This week, I have the pleasure of having the Physician on FIRE here to hang out and tell us his secret to success. This series is focused on highlighting doctors that are free of debt. Leif is here to share his wisdom and to show us how debt free living has made his financial independence possible. So without further adieu…
Welcome Physician on FIRE!
Hello! My name is Leif and I’m a part-time anesthesiologist, at least for now. In August of 2019, I’ll be a no-time anesthesiologist. I might possibly be a retired anesthesiologist, but I don’t want to make that declaration official until I’ve been away from clinical medicine for at least a couple of years.
I reserve the right to go back to work if FIRE, that’s Financial Independence / Retire Early, isn’t all it’s cracked up to be.
I’ll still be doing some work, if you consider thinking, typing, and communicating with people like the Frugal Physician to be work. I have a website called Physician on FIRE that I started in 2016 after realizing that I was probably financially independent — making work optional — at the ripe young age of 39.
I spent eight good years as a Golden Gopher at the University of Minnesota, earning a B.S. and an M.D. degree. After that, there was one year in Badger country for my transitional year internship before becoming a Gator sedater for a few years as a resident at the University of Florida.
I’ve been in private practice for the most part, but I did nothing but locum tenens work for a couple of years, and that included 9 months at the Pittsburgh VAMC, which is part of a large academic center.
I’ve been in my current position for just over five years, and have been working part-time for a little more than a year. I squeeze all of my clinical shifts into a busy seven-day stretch and enjoy long stretches off in between.
My family and I (I’m married with two grade-school-aged boys) use that time to travel. They’re currently enrolled in a public school, but when I have complete freedom and location independence, we plan to “roadschool,” which is homeschooling, but from anywhere in the world.
That’s awesome. I can’t wait to read about your adventures! What are your hobbies or passions outside of medicine?
This section alone could be an entire blog post, which helps to explain why I’m ready to retire from medicine.
I enjoy the usual stuff that most people seem to like, including music, movies, and being outdoors. I like to exercise, or at least I say I like to exercise, but I don’t always find the time. Sometimes I run; sometimes I hide. Sometimes I’m scared of…. wait… that’s just a Britney Spears song… sorry ’bout that!
Some of my less common but very fun hobbies include home-brewing beer and the Olympic sport of curling, but on an amateur level, of course. I once walked a marathon. Well, I jogged a little bit after Mile 24 to finish in under five hours.
We’re big on extended family travel, and I’ve written about our adventures in Mexico, Hawaii, Honduras, and Disney World. I’m writing this on a plane heading home after spending two weeks exploring Arizona.
Have I told you that you are my hero? I mean aside from quoting Britney Spears songs (Oops you did it again). That travel stuff sounds amazing! What an opportunity for your kids to get a worldly education.
PoF's Student Loan Story
Can you tell us a little about your student loan story? Did you and your wife have any?
I graduated from medical school 17 years ago and paid off the last of our student loans about six years ago, so the details are a little fuzzy. When I graduated, the average student loan balance of an indebted medical student was just under $100,000.
I had a full-tuition scholarship and a bunch of other public and private scholarships that helped me get through undergrad with no debt. I stayed at the same land grant University for medical school, paying in-state tuition, and ended up with between $55,000 and $60,000 in debt when all was said and done.
When my grandfather passed away and I was four years old, some money was set aside to help me, my brother, and our cousin with the cost of higher education. It added up to about $40,000 over six years for me, so that also kept me from racking up a six-figure debt.
My wife worked full-time, attended her flagship land-grant university with a Bright Futures scholarship. She was in grad school when we met, and I believe she had about $15,000 in student loans. When we were engaged, I started paying for her tuition and also started her first IRA.
Altogether, we had about $70,000 to $75,000 in student loan debt. I realize that’s tiny compared to the balances some individuals and couples have. I created the Student Loan Resource Page to help others figure out what to do about their heavy burdens.
Debt is debt. How did you pay it off? What debt repayment method did you use (i.e. Debt snowball/debt avalanche)
I had consolidated mine to a very low interest rate on a 25-year graduated repayment plan. I don’t recall the details of my wife’s interest rate, but I do remember being tired of seeing money siphoned out of our checking account each month. I paid off the balance with two big checks and we were done with it.
