Steve who’s an attorney. He’s a recovering attorney and he renewed his attorney’s license or whatever, because he wanted the option. He said, “I hated writing that check. I don’t want to give them this money for this.” But he wants the option and that’s different. He’s just practicing law. He’s not practicing medicine.
But that's very interesting. I'm a licensed real estate agent and every three years I have to re up my license and I have to take continuing education, which is, not nearly … I'm not at all comparing real estate agency to being a physician, but there are very real monetary contributions I have to make to keep my license.
And if I don’t keep it up, if I let it lapse, I basically have to just go back to school and do it all over again. If you let it lapse and you went back and got it again, you don’t have to go to school again. Do you just go to clinicals? Or I don’t know how that works.

Doc G:
It depends how long and in what state you’re in. In certain states, if it’s been long enough, you actually have to do an apprenticeship with another physician for a certain amount of time. Sometimes there are testing protocols. One of the biggest problems is the insurance because if you can’t get malpractice insurance, you can’t practice. And that can be one of the biggest struggles if you’ve been out for a long time.
There are some reentry programs that people are starting to form to help physicians. For instance, we have a lot of people who took maternity or paternity leave for a number of years who want to come back. And again, the coronavirus has changed all of this too, because the need for physicians in some areas, they’re willing to take anyone back and just get them in there and start helping because we’re so short staffed. But it’s no small effort if you want to come back to being a physician after being gone, let’s say for five years.

Mindy:
Okay. So just wait for the next pandemic.

Doc G:
Exactly. And then just jump right in when you-

Mindy:
Then just jump right in. Okay. And no longer feeling bulletproof.

Doc G:
Yeah. I mean, think about it. As a physician, even still doing my hospice contract work, I make a decent amount of money. It’s highly skilled labor. When you’re bringing money in, when you have the W2 asset class, you know that you’re going to continuously have the ability to make money and that if the stock market drops, or if things go bad, you still have income to cover your costs and you don’t have to break into those investments.

Scott:
You have high income because it’s very highly skilled labor and you’re still able to command a lot of money.

Doc G:
Which means that during a recession, I don't have to break into my investments because I have cash coming in.

Scott:
And in a sense that makes you bulletproof.

Doc G:
That’s right, yeah.

Scott:
So when we talk about [inaudible 01:00:15]Mindy’s favorite references is back to one of the episodes we had with Joel from FI180 where his worst case scenario is going back to everyone else’s everyday life. That I think is a much bigger hurdle for you in your profession. But obviously mitigated because of the way that you’re able to command income that will really support your lifestyle under any circumstances and part-time work there. It’s just the ability to go back to reclaiming that full time identity piece of being a practicing physician that you’re giving up, which is a much more of a mental or identity challenge, it seems like then a financial one.

Doc G:
Yeah, the nice thing about having a doctorate degree is it’s respected throughout the business world anyway. So even if I decided that I couldn’t go back to medicine, but wanted to get back to the work world, there’s lots of businesses that will hire someone with an MD because they know by going through that much schooling and by being a practicing physician, that I have certain organizational skills and leadership skills that I could use in their organization. So that’s the upside is that no one can take away my education and I can still use that if I really was forced to go back to work, I would have some options.

Mindy:
Duck. I think this is really great. I think you’re bringing up a lot of points that people don’t think about, especially maybe even in the beginning of their financial independence journey. The concept is, “I’m going to quit my job.” Well, how? How are you going to quit? And it’s not just, “Take this job and shove it.” It’s, here’s the things that you need to think about.
This goes pretty well hand in hand with the pre-retirement checklist that we featured a few episodes ago where, it isn’t just a, “I hit my number. I’m going to give my two week notice the next day.” There’s a lot of things that you need to think about in order to have a smooth transition. Of course, you can hit your number and then be like, “See ya,” but then you’re going to have a much more difficult transition into your retirement life.
Scott is planning on playing video games for six months, which I love. I bring that up a lot. Daphne was playing video games this weekend. And I’m like, “Yeah, this is what Scott’s going to do for the first six months.” But he’s got that planned out. That’s something that brings him joy. And then after six months, I really hope that you get up off the couch, Scott ad go for a walk.

Scott:
Well [inaudible 01:02:35]two weeks, I’m sure.

