Author: SmartMoneyMD

How to waste money by trying to save money

Posted on by SmartMoneyMD

All of us who are cost conscious have been there.  You believe that you can save a few bucks by cutting corners only to realize that your frugal tendencies didn’t save you anything.  Perhaps it even cost you more money. Don’t do it.

I’m a sucker for discounted bakery items at the grocery store.  Day-old donuts at a deep discount.  I’m in.  I buy six nearly stale donuts for $1.99.  Fresh ones are 69 cents each.  This means that I need to eat three of the six discounted donuts to justify the cost of fresh ones.  Stupid.  If I eat all six of the donuts, I come out ahead financially.  My arteries? Not so much.  Most recently I fell for the discount donut trap and only ate about 3 donuts before tossing the box.  I don’t even think that I was happy afterward.  These grocery store donuts are mediocre at best even when fresh.  And each one of these packs in a jaw-dropping 14 grams of fat apiece!

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Lesson learned: If you want a good donut, just go to Krispy Kreme, spend $1.10 for an awesome donut and go on with you day. You’re going to consume 14 grams of fat either way.

Big ticket items can really become money pits.

We all know that “luxury” items like swimming pools, boats, and time-shares are money pits.  Moe, the doctor who spends a $1 million salary, once told me his monthly pool maintenance costs (water, heat, pool guy) costs several hundred dollars a month!  What about items that you purchase to actually save money?

I’m becoming more and more skeptical about expensive maintenance equipment like riding lawnmowers, weed eaters, drills, and chainsaws.  I don’t expect that most of my readers will ever deal with serious manual labor, but this is a clear example of how trying to save money can actually cost you more. Let’s say that you decided to hang up a flood lamp in the front of your garage.  You have no tools, but there is a sale at Costco for a flood lamp so you buy it. You know that power tools can be expensive, so you go to Harbor Freight Tools to buy a drill.  The drill costs $50.  You buy discounted drill bits for $6.  For $56 and 30 minutes of your time, you can have a great working flood lamp. Wrong.  Since you’re an amateur handyman, you don’t realize that your house is made out of stucco, and your cheap drill bits are useless.  You go back to Harbor Freight and buy masonry bits for $19.99.  You spend another hour trying to drill and mount your flood lamp.

Total cost: <$75.

Total time spent installing light: 4 hours including agony and driving to and from the hardware store. You might not ever use the drill any more after this ordeal. Moreover, you probably didn’t even do a great job installing that light.

Solution: If you aren’t much of a handyman, just find a handyman, pay him his rate to install the light for you.

This little guy paired with an inexperienced operator has ruined many a hedge…

Do it yourself is overrated if you know nothing about what you’re trying to accomplish.

Do you want a family practitioner biopsy something that looks like a melanoma? That’s right. You probably don’t want your Dermatologist installing your hot water heater either. You have to realize that not everyone has the time or interest in dealing with unthinkable chores.  And that is okay.  We all specialize in a profession so that we can offer our services for a fee commensurate with our training.  If you don’t want to mow your lawn in a crappy manner to save a few hundred bucks, either hire someone to do it or get rid of your lawn.

Every person has different interests and strengths.  As doctors, we all have different strengths outside of medicine as well.  The plastic surgeon who is an expert woodworker is going to fare better customizing a desk for his daughter in college than the Radiologist  who is an expert painter. What should the Radiologist do? Send his daughter off to college with an Ikea desk and a custom painting if he wants to contribute something unique.

How much DIY do you accomplish?

Note: I haven’t purchased a box of discounted half-stale donuts in 4 weeks! Hopefully I can keep that streak alive!

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Do doctors even need to have ancillary income?

Posted on by SmartMoneyMD

We focus a lot on finances and keeping realistic lifestyle standards on this website.  As doctors, we are privileged to have a relatively high standard of living compared to the rest of the population.  Of course, this does come at a price of a long incubating period before doctors “become” useful and a relatively high level of stress in our work.  What is important to realize is that despite a nice paycheck, doctors are far from immune to financial ruin and bad decisions.  Much of these bad choices come from generalized overspending and bad investment decisions.  I remember seeing an oncologist in my hometown open a Baskin Robbins and Popeye’s fast food establishments only to have them close down after a few years.  Just because you can cure cancer doesn’t mean that you can run a fast food business.  But hindsight is 20/20, as they say.  If you are going to hit it big, you’ve got balance risk and reward while adding in a touch of luck.  If I truly had that formula, I’d be selling it through my informercials.

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Diversification protects us from obsolescence.

