Welcome to the BiggerPockets Money podcast show Number 51 where we interview Carlos Fuego from CrispyDoc.com
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‘I do not want you to be miserable and let us like work together to try and sort of change things so that this works. The original plan was let us get out of medicine as quickly as possible. Let us save on steroids and just get out. I did not mean we cut back our lifestyle, but it meant that every, like every penny was scrutinized.’
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Scott: How is going everybody. I am Scott Trench. I am here with my co-host, Ms. Mindy Jensen. How are you doing today, Mindy?
Mindy: Scott, I am really doing fantastic today. Once again, I am super excited about today’s guest and I kind of feel like I say that all the time but I really am super excited about every guest and today is no exception. Today, we interview Carlos Fuego who is an emergency room doctor with a superpower, the ability to realize that money does not buy happiness and family time is far more important than the status of being a doctor. He realized that his kids kind of viewed him as a roommate and his wife was starting to resent the fact that all he did was work.
He took a step back and he is like, ‘You know what? What is really important to me? I do not care about the status of being a doctor. I want to have a good family life. I want to have my wife on the same playing field. I want to be happy in my everyday life.’ On top of that, he felt burnt out in medicine because he was just there all the time. He discovered that when he pursues happiness, he is just so much happier in general, and when he is happy, he truly enjoys being a doctor.
Scott: I love the episode. I think that he does a really good job of showing like what you can do if you have a high income and you are feeling burnt out and how to avoid the trap that I think a lot of those high income folks fall into it. You know, if we go back to a couple episodes to the one we interviewed Financial Samurai, which episode number was that? Was that 46?
Mindy: Financial Samurai was episode 46.
Scott: Yes. The concept of forecast or misery came up in that episode. I think in a lot of ways, that is what Carlos did here is he forecast is misery and he kind of backed into a lifestyle that is way better and was able to use the math of personal finance to create that for himself. I think it is just a great example of that. If you are willing to go a little bit of outside the beaten path and understand the costs to your life of those high income, high stress job, I think this will be a helpful episode for you.
Mindy: Yes, I know Carlos in real life. When you meet him, he is a doctor is not the first thing that you… Not the first impression. He calls himself, does he calls himself a dirt bag? Is that the word he uses?
Scott: Crisis management.
Scott: He is not a doctor. He is not an emergency room doctor, he is in crisis management.
Mindy: He is in crisis management. But he described himself as kind of a dirt bag like I would just live in a youth hostel all the time and that is not how I would describe him. I would describe him as like a grateful dead follower who does not smell. Scott is too young to remember the grateful dead tours of the 1990s. But he is carefree like the grateful dead followers of the 90s. They were carefree. They were like Lucy Goosey, whatever. That is his life because he does not stress about money and his job and any other thing that you can stress about. He is like whatever and that is what makes this such a great show is that he is such a good steward of this concept. This is what makes me happy so this is what I am going to do.
Scott: Love it. Well, should we bring him in? We should. But first, let us hear a note from today’s show sponsor.
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Scott: Alright, big thanks to our sponsor today.
Mindy: Carlos Fuego, welcome to the BiggerPockets Money podcast. How is it going today?
Carlos: It is going great, thank you. I am excited to be here.
Mindy: I am so excited to talk to you. Carlos, I know about your backstory and you did not experience a ton of what your grandparents did because you were not around yet. It still helped shape you as a person. Can you give a little bit of history about your grandparents and then how that kind of shaped your whole money story?
Carlos: Sure. My background is my parents are from Mexico and Cuba. My dad is from Cuba, my mom is from Mexico. They were born there but if you go back one or two generations before, depending on how far back in which branch of the family, they all sort of have roots in the old country and our family is Jewish which meant that they were usually trying to get away from something and that is how they ended up in Latin America.
The story on my dad’s side is basically my great grandfather was trying to get away from the pogroms, sort of regular persecutions that happened in the Ukraine, he decided to test out the waters by saying, hey, could you make it to the some other country? The game plan at that time was get to the US. There were very strict limits on the number of Eastern Europeans that could get there. Plan B tended to be, okay, you move to Latin America, you become a citizen of Mexico, and then you come to the US five years later because hey, at that time, Mexicans could easily cross the border, go figure how things changed.
My great grandfather gets off the boat in Mexico, he is just taken this transatlantic cruise and kind of has the wife and the kids back home and he gets off on the shores. The story that our family tells is he gets off on the dock, unbeknownst to him, the Mexican revolution is going on. He sees a guy stabbed on the dock as he is getting off and like it has not yet touched dry land, turns right back around, goes to the ship captain and says, ‘I will work my way to whatever the next stop is but you cannot leave me here. This is what I was trying to get away from that home.’
Well, lo and behold, the next stop was Cuba and he gets off and he is like, ‘Ha, it is a little bit warmer than the Ukraine here. The water is a little bit nicer than the lakes that I am used to.’ Long story short, he becomes a peddler on the docks in Havana. He sends for the family, brings him back. He is used to kind of this life of total deprivation. What he does is he scroungers and saves every penny he makes and he puts it into, and you guys will love this, real estate. He buys in the boondocks where there are very few roads, no one is living, but he thinks, ‘Hey, I am going to start growing something and I want to live this sort of life of the kind of this rural farmer’s life.’
It turns out that he bought land in an area called Pinar del Rio which is in northern Cuba. It is this sort of red, beautiful soil, that as luck would have, it turned out to grow tobacco very well. He builds up his land holdings and he has a tobacco plantation and then starts to diversify and buys a factory and basically is able to save up and then loses everything when Castro comes to power. The family story from Castro’s side is my dad is sent over early, my uncle was already studying here, and my grandparents were planning on staying. They sort of set my father and my uncle who were their only two kids ahead of time because the military was conscripting young men of military age and they were scared.
That long digression was just to say the family story was basically all about when you start over again, the only thing you have got is your education and that was a huge huge emphasis coming from that side of the family. The best proof of that is my parents, my aunt and uncle. They were five grandchildren coming from the Cuban side of the family. Five of them went to Stanford, the black sheep went to Yale. Like education was drilled into us as that is your future, that is the only way you are going to get head. With political instability, that is the only thing you can count on.
Mindy: Let us move on to your story now. You have this, I mean obviously, your dad has this, I do not want to say weight on his shoulders, but definitely like, ‘Okay, my dad has sacrificed everything to get me here. I better not slack off.’ How did that affect you in your growing up in your like formative many years?
Carlos: Interesting. My parents were shielders and they really, because of this emphasis and education, they did not want us to worry about anything. We had no idea how to deal with money. We had no idea, frankly, how to deal with cars. We had no idea how to deal with anything. They just wanted us to study and do well. It was not quite like you see those sort of caricatures of immigrant parents where they are like, ‘No, no, no. You have the freedom of every other student. You could choose what kind of doctor, lawyer or engineer you want to be.’ Like it was not that heavy handed with my parents, maybe more so with my cousins who sort of felt that intensely.
For us, I think it was we want you to be the best that you can be. We want you to really blossom. The downside of that, the upside is I had growth mindset. I could learn anything and if I was going to fail, it was never going to be for lack of effort because there were lots of people who are smarter than me, there were lots of people who caught on quicker, but my work ethic was the one thing that was going to carry me to be able to compete with that level of people and that was what helped. For money, I was totally a dufus, I knew nothing. When we got money for birthdays, we saved it all.
My parents had this program that we continue with our kids where whenever we get a birthday gift, it immediately went to them. Like there was no talk of like, great there is a video game I have been saving for. This is going to college and so there was always the expectation that we go on to higher education, but there was also that thought that you had to say that for the future. You never were sort of living for today.
That was part of it. They had match every savings that we got from birthdays and we put it in and deposit it and so that was the expectation. When I got to school, had no idea what I was doing. I had started a job in high school teaching Sunday school and continue that in college. I was making money to help save. I have got maybe some partial scholarships to help offset the costs. I was very lucky that my parents, because of this emphasis on education, they had said we want you to have a debt free education and we will do whatever it takes to do that for you. Of course being oblivious, I did not realize what a huge gift that was until the tail end of that where I was like, ‘Wow, that is a lot that they have offered.’