Doc G:
Yeah, I was about to say, I don’t see Scott sitting around for six months. Not from what I know this guy. It’s not going to happen.

Mindy:
But that’s a plan. Is it my plan? No, I hate video games. But that doesn’t make it any less valid for Scott to do. Go nuts. I hope you enjoy it.
One of the struggles that I have with Carl is that he won’t take time for himself. He feels, he even said, “Well, this is my time now and I’ve got to make every minute of it count.” No you don’t. It is perfectly valid to sit down and read a worthless book that doesn’t teach you anything, that doesn’t further your education on any subject in any way, and is just for pure enjoyment. That’s valid. And really what is your life if you’re not doing things that are fun?
If you want to go on a bike ride, great, go on a bike ride. But don’t do a bike ride because you feel obligated to do a bike ride. Don’t go on a hike because you have to. Or don’t not go on a hike because then that’s not furthering your life down the road.
Once you hit financial independence, you won life. So take a minute to enjoy what makes you happy. And if speaking and podcasting and writing makes you happy, great. You are good at it, Doc.

Doc G:
Thank you.

Mindy:
Okay, Doc G let’s peek into your portfolio. We want to know what you are investing in, where you are planting your money so that it grows for your retirement.
All right, where did you plant your money so that it would grow for retirement? And there's no one right answer, but we all know that it will take forever to become a millionaire based solely on your W2 job, as long as you're not a physician making seven figures. So to improve our chances of success, we invest in stocks and bonds and real estate or other opportunities. Where are you putting your money, Doc? When did you start investing?

Doc G:
So I started investing probably around college. I inherited a small amount of money and started investing then. And my parents were both investors. So it was something I grew up knowing. I didn’t understand it until I got a lot older. But I usually look at my portfolio in thirds. So I am about a third real estate. I own four rental units, which I manage. I’m about a third taxable, and then a third tax deferred. In the taxable and tax deferred, I would lump them together because the asset allocation is not based on … the asset allocation is overall for both of those two thirds. I am about 10% bonds, 30% international, and 60% national all index funds.

Scott:
With the bond allocation, do you weight that more heavily to your pretax investments, given the nature of the interest income?

Doc G:
Right. So bonds are all in pretax, non-taxable, or tax deferred vehicles at the moment.

Scott:
Great. And if you're listening, our rationale behind why that would be is because they generate taxable income, which you put that in your 401k. If you're not planning to spend it, that's a much more advantageous place to do that versus stocks, which is going to hold. Which yes, can produce dividend income, but the majority of the longterm gains are going to come from appreciation, which you never realize until you sell.

Doc G:
And I would note that my bond allocation is fairly small for a few reasons. One, is that both my wife and I still have W2 income. So I don’t feel like I need as strong of a bond position right now. And the other is my plan is to eventually ramp up the bond allocation as time goes on.

Mindy:
Let’s talk about your real estate units. You have four. Are they single family homes?

Doc G:
We are a little bit strange in our real estate. We originally bought a condo downtown Chicago to use. And we renovated it and used it for about six months and realized that we wouldn’t use it as much as we thought we would. And our realtor said, “Oh, I got a guy who needs a place. He’s getting divorced. He wants to live downtown.” So he moved in and lived there for two or three years. And we had never done this before. Although, my parents had been big landlords and real estate investors, so I grew up with this. And it was so easy. And this was right as the housing market died.
So we bought another foreclosure condo, fixed it up for almost nothing, got renters in there. Then we decided we wanted to buy a lake house on Lake Michigan and Wisconsin and found another foreclosure, fixed it up. By the time we fixed it up, we were going to Airbnb it, but we were too tired to do any more with it. So found another person to rent it to. Rented it for three years. Sold it to a neighbor for almost double the price we bought it for. And then reinvested that into two more condos in the city.
So we own four condos. We own them outright. We don’t have any mortgages. And I use them as a hedge to our stock market investments. So we have dividend income and we now have rent income. And the hope was stock market goes down, real estate market stays up. Real estate market stays up, stock market goes down. Who knows what’s going to happen. Of course, coronavirus is strange that way. It’s made the real estate market where I am a little bit more difficult. But in general, I look at it as a way, not of building wealth, but actually diversifying and protecting my streams of income.

Mindy:
Awesome. I love real estate. We all love … well, not we all. Scott and I love real estate.