I’ve long believed in branching out our revenue stream. It doesn’t ever seem wise to be a one-trick pony in income generation.  What if a younger, better version of yourself comes along to take your job? In middle school, I remember seeing kids trade baseball cards.  Sometimes the trades involved cash, but only in small amounts.  After all, 5th graders were limited to allowance money.

Later, Magic: The Gathering cards came about and kids started trading and selling those.  It was a mini-economy.  I remember that there was one kid who seemed to have the most valuable cards that everyone else wanted.  The kingpin.  I always considered that kid to be a successful entrepreneur until the game fell out of fashion, and no one wanted to buy any of his cards anymore.  Amateur.  He should have diversified.

If you didn’t protect your trading cards from Kool-aid spills, your investment could be worthless!

You might also like: Why every doctor needs a side hustle. 

Unfortunately, most people never diversify either.  Most doctors I know certainly put all of their eggs in one basket.  Myself included.  Most of the time we just don’t have the time, energy, or interest in diversifying income.  The people I know who actually do really love money.  Sometimes more than their families. The rest of us just buy disability and life insurance and move on.

But having ancillary income isn’t necessarily a bad thing.

What is even better than income diversification is passive income diversification.  Who doesn’t love passive income? (That’s you @PassiveIncomeMD!)  Many doctors I know buy real estate, flip homes, write books, and even host wine tastings as means of additional income.  Some of it is passive. Others seem far from passive.  Many of these options do bring income outside of their primary occupations.  Who knows, at some point your hard work will actually pay off.  The book you wrote that you spent months away from your family can actually produce a lasting income stream for years. Think of it like paying it forward with delayed gratification.

Bullshit! I trained 12 years to become a thoracic surgeon, and you want me to flip used furniture on Craigslist on my hours off?

Point well taken.  You have to look at the situation in two aspects:

1) How much time do you have to spare? What are your family obligations? If you spend that extra 5 hours per week writing an ebook after being at work for 85 hours that week, will your wife divorce you? How much do you like money? How much potential earnings and gratification would you get for doing extra work?

2) Will this ancillary business venture affect your primary income stream? You see this as a recurrent theme in Shark Tank.  You have bustling entrepreneurs who aren’t willing to quit their day job yet but have potentially groundbreaking businesses that need more dedication. Which one do you choose?

You have to look at what your passion lies.  The anesthesiologist who spends his residency looking at foreclosures clearly has a passion in real estate (not in medicine).  If you are a thoracic surgeon who spent twelve years of your life to learn about cracking open chests, you’ve probably found your passion.  You probably don’t want to (or need to) find a side hustle.

Doctors really don’t need to have supplemental income. 

This goes back to my main premise—doctors don’t need to have ancillary income outside of their jobs.  We work relatively hard in our primary jobs, and make good money.  Just because some doctor you know from the hospital brags about flipping homes in his spare time doesn’t mean that you do too.  Likewise, just because some doctor blogger on the internet starved himself for two years to pay off some egregious amount of student loans doesn’t mean that you do either.

You just have to know what is important to you, play your cards strategically, and fold when you have a bad hand.  If you have a potentially lucrative hobby, you can decide whether it is worth your time to venture into commercializing it.  If not, you can still be a successful doctor even if you are a one-trick wonder.

Welcome ScrubNotes Visitors!

Posted on by SmartMoneyMD

Hello everyone! I am grateful for ScrubNotes to feature one of our articles today discussing the prestige of medical schools, and whether they are worth the cost. As an overview, Smart Money MD is a physician-oriented financial and lifestyle website to help guide us through the complicated world of delayed gratification from medical training.  Once you become an attending, do you earn enough to power through any financial considerations? Or do you still have to watch what you spend?

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If you guys haven’t already signed up for our mailing list, be sure to do so. You’ll get access to our FREE Financial Cheatsheet. You will also get special updates as well.

Smart Money MD is an interactive online community.  Please do not hesitate to reach out if you have any questions or would like to see certain topics featured.

Enjoy!

Head over to the beginning to go through our articles!

Building wealth – Don’t sweat the small stuff unless you should

Posted on by SmartMoneyMD

Back when I was a resident, I lived in a high cost of living area. About one and a half of my paychecks went towards my monthly rent.  I know this sounds crazy as a resident earning about $50,000 a year, but that was my situation.  I probably paid more than what most of my readers pay for their mortgages on an entire house! This wasn’t a nice pad either with a Sub-Zero fridge or Toto toilet either—I lived in a roach-infested studio where the amount of heat I got in the winter was controlled by the building’s superintendent.  But, the trade-off for such an expensive unit was that I felt safe living there…most of the time.