Scott: What happened when… You graduate college, right?
Scott: You have got all the savings. It sounds like you graduate at least undergrad debt free, right?
Carlos: I did. All the savings went… It still cost as much proportional to other schools as it does now. It is interesting kind of going through the whole fight Kool-Aid to be like wow, there is a lot of people that questioned the value of that education and reasonably so. But I go through, I am debt free. The savings had all been spent on college, but I went straight through to med school next. At that time I was looking at, I just gone to this really expensive private undergrad school, I was looking at the choice of public or private med school. The biggest decision for that was I wanted to be where I could have the support of the people that are going to get me through because I knew it was going to be tough.
Financial considerations were a factor because at that point I was slowly starting to get like there is a big difference in cost. I went to UC San Francisco which is a state school for us and it was a fantastic education. I remember when we were protesting outside because they were going to raise tuition from $9,000 to $13,000 a year so you can imagine Paleolithic period of tuition that this must have been at. That was a huge win. And again, my parents were there and they said, we will do this. I did work jobs, they were minor jobs like teaching anatomy on the side but I tried to supplement the income. But in med school, really, you do not have a lot of time for a lot else.
Scott: Okay. You graduated med school debt free as well, right?
Carlos: Yes, huge win.
Scott: When do you start making money? What does kind of your financial position look like kind of following when you started getting your residency and then into the higher pain? What do you to kind of do with the advantage of position you got to start with?
Carlos: Great question. The answer was I did not know so I did what I usually do, which is I said, ‘Hey, dad. I am pretty much still a college student at heart.’ I am kind of innately a dirt bag and my wife likes to kid that I would be perfectly happy living in my life in a youth hostel with a shared bathroom and she is probably right. I was every bit that person at that time. I said, ‘Dad, I have got way more money than I know what to do with, what do I do with it?’ He is like, ‘,You just take it and you stick it in your retirement that is offered through internship into an SMP 500 fund.
This was 1999 and I do not know if you have ever looked at the sort of gradual growth curve of the SMP 500. It goes up until about 1999 and then it dips down and it is kind of like this deep Incisor v shape where it does not really get back to what it should have been until almost a decade later. Those first years where I had Monday, I was oblivious. My dad said that was probably a reasonable thing to do. I deposited the money and I did not pay any attention to it.
Mindy: I want to jump in here and say if you are investing for retirement, put it in. Do like Carlos did, put it in and then do not ever look at it again. We have some weeks,
the past few weeks, they have been some volatility in the stock market and I see all these posts on Facebook from people like four months ago. ‘I am doing great in the stock market, it is so awesome. I am amazing, I am wonderful.’ Then like two weeks ago, ‘Oh my God, what do I do?’ Nothing, do Nothing. Did you take any money out of the stock market during that deep v shape?
Carlos: I was completely oblivious. It was never a better time to be stupid and ignorant and I completely just had it on autopilot. There was a way to set it off. I did that in internship. I moved to LA for residency and I did exactly the same thing and I just saved as much as I could. At that time, I do not know if I was even aware of like Roth IRAs which I would have qualified for. I was probably putting it into some less favorable but still tax favored set up. But it was you put it all in, you got the statements in the mail, you brought that collection to the nice lady who looked about your age in our block once a year and that was all I knew of money. I could still eat the food I liked because I was working strange hours.
It is not like I was big on social expenses. I remember I was invited to one birthday party of a friend who had been a trader on the Pacific Stock Exchange. Like my idea of a birthday party was like, okay, we will all be in a chip in and get his burrito. It turned out to be in Venice beach. This gentrified part of Venice beach where it was like a foodie place. I swear I looked at the menu and I was like it dawned on me this is going to be a hundred dollar meal plus what I have to chip in for my friend. I was sweating bullets. It is not that I did not have the money, it is that I could not conceive of that level of spending and think of it as normal.
I remember I was like, wow, I have just blown like whatever. I was planning on saving for this. Ate ramen for the rest of the week or the rest of the month or whatever it was and swore to myself like, ‘These are the parties that whenever I get invited in the future I am going to say, ‘I am so sorry. I cannot make it for dinner. I would love to join you and buy you a beer afterwards.’ I deliberately avoided them just cause like that was not my programming. I could not feel comfortable doing that.
Mindy: I relate to that so much. I love that. I just made a note to Scott. I love that he is a doctor worrying about a $100 meal. But you know what, that is what gets you to early retirement. Not going and spending a $100 at every meal every time you go out because that is what gets you to retirement debt 85.
Carlos: Like we still, to this day, my wife and I, we have realized that the way that we do best going out with friends is when we can name the venue because we do have some foodie friends who are really big and LA has got a lot of temptation. We will say, ‘Hey, have you tried this great new, diety Ethiopian place, this fantastically interesting Ramen House that just opened up that is authentic. Or the Cuban place which happens to be located near a Taiwanese bakery? We have started to frame things in such an interesting way that are foodie friends were like, ‘Well, I wanted to go to the celebrity chef place will be like, ‘No, I have never tried Zimbabwean food. Let us do that. That sounds awesome.’ That is like you are the only friend who will go with me. We have carved out a niche where like our ritzy friends like they will come dumpster dive with us and it works well.
Mindy: That is a really good tip though. Like you define the location, you are steering somebody away, they will probably still go to that celebrity chef thing, just not with you and that is okay because that is not what interests you. I went out to dinner with my husband and we went to Morton Steakhouse which is a nice steak house. This was a thousand years ago when dinner was only $135 for a couple. But afterwards, we looked at each other and we are like that was really delicious but that was not in my Plebeian taste buds any better than Outback Steakhouse which is $50 so let us not go back. Not a slam on Morton’s, it was really delicious. I bet if I went back now as a more refined adult, I would probably appreciate it more. I just do not want to spend the $135 on dinner.
Carlos: I think our equivalent is we have like the annual hospital gala right and you like are kind of expected to go and I just do not look at the bill because it hurts too much to look. But, for a while, I would go with my wife and say, ‘Look, our friends are going. This will be a once a year expenditure. We will go. We like jokingly call it Dr. Prom cause everyone gets dressed up. You see people all glitz out. We decided like we certainly want to do our part for the community and for the hospital but we really do not need to go to doctor prom. Like the cost benefit does not work out for us. And there is the night after Dr. Prom, there is this like free party that a bunch of docs throw, not as Ritzy, not as nice, but really like everyone is elegant. Everyone has free food.
We have started to go to like the frugal Dr. Prom night after party and told our friends, ‘Hey, you know we cannot make it this year to that one. I am so sorry but we will be at the one right after if you want to come hang with us there. That has become our like alternative to Dr. Prom venue.
Scott: In 1999 is when you graduated and got her residency, right?
Scott: When did you get your first kind of like, I do not know, with the full time doctor position? What is the hook term?
Carlos: Yes. You are an attending physician, sort of a historical term. When I became an attending physician, I actually was a glutton for punishment and when I graduated I had these great experiences in med school. I spent a summer working in Argentina and sort of getting some clinical experience in a hospital there and Spanish is my first language. I had a great time there. Then in med school I also was selected for this Dean’s Scholarship to go spend two months in Beijing, China and study in hospitals there. I had this real interest in travel and sort of spending time internationally with medicine. In residency, I kind of built on that.
Spent some time in Nairobi, Kenya, spent some time in Bali actually at a clinic there. I was like, ‘Maybe this is my career.’ Maybe what I do, at the time I was not dating anyone, I thought maybe what I do is I am this free floating balloon and I go around traveling and doing humanitarian work. Lord knows I do not spend that much. It is not like I need to get this guaranteed income. I actually did a fellowship in international and emergency medicine for a couple of years. Even though I was a fully certified attending physician, I was still making a fellow salary. Got my MPH for two years, spent two years in Boston and was teaching there and spending a lot of time abroad the vast majority of it. About six months of those two years, over a lot of smaller trips spent in Ethiopia. That was where I spent my time. Now, that was not a lot of money because I was basically making a slightly glorified resident’s salary.
