Month: December 2016

Ways to generate ancillary income as a doctor

Expert side hustler

Diversification is a path to reduce risk. This applies not only to our investments, but also our income. As doctors, we are sort of like one-trick ponies. I pretty much only do a handful of procedures and clinic-related activities. Most doctors are paid based on their clinical productivity.

If you are injured and cannot perform your typical duties, you are screwed. Sure, there’s disability insurance, but the cost of coverage does balloon up for most doctors in mid-career. Many of us pay almost a full month’s salary towards disability premiums in order to cover one year! This is not insignificant especially if you are trying to repay loans or build up a nest egg.

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What can doctors do to diversify their income?

Keep your primary profession

Okay, so this isn’t diversification, but it does boost your income stream, allowing you to have more to invest.  The easy option is to do what you are already doing. You can rarely find something outside of your medical profession that can offer you a similarly high hourly rate. And it won’t be anything new that you’d be doing compared to your primary job.  Add some shifts if you are a shiftworker. You can opt for locums opportunities or moonlighting (working a second part-time job) if your primary employer allows for it.

Some radiologists that I know actually do locums opportunities when they’re on vacation! There are many primary radiology jobs that offer significant amounts of time off. Sometimes family schedules prevent you from taking off for vacation (spouse’s job or kids’ school schedule)

One of my friend’s spouse is an ER physician. He lives in the Bay Area, but actually has several part-time options in the midwest, where reimbursements are higher!

 

Do things that are peripherally related to your career

I frequently receive surveys conducted by medical consulting firms with monetary compensation. Sure, the surveys will never replace your day job, but it can bring in another $50, $100, or even more depending on how involved the questionnaires are, and how well research in your profession is funded. I have noticed that professions that utilize medications more frequently will have more options for medical research related survey work.

Speaker fees: Let’s say that you are an expert in G6PD deficiency. There is a new medication on the market to treat it, and the company needs experts to vouch for their product. Yes, you will become a shill for a faceless corporation, but you can get paid for giving a talk. You won’t get rich off of these events, but it does add ancillary income.

Consulting: Likewise, you can either be an expert in the science or an expert in the process of certain treatments or specialties. You can start your own company and offer your technical knowledge of a particular subject. I have seen full-time clinicians start side consulting businesses, only to transition to them full-time when they become busier!

Find occupations outside of your primary career

I once met a doctor who ‘retired’ from clinical care at age 42 to start his financial corporation. I’m not sure what he actually does, but perhaps he sells insurance vehicles or offers wealth management services.  That’s a significant 180 degree change, but I guess he likes what he is doing and is probably good at it.

From seeing what other money bloggers out there are doing for ‘side hustles’ or ancillary income, there is a wide range:

Food delivery / messenger: Delivery services like Postmates, UberEats, and other startups need drivers and messengers for the lazy! I’m not sure what the going rates are for messengers, but based on the pricing for customers, I’m assuming that one could command anywhere from $10-$15/hr depending on your region. @financialpanthe has reported doing this on his free time, and also the consequences of looking like a lawyer in the process! Kudos to him. I would assume not to risk running into my patients while I was making a delivery.

Uber/Lyft driver: This is the foundation of food delivery. I suppose that this is a fun way to meet interesting people while making some money. Sam @FinancialSamurai appears to have an interesting arrangement to activate his Uber activity whenever he wishes to drive across town to run an errand anyway. Nice. It is also less stressful since he already has multiple income streams that don’t require a set time commitment. Would I want to pick up an Uber passenger on my way to work? Uh, probably not.

 

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Real Estate: This is a big one. If buying your shares of VNQ (substitute your favorite REIT) isn’t active enough for you, you can invest in the real estate market. Plenty of money bloggers deal with real estate, like @FinancialSamurai @RetireByForty and others. There is definitely more involvement (or headaches) in real estate, but you can leverage your investments and generate significant cash flow while having a physical piece of investment property.  I certainly have not had the energy to dive into the real estate market, although I would be willing to venture into this source of income if the right opportunity comes around.