With a skewed budget like that, I did pay close attention to my budget even though I wasn’t attuned to the finer aspects of finance. Cheap cellphone providers weren’t in style yet, so I shopped around frequently if my phone company decided to jack up their rates.  Likewise, I spent a few hours every year on the phone with my Internet provider, threatening to leave their company if they wouldn’t keep my bill the same.

I sweat the small stuff.

Most doctors have some sort of compulsive behavior in their blood.  All financial bloggers DEFINITELY have compulsivity in their fabric too (Yes, if you like spending your weekends plotting out your dividends from your stock market funds, you have compulsive behavior!).  As a busy resident, the time I spent sweating the small stuff could have been probably better allocated to sleeping, studying, or even socializing.  But, I was very aware that my budget had a narrow range before I needed to break out the awesome balance transfer checks that tempted me.

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So lowering my Internet bill from $80 a month to $29.99 a month was worth negotiating for an hour or two each year with the frustrating service representatives.  So was fighting through extra crowds of customers at the cheaper ethnic supermarket.

Total savings of getting your feet stepped on at the supermarket: probably $15 a week.

The savings do add up. And for most families, the $50,000 a year resident stipend could easily feed a family of four.  Saving a few thousand dollars of post-tax dollars a year could help fuel your Roth IRA, 529, or emergency fund. That is a practical use of time and money for that budget.

Once your life gets busier and you begin to command a higher price for your services, the small stuff might actually become too small for your time.  You might not want to drive an extra two miles and wait in line for gas at Costco to save ten cents a gallon.  Do you risk your child’s well-being by using the babysitter who is $1 an hour cheaper? What about $5 cheaper? Or $10?

Pinch hard enough and it might go into your veins!

The decisions become more complicated as more variables come into play.  If you are justifying a minuscule cost savings in exchange for time already in your limited schedule, then it’s probably not worth it.  For instance, if you have to round for 4 hours on Saturday and Sunday morning, then you probably would not want to raise your blood pressure on the phone with a Comcast agent trying to lower your Internet/TV bill.

On the other hand, if you typically spend your weekends building furniture or at the local park with your kids, you could probably spare an hour a year to save $1000 on your Internet bill.  It wouldn’t really matter if you otherwise had a salary of $50,000 or $500,000. I would venture a guess that even some people I know with a $5,000,000 net worth would still be willing to argue with a phone rep to save a grand.

Some people will sweat the small stuff no matter what situation they are in.

Another consideration on savings depends on how much your job allows you to earn more for working more.  If you are an ER doctor, you could probably fill in a few extra shifts and earn a few extra thousand bucks.  You might end up deciding that it’s easier for you to just go to work to earn more rather than going out of your way to save on gas or groceries.  If you really like money and are willing to sacrifice time your time, you could do BOTH.

Whatever your threshold for pinching pennies, make sure you actually have a threshold.  At some point, you have to decide what makes you happy.  Sure, that high sugar, high calorie Starbucks latte might cost $6, but you could swing it a few times a year if it can help you get you through your clinic.

You might also like: Money Does Buy Happiness

What is your threshold for saving a buck?

(Photo courtesy of Flickr)

What should doctors do if their jobs are not a good fit?

Posted on by SmartMoneyMD

We’ve all seen it. Some of us have experienced it.  The rest of us WILL experience it.  You take your dream job after your training, and it turns out that the dream job was really a dream.  Perhaps your q2 call schedule turned out to be tougher than you had anticipated.  Maybe your hospital ends up being short on doctors so you end up taking more shifts than you’d prefer to. And no, you don’t get overtime pay as a doctor! You get the same rate as you would otherwise. I’ve known a few unfortunate doctors who actually end up taking new jobs and finding themselves in another similarly unfavorable situation. What gives? Is the world out to get you?

Find out what makes the situation unpleasant to you. 

Everyone is different.  I have friends who are okay with taking two to three weeks off a year and working holidays.  I have others who cringe at taking no less than six weeks.  I have friends who are okay with spending their weekends rounding (their spouses and kids are apparently okay with it as well) instead of hanging out at home or taking a road trip.

Common issues that I’ve seen my colleagues complain about include:

  • Call schedule too onerous.
  • Pay is too low.
  • Patients are too sick.
  • Patients are too healthy.
  • Job is too boring.
  • Location of the practice/hospital is too remote.
  • Senior partners abuse them.
  • Too many satellite locations.
  • Partnership track too unfavorable (they find out two-three years into employment).
  • Work hours too long (many outpatient specialties are open on weekends)

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Whatever situation that makes your life unpleasant, you need to identify what needs to change in order for you to be happy.  As doctors, we are great at shutting out unpleasant memories.  It would be a shame for you to seek out a new opportunity only to have the same problems that you encountered in a previous job.