Scott: How much were you making it and how much were you stuck to saving during this period?
Carlos: Okay. When I was a resident, I was probably making in the mid-forties. That whatever I did not spend, was going straight to savings. When I was in fellowship, same deal. I was making actually more probably on the order of I want to say 55 to 60 maybe for those two years. I finished fellowship and ended up with about $80,000 in savings. The vast majority in tax protected spaces. It was just accidental. Again, it was putting it into the SMP 500 fund at wherever I had that and not really looking at it.
Scott: Would you say that your travel and what you were kind of able to do with the fellowship and go around with all these different places was in part due to the fact that you had not adopted a lifestyle that maybe some of the other doctors had begun to adopt?
Carlos: I think that was part of it. Like definitely being a dirt bag is a big part of like just saving money. But I think the bigger part probably, if I am honest with myself, is I had this head start because my parents gave me a debt free education, which is a gift that I want it give my kids. I had probably a five to seven year head start on anyone around me who was going to have to take that much time to get rid of their debt. I could say, ‘Oh lucky me, I am the king of the universe,’ or whatever the saying is because I basically could piddle around and I did not need the money. There was no interest accruing that I was going to pay for those years of piddling. There are lots of people who cannot say that. Yes, having a low burn lifestyle helped but it was really that advantage that I could explore that.
Scott: Got It.
Mindy: Okay. You mentioned just a moment ago that you want to give your kids a debt free education as well. Do you think that is a good thing to give them this debt free education? I do not want to saddle my children with this horrible debt and by the time they are in college it is going to be, I do not know, $80 million a minute or whatever. It is going to be pretty hefty should they not go to a state school but I want them to be part of the process of, ‘Hey, you need to pick something that is not super expensive. You are going to get a great education at a state school, you are going to get a great education at a private school, but you are going to be so much more for that private school education.’ Do you think if they know that you are going to foot the bill, they will just choose whatever they want or I guess you could make that part of the conversation?
Carlos: I definitely make them part of the conversation all the time. Like I go back and forth about this. Our cousins who still live in Mexico, one of their kids when he was in college comes back his freshman year and he tells his mom and dad, ‘You know guys, I am really torn. I am thinking I really like music but I also liked philosophy. Maybe I will major in one in minor in the other.’ They looked at each other and they have the same baggage that my parents had. Their big generation before theirs was basically destroyed in the Holocaust. Like it was their job to make up for lost time and the kids were supposed to be like the embodiment of like our family is back and we are successful.
They had this sit down, come to Moses moment where they are like, ‘Hey guys, you are going to be able to graduate with a degree in economics or engineering which you will then leverage into a very high paying job that will sustain you independently. Then at the end of the day you can philosophize or play your piano or whatever it is that interests you but that is not a degree that is going to get you to be able to sustain yourself. Do not look at us because we are not doing outpatient economic here.’ I have started to have these conversations with my kids interestingly where I was talking to my daughter, and like a lot of kids who just started the fifth grade, she is a really talented artist and she loves nothing more than to draw. When people were asking her for a long time what you want to be, she said I want to be an artist.
Of course, like as dad with like all of the immigrant baggage in the background setting off flares, I am like let us talk about something, kiddo. Like how many of your friends’ parents are artists? She will be like, ‘Well, one.’ I am like, ‘Okay, where do we normally see artists?’ She is like, ‘Well, we see artists kind of at the art walk on the beach.’ Okay, how many of our neighbors are artists? She was like, ‘Well, I do not really know any.’ What do our neighbors do? Well, she is like, ‘Well, there is that guy who is an engineer and then there is that guy who is like a high end real estate agent and there is that guy, yes, they are both doctors, those folks.’
I did not have to say it and like I feel a little bit guilty, right? Because like am I bludgeoning her dreams away? I hope not. We do have this talk of like there is rainbows and unicorns and I do not want to deprive my children of their childhood, but I do want them to walk in eyes wide open. I want them to say like teaching as a noble career and My mother was a kindergarten teacher for 35 plus years and loved work every day that she went in. It is also hard and not remunerate it the same way that engineering or being a physician is. We talked a little bit about that and it was interesting because the other day someone asked her in front of me, but I was off to the side, she did not see me. Like, what do you want to be? She said, ‘I am not sure. Maybe I will go into education. I like art but I do not think I am going to pursue that as a career.’ I was like, well, either I am the biggest A holder ever was or there is some reality that is sinking in and maybe she will pass it a little bit earlier than everyone else.
Mindy: Let us go with reality sinking. You were traveling the world, what brought you home?
Carlos: I was kind of this free floating helium balloon in the world and I was like I am going to just try and see like I had these pseudo academic aspirations where I really liked to teach and I am sort of big nerd by just my nature. I thought like maybe I can do academic teaching and meld that with a career in international medicine. Go do this fellowship for two years, I went out there and at the time that I left for it happened to get into this relationship with an east coast girl from Jersey who moved out to Boston with me. We did not move in together fortunately, but we moved out there together. The relationship did not work out. I am near the end of fellowship with about six months left and just like heartbroken and I knew when I went out there that was going to be kind of a short term thing.
I wanted to explore a great places to be young and alive, Boston was one of them. I had a great experience, I have no regrets. But the best part of all was that about six months before I am leaving, I am out of that funk. For whatever reason, I snapped out and I think in six months I planned to be back in California. I am an unrepentant Californian and considered it a promise land despite the toxic financial scenario here and my family is out here. I said, ‘Look, in my mind I could either already be back or there is maybe a handful of people that I have met that I really would like to get to know.’ Top of the list was my wife.
Scott: What was your financial position when you moved to California? What was your kind of earnings? How much did you accumulate at that point?
Carlos: It was like $80,000 at the end of fellowship. That was four years of residency plus two years of fellowship which is like a prolonged path for the emergency room. I came out, my wife at that time she had a condo. She is a little older than I am and so she was living an adult’s life. I was living still a student life. She sold her condo, happened again by dumb luck to be sort of the peak of the market right before the bubble burst a few months later I think for that section of Boston in a few years later for the country as a whole. We had this amount of money that we were sitting on and we figured we would go live in LA.
We rented an apartment that was less dumpy than the other apartment but it was a young place. We were close to the beach and it was like perfect to be goofy in love. We thought we would rent for a year, find a place and buy. Then what happened was prices kept climbing, right? That is 2005 we moved out, prices are skyrocketing. I am getting nervous, I am also feeling a little bit ants in the pants because I have never owned a place and there is this disease that all doctors get like it infects them when they are in medical school which is that as soon as I get my purse paycheck, I need to buy a house. I was feeling that very acutely in a hot market in Southern California and my wife, to her credit, is more picky than I am. We had like the down payment set aside, she said, ‘You know what, waiting a little longer served me well. For a husband, I want to wait for the right deal so let us find something that meets all our needs rather than just because you want a garden we should buy the first thing we see.’
That helped because we waited and we waited and she was picky and I was burning to buy something and then 2008 happened and suddenly things that had not been in our price range dropped down. We were able to get a great deal on an nice house which I am talking to you from that but which was my biggest financial mistake.
Scott: Let us go back a second. You had 80K, when you moved to California it seems like a big live event. Your wife is bringing how much in?
Carlos: Significantly more because she had just sold her condo. In terms of savings, I probably had a comparable amount in my retirement if not even a little bit more since I would been pretty aggressive early more so than she had. In terms of the amount that she got from her condo sale, that was like going to the our down payment for our house and that was huge win for us.
Scott: Okay. Then your new situation in California, what does that look like?
Carlos: We both started working at community hospitals. We were both making, I would say probably the average nationwide salary for emergency docs, working hard. Had those experiences where that was a doc salary for the first time for me and for her. We just saved it. We maximized our retirement savings because of the requirements of my work. Emergency docs tend to work as independent contractors. My work required me to form a corporation so my wife and I incorporated jointly and basically our salaries would pass through the corporation. We were then able to put a sock away, money and a profit sharing 401K deal. We were able to sock away significant amounts. We were probably saving in excess of a 100K a year. During those years where we had this by our salaries very low cost housing compared to what we could afford living. Like students, walking to the beach and working like dogs.
