FIRE Crossroads 017: A Coast FI Physician from the Land Down Under

When I realized I was financially independent and ready to think about winding down my career, I conjured up a plan to finish out my career in Australia or New Zealand. I read up on the requirements, and I spoke with both locum tenens agencies and with physicians who had taken that leap.

Ultimately, I decided against the move. Given the exchange rate and relatively low pay, particularly in New Zealand, along with the fact that many anesthesia jobs also required ICU work, which I hadn’t done in over a decade, the vision of working down under didn’t line up with my desired reality. I figured I could visit someday without the burden of obtaining licensure, brushing up on old skills, and having a job while exploring paradise!

Alas, I haven’t gotten there yet — stupid pandemic — but today’s interviewee has worked in Australia for her entire career after receiving her education in the U.K. Having achieved Coast FI, and having two young boys at home, she struggles with the pull to live for today while continuing to save for tomorrow.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes. To see other posts in the series, visit our Q&A archive. Let’s chat with our doctor friend from Australia.

 

 

Getting to Know You

 

Hey Physician on Fire readers.  I am an emergency physician living and working in Australia.  I am a mother of 2 primary school boys and married to a stay-at-home hubby.  I work part time, putting in 30 hours per week at our local emergency department.  Outside COVID times I like to locum in small departments around the country occasionally for a change of scene.

 

Where are you on your financial independence journey? Have you crossed the halfway point in terms of net worth and/or passive income?

I have been a practicing specialist emergency physician for 7 years, interrupted for maternity leave and extended travel.  We are currently around 1/3 of the way to financial independence with a net worth of around $1 million.

We have just crossed a few significant milestones.  I am now “Coast FI” meaning, if I contributed nothing else to our investments, we could expect to reach financial independence by the time I reached 60 years old.

I have also noted annual growth in our investments have started to overtake our annual contributions for the first time.  Our money is finally working for us!

 

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

I am a married 41-year-old woman, mother, blogger at Aussiedocfreedom.com and emergency physician living down under.  My hubby doesn’t work, but stays home to care for our two boys, aged 5 and 8.  We do not currently financially support anyone outside our home.

 

In what field are you working? How is your career going? What do you like best and least about your chosen profession?

I am 7 years post qualification as a specialist (aka attending) emergency physician.  I still love the “doctoring” bit where I get to chat to patients and manage the critically unwell.  Teaching young doctors rotating through emergency can also be really satisfying.

Dealing with hospital politics, the few misbehaving junior doctors, and constant bed pressures are the usual irritations. [PoF: I’m assuming “bed pressures” to be a lack of “beds,” or staffed rooms for hospital patients, a constant struggle in the emergency department, especially during the pandemic.]

 

Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?

Realizing we have reached coast FI provides quite a few options.  Although we could easily “coast” to a retirement at age 60, I had always planned on retiring at 55.  Or at least be financially able to retire at 55 with the idea that I would take on passion projects, whether paid or not.

With 2 small kids growing up far too fast, there is a constant tension between living for today and investing for tomorrow.

Will I regret continuing working and investing to retire early, by which time my kids will be grown?

At the moment, I am managing this conflict by trying to make the best of both situations.  I work part time (30 hours per week) and have a lot of paid leave available, some of which I can take at half pay to stretch it out.

I am planning long summer holidays with the kids each year, whilst working part-time.  Once my leave runs out, it may be time to reassess whether it is time to reduce my hours further.

I really want to embrace these years whilst my kids are young enough to want to be around me, but old enough to form long lasting happy memories.

 

Investing

 

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

  • $1.35 million Direct property investments in Australia (2 properties!  Land here is $$$, $1.25 million debt)
  • $600,000 in stocks (50% Australian, 50% US)
  • $125,000 Bonds & fixed interest
  • $180,000 cash offset against our home mortgage
  • $360,000 equity in home

 

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

The majority of stock and bond investments are in our tax advantaged “superannuation” (pension) accounts.  We only have to pay 15% income tax on money that goes into super (my marginal rate is 45%!) Withdrawals after the age of 60 are untaxed. [PoF: That’s a sweet deal the Australian government offers!]

The two property investments are owned directly by myself, taking advantage of Australia’s negative gearing arrangement.  Because Australian property is so expensive, it is not uncommon for the rent to fail to cover mortgage interest and expenses.  Any shortfall can be claimed against my employment income.  The property investments were selected based on their capital gains potential.