Scott:
One last question here about the overall portfolio. The cash position, how big of a cash position in terms of months or years of spending, do you like to hold?

Doc G:
For each unit?

Scott:
For your overall financial position across your business and personal?

Doc G:
So as of recently, I’ve pulled back more in my hospice position and they actually hit some hard times and have cut down my consulting. So we now have a year’s worth of spending in cash. But we also bring in at least 50% more every year in dividends and rents. So I’ve got a year and a half guaranteed, if not, a little more.

Doc G:
So I’ve got a year and a half guaranteed, if not a little more, if we were really at a point where things went bad and we didn’t want to liquidate any of our current assets.

Scott:
Got it. So you’ve really built yourself a financial fortress.

Doc G:
Yeah. And that’s living well. So the other thing is that’s really spending at the upper most top of what we ever spend. So we’ve got a pretty decent cash position, but while we’re still working we just don’t feel it as important. So when my wife leaves her W2 job, then it probably will be more important. But now she’s getting a very stable income and I still make money off consulting so we feel very strong in our position right now.

Scott:
Got it.

Mindy:
And do you have any plans to diversify your portfolio further? I mean, it’s pretty diversified right now.

Doc G:
Yeah. At this point, I don’t think so. So I feel like we have all the asset classes we need and I consider my consulting business a business. So if you look at the W2 asset class, the business asset class on top of bonds and stocks and real estate. I have no interest in precious metals or those type of things. The bigger question is, will we go after more real estate if the market turns down? Because we’re in a good cash position and we still have incomes. And that’s something I have to think about because obviously if we bought more real estate, I would probably … I pretty much self manage all of our units. But if I push them to a management company, it would become very easy. And then we could probably take on a few more units, which would provide even a better income cushion.
So if we take our dividend income and if we had a little bit more rental income we would probably be able to say, “Okay, we’ve got our yearly needs completely covered and never have to touch our investments.” And while I don’t think we need to be there because we have enough investments that we should be able to spend them down, that’s always a really nice position because then you know that your assets are growing and don’t need to be touched and then can go to places like your children or your grandchildren. Or better yet right now think about really some giving to really important causes and what’s going on in the world and we see the need for more social justice and poverty and just problems in our world. It’s nice to have a little money to give towards those things you care about.

Mindy:
Absolutely. So are you in A class rentals? It sounds like you're in downtown Chicago for all four of them. Are all four in?

Doc G:
All four of them are A-class rentals. They’re condos in nice areas like Lincoln Park and in the Gold Coast. And what’s really nice about that is our renters all have really good credit scores and our biggest problems we tend to have with them is that they want too much fixed, but otherwise they tend to pay. They pay on time. We’ve never had anyone stiff us in the 10 years we’ve been doing this and actually I have one unit that’s unrented now. The longest I’ve ever had a unit unrented is two weeks in the last 10 years. And I have one now, which unfortunately I think is going to make it a month. This Coronavirus stuff really messed everything up just because for quite a while in Illinois we couldn’t even have showings. So the rules in Illinois up til, I think it was about a month ago, was that you couldn’t even show a unit if it was otherwise occupied.

Mindy:
Oh, wow. Yeah. That’s kind of thrown a monkey wrench in everybody’s rental plan. How much time do you think it takes you to manage your rental portfolio a month?

Doc G:
I would say some months almost nothing. Months like these where I have a unit that’s up maybe 10 hours, only because our units are physically a little bit far from our house. So every time I want to show a unit I might have to drive 30, 40 minutes to get there, show it, drive 30, 40 minutes to get back. But when they’re rented and everything’s chugging along an hour or two a month at most. At most.

Mindy:
Yeah. I really love real estate. And I can’t say enough good things about the wealth generating power of real estate. And once you get it set up, it’s almost no time. You’re in a great asset class where you’re in the A class, which is really kind of the least … I mean, the biggest problem is, “Oh, can you fix this?” “Yeah, I can fix that. That’s not a big deal at all.” As opposed to chasing rent and other issues that can come up with having a rental property.

Doc G:
Yeah. And the A class is not for everyone, neither is owning your units outright. But again, personal finance is personal for us. It fits the diversification and the safety we need. Right? So when you're not using leverage for your real estate it really fulfills that defined need that I have, that weakness I had in my portfolio otherwise.