Scott: Awesome. What year did this begin? This period where you begin?
Carlos: Probably fall of 2005.
Scott: Fall of 2005, awesome. Then when did you discover financial independence?
Carlos: That came much later. I had like little inklings of it. There is like in the movie you see a flash of something and someone is kind of recognizing that there is this bigger thing out there but they just choose not to see it because I had all kinds of excuses, right? When I was a med student, I was too busy, I was learning. When I was in residency, I was too busy. I was learning how to be a doctor and save lives. Then when I was doctoring, like at that point, I was too busy saving lives. Money is kind of vulgar. You do not think about that, we did not talk about it at home certainly.
Then I was married, not married, but I was living with this fantastic woman and goofy in love. Like I would much rather spend the time being goofy in love when I was not working. I had every excuse why I just was not going to think about that. The incorporation, basically, I am at work like what do you do with the paycheck? One of the other docs in the lounge says, ‘Well, you should go see my husband’s sailing buddy. He is a financial advisor and he got us 18% last year. I was like, okay. I made an appointment with him and I am wearing my, flip flops or sandals and shorts and maybe an untucked shirt and the guy is looking business-y in and his snazzy suits. He seems nice and we like him and he is charismatic.
Ultimately, I am asking him all these questions that I think might be useful but I do not really know and he says, ‘Look, I am taking a much bigger risk with you than you are with me. Most of my clients have a million dollars or more in assets and you guys basically have peanuts. If you want me, I am here for you and I am happy to take that chance on you because I believe that eventually you will get a decent net worth. In exchange for which these early years like I am the one who is doing a lot more work than is really going to be warranted by the amount that you are going to pay me for an assets under management structure.’ I said, ‘I like his honesty.’ He struck me as an ethical, upstanding citizen. We went with him.
Then every year we would meet and he would use a lot of jargon. I would walk out of the meeting and look at my wife and I will be like, ‘Boy, I have got about 50% of that and she would say I got about 25. You are doing better than I am. We both looked at each other with relief. Like, boy, I am glad we have got a smart guy like that looking out for our interests because boy, I do not understand that and it sounds really complicated. At the back of my mind, I was thinking like at this point, now our daughter was born a couple of years after we were married and I am thinking like I do not want to be the guy who screws this up. What I wanted was plausible deniability.
I wanted to say if it all goes to hell in a hand basket, it was not my fault we had this smart guy who was doing it for us and we had the best people on the job we could have. Then a couple of things, there was the New Yorker article in Mr. Money Mustache that came out and I read that and I was so hungry for that. Oh God, like read that article. Went to the website, within a week, probably within three days, I read the entire website. This was my financial conversion, like I was born again. It has happened to come at the perfect time. I mentioned buying this house. At the time we were buying this house, I was going through my first doctor lawsuit and there are horrible horrible affairs.
Eventually, you get the perspective to realize it is about the money. Your insurance has it and someone wants it and they have got a hard life for a variety of reasons and so you start to not take it personally but the first time you get that, I mean you went into medicine because you care about people and you gave up all your twenties to do this and someone is telling you that you did not do your best. Like how dare they? Gets at the core of your being and why you did this. You feel wretched and you feel betrayed by these people that you went out to help and you have got this bunker mentality that they are all out to get you. We were trying to get a loan for this house and like we had a huge down payment and basically we put down a 50% down payment on a house in Southern California. That is ridiculous and it happened to be a great time to buy.
Essentially, we were being turned down for a loan because they said, well, I do not know that lawsuit. Finally, my attorney, my malpractice attorney got on the phone and called these people at the loan originator and they said, ‘Okay, we are going to give it to you.’ But I felt like how is it that this career that I dedicated my life to could potentially jeopardize my family’s ability to have a place to live.
Well also at that time, my wife was pregnant with our son. Like I had all of this. Like just the horror of going through a physician lawsuit, the stress of not being able to buy a home and it was going to be my fault. I happened to be a period where our group was understaffed and so instead of working 12 shifts a month, I was working 15. It sounds like a small nut numerical difference. That is the difference between your kids thinking of you as a renter at an Airbnb and your kids feeling like you are present for them. That is the difference between your wife feeling like you are part of the team and you are helping with the mental load at home and your wife just being resentful of the fact that your job is taking you away.
My wife, she has the same job, she gets it better than anyone and she was still resentful. It was a horrible time. I read this and I was like, this is it. This is what I need, I need to do this and I need to get out as soon as possible because this is horrible. I do not like my life. I sat down, I went through what are my priorities. What is going on here and how did I diverge from them? I realized, okay, where am I spending my time? Well, my work schedule comes first and all the other parts of life they go after that. My kids come next. My wife unfortunately is coming after my kids instead of them being at least on an equal playing field. There is the basics of like what happens if the house does not go down in flames? There was not disappointing others. At this time, mind you, we have got kids and the grandparents, they want access.
We calculated that in my daughter’s first year of life, one out of every six days is spent with a family member visiting, whether it was my wife’s or my parents. We were doing a lot to help other people, but we were not really doing a lot to kind of take care of ourselves. I saw financial independence was the answer. Now, again, I have been oblivious and we had been savers and that helped. We got our house and that helped because I was always hovering in the back of my mind like what is this pain going to look like? How much am I going to owe because that is how long I am going to have to be in this job that is making me miserable.
That was always at the back of my mind particularly at that time when I was pretty miserable and was feeling burnt out. Hence the name, Crispy Doc. But Crispy Doc is also like, hey, fire makes you crispy. Like that was the whole idea. Hey, this kind of exposure is a good thing. Read the article, read Mr. Money Mustache, that sends me down all of their wormholes, a mad scientist, JL Collins, Go Curry Cracker, all these like the incredible same cast of lovable characters that you guys have interviewed makes me happy to share a stage where they have been. I was like, this is great, I can do this. My wife looked at me the way like your partner or the person who knows you the best in the world would have looked at you if you just said, guess what? I am becoming a Hare Krishna. She was like, ‘We used to have this shared reality and it seems like you are not a part of that and I love you and trust enough that you will return to it one day.’
I was able to do a couple of things. One of them was like within six months I was reading a ton of books and I basically took half of our assets and move them out of Merrill Lynch into betterment. It was like, oh my God, the robo advisor was like this sexy new thing and I was going to go down in order of magnitude from what I was paying the advisor. We were so excited. Then another six months and I was like, ‘Yes, the robo advisor was a mistake because this was all on the road to do it yourself portfolio management so I broke up with my advisor who is still like, and who I think is an ethical upstanding person. But I just thought if his kids are my kids were going to get the money I was working for, I would rather it be mine.
Mindy: I like that, I like that comment a lot. One of the things that I think a lot of people who are starting to understand the concept of financial independence or are even just starting to look at it and thinking, oh maybe that would be cool but is the sunk cost of you just said you gave up your twenties to become a doctor. How do you reconcile the fact that you gave up your twenties to earn this position and then how do you reconcile that with giving up this job completely, which is totally not the norm and you are now going to have to convince everybody or used to be a doctor and I did not lose my license due to malpractice. I just decided to quit because I wanted to be financially independent. Like how do you come to terms with that?
Carlos: For me, I think there were two things that probably helped. One of them was like I was kind of born 40. Like you know how there is the 16 year old kids that are like, ‘I do not want to drink this weekend.’ Then there is a 16 year old kid who was like, ‘I want to get a fake ID because I want to get into the clubs.’ Then there is like the one 16 year old kid think the breakfast club who is like I got a fake ID because I want to vote. Like I was that third kid. I was a dungeons and dragons kid. I like to think about the world and that was what gave me pleasure. Like my high school self was probably I was a floater. I had friends with the smart kids, was in a lot of classes with them.