A small stock portfolio is held outside of superannuation in hubby’s name as he pays no income tax (he doesn’t earn enough to hit the threshold).

 

Do you have investments in an HSA? How about 529 Plans?

Within the investments above, we have around $50,000 saved for our kids’ tertiary education.  We did open a specific “education investment bond” but suffered lackluster performance.  They also attracted excessive fees.  Now we just have the kids’ savings in my husband’s account.

We are very lucky in Australia to have a reasonably functional health service free to everyone, but we do purchase health insurance.  The government strongly incentivize high income earners to buy private health, plus we think it is worthwhile to avoid long waiting lists for elective surgeries if needed.

There is no equivalent to the HSA in Australia.  We hope to continue health insurance into retirement, it means far shorter wait times for the sort of elective surgery old folks need.  We will have to pay a manageable excess each time we claim.  Our plan is for these to be funded from our general investments.

 

What has been your best investment?

My best financial investment has definitely been in medical school and postgraduate training.  A great salary makes investing far, far easier.  Since reaching my specialist qualification I have been amazed at how quickly we have been able to pay down debt and invest.

The other best investment I definitely can’t take credit for.  The government here realized they cannot afford to fund everyone’s retirement.

A few decades ago they introduced mandatory super (pension) contributions.  Employers have to contribute currently 10% of an employees’ basic salary into a superannuation fund.  This means I started saving for retirement at age 24, decades earlier than I would have gotten around to on my own.

 

Your worst investment?

A few years ago, as a trainee emergency physician, my salary was increasing pretty quickly.  I felt it was the responsible thing to do to go and see a financial advisor to work out how to do something sensible with my money.

Of course, he convinced me into a superannuation fund with a 4% management fee! He really was a great salesman, and I was pretty gullible to believe his hype that “You get what you pay for”.  I had to undo that decision three years later and dived headfirst into learning all things finance.

 

I've got my 2 acres of non-leveraged, crop-producing, cashflowing farmland via AcreTrader. Get yours.

 

Into the FIRE

 

Numerically, what is your FI goal?

$2.5 million plus a paid off home.  Aiming for age 55, although I may work (paid or unpaid) after that depending on opportunities that come along.

 

When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?

If we continue our current rate of investments, we expect to hit FI when I am around 53 years (in 12 years).

We may delay our FI date to take the boys on an extended trip around Australia.  We took an epic trip before they started school, but only got round ½ the country.  We are considering seeing the rest before the eldest starts secondary school.

More than dreaming of retirement, I like the idea of being independent of having to work for money.  I spot incredibly fun work opportunities advertised that I can’t take on as I’m committed to a regular work schedule locally.

I’d love to be able to try a season as a ski doc, a cruise medic or as an Antarctic team doctor!  I also like the idea of working for Medicins Sans Frontiers.  I’m not sure I have time for all of this, but I’d love to do what I want without money being a factor.

 

What are your post-FI plans? How will your life change? What do you look forward to the most?

In between my incredible “work” adventures, I would settle into my “day off” routine now.  I am totally a creature of habit and love to enjoy a daily rhythm involving a hike, run or swim, learning a musical instrument (currently guitar), reading, working on my blog, and hanging out with hubby.

 

Have you made any major changes in your lifestyle or investments to accelerate your FI path?

I have been following a lot of FIRE inspired blogs and podcasts over the past 4 years, since returning from our epic Australia trip with the boys.  After extended maternity leave and 6 months off to travel, I felt I had some financial catching up to do!

I have learned so much, and I’ve structured my finances in a more efficient way. The most powerful factor has been separating our discretionary spending from essential spending.  My husband and I both get a separate weekly “blow it” budget.  We get to spend this on anything we like, without criticism or questioning from each other.  It us helped us both prioritize what we really want to spend money on, whilst not missing out.  We have very different interests, so having separate accounts suits us well.

I have made a far more concerted effort to cut expenses in areas that we don’t notice.  For example, getting the best deal on our mobile phones, insurances and buying bulk groceries to reduce costs without sacrificing the enjoyment we get from food.

From each pay cheque, money is automatically and immediately direct debited into our superannuation accounts, hubby’s brokerage account and our investment property mortgages.