Online sales: eBay, Amazon, and Etsy will have you covered. If you have a source of items that other people might want (like your handmade Russian-style finger puppets), you can have a wide audience with limited initial investment. There is still a cost of time involved in the sales process that can be time consuming. Remember, as a doctor you are trading your time and skills at a relatively high hourly rate for your services. If you are making online sales, you are doing the same thing at a lower rate. But hey, diversification is diversification.

What other means have you discovered to generate ancillary income?

(Photo courtesy of Flickr)

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Wasteful Wednesdays – High flow water fixtures

It’s that time of the year between Christmas and New Year’s. Interestingly, Hanukkah also falls within this week—I don’t recall it falling so late in December in recent years. Most of us are relaxing with family, taking holiday vacations, and digesting that so unhealthy Turducken that we finally caved into trying out this year.

While taking a shower this morning and wondering what I could cook on my wasteful stovetop, I was reminded of another convenience that is not in keeping with conservative measures or being financially frugal—my shower head.

The rage these days is about low-flow fixtures. You have 1.6 gpf toilets compared to the classic 5-gallon toilets of the 80’s and early 90’s. I remember being able to modify those 5-gallon toilets to flush using 6-7 gallons by changing the angle of the float, just to ensure that all of the waste is flushed away. More efficient toilet design such as glazing of the trap and wider flush valve diameters (remember, I am a self-proclaimed toilet expert) allow less water to do the trick.

 

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Likewise, low-flow faucets and shower heads are becoming the norm, to decrease water consumption. Our local utilities company actually sent us a 1.25gpm low-flow shower head. I’ve used it before, and it does the trick using aeration holes to diffuse the water spread.

However, when we moved into a house with wasteful kitchen appliances, I started using the built-in shower head: a water-wasting Kohler 2.5gpm shower head!

It works great. Water pressure is excellent. It uses twice as much water as the low-flow units:

Boy do I love the extra calcium in the water!

Rough calculations on my water consumption and costs show that I will spend an extra $50 a year for using a high flow shower head. No, I don’t live in a drought-stricken area, but I do sometimes feel guilty of using extra water.

Do you use a low-flow shower head?

Is a degree from a prestigious medical school advantageous for doctors?

Some of us are overachievers. Some of us are overachieving doctors. What if you’re in-between? Let’s say that you’re an overachiever, and you want to become a doctor.

Should you go all the way up top and get that medical degree from a top private institution? Does it even matter? With tuition costs skyrocketing, you can easily spend $60,000 annually on tuition alone for each year in medical school. Add another $10-$15k in room and board, and you will be about a quarter million in the hole by the time you get out. In contrast, medical school tuition in 2016 for UT Houston for in-state resident is only about $20,000 annually. That’s a big difference.

These are considerations that are rarely taught or even discussed. If you are planning to go to medical school, it does pay to consider the consequences thoroughly before you proceed.

Does a prestigious degree help get you a better job?

It depends. It depends on where you plan to work. In clinical medicine, you can either work at an academic institution or in the private sector. Many job situations in the academic world require teaching, research, or involvement in administration. If I were a departmental chair looking to bring on a clinician-researcher, I’d want someone who not only can practice medicine well, but also has strong writing skills, coherent presentation abilities, and innovative characteristics. If two candidates had similar track records with similar recommendations and charisma, I might lean towards going for the gal with the Ivy-league degree, especially if I am running an Ivy-League department.

If I needed a doctor in the private sector, the institution that granted the degree is unlikely going to matter much at all. Yale? Great. Wayne State? That’s okay with me. You just need to be ethical, hard-working, and reasonable to deal with. For all other qualities, the verification process in each state and governing medical board can do the rest.

Do doctors from prestigious institutions make more money?

It depends again. To understand this question, you should understand how doctors make money to see whether an Ivy-League degree will translate to higher dollars. This is also contingent upon how you are using your medical degree, whether you are practicing medicine, performing administrative work, or consulting. Remember, you don’t have to be a doctor to get rich. Or you shouldn’t become a doctor if your main goal is to become rich.