I was also friends with like the girls who dressed in Ann Taylor and were feeling really prestigious about dating guys from City College when they were 16. Also an occasional football player where I would go have lunch with those guys. I had like this sort of random set of friends. I felt like an outsider to begin with so I did not really need to feel like an insider. Part of the reason I liked emergency medicine is it is kind of a misfit specialty. Like, yes, you have these folks who are like I like to beat my chest in the mountains and rock climb but you also had folks who were like, I would like to help people in jail with their health and I like to hike the Pacific crest trail for three months at a time and I like to play punk rock music. Like those were the people that I connected with.
Wow, those were my people because like they did not fit in any other square pegs and round holes. I felt okay about that. I also felt like I did not have the doctor with a Capital D complex. Like there is a lot of people where that is their sense of self and their sense of worth. They like to walk into a room and immediately have the prestige that comes with that. Like my best example would be I had a roommate in med school who when we were in our first year where you do not do anything remotely clinical. The only time you were in scrubs was for anatomy lab so that your regular clothes did not smell of formaldehyde.
He got an extra set of scrubs and he got a pager. Nobody needs a pager as a first year med student. He would say, ‘Hey, could you please page me at like 1:00 PM because there is this really cute girl who works at the optical store and I am going to be planning on being in front of her in my scrub suit and my pager at that time. Like I really want to make a good impression. I paged him and whatever and he was like really hanging on to that. My equivalent was, when I was doing the online dating which was just starting out at that time, like I did not list that I was a doctor because I would not want anyone who that would be why they be attracted to. I was in crisis management instead of emergency medicine. Because I figured most people are going to conclude that that is a social worker so only someone who really wants to meet me would go for that. I did not feel like I had to be just a doctor.
Mindy: That is brilliant. Crisis management, you are managing crisis. Yes, I mean is anybody going to feel misled that you did not say you were a doctor? No. But is somebody going to feel misled when you say you are a doctor and then you are not a surgeon making nine figures a year, whatever surgeons make, because they clicked on you because you were a doctor? That is a really good way to weed people out. My husband was talking to his boss and his boss said, ‘You will never get a girl with driving that car.’ He was driving like an Eagle Talon, which is not a sexy car, but he is the only person dating somebody and everybody else in the office with their BMWs and they are just having problem after problem with all these girls that keeps cycling through their lives because they are only dating them because they have a BMW.
Carlos: Yes, you get a lot of that in medicine. You do get a lot of like trophy folks. I drive a Kia Rondo which car and driver, I believe the direct quote was, it is as sexy as a washing machine.
Mindy: You said when you first started this that your wife thought you were crazy.
Mindy: Did she eventually come around or does she still think you are nuts?
Carlos: She still thinks I am a little nutty. Like I was telling about my ten conference and how it ranged from like people who I am sure she would get along with fantastically, to people basically variants of like the Saturday night live guy living in a van by the river. I am like I love these people both like have the whole spectrum. They are just fantastic and she is like maybe we will go out with the set that is not living by the river. I think part of it is we ran through the numbers and she ultimately saw how unhappy I was and she is a phenomenal partner and said, ‘Look, I have got your back and I trust you.’
If you say you can manage our investments and we should take them away from this advisor, like I trust you. I do not want you to be miserable and let us work together to try and sort of change things so that this works. The original plan was let us get out of medicine as quickly as possible. Let us save on steroids and just get out. I did not mean we cut back our lifestyle but it meant that every penny was scrutinized. We changed our phone plans, we traveled to see family for a few years there. We did things that were, I would say, more just deliberate and thoughtful than they had been before.
Again, we had these forgiving doctor salaries that were great. My wife, in that time period, when we started having kids, our oldest is now 11, she transitioned out of clinical medicine. She still does it once a week and started building a business that has worked nicely because it has got all the things he want with a family. It is flexible, it is autonomous. Now, she actually helps people get into med school and residency and does this consulting and and other more than her clinical salary.
But she was saying all along like we can afford this. If worst comes to worst, we just will save less so that you do not have to be miserable while you figure out what your next act is going to be. An interesting thing happened when I dialed back the medicine. Part of the things where we started to change the institution, right? Docs do things because they have always done them. I started to look at what is the biggest aggravation and how do I stop it? The biggest aggravation at the time was I was working way too much. I worked with my group to change the policy so that we could work significantly less. Now I am working six shifts a month and two weird thing happened. One weird thing was I suddenly liked my job a lot. Like I had been dying to get out of this and I could not wait to leave it behind and never looked back. Doing less of it and doing it slower and more humanely, like made me into a human being again.
The other thing was all these priorities that had sort of been peripheral, right? You have your like actual life and your ideal life and the then diagrams used to be like tangents. They barely touched and suddenly they overlapped a lot more and so I was getting to have a lunch with my wife on the days when I was not working. Like every day at home. Good food that we made here but it was just nice to have that check in time. Like the kids, suddenly, I was the dad that volunteered at school, right? Like all the moms are like, ‘Oh, that is the dad who always volunteers in class.’
Like it was great to be that dad. That is the kind of dad, like I sort of am a touchy feely new aged guy. That made me happy. I got to do things for self-maintenance. Like I got into a sea kayaking and kayak surfing and I guess more just physical maintenance, things that I have been ignoring and other strange things. Tonight, after this podcast, I am hosting a game night here where three guys who I love dearly are coming over and we are going to geek out on the sort of adult equivalent of dungeons and dragons, a game called Puerto Rico. But it is kind of cool because I will tell you something and I will, I will warn you now, Scott. You need to start working on this so it does not happen to you because that happens to a lot of people. Guys do not have friends at this age.
In your mid-forties, guys are kind of isolated creatures where we like go into our little hobbit holes and our only friends with the people that we casually contact at work. I have got these really wonderful friends. I take walks with them during the week, like we find time. That is a rare, rare, luxury. My life is great right now. I want to keep doing this and the cool thing is like, hey, it is a doctor’s salary. Six shifts a month, that is unbelievably generous. Like we front loaded our savings and now I just have to keep working and not touch that and the beauty of it is I really like what I do. I can also do medicine that does not pay.
For example, I am on the bioethics committee. I get to like hold grandma’s hand as she decides what to do with Grandpa and we go through what he would want to do. That takes hours of my time on a regular basis every month. I love that, that is the part of medicine that I went into to do. It does not pay me a penny, I do not need it. I do not care, I get to do it anyway. That is a beautiful thing, that is where this is exciting.
Scott: Yes, I think that is fantastic. I mean, what it sounds like is you had basic financial sentence. You were being frivolous for a long period of time which sets you up for when you discovered phi to begin and make those changes that the phi in two minutes that you needed to get comfortable with the math and really have a kind of a quick path towards making a… You are able to get some of the benefits and that lifestyle pretty quickly. Can we go through the math of how things were prior to and after your discovery of phi? What was your kind of wealth position? How is that allocated more specifically and then what did that change look like? What is your savings rate kind of increased too and how did you allocate?
Carlos: Sure. In terms of our asset allocation before I went down this path, I have to say I was ignorant of it, to be totally honest. It was all the adviser says we should do this so okay. I had no clue. What happened was when I started switching things, I became acutely aware. I looked at some of the stocks that we were in. He was generally an ethical guy and I would call him on things like, ‘Hey, I really am not a believer in hedge funds. Like I would be reading and I would be like, God forbid, he puts us in that. He would say, ‘Well, that is why I avoid them.’ Great, like he passed a lot of the sniff test. But then I would find an occasional fund that we had a genius manager who was going to beat the market and it was a 2% expense ratio and I just, like again, I was sweating bullets.
When we switched half our stuff over to betterment, it was kind of their allocation, a lot of low cost ETFs. We had to liquidate my holdings at Merrill so there was a big tax hit that year just because they did not accept any kind transfers. Although, around that time, because the stock market had taken a hit, it was not as big as it might have been at a different time. We switched over from betterment, then I moved that eventually to Vanguard and moved our Merrill Holdings to Vanguard. Now, my asset allocation is probably about 80% equities, 20% bonds. The bonds are probably split half and half between a Vanguard total bond index, admiral shares, and their either municipal funds or tips funds depending on which account it is in.