I don’t know what to call it. A debt guillotine, maybe? A debt nuke?
We made minimum payments for a number of years and then wrote two big checks to pay off what was left on each of our balances.
The beautiful PoF family
Nice! So you didn’t pursue Public Service Loan Forgiveness?
Nope. As a locums doc, it wouldn’t have been a possibility. The option didn’t exist when I finished medical school or residency, anyway.
If you are going that route, keep meticulous records and certify your eligibility often. Also, be sure you’re not giving up a ton of potential income to work for a non-profit as opposed to a private practice. It makes no financial sense to earn $50,000 less per year for ten years to avoid $300,000 in student loan payments.
Yeah, that’s true. For me the psychological burden of the debt hanging around wasn’t worth it (and I didn’t keep up with the paperwork).
PoF on Frugality
Would you call yourself frugal?
My wife and I both grew up in small towns in the upper midwest. We’re relatively frugal by nature.
The times that we’ve flexed our spending up, like springing for dinner at a high-end restaurant or staying at a 4.5 or 5 star hotel, we honestly haven’t felt like we’ve gotten our bang for that extra buck. I’m all about value and generally being happy.
Spending more money on the finer things has not made us any happier, and that’s a good thing. When you understand the inner workings of the hedonic treadmill, you realize that it’s wonderful to be content with what you have and not forever yearning for more.
Amen, Brother. Did you “live like a resident” as a young attending?
For the first two years, my wife and I lived better than residents while spending a whole lot less #locumtenens.
When we did settle down, we built way too much house for the area we were in, and that was a mistake. I feel like we live really well now, raising two kids while traveling extensively both internationally and within this great nation’s borders.
Having no debt whatsoever, including no mortgage, and living in a low-cost-of-living area that we love, we can do this without a six-figure annual spend. When I was tracking our spending for the sake of the blog, our outflow was $62,000 and $61,000 a year.
Add in some additional travel and the cost of health care, we may be closer to a six-figure annual spend in the coming years, but we’ve got a portfolio to support it with a very safe withdrawal rate of under 3.5%.
Did you have any other consumer debt to pay off (excluding your house)?
Nope.
Did you invest while paying off debt?
I’d guesstimate we were putting 30% to 60% of my post-tax income towards investments, depending on the year. I didn’t think of it as investing for retirement, per se, since I thought that would come much later. I was just working on building wealth in pursuit of a misguided $10 Million dream.
Side Hustling
Tell us about your hustle.
In the first half of my career, I was a locums machine. I was a fill-in doc before my first “permanent” job, during that job, in between jobs, and during many weeks off in my next job. My current job disallowed external locums, which is probably a good thing.
With some extra time on my hands and our kids both in school, I decided to start this personal finance blog with a focus on financial independence.
In its first year, between advertising, affiliate marketing, and some freelance writing (mainly republishing my articles elsewhere), I earned between $15,000 and $20,000 from my online activities. I’ve seen roughly 300% growth year-over-year in the two years since.
Now that I’m only working part-time for 2/3 of the year in 2019, I expect my online income to exceed my clinical income. I donate half of my website profits and I have a couple of shareholders.
By the time I’ve done my profit sharing, donating, and have paid taxes, I figure I’ll pocket 25 to 30 cents for every dollar the site generates. It all feels like gravy since, by the definition of financial independence, it’s all money we don’t need to maintain our lifestyle.
PoF on Investing and Credit Cards
Awesome. Sounds like you’re living the dream! How are you investing now?
The vast majority of our money is invested in Vanguard index funds. You can see the details of our low-cost, tax-efficient portfolio here.
I’ve also invested in a couple of small craft breweries and crowdfunded real estate deals.
Very cool! I’ll have to keep a look out for your beer. How are you investing for your kids?
Our children are lucky enough to each have a six-figure 529 Plan. We started them when they were babies and have made building them up a priority.
