Category: Waste Money

The calculated approach to outsourcing your life

The calculated approach to outsourcing your life

One of my biggest frustrations early in my career was accepting that outsourcing tasks comes at a cost. My colleagues were always able to justify house cleaners, home-pickup dry cleaners, and handymen even as residents. Their main argument was that it helps stimulate the economy.  I understood that we should all help those around us, but I could never convince myself that anyone with a $40,000 annual residency salary truly needed a dry-cleaning pick-up service even if she was working 100 hours a week.  If I had only outsourced my chores as a resident, perhaps I would have published more papers.  I guess I’ll never know.  Did doing my own laundry cost me a career as a superstar doctor?

Fast forward to today.  I’m no longer working 100 hours a week, but 50 hours a week is still taxing.  Life evolves as we age. We get arthritis. Kids need to be shuffled to their activities. Elderly parents need medical care. Suddenly there are too many events and obligations to meet in a given day. How do we find more time?

Outsource your life.

Welcome to the world of personal assistants. TaskRabbit. You name it, you’ve got it. You pay a negotiated amount for someone else to take care of your unfinished business. Buying furniture. Putting together your furniture that they bought for you. Cleaning your house. There is almost always a price to be named for a chore that you don’t want to complete yourself.  If you have an unlimited budget, you could outsource every aspect of your life.

These feline friends know how to take life easy

As reality dictates, most of us do not have unlimited budgets.  How do you put a price on time? I generally follow these two principles:

Put a rate on the job.

What is the going rate for a chore that you’d like to outsource? How easy is it to get the job outsourced? It may actually be more difficult to outsource a job than you’d otherwise think.

For instance, two years ago my air conditioning unit stopped working. One of the capacitors broke in the unit, and the unit was mounted on the roof of my two-story house. The cost of the job was clearly over my normal pay scale as a physician, but it was not prudent to for me to risk breaking my neck from a fall on the roof. Unfortunately it was high season for the air conditioners, so the wait-time for a routine repair was 2 weeks! An emergency call would’ve cost 2.5x!

An analysis table was useful in this situation:

Advantage of outsourcing

  • Avoid fall and shock risk
  • Avoid other potential injury to unit.
  • Exchange money easily to no worry about details
  • Instant resolution of a problem

Disadvantage of outsourcing

  • Relatively expensive post-tax cost—would need to perform a roux en y surgery to cover the after-tax cost of the air conditioning repair
  • The paid help may not do a good job on the work.

I ended up paying up for the emergency repair, and all was well for one day.   Another part of the air conditioner ended up breaking (supposedly), and I ended up having the call the repairmen back.  They had to charge me another fee, stating that the second malfunctioning part was not related to the original repair!  Go figure.

Another $400 later, I was back enjoying cold air in the hot summer.  Thank goodness for having a decent paying job. The biggest sting when you have to cough up for a big ticket item is that mathematically it delays getting to financial independence. Sometimes that is the only option that you have.

Prioritize according to what gives you pleasure.

In contrast, you can cherry pick what you want to do with your time.  One of my friend’s husband, a gastroenterologist managing a relatively large practice, enjoys washing his car.  He takes call every three weeks, has limited time for the family yet he spends a few hours every month washing and waxing his car. Is that time well spent?

In a purely time per cost model, he should be outsourcing his car washes. In fact as a highly paid physician, he should actually outsource essentially every task that costs less than what he could generate from his profession if money were the only goal. There are two problems with this logic:

  1.  In order to make a direct financial comparison, he would need the ability to generate income from his profession while his car is getting washed elsewhere.  Good luck finding a way to match that up. At best, he could generate income through taking more call or working more during the workweek. However, that still doesn’t confer a perfect 1:1 exchange of time for money.
  2. Your day job may actually be mentally taxing, even if it confers a great pay rate.  How much mental and physical energy does take to do the day job instead of washing a car? What if every additional weekend you work confers a week of shorter lifespan?  What is the price you can place on your health?