If we are considering doctor worth from revenue alone obtained through clinical practice, insurance companies make no distinction between where you obtained your degree. U.S. grad, international grad, it doesn’t matter. As long as you pass your boards (sometimes you don’t even have to do that!), you’re golden. From clinical practice alone, you’re not going to make more money having gone to a top college or medical school. Period.

Now having that special degree CAN get you more business, depending on which part of the country you practice medicine. This is particularly true (and sometimes annoyingly so) in the New England area. Patients in New Caanan Connecticut do (in general) care where you obtained your degree. They may or may not even be highly educated, but the high concentration of Ivies in that region predisposes this behavior. Unless you have significant street cred and have been working in the area for a long time, your patient may doctor shop your degree.

 

Okay, I sank $200,000+ into an Ivy-league medical degree, what am I going to get in return?

Many of us, under the guidance of family, friends, or schooling, end up enrolling in well-known [read: expensive] private universities and medical schools.

DESPITE the equivocal conclusion by Smart Money MD.

Don’t fret. You’re not totally screwed. If you have a good inheritance coming your way or an alternative means to fund the process, you’re actually in great shape.

If the above doesn’t apply to you, don’t fret either!

Step 1. Pat yourself on the back.

Congratulations. It is not easy getting in. It is SIGNIFICANTLY more difficult to get in medical school than law school, business school, or college. Kudos to you.

This is a fact. By numbers alone. There are simply fewer number of available positions in medical school. The Class of 2018 Stanford Graduate School of Business has 417 new students. Last I checked, the Stanford medical school had fewer than 90 students per class. I think the acceptance rate in the medical school was about 2-3%, while the business school acceptance rate was 6%. If you compare these numbers to that of an average public medical school and public business school, you’ll see that the class sizes will be larger and the acceptance rate will also be higher.

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Step 2. You’ve got a lifetime of prestige attributed to your name.

Yup, your mother can brag about her daughter at every holiday party. Your distant relatives will direct their children to you for advice. Your alma mater will also hit you up for donations every single year. You can volunteer with your local alumni group and have “exclusive parties”.

You have a lifetime of memories and connections to potentially successful friends and colleagues.

This is not a bad situation to be in.

Step 3. Clear your mind and get to work.

Get yourself back into the real world. Don’t let anything else cloud your judgment. You’re probably not even that smart. Your coworker at the hospital who came from Portugal probably is one the smartest gals in her country. She memorized Harrison’s twice to pass her country’s exams. Oh yea, she also repeated residency in the U.S. and passed all of her U.S. board exams…in English.

That’s right, her native tongue is Portuguese, and she learned Spanish as her secondary language. English was her third language.

Get yourself out of debt if you funded your education through loan sharks. If I dug myself out of debt, so can you. Save up your money. Figure out how much you are worth.

Figure out what makes you happy. Then work to get there. Easy peasy.

Would you spend extra to get a degree from a top medical school?

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(Photo courtesy of Flickr)

How fancy appliances can dent your savings rate

I was recently thinking about all of the financially foolish actions I have committed that violate the rules of good financial sense and realized that I could easily fill a year’s worth of material every Wednesday….

Let’s call it Wasteful Wednesdays

Of course, the only role of noting financially irresponsible actions and purchases on a website that encourages good financial behavior is to provide examples of what not to do, and how easy it is to squander your earnings, no matter what you income levels are. There is no limit to how quickly you can exhaust your paycheck…

Notwithstanding my retirement-preventing expensive house purchase, let’s take a look at my kitchen appliances are probably adding year’s to my working career…

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The Refrigerator

Don’t worry, the paneling itself costs more than the average fridge

This Subzero fridge costs about $12,000 retail. It is built-in the wall so that it’s nearly impossible to change the water filter.  Since the fit is so snug next to your cabinets, you have to pay extra to make sure that your cabinet doors won’t block the refrigerator door from opening. Some people like to have the door blend into the cabinets to look cool. The fridge includes a built-in alarm to notify you that 5 seconds is too long to keep the fridge door open too (hey, we’ve got to be energy star compliant somehow!) And it depreciates in value faster than my car too. By the way, the freezer compartment is intentionally small to prevent me from storing unhealthy frozen foods (literally written in the owner’s manual). It is also the reason I own another freezer in the garage that I pay extra electricity to run so that I can store my ice cream from Costco.