Mindy:
Yeah. And when your tenants aren't paying you rent, you are also not missing out on mortgage payments.

Doc G:
Nope.

Mindy:
So yeah. All these people that are like, “Oh, you have to have leverage all the time.” No you don’t. You can have it completely paid off if you want and that’s okay. Scott, should we move on to the famous four?

Scott:
Let’s do it.

Mindy:
Doc G are you ready for the famous four?

Doc G:
I am.

Mindy:
These are the same four questions we ask of all of our guests. What is your favorite finance book?

Doc G:
So I have to give props to Jim Daly, he’s The White Coat Investor, because it certainly is the one that changed my life. Also The Millionaire Next Door. And of course, JL Collins, The Simple Path to Wealth. I mean, how could you not mention all three of those. But The White Coat Investor was the one that really pivoted me in my life.

Mindy:
Is that called The White Coat Investor?

Doc G:
It is.

Mindy:
Okay.

Scott:
Alright. What was your biggest money mistake?

Doc G:
So I made this mistake over and over again in my early career is I thought because I was a doctor I didn’t have time to understand money or investing. So I was doing it, but I was always relying on other people. And it’s not that getting advice from other people is bad. There’s some really good financial advisors out there, but it still behooves you to understand exactly what you’re invested in and why. And I really tried to push that off for years because I kept on telling myself, “I’m a busy professional and I don’t have time for it.” And that was an excuse, it was an excuse that I should’ve never given myself. And when I started finally learning about the financial instruments that I was invested in my overall understanding just bloomed and the world made so much more sense to me.

Mindy:
I think that’s very fair. I think that regardless of where you’re at you should understand what you’re investing in.

Scott:
Yeah. The Millionaire Next Door calls out that phenomena amongst doctors in particular, I think where it seems like there’s a lack of self education on this concept to a certain extent amongst certain maybe high-income professionals and maybe inclusive of some doctors.

Mindy:
What is your best piece of advice for people who are just starting out?

Doc G:
So we’ve talked a little bit about this before, but I think it’s reverse engineering. A lot of people look at their finances or look at their job and they make that the big goal. So instead, especially if you’re at the beginning of your career, I think the better thing to do is define what to you is a good life. And this can change from time to time, this is not something that’s static. But if you start with the goal of what does a good life look like, you can then orient your finances and your work life to meet that goal. And I think that was a big mistake I made is I didn’t think much about what a good life really looked like. And so of course I didn’t know what I was doing with my career or my finances because I didn’t know what the real goal was.

Scott:
Love it. Define what you want, put together a three to five year plan, translate that to one year goals, quarterly goals, weekly goals, take action daily to move towards it. There you go.

Doc G:
There you go.

Scott:
Alright. What’s your favorite joke to tell at parties?

Doc G:
Alright. So I don’t have a lot of jokes, but my stepbrother told me this joke in high school. And so I just fell in love with this joke. So there’s this woman who owns a company and she’s in sales and she gets this huge job. And so she’s looking at her company and trying to figure out who’s going to run this thing, this thing that’s going to make her company tons of money. So she holds a contest to figure out who her two best employees are and she gets strange results she didn’t expect. The first is John Smith the third, Harvard educated, he kind of makes sense. He’s a little bit of a pain, but he does a good job. And the second is RJ. RJ is a procrastinator. His boss didn’t know it, but he fudged his grades on his transcript. He gets the job done, but barely.
So she’s got everyone collected all together, the whole company in the same room. And she says, “Okay, I’m going to do one more contest for our two finalists and whoever does the best job is going to win the account. Here’s the contest. You need to write a poem. I’m going to give you five minutes. There are no rules to this poem, but it has to end in the word Timbuktu.” So John Smith the third immediately gets a pen out. He starts writing ideas, he’s coming up with words that rhyme with Timbuktu. He’s all over it. RJ sits back, picks his nose, looks around, doesn’t quite do much. Four minutes has passed, one more minute left. You see this little light on John Smith’s face as he gets those last words down. And RJ finally just throws something down.
So she ends the contest. She looks at John Smith and she says, “John, tell us your poem.” He says, “I looked out across the land and yonder I spot a caravan. Across the skies of Azure blue, their destination Timbuktu.” So people are clapping. They’re like, “Oh, he’s totally going to win. I can’t believe he just did that in five minutes.” So she looks over to RJ and she says, “Okay, RJ. It’s your turn.” He clears his throat, “Tim and I a fishing went. Along we spotted three girls in a tent. Since they were three and we were two, I bucked one and Timbuktu.”