Then there is the other 10% in the vanguard, admiral shares about probably 30%. Probably another 20% in international and then the balance in the total stock market index fund VTSX in terms of the wealth. We were working really hard to front load our savings. We went from saving just over a touch over a 100K in the profit sharing trust. We found an actuary because we were a corporation, we were able to do define the benefits plan. The define benefits plan, since I was in my mid-forties and my date of retirement was going to be 50, I had a lot of making up to do which meant I was able to jack boost that sucker like crazy and had a big year sort of basically front loading that for one year where we lived off our taxable, put everything we could into the profit sharing trust and the defined benefits plan. On top of that, we both contribute to backdoor Roth IRS, mine and my spouse, we have a high deductible health plan. Contribute to an HSA.
Scott: Basically, just to chime in real quick, it sounds like you were basically able to set up because you are a corporation. Some ways to shelter in the equivalent 401K, a tax deferred plan. Tens or maybe even close to six figures in pretax retirement contributions. Is that what kind of what you are kind of getting out of here?
Carlos: Yes, sir. Thank you for summarizing that much more concisely.
Scott: No, no. I think that some people listening might not be familiar with that. A lot of people are getting paid a wage income. This is a concept that I think might be new. But because you are a corporation, you were able to shelter a lot of that by talking to your accountant. Setting up a system that appropriately allowed you to set up ways basically to… It is a little complicated, there is a number of ways to do it around like the number of employees that are at your company and all that kind of stuff. But you are able to set one up that allows you to set aside a very large amount of money and that was all pretax?
Carlos: That is correct, that is correct.
Scott: Yes, awesome.
Carlos: We did that. Our taxable is more or less stayed the same because we lived off it for a year and a half or so that we were trying to really jack up our savings in the tax deferred space. Then we basically… Now, we are on this glide path which is really nice where my wife has her business. It is like a third child cause it took a lot of attention when it was young, but now it is automated and it works really well with our family. My work is like really fun right now and every year I look at it and think sort of what is the one aggravation that I can try and subtract? For me, right now, it is probably the night shifts. Basically, I am working with my group to test the pilot program to say, ‘Hey, is there a fair way that is win-win?
Were the young, hungry, indefatigable docs can take on nights in exchange for which we pay them an extra premium and let us find a fair way where they feel fairly treated and rewarded at a time when they really do not get the fatigue and the value of the income and I might be able to get out of something that makes my life a little hard right now with my physiology or burn out or what have you. I feel like if I could do that, I could do this job for a long time to come. It is a great job because like, I can still, this last summer we traveled for five weeks with our kids. That is amazing. No doctor gets to do this, Scott. Like nobody you know has taken a three week vacation as a physician because you just cannot do that. You do not have that flexibility. We do and it is fantastic because that is one of my dreams, that is one of the things that I really wanted to make happen that I talked about with my wife, talked about with the kids and they were all on board.
Scott: What are your assumptions around passive income and how does your wife’s business play into your overall position in terms of how you are thinking about your financial future for your family?
Carlos: My wife really likes what she does, and between you and I, if I had to call a 10 years’ time, she is going to drop clinical medicine but keep this job because she likes this job. It makes her feel good. It plays to her expertise. She loves her clients. It is kind of like the residents that we used to mentor once upon a time where she can give them really good advice and help them sort of take things to the next level. That is a huge comfort to me. She is a workaholic too so I think this is a productive way to channel what would otherwise be nervous energy that would not have an outlet. I like to think of myself as the VP of Leisure for our family. I planned vacations. I make sure like there was a time where we actually started having meetings, just she and I. I would say, ‘You know what?
We are going to have to talk about all of these things that are popping up in your mind at a scheduled time because right now it is a pacific sunset, we are now walking on the street, I need you to be present with me and that worked really well for us. Passive income, I think we do not have real estate holdings. We probably… Do I have fantasies? Yes. Being in Southern California, a significant portion of our equity is tied up in our house. I do not even count that in my net worth because I do not think that is an easily liquidated investment.
But when our youngest is out of the House and in college, I am looking to get my wife to say, ‘Hey, that is the year that we should live abroad for three to six months. We should rent a nice place in some area that we would always wanted to live like, I do not know, maybe the South, maybe New York, maybe the northwest. Find the nicest time of year to live in those places and just go try a bunch of things on for size and see what feels good and then spend maybe three to six months here in our home community but in a rental that is right sized because I would like to ultimately be able to persuade her to sell this house and get a much smaller house or even just rent and be nomadic for a while. Like her point is, well, the kids will want to come home. My point is, like if we say, ‘Hey, kids. We are flying out to Portugal for a break.’ Like they will be more than happy with that. They do not need to come home and see their friends. They will come to Portugal.
Mindy: Yes, I would do that. Remind me again what your wife does. I know she is a doctor. Is she an emergency med doctor and then you said she has a second job.
Carlos: She is. She basically started a consulting business where she was an associate residency director at her program. She has got this beautiful educational pedigree that like makes most immigrant parent’s mouth salivate because they are like that is what I want for my kid and she also really likes mentoring young people who are rising up, who want to go into medicine or go into sort of higher levels of medicine. When you were within faculty position, that is kind of the least well compensated most workload of all the faculty members. She really wanted to keep that element of mentorship. She started this business Helping People.
Editing their personal statements, editing their CVs, editing their applications and tightening them up. Going through mock interviews to help them get into med school and residency. It has taken off. It has been a decade plus but it is taken off nicely and now that business that she built exceeds her clinical income from medicine.
Mindy: Oh, wow.
Carlos: Yes, it is a big deal. That plays in, Scott, to your question, I do not have a rental property that is going to be paying me and cash flowing but I anticipate that that business is not going to go away for the next probably 15 to 20 years. If we can use that business to pay our day to day expenses, then I think we can just leave our nest egg to grow unperturbed and that is going to set us up for financial independence and probably backfire.
Scott: I think it is fantastic. Your peers that are also working with at the hospital, maybe I have the same sort of tenure, are any of them starting to find that the job is really grinding on them or it is getting frustrating and they just do not have the same options as you because of their failure maybe to produce similar outcome?
Carlos: Yes. I think part of it is, or financial advisor to his credit, when we told him, ‘Hey, we found a house and we are going to make a bid.’ He looked at me and I told him like, ‘Look, I want to be retired by age 45 or at least I want to have the option.’ He looked at me and he said, ‘Look, I am not going to laugh because if any of my clients could do this, like you would be the guy but where you are moving to, like that is not the norm and your budget will increase with that move. It is funny because of course those have been prophetic words where my wife and I will look at each other and we will say, he said it was going to be like this when there is a big plumbing problem, when we are hosting thanksgiving and their sewage spilling onto the side of the road because one of our pipes burst with the connection to the main pipe drainage.
Their lifestyle has probably inflated to what many doctors feel like is the obligation, right? You work all these years and probably most of your readers are the vast majority have read the millionaire next door. Doctors are under accumulators of wealth because we feel the need to have these visible showy ways of spending our money. Like I find a little misfits that worked for me. Like there is a guy who was probably one of my closest friends in the group or one of my closer friends in the group. I went to a thrift store and I found like a $200 marnet jacket that was in a size that was too big for me but would fit him. I bought it for him and I gave it to him. This is the same guy who grew up like basically collecting seashells on the shore in Hawaii and he loved this. He was like, ‘This is great. I used your jacket on my camping trip. Like that is the greatest thing ever.’ I had no shame at all telling him it was 10 bucks man, it was 10 bucks. I am this kind of frugal weirdo. Like they have already sort of pegged me as like that is the guy who really wants to be hands on with his kids.
I think they kind of write me off and in part like it gives them permission to be like, ‘Well, he is just weird. Like no one has really like him, right?’ But when there are young people that joined the group, people my age, I cannot really reach and unless they reach out to me it is not going to happen because they have got feeds of them like this is when we took the Disney Cruise and like Disney Cruise is the great I am sure. Not my cup of tea but like if they are happy, I am not going to criticize. It is personal, the personal in finance, but it is just not my path. When I hear them, some of them have different situations. Their debt, I have one doc in my group who recently we were at party and he and his wife who are both physicians. We are like, boy, we are so happy. We just made this milestone.