Oven / Range

You pay extra for the red knobs

If you have to ask what brand this stove/oven is, you don’t deserve to know. I believe that this is another $10,000 drop in the bucket. That’s why there is a stone mode for you to make your own pizza at home. Does it make pizza taste better? You bet it does, only if you buy optional the $100 pizza stone kit. Hey, it’s saving you money every time you bake your own pizza instead of getting take-out. Ten dollars is worth saving, right? In case you’re worried, I actually saved money by owning a stove/oven single unit instead of two separate appliances.

 

The dishwasher

This dishwasher is made by the other Swedish company at non-Ikea like prices

This high-end Swedish Asko dishwasher supposedly will save you water and electricity every time you use it. Don’t be bothered that each cycle takes about 2 hours! Worried that a stainless steel or brushed nickel finish to your dishwasher won’t match your fridge? No problem, you can pay extra on top of the $1000 dishwasher to have a skin custom-made.

 

There you have it. Three kitchen appliances that could have easily covered the annual cost of living in the MMM household. And these aren’t even the top of the line models that you can buy! You can be sure that if any of these appliances break down, I will be the first to sell them for scrap parts and find replacements a tenth of the cost of these. Lesson learned: you can sink a lot of money in your kitchen.

 

What splurge appliances do you own?

Earn some airline miles while investing in low-cost funds

I like airline miles and fancy hotels just like everyone who has gotten themselves in this predicament. There are practical ways to redeem these perks (converting to cold hard cash), and highly luxurious ways of capitalizing on them (like flying in first class with your personal butler) that don’t actually save you money but simply allow you to travel and vacation in style.

In any case, those of us who are looking for low-fee ways to invest can choose low-fee funds from Fidelity while earning airline miles. If you are able to put $100,000 in a taxable investing account in Fidelity for at least 9 months, they will award you with 50,000 airline miles! They have offers for American, Delta, and United miles.

This can translate into at least one free domestic airline ticket (maybe $400) or something fancier if you are into that game (this may be a topic for future posts).

Fidelity lowered its index fund fees earlier this year to compete with Vanguard’s fees. The differences in savings are negligible over the long term, but worth noting:

Chart courtesy of Fidelity Investments

For instance, Fidelity’s S&P 500 index fund has an expense ratio of 0.045%, compared to Vanguard’s at 0.05%.

You can still receive a certain number of miles if you put in a smaller amount. I typically keep my taxable investments inside a Vanguard account, but given the recent change of lower fees with similar funds and airline mile perks, I plan to roll in some uninvested funds over the next year into my Fidelity account.

 

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Note: I do not have any financial interest in Fidelity or any of the airline affiliates. All of the links in this post are public links.

On being ill as a doctor

While full of medical knowledge, doctors are still human. We get illnesses, aches, and pains, just like everyone else. One of the worse feelings about getting ill, is that we are still subject to the same rules, medications, and limitations that medicine has—there is no magic pill that I hide in my back pocket for a rainy day.

Case in point: I am currently fighting through a severe bout of “pinkeye”, or viral conjunctivitis. This is the same highly contagious red eye disease that your five-year old gets.  I picked it up likely over the holidays or from a patient or coworker.

In the most severe form.

imagine that these are your eyes except that they are also swollen shut

In ophthalmic terms, this means pre auricular nodes, chemosis, bilaterally, eyelid edema, 4+ injection…the works. My right eye has been swollen shut, and I’m currently in day 8 of this debilitating condition with no end in sight. I’ve been forced to take off the past five days from work, and nearly reaching short-term disability status (how embarrassing!). These conditions can last a whole month.