Scott:
So who got the job?

Doc G:
She gave up. She told the clients she wasn’t interested anymore. That was it. It was over.

Scott:
Wonderful. That was the most thorough joke we’ve had on the show thus far.

Doc G:
The worst part is as I was thinking about this I’m like, “How can I sanitize this so that I’m not hurting anyone’s feelings by saying something inappropriate?”

Scott:
Doc G, where can people find out more about you?

Doc G:
So you can find me at the Earn and Invest podcast. That’s earnandinvest.com where we have two episodes a week. Mondays are panels and Thursdays are individual interviews where we really try to get to next level personal finance conversations. Not just how do I settle my life financially, but what does it mean and what do I do now? I’m also on Facebook. We have a Facebook group. That’s facebook.com/groups/earnandinvest. Or you can find me on Twitter earnaninvest.com. That’s E-A-R-N-A-N-I-N-V-E-S-T because and was taken as well as on Instagram @earnaninvest. And we just have a great community and take a listen to the podcast.

Scott:
Yeah, I’m a big member. I’m a member of your Facebook group and I always appreciate the regular stuff that you post there. So definitely go check out, Earn and Invest.

Doc G:
Yeah, Scott and Mindy have both been on the podcast and have had amazing episodes so I feel a real privilege of having them on.

Mindy:
Oh, thank you.

Scott:
Yeah, it was a very fun time.

Mindy:
We will include links to all of those in our show notes which can be found at biggerpockets.com/moneyshow133. Doc this was a really great episode. I thoroughly enjoyed hearing from your point of view how difficult it can be to separate yourself from this identity that is your job or this job that is your identity. And I think that a lot of people are going to get a lot of value out of this. So thank you very much for your time today.

Doc G:
Thanks for having me. This was a lot of fun.

Mindy:
Oh, I love talking to you. Okay. And we will talk to you soon.
Okay Scott, that was Doc G dropping a ton of knowledge. What did you think of the show?

Scott:
I thought it was bucking great. Maybe too much there. Yeah. No, I think Doc G is always fun, fantastic, thoughtful as you mentioned in the introduction. I just think he’s got a really good introspective approach to thinking through some of the bigger challenges around FI and the broader implications. What does it all mean if you can win? Financial independence is like living life on a cheat code, right? Or having this super power where you don’t have to depend on wage income anymore. And the philosophical implications that I just think are very profound and what that means for your identity and what you want to do and what you can do to better society. I think Doc G has put as much thought into that as anybody.

Mindy:
Scott, I cannot stress enough that this episode is not just for physicians. The challenges that Doc G is facing are specific to physicians in some respect, but in most end of workplace transitions you’re going to have all these same things. Why don’t you have a job anymore? Why are you unemployed? When are you going to start back to work? When are you going to get a new job? There’s a lot of things that people who are not in this space but are in your life may throw at you. And being comfortable with your choice, being comfortable with your position and planning for the transition is so important for a successful retirement.
And just because it’s a successful retirement now, doesn’t mean you have to stay retired forever. You can go on to build a job, build a company, or do things that tend to generate income but aren’t necessarily big, fancy wow jobs. But Doc G said he’s happy now and he wasn’t happy before. It didn’t make his heart sing, which is my line Doc G don’t be stealing my lines. But if your heart doesn’t sing, your attitude is way different and find something that makes your heart sing and start singing.

Scott:
Yeah. It’s interesting to me because he’s obviously so smart and so successful and so hardworking. To be commanding nearly seven figures in income, as he alluded to at one point in the show, speaks to a very strong skillset if nothing else. Right? Along those lines. Yet that these basic financial concepts are not things that I think even brilliant people can discover for themselves. Right? It’s a concept that very few people seem to have stumbled across or invented to put it another way. It’s you have to be exposed somehow, you have to see it. And he saw it in The White Coat Investor when it finally clicked for him.
Everybody has that. And it just, I think again, screams to me why isn’t this a concept that we’re all taught about in school? It’s the key to capitalism. It’s the key to, in some cases, maybe happiness in a capitalistic society is being able to understand these concepts. And if even what I perceive as a top student, went to medical school near the upper echelon in society of an earner as a doctor with all the prestige that that profession brings. If that person is not aware of these basic concepts and able to go after them, what does that say for society and where our educational priorities to some extent lie in not exposing people to these concepts?