 

Are you facing any unique challenges making FI or RE more difficult?

I have to acknowledge I have been very fortunate.  I was born to loving parents, who (despite being overleveraged) appeared financially stable.  My mother lent me her old car for my first year of work, so I have never even needed a car loan.

I studied in the UK, qualifying 15 years ago.  My student loan debt seemed terrifying at the time, but in retrospect was tiny in comparison with the US medical student loans I am reading about so often.

 

What advice do you have for others who are seeking financial independence?

Just get started.  I suspect no matter where you start, everyone feels way behind where they should be.  Set some time aside to dream up your ‘perfect life’.  Use these dreams to inspire specific goals, and then work out the gap between where you are now and where you want to be.

Along the journey, take advantage of any ways you can get closer to that ‘perfect life’ despite not being financially independent.  Life’s too short to live regrets, so make sure you allow time and money for those life-defining experiences.

You have to try and strike the right balance between now and later, easier said than done!

 

How can parents financially empower their kids?

The “Millionaire next door” series of books by Thomas J Stanley found exactly this in their extensive studies of millionaires.  Financial handouts from parents are often a hindrance more than a help.

I do plan to pay for kid’s university fees, as my folks did for me.  I will let them fund their living expenses with student loans.

A child’s lifelong financial habits are said to be largely set by age 7!  Much of this is picked up through observation, but kids can learn basic financial concepts from a pretty young age.

I have spoken to my boys about money since they were young enough to understand.  The first lessons involved withdrawing money from an ATM – and that it isn’t a magic never-ending hole in the wall full of money!

Both boys understand that you work to earn money, and that you have to spend that money on “needs” before choosing which “wants” you would like the most.

We have done a few of the Choose FI money lessons, particularly during COVID-19 homeschooling.  We also have board games such as Cashflow for Kids and Monopoly.  My 8-year-old understands the difference between an asset and a liability; I didn’t discover that until my mid-twenties!

The 8-year-old is already a great saver, and I can imagine him getting his finances sorted very quickly after leaving home.  The 6-year-old still blows any money he gets on some plastic toy he is obsessed with for 5 minutes.  I’m hoping it will click sometime soon!

 

Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.

I do feel under an enormous amount of pressure from the people around me in offline life to live up the image that is expected of a doctor.

How do people deflect this kind of pressure?  I am in a stronger financial position than many of these people, but I hate the idea of flaunting it.  Plus my priorities are hidden (investing) and my scruffy car is getting far too much negative attention (it works fine!)

 

PoF: Catch all the future interviews from those just getting started, at a crossroads, or at the end of their FI journey with a free subscription to Physician on FIRE.

 

 

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I’ve shared my feedback privately with today’s guest. I wouldn’t want my opinions to influence yours. Please give your take in the space below!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.

 

3 thoughts on “FIRE Crossroads 017: A Coast FI Physician from the Land Down Under”

  1. 30 hrs/week in the ED is a “part time job” down below? What is a “full time” then? Or you do more of a urgicare type stuff, and day shifts only?

    Reply
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  3. This was a very interesting interview. The Doctor seems to be doing a great job balancing work life with family life with financial progress. Congratulations. I’m curious to know the salary levels for Doctors in Australia and the portion of earnings that go to taxes. It must be very challenging to deal with the property market there – unless I suppose you got in long enough ago to benefit from the dramatic increases. Perhaps it’s similar to parts of Canada or the coast areas of the US. Thanks for the interview.

    Reply
  4. “How do people deflect this kind of pressure? ”
    I know what you mean. My friends, who make about the same as us I guess, have bigger houses, nicer cars, etc. One couple that is more like us, was making a lot of money as a lawyer and business owner and drove a rusty old car. Our other friends were so annoyed about it, and I thought it was great. Now, they have a nice house but work is flexible for them. I imagine they complain about us equally.

    When it comes up, I find conversations around this a little awkward. I have told people, which is the truth, that I love cars but I really don’t like owning nice cars myself. I’m happy you drive a new Tesla, and I love to read about them, but owning one would make me worry too much that I will scratch it or have to think about it. Also, I say that I am spending my money by being able to work less. You could say that, yes, you are a doctor, but you work part time and your husband doesn’t, and you don’t mind trading that off for a nicer car. Seems like the key is not to upset other people’s choices if you don’t want it to get too weird.

    Reply

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