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Boy has it been miserable. I’ve been in pain and blurry most of the week, and taking the usual concoction of medications that are given—all of these are simply treatments to help reduce severity of the disease, but does not shorten the clinical course.  Add to the ocular symptoms the usual set of symptoms we experience from a head cold: headache, nasal congestion, fatigue—you’ve got one miserable camper. What this means is that I will have to let this evil virus run its course.

Talk about disrupting productivity.

Then your mind plays tricks on you. Certain uncommon, but possible sequela of getting pinkeye can permanently disrupt one’s vision. How will I end up? Will I have to invoke the disability insurance that I hoped I’d never have to use? Will I have to downgrade my lifestyle (fortunately for being on a mission to reach FIRE, I have been tweaking my financial self).

But hey, on the bright side, I get to stay at home, with a hot coffee in my hands, a box of tissues on one side, and a furry feline friend on the other: 

Mandated time off isn’t bad at all!

 

(Stock photo above courtesy of Flickr)

You don’t have to become a doctor to get rich

No, this isn't a cave. It's the inside of a septic tank!
No, this isn’t a cave. Hint: it does hold everything that leaves your home’s plumbing!

This post isn’t intended to deter future physicians of the world—the world already has a shortage of healthcare professionals and will continue to see a greater demand for all healthcare workers in the next decade.

This post also isn’t to condemn all of us doctors who entered this career path to make the world a better place. In fact, we can all live a happy and wealthy life as doctors. WCI and PoF are two great guys in the medical field who have publicly documented their trajectory in building a comfortable financial safety net relatively early into their careers. I’m sure that there are thousands of other like-minded doctors out there who are doing the same thing but aren’t as easily found since they don’t have a web footprint.

Those of you who are still building into your careers—medical students, residents, fellows, law students—can start getting prepared to become a rich doctor by riding the wave and getting psyched mentally.

 

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The background: there are a lot of rich people out there. 

According to a report by Credit Suisse in 2015, there are 15.7 million millionaires in the United States alone. Last I checked, there were only roughly one million doctors (MD’s and DO’s) in the United States. What this means is that among the ranks of millionaires are plenty of other professions: lawyers, businessmen, CEOs, computer programmers, writers, politicians, and both professionals of the like.

Some of the wealthiest people whom I’ve met are everyday guys you would see on the street (On the flip side, I don’t take care of any celebrities or high profile people, so the likelihood that I would run into anyone else is slim!) These multi-millionaires include the general contractor who owns his mega-home inspection business, the professional blinds installer, the septic-tank installer, the concrete manager, the car dealer, and the loan dispersement agent for home mortgages.

Sam from Financial Samurai recently featured a janitor in San Francisco who was able to earn more than $271,000 a year! That’s more than what a starting Hospitalist can earn!

What does all of this have to do with me if I am already a doctor?

We can all learn from others who have succeed before us. My view is that we all inherently have traits that can help us get what we want. What traits do you need in order to be rich? Why, the same ones that got you where you are now!

Motivation. You have to want something badly enough. Most doctors worked relatively hard and long hours to get to where we are right now. That requires motivation, whether internal or external. If you want to be rich badly enough, you should be motivated enough to get there.

Resilience. You will fail. But we can learn from our failures. Figure out what set you back, and what you can do to avoid failing next time. In medicine, setbacks come in the form of patient adverse events, administrative snafus, illness amongst family and ourselves. But we have ways to learn what to do next time and bounce back stronger.  In finance, you will take risks and you will lose money. But we still use these experiences to help make us stronger.

Flexibility. We have to adapt to situations, learn from our mistakes, and keep forging ahead. We cannot be too proud of ourselves, and understand that we are not correct all of the time. You have to ‘own up’ to your mistakes. That is how we learn and improve.

Acknowledgement of your limitations. Just because you are a doctor doesn’t mean that you are the smartest person in the room! It almost has no bearing to you getting rich either, if that is your goal! You do, however, possess unique skills that you can leverage to reach your goals.

What have you done recently with your skills to improve your financial situation?

 

(Photo courtesy of Flickr)