Mindy:
That’s a really good point, Scott. This guy, this doctor is so smart and so well read and he doesn’t even know about this. This absolutely needs to be taught in school. The Budgetnista has her own law, the Budgetnista Law in New Jersey, which is pretty sweet. I’d love to get that as a national law. I think that introducing these concepts to kids can only help them in their future. And we talked about the art of subtraction and is this a privilege of the wealthy and it’s a privilege of the informed. You can’t make these decisions when you don’t even know they exist. And I consider myself to be fairly well informed and it wasn’t until we stumbled across Mr. Money Mustache that we discovered this could work. This could happen. You can do this. So boy, I went off on a tangent there but yeah.

Scott:
No, it’s so obviously correct once you understand, “Hey, I have to spend less than I earn, invest like this.” And that is achievable for the vast majority of Americans, at least those Americans who are at the starting point economically. And what I mean by that is around that median income. Right? If you’re able to earn around that median income or greater it seems like this is possible or achievable for a large number of people. Even though we just obviously interviewed a high six figure or approaching seven figure income doctor today, we’ve heard tons of stories from all these different perspectives. And it really does seem like an educational, informational gap that is holding a lot of people back from even believing this is possible or even having the faintest inkling that it’s possible.

Mindy:
Yep. And like I said, just because he makes six figures. If he’s spending six figures, he’s not wealthy. He might have a lot of stuff. He might go on a lot of vacations, but he’s not generating the wealth if he’s spending what he’s earning. You can still be paycheck to paycheck no matter what that paycheck is.

Scott:
Millionaire Next Door really highlights two examples of this. He mentioned that book as one of his favorite three, but the author calls them under accumulators of wealth or prodigious accumulators of wealth. I believe are his terms. And he highlights two doctors, right? Who have a completely different … one doctor actually earns more, but is basically just a few months away from bankruptcy if he were to stop earning income. And the other doctor is a multi-millionaire because of different habits. And so that scenario plays out across all levels of income, although I think there is some real hard conversations about just how accessible this is to somebody who’s earning significantly less than a median income in this country. I think that there’s certainly some problems there in making this successful.

Mindy:
Well, do you remember when the NBA went on strike? I thought there was … in 96 or you probably don't remember, but the National Basketball Association went on strike and all the players stopped playing so they all got no paychecks and they started defaulting on their mortgages and defaulting on their car loans. And they had no money because they were not prodigious accumulators of wealth, they were prodigious earners. They were not prodigious accumulators of wealth because they had all this money coming in. Why do I have to save it? Well, I hate to speak ill of MC Hammer, but he is a perfect example of what happens when you don't save your money. You go broke and it doesn't matter much you were making. When you don't save anything, you have nothing. The end. That's also a very sad story because he was trying to help all of his friends and everybody, he gave money to a lot of people to help better their lives too. But it's not the best choice.

Scott:
Well should we get out of here Mindy?

Mindy:
We should. From episode 133 of The BiggerPockets Money podcast, he is Scott Trench and I am Mindy Jensen and we are saying hasta la vista baby.

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In This Episode We Cover:

  • Doc G’s specialty as a doctor
  • His journey into the medical field
  • How his life changed from being a doctor to investor
  • How his money journey began
  • The art of subtraction
  • Stepping away from being a physician and leaving a large paycheck behind
  • Questioning what truly makes you happy
  • Doc G’s portfolio
  • His rental property business
  • And SO much more!

Links from the Show

Books:

Connect with Doc G:

The BiggerPockets Money Podcast is for anyone who has money… or want to have more! Join BiggerPockets Community Manager and Podcast Director Mindy Jensen and CEO Scott Trench weekly for the BiggerP...
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    Zach Lemaster Rental Property Investor from Denver, CO
    Replied 23 days ago
    Love this concept! Right up our alley with what retirement means to each person, and how powerful real estate can be!