You might have problem if you sleep here more frequently than in your own bed.

Try to remedy the unpleasant situations at your current job first.

Look, most people don’t like to move, especially if they have established friends and family in a particular area.  Some of us have strong religious ties to a location.  Even most financially independent early retirees with school-aged children choose to stick around most of the time (That’s you Justin @RootOfGood and @RetireBy40).  It would behoove you to talk to your coworkers, managers, administrators, and bosses to determine if any of your gripes can be resolved amicably.  I’ve discovered that in negotiation, you have to figure out what you bring to the table in order to justify your worth.

You might also like: How are doctors paid?

If you are the world’s expert on melanoma, you probably will have more negotiating power than even the most skilled orthopedic surgeon.  Even then, the negotiating power has to align with what your employer needs.  A private practice Dermatology practice may prefer to have a proficient and friendly general Dermatologist over the world’s smartest melanoma guru.

Not all of us will have that magical ace up our sleeves for improving our work/life situation, but it is definitely financially advantageous for most people to keep the same job if possible.  This is mostly because of the effort and potential lost income that comes from job changes.

If you end up moving to another state, you will need to apply for a new medical license, get credentialed on insurance plans, and potentially spend months without income if you end your prior job prematurely.

You need to figure out an exit plan.

If all else fails and you find that your current situation cannot be rectified, you will have to find greener pastures.  But wait, you shouldn’t just march into your boss’s office and give her the middle finger! You need a backup plan. It is easier and less stressful to find alternative opportunities if you have an existing job.  Once you’ve made the decision to make the switch, plan out your next steps:

  1. Look for opportunities nearby. Perhaps in the same city or nearby regions. Then look elsewhere in the same state, if you would prefer minimize your move.  You already have an active medical license in your state, so that is the easiest route to take if you decide to change jobs. Be sure to check if your existing practice has restrictive covenants.
  2. Check with your colleagues elsewhere who might have some leads on potential opportunities. An potential opportunity might crop up that you might otherwise not know about.
  3. Look at your professional society job bulletins for opportunities.  Given that there are so many postings, it can be confusing if you are not locked into a particular region.  Try to narrow down opportunities that might suit you, and check them out. Make sure that you have an updated CV, clean up your online profiles, and go at it. You might find yourself looking for over a year for the right fit. That is okay, if you are able to maintain you current job.
  4. As with any profession, the more people you speak to, the more that you will learn about the profession. You will develop a better understanding of what is important to your lifestyle and what the critical questions to ask a practice or hospital.  You are also more marketable as a doctor if you have already been in practice for several years.
  5. Don’t be afraid! Many doctors in this situation are primary breadwinners in the household. They may have kids, a stay-at-home spouse, and no ancillary income. If you have been playing your cards appropriate, you should have an emergency fund and have been living below your means!

You might also like: How to burn through a $1 million salary

Go for it.

It is not easy to pull the trigger. A new job means a potentially big move. Take a breath, don’t fret. You are still (hopefully) an able-bodied doctor with good earning potential.  Don’t be worried that you might make a mistake.  We all do. Don’t be afraid to keep your head high, regroup if you have to, and keep whittling away. Good luck!

Any tips for the job hunter?

(Photo courtesy of Flickr)

How hard should you work as a doctor?

How hard should you work as a doctor?

Posted on by SmartMoneyMD

I can’t think of too many white collared jobs that rival the intensity and duration of work endured by doctors.  Sure, there are plenty of physically and mentally demanding occupations out there, but what other job involves handling the livelihood of others, triaging life-threatening events, and multi-tasking multitudes of time-sensitive matters?

The work of a lawn maintenance guy.

Take, for instance, the duties of “just” a lawn irrigation serviceman. Let’s say the lawn guy is tasked with installing a drip irrigation system in a lawn.  This is an extremely labor-intensive process.  A general overview is that supply lines have to be placed, individual irrigation lines have to be delivered to the plants, the valves tested, lines buried, and landscaping created to make the lawn aesthetically pleasing.  Even more labor intensive is searching the lines to identify any leaks in the lines after they’ve been buried! Combine this work with the scorching summer heat, and you’ve got yourself one strenuous job.

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Rinse and repeat. Let’s say you and your crew of three guys repair and install new irrigation every day, five to six days a week. Fifty weeks a year.  You’ve got yourself a pretty strenuous and repetitive schedule. Plenty of people do it. It pays the bills, and it is hard work.

Falling asleep in front of your computer is probably okay but not in the operating room during a surgery!

The work of a corporate finance guru. 