Clearly this gastroenterologist has decided that washing his own car provides enough enjoyment that he chooses not to outsource the task. There is nothing wrong with that.

How do you decide to outsource your life?

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The most common questions asked by college applicants

The most common questions asked by college applicants

College application season is in its full swing, and parents are just as anxious (sometimes more anxious) about where their children end up.  I volunteer for my alma mater to interview applicants, and it seems like every year there are more students applying.

What is awe-inspiring about meeting these brilliant kids applying for college is that so many of them are so determined to make a difference in the world. At their age, I was simply trying to get good grades and follow the rules. In retrospect, I was not mature enough (or did not have the advice) to realize that understanding the rules is only but a small part of the big picture.

The application process is just as interesting to me as it is nerve-wracking for the students.  I find that the questions asked are the most entertaining. I would stratify them in three categories:

Generic but sincere 

These are the questions that I would’ve asked when I was in high school. I’d say that the majority of what I am asked fall into this category.

“What did you like the best about college?”

“What do you think helps College X stand out from the rest?”

“Does College X have Major Y or Club Z?”

There is nothing wrong about any of these questions. If I had to make any criticism of them, it would be that the answer to half of these questions could probably be found on the college website.  The other half of them are questions that I, as an alum, should hopefully be able to reflect upon and provide my opinion.  I enjoy being asked these questions, because they actually help me recall both the great experiences as well as those I wished I could wipe from my memory.

Thought-provoking questions

I’d categorize these questions as relatively thought provoking questions that had stumped me when they were first asked. Over time, I’ve come to find a satisfactory answer for my applicants, but certainly these are questions that have often triggered further questions.

“If you had to do it over again, would you have attended College X?”

“What did you regret about college?” or “What did you regret about attending College X?”

As an honest answer to myself, it really doesn’t matter to me at this point if I regretted going to college, because there is a very low likelihood that I’d ever “repeat” college. Sure, if I had made different decisions, maybe learned a little bit more about handling my money a little better earlier in life, I might not have even entered a career in medicine.

Questions that should not be asked 

Rarely, some questions I am asked are far out in left field. These are the ones that be no means should I know the answer to or should be asked in public. I suppose that the students that ask the most bold questions are the ones that get furthest in life.

Last week, one applicant digressed into a discussion about alumni donations. One student casually brought it up:

Applicant: I heard that college are always looking for funding.

Me: [silent]

Applicant: My father’s donated hundreds of thousands of dollars to College X

Me: [silent]

This came after a lengthy discussion of the Model UN club that he was a participant in. In all fairness, I’ve learned not to dismiss speculation or questions that I don’t know the answer to. Maybe if you donated several million dollars to a school, your heirs would get accepted?

Good luck to all college applicants in 2018!

Lifestyle creep and the 4% Rule

Lifestyle creep and the 4% Rule

If you’ve been keeping up with the online money blogging world, you’ve probably heard about the 4% Rule, or 3% (3.5%) rule for some. However flawed, it gives you a decent start on estimating how much to build up your nest egg before you start telling your managers at work how you really think about their Maserati while you’re stuck with a fifteen year-old Honda Civic.  Once you figure out how much you spend annually, you can estimate how long your money will last.

For instance if you spend roughly $50,000 in today’s dollars annually, you’d need $50,000/0.04 = $1.25 million in today’s dollars to last at least 25 years. This has to be invested in some manner too to stave off inflation, and gold bars under the mattress doesn’t count.  Fair enough, but what happens after 25 years? We don’t have much data in the ill-referenced Trinity Study to extend beyond that, so some just adjust the percentage withdrawal rate more conservatively. With a 3% withdrawal rate at $50,000 annual expenditure, you’d need $1.67 million invested.

Lifestyle creep

“Lifestyle creep’s a bitch” -says somebody. I will claim it as my own if no one else does.