We collectively now only have a half million dollars that we owe in debt. That is crazy but that is the reality of young doctors today. You get a two doctor couple, like that is horrible and that is the norm for a lot of people. I would not say that like I am in a position to judge them or say in somehow they do not have those options because there are situations were very different than mine, right? I got a debt free education, I am in a very different boat. I got a huge gift but, yes, do a lot of them grow into their income before they grow out of their debt? Yes. Do a lot of them spend lavishly?
Absolutely. It is a lot of societal cues. When there is a new doc that joins my group, I usually say, ‘Hey, look. If you want to talk about what to do with your first paycheck, you know my email. I am happy to pay for a coffee and we can talk about what to do.’ I leave that door open to a lot of people. Two have taken me up on it. One of them is like texting me every two to three days being like I just read this book, oh my God, this is amazing. Like I can see it working in his mind and I feel like I have converted another one to my Hare Krishna fire religion.
He is going to be great, right? There is another one who is young, single woman who like we sat down and we went through her debt and we talked about what it would take, what her payments would look like, how much she should say to kill it and how soon. She was like so appreciative and so grateful, but I am batting probably a hundred at best on my best days. A lot of people do not want to hear it. Timing is wrong, they are just not open to it and I would not have been either, right? That is the stuff where I looked at my wife, she looked at me, and were like we are so glad we do not have to deal with this. The truth is it is not that hard. Just do not make the moron mistakes that you learn after you have already made them, unfortunately in medicine, in your investments. Like doctors collectively, you will appreciate this guy, we are like the group of people who continue to buy the Chinese fruit juice company well after everyone has found out what it means.
It is just because we just do not course correct, we do not think about that. We have this huge bull’s eye and it is for good reason. We do stupid stuff with our money, we have been doing it for years and so yes, a lot of my colleagues would probably fall into that. I do not think I blame them for it but I let them know that the lifelines open, if they are interested to talk about it.
Mindy: I am going to take exception with everything you just said. You made it sound like only doctors do this. I got news for you, Carlos, it is every single person on the planet. Anybody who has a dime, they spend it. That is like you are a frugal weirdo. I am a frugal Weirdo. Scott, are you that frugal, Scott? You are a weirdo for sure.
Scott: I am pretty frugal. I still live in my house hack.
Carlos: Scott, if my sisters were younger, man, I would have some dates set up with you, okay? I hear it. I do not feel that much older than you, but I look at you and I am like, ah, such a shame upon him. Like that is a kid who has got his head on, right? Like that is someone that I would love to introduce, right?
Mindy: Yes. Scott has a very lovely girlfriend, but…
Carlos: Then I will backup you if that is okay.
Mindy: Right. Yes, this is not just for doctors. I think doctors and lawyers and insert high paid profession here, will do this. It is just easier to spend a lot more money when you have a lot more money coming in. Doctors do not live in, dumpy little houses. They live in nice houses because that is what you do when you have a lot of money. The fact that you are leaving the store open and introducing yourselves to all the new, I do not know the name, residents, interns, fellows, attendings, obviously I am not a doctor.
Carlos: That is okay.
Mindy: But introducing yourselves and hey, if you ever want to talk about finances, I would love to talk to you. That is a really nice thing. It took me a long time to realize that you cannot just beat people over the head. Yes, we are right. We are right about everything when it comes to money, I am only kind of joking, but you cannot tell somebody who does not want to hear anything about this. Just leaving the door open is really one of the best ways to do it. I love that, I love that idea. I am going to throw out a challenge to everybody here. If you are in a position of not authority necessarily but if you are in a position to talk to people about this, just put it out there. A little bit, ‘Hey, if you ever want to talk finances, I would love to talk about it with you.’ Although, yes, earlier in my life I would not have been receptive wither. Okay, this was fantastic. Thank you so much, Carlos. Do you have any last words of wisdom for our listeners about taking the leap or starting their financial journey before we transition to our Famous Four?
Carlos: No, I think a lot of it is timing. Again, like when I met my wife, I was just ready. I was ready and she was the right person and I am so lucky, you know? I think a lot of it like that with your financial education. Like you have to make a certain number of mistakes before you are kind of prime and ready for the message and then it has to be put out in front of you and it might be serendipity or it might be a good friend who notices, hey, you are looking like you are a little short tempered at work today. Do you want to talk about that? Or you want to grab a coffee?
I think we feel a lot more powerless than we are in medicine. Especially like there is this whole ‘we have always done it this way’ and when I started to say, ‘Hey, look, I am feeling a little burnt. Like I think I need to cut back.’ Like there were some people who said I think what you need to do is get out of medicine because you cannot do it the way we have always done it which is medicine has to have suffering in it. Otherwise, it is not the job that we took on. That was not my experience. Actually, when I suffer less, I give much better patient care.
I am much more fun to be around. Frankly, I am able to think more clearly and be a much stronger advocate for my patients. No, life does not have to be about suffering and there does not have to be martyrdom inherent in it. I think that was a huge revelation for me. I think getting a grip on your personal finances, pursuing financial independence, like that is the key. That is this tool that you get where suddenly you have all this power. You have the power to walk away from stuff that is toxic or unpleasant, you have the power to make your life into the idealized version of it that you always thought was going to be elusive and escape. That was a big turning point for me and I would love it if the people who are listening sort of take that to heart.
Mindy: I love it. I have one more thing before we get to the Famous Four. I will say that medicine sometimes does change. You used to use cocaine as what? A pain reliever or doctors prescribed smoking cigarettes to lose weight and did not you do something with leeches? Like that is pretty gross and you guys do not do that anymore. Medicine can change too.
Carlos: Medicine can definitely change too. I will definitely grant you that.
Mindy: Okay. It is now time for our Famous Four. These are the same five questions that we ask every one of our guests, four questions and a command. The first question is what is your favorite finance book?
Carlos: I am going to say it is a tie between three of them. There are three books that I think, at least for docs or other sort of comparable earning professionals, like this is what I call the holy trinity of personal finance for doctors. The first one is going to be a William Bernstein, a book called The Four Pillars of Investing. He talks about how basically you need to know investment theory, the history of investing, the psychology of investing and the business of investing and if you can master those things, you are going to do great. It has the added bonus of actually being written by a guy who is a neurologist and a chemistry PhD and then got interested in finance, did a deep dive on it.
Basically now he runs a boutique advisory firm where you need to have 25 million or more to invest with them. But he is brilliant. These books are like the way to offer the same advice to the unwashed masses like you and me. It is so nice of him to offer that and he is just really into it and he has got this kind of rye area dye humor. The second would be The Bogleheads Guide To Investing which I think is just a fantastic introduction and makes it not scary and not painful. Then the third would be The White Coat Investor by Jim Dahle who is all fellow emergency physician and just a brilliant guy. A doctor who basically felt ripped off and the way that he turned his life around financially and sort of made that information available to everyone. He is just an inspiration to every physician finance blogger out there.
Scott: Love it. I have actually never read any of those three books so I got to go check them out.
Carlos: There you go, absolutely.
Scott: What is your biggest money mistake? I think you touched on this briefly but…
Carlos: We bought more house than we needed. When we were buying a house, there is people who buy a house for 90% of their life and then there is people who buy the house to be ready for that 10%. Again, I said during that first year of my daughter’s life, one out of every six days was spent with a visiting family member from out of town. We thought that was going to be normal and we extrapolated that and so we bought a house that could accommodate out of town visitors and we probably have a third more house than we need. When I think of what that money could have been doing for us over these last, what, nine or ten years, it hurts a little bit. Now, I am happy where we live.
We bought a turnkey place at a great time where it was just dumb luck. The House has become more to our tastes because there was a flood so that was an excuse with the insurance settlement to remodel a little bit. Now the house really reflects what our tastes are. It is hard to kind of say, well, let us sell this and get a fixer up or we do not have the fortitude that Mindy and Carl do to flip, live in, and move on. My fantasy is maybe when the kids are older we can sell this right size or even rent and let that money work for us. But, having said that, it is a beautiful place in Pacific Coastal California. Like we get a lot of pleasure if you assume that your house is a consumption item, I think we get a lot of pleasure for what we consume. Just when I think of the ways that money could be working for us, that is my one regret.