The finance industry works hard. I would consider finance bankers, analysts, associates, or whatever title they may have to be the grunt workers of the white-collared world.  Think 80+ hour weeks for projects, presentations galore, and meetings to consume your life.  Many financial analysts I know party hard too. Extreme vacations and sports in the limited downtime they may have.  Some of these guys get smart and save up a financial nut like Sam from Financial Samurai.  Others just spend it on an expensive lifestyle. Many of these people don’t last in their industry.  After they move up the ranks, they either transition out of the industry altogether or just move into a more administrative role.

Sure, I’m biased, but why do people in the this industry eventually leave? The guys that I know who are in their first five years of financial banking tell me they love the challenge, hard work, and helping improve our economy and quality of lives. Huh?

The work of doctors.

Yes, I’m a doctor, but I do think that our line of work is genuinely gratifying.  Take away all of that administrative B.S., healthcare regulations, and management issues of any workplace, and you’ve got a profession that is out there to do some good. Look at the Hippocratic oath. I don’t know of any other profession that makes you swear by such a statement.

You might also like: How to identify physician burnout.

You might also like: Why doctors need a four-day workweek.

 

I know doctors who spend six days a week working to care for their patients.  Some of them take only two weeks of vacation per year.  Some others work either three to four days a week.  Some others take twelve weeks of vacation.  There is amazing flexibility in medicine—you just have to make a decision to what is most important to you.

Is the the money?

Is it the lifestyle?

Do you want to work 70 hours a week, take only two weeks of vacation per year, and make $1 million a year? Some of us don’t have the luxury of titrating our work-money-lifestyle balance due to the nature of our work, but this is a subject that I’ve been contemplating for a long time.  Given the intensity of our line of work, there has to be a breaking point.

I once had a patient who was in the truck driving industry for thirty five years.  He ended up getting placed on dialysis because his kidneys shut down after going for so many years in an occupation that didn’t necessarily allow for bathroom breaks!

Another one of my patients was a construction worker for twenty years, but ended up getting on disability not because of an injury, but simply because his joints broke down after many years on the job.

At what point will you draw the line on balancing your work, money, and health?

(Photo courtesy of Flickr)

How to check the engine oil level on a Subaru Impreza

Posted on by SmartMoneyMD

Checking the engine oil level on your car isn’t difficult, but it probably isn’t at the top of everyone’s list.  Most of us simply take our vehicles to the garage get the oil changed every 5,000 miles, or at whatever interval your mechanic has instructed you to follow.  I’ve had colleagues NEVER realize that they had to change the oil in their vehicles, and had gone 20,000 miles! Thanks to the marvel of modern manufacturing, their cars still run.

That’s not recommended, unless you’re the type to get a new car every five years anyway.  For most cars built within the last decade, you really just need to stick with the routine oil maintenance schedule.  There are some people who like to stretch out the oil change interval using fancy filters and synthetic oil, but a regular interval will keep you safe.

However, there are several makes of cars that consume large amounts of oil.  These are more common in flat engine vehicles like Subarus.  Other cars that are known to “burn” oil include Audis, Porsche’s, and some BMW’s.  I remember reading a report years ago that over half of the 2010 Audi A4’s required additional engine oil between oil changes!

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If you own any of these cars, you should learn to check the oil levels.  Don’t wait until the fancy Google-enabled computer system in your Audi A8 to kick on. Just check the oil levels routinely.

This is how I check the oil on my Subaru Impreza:

Pop the hood.

Don’t be scared!  The hood release is usually under the steering wheel close to the driver’s side door of your vehicle. Take a look at the engine:

This is what a 11 year-old engine looks like under the hood!

There is usually a cap that is labeled for engine oil, and a dipstick.

If you want a dipstick in your Audi A8, you’ll have to pay extra!

The dipstick allows you to check the oil levels in the reservoir.  Most dipsticks have a high and low level hatch mark. When you first take out the dipstick, be sure to wipe it dry, place it back into the engine, and then take it out to read. You will be able to get a more accurate reading.  If there is no oil on the dipstick, you are likely short at least 1 qt.

The dipstick on my car has two holes indicating both the low and high levels:

Snatch some hospital gloves if you don’t want to get your hands dirty!

If the engine oil level is low, simply visit your friendly auto store (or Walmart) and pick up a few quarts of engine oil rated for your vehicle.  Use a funnel to prevent spillage, and try to add the oil gradually while checking the dipstick in between.  If you overfill the engine, then you will have to take the car to a garage to have them drain some of it out.

I typically change my engine oil and filter once a year (yes, that is long interval), and I usually end up adding about 2 quarts of oil throughout the year!

Any questions on vehicle maintenance? Sound out below!