Smart Money MD

“Your cholesterol might improve if you’re able to lose 40 lbs!”

“Let’s strengthen those quadriceps before we do that knee replacement”

“Let’s cut back on sugar and carbohydrate consumption and see how your blood sugar  responds.”

Modern day medicine is big on lifestyle modification.  What can we do to improve our health without simply throwing chemicals and medication at the problem?  We promote these strategies in our hospitals and clinics with the intention that it could save healthcare dollars long term.  Even bariatric surgeons who offer the ‘fix’ of weight loss focus on improving metabolism, activity, and the psyche to keep that weight off while maintaining good health.  These recommendations extend beyond the exam room–every daytime talk show has had at least one segment on health. Some shows only focus on health, with @Dr. Oz’s talk show being the sine qua non of lifestyle tweaks to improve your health. Does this work for healthcare? You betcha! There’s no silver bullet for every malady, but these changes spark the conversation.

Is wallet lifestyle modification even applicable to doctors? 

Ten years ago, I would have dismissed the notion of curbing spend as a pertinent strategy of building wealth for doctors.  Look at those commercial real estate developers. Lori Greiner didn’t build a real estate empire by saving money on street parking rather than springing $20 to park in a garage. The Golden State Warriors wins games with their high-powered offense (although the defense helped too).   As a doctor, shouldn’t I be able to go gangbusters, bring in $2 million a year, and not worry about that $5 latte every morning?

Okay, most doctors don’t bring in a 7-figure income annually, but a solid 6-figure income should still be attainable. Isn’t that enough? With a good offense, I wouldn’t have to worry about changing the air filter on my 10-year-old car. I still agree on this principle, and pinching pennies matters less when we become more financially stable.

Related: 41% of doctors have less than $500,000 net worth.

However, most people don’t become financially fit overnight, nor can we reap in a cool 7-figure salary each year straight out of residency (I actually have a friend who actually was able to bring in $1.1 million net his first year, but that is a highly unusual situation). While we are building our net worth, there are strategies to expedite the process without drastically changing your lifestyle.

Five quick lifestyle tips to curb your spending.

1. Sell your excess clothing.  We all have clothing that we shove into the back of our closets. I definitely have shirts that I haven’t worn in years. Once we fill up our closets, we buy homes with bigger closets.  Now, this problem may be more gender specific—most male doctors who read financial websites in their free time probably cycle through a fair share of free t-shirts—but we are all guilty of owning clothes that we don’t actually wear.  Get rid of your clothing and make some money! Sell on eBay or Etsy!  It’s not that hard. The goal is not to make a flip on your old clothing (although there are people out there who make a living on eBay), but to purge unwanted items and get some return on the initial purchase. You will feel better with an emptier closet and perhaps a fuller wallet.
2. Get audiobooks from the library. Look, you’re paying a marginal federal tax of 39% and state, county, and city taxes to boot. You’re paying to get those roads paved and for the public libraries to stay open. You probably also commute a solid 4 hours of your life every week to work. If you listen to audiobooks, save your $10 a week and check out some books through the library. You don’t even have to walk into the library to check out an audiobook! My local library has both Android and iOS audiobook streaming apps (Overdrive) that allows you to check out books. This isn’t going to make you rich, but do it for the principle!
3. Cut down on housekeeping. Look, our time is valuable. About half of my colleagues, especially those with kids, have opted to have housekeeping. It’s a wonderful process. You pay someone and your home magically gets cleaned. The problem is that housekeeping is expensive. If your net worth is still negative or are within a few years after residency, you don’t need to have regular housekeeping. For hardwood or tile floors, use a microfiber mop. Get the most expensive microfiber cloth in existence. You’ll still save money over a weekly housekeeper.  Get a Roomba (or your favorite robot vacuum cleaner). I run my Roomba twice a week. It doesn’t wipe the counters, but it cleans up some of the dust bunnies on the floors. It’s very helpful if you have pets.
4. Don’t be a sucker for expensive furniture, appliances, or fixtures. Your first home (or even your second home) won’t be your last. If you have young kids or misbehaving pets, your couch will take a beating. A $2000 sectional is possibly more comfortable than a $1000 sectional, but you have no need for that $10,000 handmade couch from Bali (yes, this does happen!). Likewise, I have seen numerous doctors and one business administrator who spent tens of thousands of dollars renovating and customizing a formal dining room that gets used 2-3 times a year! A friend of mine also has copper faucets and sinks in his bathrooms. Copper may look nice, but guess what? Your sinks will look like the Statue of Liberty in no time with no maintenance!
5. Be wary of growing into overpriced niche foods. What do you mean overpriced? Take honey, for example. You can buy your standard clover honey at the grocery store, or you can buy Manuka honey from New Zealand. You’ll probably get a 1000% markup from the standard honey. Does this special honey confer health advantages that other honeys do not? The jury is still out, but you’ll surely pay a lot more if you stick it out. Going 100% organic on foods is another sure-fire way to empty out your wallet. There are many ethical and health benefits to consume certain foods ‘organically’, but if financial stability is any priority, temper the high-end grocery purchases.

[showads ad=responsive]

Related: How Mustachian can a doctor be?

The lifestyle modifications for your wallet will evolve throughout your career.

Don’t fret! You don’t have to suffer your entire life! I was guilty of lifestyle inflation during residency, fellowship, and during my first job. I was guilty of eating Manuka honey while having a negative net worth. I learned to align my actions with my immediate and long-term goals. Once I reached a certain financial milestone, I readjusted my trajectory.