Living your entire twenties holed up studying and drowning in debt while your friends in banking enjoy their youth is the prime way to fuel your desire for lifestyle creep.  That’s what doctors go through.  Sprinkle in a few of your classmates who overextend their future self or have family money, and you’ve got a good (false) sense of how doctors should live.

You might also like: How to make a doctor’s salary and still feel poor—and how to fix it

Financial discipline can be an acquired skill, but like many behaviors in life it is highly influenced by our childhood. Not everyone can be like Mr. Money Mustache who grew up in an average Canadian household with “normal” expenses and discover that there is an alternative financial blueprint to life.  The majority of people I know who are financially conscientious have had some foundation in their younger days.  It could be as simple as mowing the lawn for an allowance or just seeing someone in the family struggle financially.  There has to be an exchange of work for money.  The ultra-savers at a young age typically are a subset of this group who use these fundamental principles and kick into overdrive. The rest of us without the head start of financial intelligence simply learn it the hard way—through experience and time.  We get into credit card debt or some financial ruin that triggers our brain to fix the problem.

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Doctors, on the other hand, might have never witnessed financial responsibility in their childhood or gotten themselves into financial ruin. Many doctors that I’ve known come from middle class families who had food on the table every night and family vacations every year.  By the time they start earning some money in residency, they will have acquired substantial borrowing ability from banks or predatory lenders.  We are prime victims for lifestyle creep.

I’ll be first to admit that I’m guilty of lifestyle creep.  After all, why shouldn’t we own at least one nice pair of Louboutin’s if we’re curing cancer every day? That is exactly how lifestyle creep catches you.  When I was a resident, I earned around $40,000 a year and spent 60% of my earnings living in a HCOL area. There wasn’t much left to repay my loans and live lavishly.  There was a lot of pent-up consumerism in me.  Once I got a real job I was tempted to live in a larger place, buy a nicer car, and upgrade my wardrobe. The problem with increasing your living expenses proportionally with your income is that you never make any headway towards your financial goals.

The doctor who owns this car can actually afford it. Doesn’t mean you can though.

Over the years, I’ve been slowly tracking my lifestyle creep. The brunt of the lifestyle creep comes from our mortgage, which in a way is a necessary evil. If you are obligated in your profession to stick around and work a certain number of years before you make any career changing decisions, it might be worthwhile to own a piece of America in the meantime. The other contributions to lifestyle creep end up being discretionary.

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

Between the end of fellowship to my first year of practice, I increased my living expenses by around $15,000 a year. This rate slowly crept up until it skyrocketed another $40,000 with mortgage expenses. Purchases like an overpriced refrigerator do not necessarily increase quality of life, but do dig into your savings rate. At some point, our earnings actually plateau and any lifestyle creep will start eating away at your magic number. If we hope to have any possibility of reaching our savings goals, we have to constantly reassess our expenses. If we can’t adjust down, then we’d better find a way to increase our earning potential

How often do you assess for lifestyle creep?

Wasteful Wednesdays – Impractical laundry hookups

I have an unused washer and dryer hookup in my bathroom. I currently use the space as storage for mops and other cleaning supplies. It’s been an eyesore, and I’ve been considering installing a washer and dryer for added convenience. These days, you can find relatively inexpensive washers, especially if you can find a used one. In my space, however, there seemed to be one problem.

The space seemed awfully small.

Can you identify all of the problems in this picture?

That’s right. There are several problems with this picture. Based on the arrangement, it’s clear that the space was designed for stackable units only. The width of the space is only 27.5”, which means that you’d have to stack the units if you wanted a dryer in this picture. Okay, no problem. There are plenty of stackable washer/dryer combinations.

Not so fast buddy.

I should have know that the previous owners of my house had a strange obsession with expensive appliances. I noticed several other problems in the process of washer hunting:

  1. There was no dryer exhaust!
  2. The only power outlet in the corner was a 220v hookup!
  3. There are hardly any washing machines that can fit into a 27.5” space. Like maybe two brands.