Mindy: Well, I have a comment about that because when you did buy it at such a great price, what year did you buy your house, 2007 or 2008?
Mindy: I am assuming you got it at a significant discount. What could you sell it for now versus what can you buy? Like how much would you pay to get a right sized house? You are going to pay more for the right sized house than you did for this current house.
Carlos: That is the problem. I think we could probably get, I would say, easily a third or more above what we paid for the house if we were to put it on the market today. It has been upgraded so the bathrooms and the kitchens and everything are kind of nice and contemporary but we could not buy a house that was as nice if we then took some, not all of that money, and look to find a right size house because the right size houses have all gone up too. It is not a fair comparison, it is a little bit of a straw man comparison. I think we are here for the foreseeable future and once the kids are out, I am going to start working my little magic on my wife and saying, ‘Hey, imagine if we could be living in a really nice rental condo. Walkable to everything we need. You would not even need a car.’ How great would that be? We will see, hitting the figure.
Mindy: I am hitting the same problem in that I bought my house and it is so low priced and now it is appreciated so much that the next house I get is going to be a dump that I am going to buy for a lot more and I am not excited about it. Okay, what is your best piece of advice for people who are just starting out?
Carlos: Probably, when it comes to finance, do not underestimate your abilities. That sort of a double edge sword. Part of it is like if your someone who has gotten through this show and probably read some blogs, like you can absolutely navigate a three fund lacy portfolio with minimum expense. You can run your own financial house. You can do it cheaper, you can do a better than the other people out there. It is really scary to folks and physicians in particular. I know I want my guy or I want my woman to be taken care of that for me because like I that is pretty scary stuff and I do not want to be at fault if I screw this up. That is one thing.
I think the flip side of that is once you get start to go down that rabbit hole is, do not get overly enamored of the first good looking robo advisor that comes around. Again, I feel like once you get this interested, it is just a matter of time before you become a do it yourself investor. I hopped into bed with betterment when they were the young, sexy thing on the scene. I was so tempted, oh my God, they are going to tax lost harvest for me. Talk dirty to me, right? It was so beautiful. That did flame out, okay? There came a point where suddenly I realized, you know what, It is just in the end of the day like I could do this better than they could. Do not happen to bed with every attractive investor option that you see because you can handle this. Just give it enough time to build up the confidence to do that. That is what I would say.
Scott: I love that almost as much as Mindy, I think.
Mindy: But it is the best line I have heard on any episode of this podcast ever.
Carlos: I am so glad. If I made you smile, Mindy, I feel good.
Mindy: Oh my goodness.
Scott: On the same token here, what is your favorite joke to tell at parties?
Carlos: I knew this was coming and I knew it was coming from someone who appreciates dad jokes. A little qualification. My son is eight years old and last year for the variety show at school, we call it variety cause it is not a talent show, I will tell you that. We were talking about like what do you want to do and he is like, I do not know. I said, why do not you do comedy? Like you seem to have a reasonable timing. Of course, my parents who are like just discount shoppers like I am, the type of gifts that they give. They give in like 1958’s Greatest Book of Jokes to my son who just ate it up and loved it. Like let us go check out the joke book. I am going to steal this one from his repertoire.
A lady is walking a hippo down the sidewalk on a leash. This beat cops, Cesar in his turf, and he walks over. He says, ‘Lady, you cannot have that hippo here. You have got to take that hippo to the zoo.’ She says, ‘No problem, officer. I will do that.’ Next day comes around the beat cops walking his beat and he sees the same lady with the same hippo on the same leash walking down his sidewalk. He says, ‘Lady, I thought I told you to take this hippo to the zoo?’ She looks at him and says, ‘I did officer. Today, we are going to the movies.’
Scott: Nice, I love it. I need to read this book.
Carlos: You may be the only other person who was interested in reading this book. My son will be thrilled to have you over for a play date for what it is worth.
Scott: I got a short story about a hippo. It is not really a joke but I have a little fear of hippos because it was probably when I was about two years old. My mom took me to the zoo and went to the hippo and the hippo turns around, that is away from everyone, lifts its tail and everyone runs for cover including my mom. I get a full frontal hippo, number three…
Scott: Whatever that is. I do not have any memory of this but I still, to this day, I have a little aversion to hippos.
Carlos: That sounds awful. It sounds so bad. My mom loves to tell that story. She has a better job.
Mindy: That is, well, poor little Scottie. We had friends over this weekend and Brie, who is 10 I think, and Brie gave me this joke. How you get an elephant to sit in a tree?
Carlos: I do not know, please.
Mindy: Plant a seed underneath him and wait a hundred years. I told Brie that I would tell her joke on my podcast. I will let her know to listen. Hi, Brie. Well, would you like to make a joke about trunks and elephants and trees? You go right ahead, Scott.
Scott: I am not that fast, I cannot come up with it right now.
Mindy: Okay. We have asked our four questions, now here is our command. Tell us where people can find out more about you.
Carlos: Thank you for the invitation. I am at CrispyDoc.com, as in burnt out doctor, CrispyDoc, all one word, .com. I tweet at @crispydocblog because apparently there was another burned out doctor who just took @crispydoc before I could so @crispydocblog. Then on Facebook, as you have been alluding to, since I am anonymous, my Facebook name is Carlos Fuego. Sort of a nod to my Latin heritage and my love of fire. I am an administrator on the Physicians On Fire Facebook group and you can find me there.
Mindy: Awesome. Carlos, thank you so much for your time today. This was really, really, really interesting and I really appreciate you joining us.
Carlos: This was a blast. Thank you both very much for having me. I am really grateful.
Mindy: Okay. Have a good day.
Scott: Thank you.
Scott: Alright, that was Carlos from CrispyDoc.com. Mindy, what do you think?
Mindy: Scott, I really loved his comment, talk dirty to me about money. That made me laugh harder than I have left in a very long time. I really like Carlos’ story. I love that he did not get trapped by all the high dollars that were coming his way and could see that, hey, there has got to be something more. He is just a really good example of making small tweaks, makes a big difference in your life.
Scott: Yes, I agree. I think he is a good example also of someone who is extraordinarily intelligent and hardworking. Once he kind of discovered the concept of phi, his ability to go after that and practically applied learnings that he got from all these different sources and really recreate his life in a positive way has been pretty astounding. At the speed at which he has been able to do that. I think that that is also another kind of lesson, I think, to take away is like, hey, you listen to this. You are very capable as well. Apply these things and figure out how to go back into what you want and go after it aggressively. You can make kind of radical changes very quickly even if you think you are stuck in your current situation.
Mindy: Yes. Maybe you are not able to save $100,000 a year, that does not mean you cannot save anything. Can you save $10 a day? Can you save $100 a week? Can you say $5 a week? The money that you can save will compound and grow exponentially but you have to do something with it.
Scott: Yes. In order to move toward financial freedom, you got to use leverage in one of four areas. You have got to earn a lot, you got to spend very little, you have got to invest aggressively, or you have got to create assets, right? If you are not, you have to be able to do one of those. If you have no time and no money coming in, no income and no time, something needs to change, right? You have got to find a way to leverage things, right? He created more time because he was earning a high income, right, and a saving. How do you create more income if you have more time?
Mindy: Yes. In the beginning of this episode, you referenced Episode 46 with the Financial Samurai. I think he is the one who says, ‘If the amount of money that you are saving every month is not hurting, you are not saving enoug.’ What is the amount of money that you would have to save for it to hurt? Think about that and maybe back off a little bit, maybe step up into it, but write down your goals. That is one thing that Carlos said too, write down your goals and my goals are not aligning with what I am doing right now. My goals are I want to spend more time with my family but my job comes first. Let me figure out a way that my job does not come first.
Scott: Yes, love it.
Mindy: Love it. Okay, shall we get out of here, Scott?
Scott: Let us get out of here.
Mindy: From episode 51 of the BiggerPockets Money podcast, this is Mindy Jensen and Scott Trench, and we are out of here stat. That is a doc joke.