Frugal vs cheap – doctor edition

There are many articles on the web that argue the differences between frugality and cheapness. One of my favorite summaries include one article by Mr. Money Mustache. Much of his ramblings are applicable to all walks of life.

For professionals such as doctors, there is a strong emphasis on presentability. If you want to be frugal, you have to make sure you don’t look cheap.

The rule of thumb on material wealth is to have enough to sustain happiness, but not in excess. The criterion for every person will be different, but as a doctor or high income professional you probably will have a more lenient threshold before you result in financial bankruptcy (but there are plenty of doctors that end up in financial ruin).

 

Clothing: This is where you can go buck wild with your expenditures. You have to look like a doctor right? Some frugal suggestions that I have been given and tried over the years include:

  • Men and women: air dry blouses, dress shirts, and dresses. Some dry clean only clothing can be hand washed or spot cleaned. Remember, you probably aren’t waddling in mud during the day. Press your own clothing.
  • Great resources for discount fashionable clothing include: Nordstrom Rack, Ross, and even Goodwill.

 

Cars: I’ve concluded that the appearance of a doctor’s car matters very little. I’ve seen internists with high-end German luxury cars, and vascular surgeons with 13 year old pickup trucks. The key is to have a reliable car that is well-maintained.

  • A new car will depreciate immediately it leaves the dealer’s lot. Most cars depreciate 40% over 3 years. By 5 years, the car will lose approximately 60% its original value. Fancy cars like the Mercedes AMG63 depreciate about 50-60% over 3 years. Think about it, there aren’t too many fancy toys that you buy for $100,000, plow through 15 miles/gal of premium gas, cost a ton to maintain, and be worth only $50,000 after 3 years.
  • Go for a reliable, used car. Get a fancier one once you cash in your first million, and maybe a fancier one once you become financially independent. (yes, high income people like to work with big numbers).

 

House:

  • Unless you entertain frequently, the size of your house is dependent upon your personal and family preferences. Make sure you don’t buy more house than you can chew (like taking out a jumbo mortgage before you are truly settled in your practice).
  • Profitability from buying a house will be limited to the market and also how long you plan to stay in the area.
  • Obviously if you have a family and kids, you will want to look at the appropriate school district to send your kids to school. I’ve met people who toil over what school districts are best, pay top dollar for a house in the area, and end up sending their kids to private school. Not the most financially brightest decision, I might say.

 

Lifestyle: I would say that if your “frugal” lifestyle choices don’t disrupt others or embarrass you, your family, or others, go for it:

  • Opt for OTA television channels versus cable/satellite channels. You can save good deal of money long term by cutting the monthly fees, assuming that you aren’t a television junkie.
  • Exercising at a home gym, outdoors, or even through home chores can save you time and money over a gym membership.
  • Be careful about hypermiling. Yes, you can save on gas, but do you really want to piss off other drivers on the road? If no one is behind you, go on ahead. Otherwise, be wary of your surroundings (which you are anyway if you hypermile)
  • If you decide to bike to work or on errands, be mindful of the traffic around you. I’ve seen plenty of bikers using the main road (speed limit 55mph) with a Class I bike lane that is parallel to it. I guess those bikers like to be on the same road as a Hummer. I wouldn’t.

 

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