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Enter ultra-compact washing machines and dryers. This is a new category of appliances that I previously had absolutely no idea existed. These appliances are geared towards regions where space is an absolute premium. Think New York City, San Francisco, the 8th Arrondissement of Paris, or Hong Kong. These are places where you can expect to pay at least $1000 a square foot and still consider it a steal.

The only problem is that I don’t live in any of these cities.

Asko and Electrolux make compact washers and dryers. They are expensive. Think $2000 per unit. You can get a really nice LG washer that has more than twice the capacity of a compact washer for less than $1000.

Guess what? You have to buy the matching dryer too. As you can see in the picture, there is only a 220v power hookup in my wall. This is intended for a dryer hookups only. The Asko compact washer connects into the compact dryer for its power. The dryer also has a ventless hookup in case you live on the 30th floor of a 60-floor high rise.

At this point, I’ll just keep using this area to store the world’s most expensive Swiffer.

Lesson learned: you can end up spending a lot of money on appliances.

Would you buy a compact washer and dryer?

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?

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?

Common Expenses Incurred by non-Financially Independent Doctors

lifestyle inflation methodsThrough observation of myself, my colleagues, and reports from other physicians through the grapevine, I’ve compiled a list of examples of lifestyle inflation that occurs among professionals who ultimately grow into their incomes. Some are modest. Others, not so much. What large expenditures have you witnessed or are actually guilty of in your growing lifestyle?

  • Purchase of a large television. This is not uncommon, especially with “curved” TVs, super-hi def LEDs, surround sound systems, and home theater systems. Costs can range from $4999 for a “modest” flat LED set to $20,000 for a home theater with reclining movie theater seats and surround sound projector system.
  • Fancy car. This is also not uncommon. It seems like every other new residency/fellowship grad springs for a new set of wheels. I actually have a tough time assessing whether this lifestyle inflation is simply due to a sudden increase in income or longstanding family money that they were hesitant to flaunt during training. I was shocked to see one of my cardiology friends spring for an $125,000 Mercedes AMG within a month out of fellowship, but I suppose that his income can still support the car through a lease. Cars I’ve seen out of training include an $80,000 Tesla Model S and a used Lambo (no idea how much that would cost).
  • Increased restaurant tabs. Again, a common finding among everyone I know. Weekly $20 beer tabs (alcohol only) grow to $50 a week, along with eating out for lunch every day, and Michelin star restaurants on a regular basis. There is probably some satisfaction in building a refined taste in food, but that easily can grow your waist as well.
  • Fancier grocery purchases. It starts from eating store-brand yogurt in medical school to Fage in residency, to Noosa as an attending. Waist inflation will come with eating Whole Foods $24.99/lb salmon and $49.99/lb special grocery store porterhouses.
  • Fancy furniture for a fancy home. You can really go crazy in this category. Think interior designer mandated custom dining rooms with marble-top formal dining tables with chairs starting at $2000 apiece. Lawn design with feng shui elements that cost $60,000.
  • Upgraded work and formal attire. Add in a couple pairs of Loubutin’s, several sets of $300 work outfits, fine jewelry, custom dress shirts and suits, and you’ve got a money pit in your wardrobe. Worst yet, these costs are easily recurring as you cycle through new outfits.
  • Upgraded outfits for your kids. Children’s clothing is big business, especially at the age where kids will easily outgrow their clothing. A hip outfit including a baseball cap, t-shirt, shorts, socks, and shoes from Under Armour for your 5-year old can easily run you $200! Don’t worry, he’ll outgrow it after a year or even sooner when he gets new clothing a few weeks later.

These expenses actually aren’t morally reprehensible if you actually have a self-propagating bankroll to fund it, but I find it hard to imagine that any of these expenses translate into true happiness.

What other lifestyle inflation examples have you experienced?

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(Photo courtesy of Flickr)