You can too.  Lay off the Manuka honey when you’re making $50,000 a year as a resident. Once you get the firepower to generate $2 million a year from your job, you can buy all of the Manuka honey you want.

What wallet modifications have you implemented?

(Photo courtesy of Flickr)

I went to buy groceries mid week and realized how simple the process was compared to the typical weekend or weeknight days that I typically go. The aisles weren’t crowded, I had my own space to pick through the avocados, and there was no line at checkout!

I wondered what the typical demographic of people are able to conveniently run errands on a weekday morning. Wouldn’t it be nice to be able to hold a job that would allow for flex time? It would even be nicer if I worked on my own time.

You might also like: FIRE for doctors

Most of the customers appeared to be mothers with young children. It wasn’t clear where everyone else fell in the spectrum. Entrepreneurs? Funemployed? People like me who took a sick day off? Better yet, perhaps some of these guys are financially independent!

[showads ad=responsive]

As I was deciding whether to buy the apple fritter or crueller in the bakery aisle, I recognized one of the emergency room doctors at the local hospital. He was sporting a beaten up t-shirt with a logo sponsoring a local 5k race, jeans, and stained shoes. Had I not known he was a doctor in the high dollar range, I would have assumed that he was one of those funemployed individuals.

In reality, he was practicing stealth wealth whether or not he was aware of it.

You might also like: How Mustachian can a Doctor be?

The premise of stealth wealth is simply not looking the part of having a bunch of zeros in your bank account.  This applies whether you’re taking the F train in Brooklyn at 2am or walking into a car dealership with the preying eyes of hungry salesmen tracking your every move. Is it simply a survival strategy? Perhaps, but I can say that I’ve saved a lot of headaches by blending into the crowd.

Sometimes attracting attention is bad for your health (read on).

As doctors, we can’t really hide from anyone. If you are a licensed physician, your credentials are public information. Ever since I obtained my first medical license, I started getting phone calls and mailings from asset management companies, random insurance companies, and ‘wealth accumulators’.

I think these companies knew that most of my colleagues were busy trying to pass our boards too—they invited us to a nice steak dinner while one of their professional advisors gave a talk.

Guess what? I’m guilty of going to these talks too. I still remember that at the last talk I went to, I didn’t understand a darn thing the advisor was talking about. What’s more embarrassing was that I had already gone to a similar talk six months ago.  It felt like one of those Embryology lectures back during first year medical school where you try to follow along but are totally lost when you talk about germ cell layers. He talked about having some “secret” but legal way to fund money into a Roth IRA after I start making real money. I still remember that I was so happy after that talk that I had leftovers to eat another day. I ended up getting GI upset the following day, didn’t associate it with the meal (because what can go wrong with free steak?), ate my leftovers several days later, and got GI upset again and a fever for two days!

I developed a Pavlovian response to these lectures and never attended any more. Sure, I was probably short-sighted to disregard my future earnings.  I also did not have any children at the time who needed to rely on my income.

Had I not gotten the attention of a wealth accumulator service, my future may have been very different. Fortunately, I think that I am able to manage my finances with the help of fellow strangers on the Internet. ?

Stealth wealth as a rebellion against materialism.

One can argue that life is more fulfilling by spending money on experiences rather than objects. It would seem that memories from experiences would sustain happiness much longer than an object like a fancy coffee table.  With memories, we can always look back these experiences and recreate happy thoughts.

I can easily see this corollary in my six-year-old nephew.  He is able to throw the most vicious tantrums in order to get an overpriced model car racetrack. He then becomes the most angelic child after an adult succumbs to his demands but soon requires the expansion pack after several brief days of enjoyment (Hopefully he will outgrow these habits).

[showads ad=responsive]

Fortunately for car dealerships, clothing stores, and electronics companies, the majority of the world does not buy into the experiences alone either. I honestly don’t either—I wouldn’t mind having a new Tesla parked in my garage any day of the week.

But buying into the concept of stealth wealth can help us reduce our materialistic tendencies. If you don’t want to be flashy making a grocery run in your Tesla, you keep your ten-year-old Subaru running as long as possible. Likewise, if you opt to wear $20 Timex watch in lieu of a giant Hublot, you’ve effectively saved a perfectly good watch from going to the trash or shoved in a drawer with no hope of future use.

Reduction of material substance will help build your wealth.

Gee, if you have a constrained outward appearance of money (stealth wealth) you actually help your bank account grow by keeping more of it in the bank.  I see many high-income professionals practicing this strategy in various degrees. I see some multi-millionaire construction company owners who put their money in their homes and the $80,000 V12 trucks. However, their clothing consists of budgetary jeans and t-shirts. Their vacations are simply camping trips with minimal recurring costs outside of the initial equipment purchases.

I’ve met other high-income individuals who live in homes that could be purchased with less than a quarter of their earning potential, but enjoy lavish vacations several times a year.  Compare that to my local orthopedic surgeon who lives in a decidedly mid-seven figure house, sends his kids to private schools, and goes on hunting expeditions throughout the world.  He might have an Ace up his sleeve, but he might also have a very long working career.

Stealth wealth can make you happier.

Having a sizable bank account could probably make you a happy person, but I’ve seen plenty of wealthy individuals who are miserable.  As doctors, dentists, lawyers, and other highly-compensated individuals, we actually have a relatively stable hold on the income generation aspect of our finances.  What leaves our wallet is more likely to impact our degree of happiness.  Stealth wealth provides us a framework to determine what is important to us, and direct our expenses towards happiness.

Who knows, that guy at Starbucks in the corner sipping his latte may be an Internet mogul practicing stealth wealth.

What part of your lifestyle do you consider Stealth?