Beyond that, they each have an account with the Bank of Mom and Dad. That’s what we call the spreadsheet that has their deposits from birthday and holiday money. Their balances are in the three-figure range, but with the 1% interest we grant them per month, they will hit four figures, eventually.
That’s a fun idea!
Where do you stand on credit card use? Do you use them?
Like a boss.
I’ve really gotten into travel rewards in the last few years, and we’ve taken numerous family trips using the points and miles from the welcome bonuses on various cards. I outline our strategies and offer a detailed credit card tracking spreadsheet in my master post on the subject: Credit Cards for People Who Love Free Travel and Money
Paying off the Mortgage
Let’s talk about your home mortgage. Did you finance out your house?
I’ve had my share of mortgages over the years; we once owned five properties at once, and none of them were investment properties.
We’re now down to three properties and expect to be down to one or two within a year or two. We paid for our current home with cash. We bought our cabin at an auction. Our vacant lakefront property was a deal too good to pass up, and we plan to build there to give us a home base in early retirement.
We plan to sell our current home and possibly the second home at some point.
PoF on Charity
I loved your post on Donor Advised Funds. Can you tell us more about your charitable donations?
I can’t say I decided to walk away from this lucrative career without feeling some pangs of guilt. To help alleviate those emotions, I started a donor advised fund and donated to it aggressively over the last few years.
The goal was to build it up to about 10% of our nest egg, and we achieved that balance about a year and a half ago. I believe the amount donated from it is about $50,000, but that total should be about triple after we make some more generous donations this fall.
As long as my site continues to generate income at its current pace, I anticipate making six-figure donations to the donor-advised fund annually.
We support a lot of local charities, but I anticipate looking more globally as I read more about effective altruism.
We’ve also donated our time and my skills on a medical mission in Honduras, and we’re returning for a repeat visit this May. We support an adorable girl we met there last year with monthly donations to NPH Honduras.
That’s so inspiring! So many good feels. I really appreciated your donation to the Ronald McDonald House as well. Thanks for all that you do.
Debt Free Living
It’s amazing what you have accomplished. Part of that was probably becoming debt free at an early age. So can you tell us, what age did you become debt free?
I was debt free by forty when we finally sold our so-called dream home and our final mortgage was gone. I was 39.
It was a weight lifted off my shoulders. Not only were we debt-free, but that sale closed an ugly chapter in our lives that included being sued for millions because I volunteered to serve on a Hospital Board.
I’ll be surprised if I take on any significant debt in the future. There’s just no need at this point, and I am grateful to find myself in this position.
Does it change how I feel about medicine? To be honest, I am still a bit jaded by that lawsuit that finally ended after three-and-a-half years and a bunch of legal fees. I am thankful that I’ve never been party to a malpractice lawsuit [knocks on wood].
Knowing that I am debt free and feeling that we have Enough to be happy for the rest of our lives, I feel more compelled to say goodbye to practicing medicine for good. We live in a litigious society, and not enough has been done to protect physicians from frivolous lawsuits.
It may be greedy, but I’m not fond of the rules and don’t need the stress, so I’m about to take my ball and go home.
I will always have great respect for those who continue to care for our patients and for me, and will mostly look back fondly on the 20-some years of my life I devoted to learning and practicing medicine.
It is unfortunate clinical medicine is losing you, but you continue to give so much through your blog. The benefit of being debt free and financially independent is you get to do what you want to do, when you want to do it! So, congrats Leif!
Any parting words of wisdom for our readers?
Don’t eat the brown acid, the yellow snow, or the bleu cheese. Actually, I like the bleu cheese, especially on a burger nestled up against some bacon. Avoid those others, though.
Also, the ultimate luxury item is not a car, handbag, mansion, or exotic vacation.
Freedom is the ultimate luxury.
I couldn’t have said it better myself. Thanks for being here, Physician on FIRE! I hope you all learned a lot and are as inspired to pay off debt by this interview!
Stay Frugal, ya’ll
Much Love,
Dr. D
Are you a debt free doc? Would you like to share your story? Email editor@thefrugalphysician.com.
Standard Disclaimer: Not meant as individualized financial advice. Some photos from unsplash.com
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