It gets better. That’s the main message I have for today’s FIRE Starter interviewee.
He describes some aspects of life as a resident as “demanding, draining, soul crushing.” Those are strong words, and I can empathize. There is a hierarchy in residency and a lot of work to do. As a second-year resident, he’s pretty low on that totem pole that includes senior residents, chief residents, fellows, and attendings above him.
He will, however, rise through the ranks, and with a busy work life and home life that includes two young daughters, these years will fly by. He and his wife are making financial progress to dig themselves out of debt, and I see a bright future ahead for them.
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.
Getting to Know You
Where are you on your financial independence journey? Have you reached a positive net worth? It’s OK if you haven’t! Most of us started out in the red.
My wife and I are early on in our FI journey and our careers. I am now in my second year of residency. It should come as no surprise our net worth continues to be well below zero. I don’t particularly feel ahead of my peers with our net worth number, so perhaps I am underqualified to be writing this at all. What we do have going for us is a little grit, willpower, and a knack for winning in the margins.
When it comes to investing, I only have 2 years of experience and that started with a Robinhood account (thankfully I’ve continued learning from there).
However, we do have a lot of experience with living frugally. I grew up in a blue-collar family and was a first-generation college graduate. I went to undergrad on an academic scholarship along with summer jobs to pay my other expenses which allowed me to graduate debt-free.
I then attended a state medical school, although not necessarily the cheapest state school, with tuition costing about 45,000 dollars a year. During medical school, my wife finished her undergraduate degree and we ended up borrowing max amounts on her loans to live off since they were at a much better interest rate than mine.
She worked for a little while after graduation, but we decided to start a family and she wanted to take a full year off to be home with our little one, which I fully supported. She started working again after I started residency but when we decided to have baby number 2, she took some time off and is now back working part-time.
At the end of medical school, our net worth was around (-) $207,000. Our current net worth now is (-) $132,000. It is hard to say exactly what our yearly income is because my wife is now working part time, but I would say our combined annual income is ~$75,000. My goal right now is to have our net worth better than (-) $100,000 by the end of residency.
Tell us about your household. How many people? Are you supporting anyone outside of your home? Where do you live?
Our household consists of my wife and me and our 2 daughters. Starting to have kids was one of our biggest decisions, but we decided we didn’t want to wait until we were more financially secure. We decided we want to enjoy being young parents and are hoping to still be able to bike, ski, and vacation better than our future teenage children can, at least for a time.
Currently, we live in the East, but it is unclear where we will go after residency.
In what field are you working? How is your career going? What do you like best and least about your chosen profession?
I work as a resident physician in year 2 of residency. As any resident finishing an intern year, I’ve had doubts on my career choice.
Living at the hospital along with the stress of a never-ending workload, constant pressure from seniors and attendings, and the underlying fear that I don’t know or ever will know enough can be… demanding, draining, soul crushing.
I do like being a physician, though, and I have no idea what I would be if I wasn’t. I have grown leaps and bounds in the last year which has been internally rewarding to see.
I am still deciding if medicine is a calling or a job for me. The worst part of my job is the time commitment. Getting back time is one of the big appeals FI has for me is time freedom.
When I am not at work, I try to spend time with my kids and spouse. My work has taken a toll on my health and that is a real focus for me right now. There have been no true health scares, but I do wish I was able to exercise more and need to eat healthier. Learning to balance work, young children, and my health has proved a difficult task.
What is the most challenging obstacle to making progress towards financial independence?
Currently, I feel my biggest obstacle to progress towards FI is my limited amount of time for saving and investing and our huge debt. Our income is fairly small compared to our debt but obviously, this is temporary, so I have not lost any sleep on this issue yet.
Another obstacle is that I think/know I have too much money in cash. It started off with a well-funded emergency fund of $10,000. However, it grew towards the end of medical school when we saved money to go on some trips.
However, because of the COVID pandemic, we never got the chance. Now we have no time to travel, but holding the cash is us holding on to the ability to do those trips later. We also saved up a lot of money to pay off our medical bills for our second baby, but we recently paid them off which was cheaper than we’d budgeted for adding more cash to the pile.
Another thing I did last year was max out my wife’s Roth IRA, but we didn’t invest the money, just placed it in the Roth as a place holder, so we didn’t lose any money that year.
My wife is a little more conservative than I am, and we decided that we would put the $6,000 in the Roth but keep it out of the market as we could always pull it out if anything happened (remember at this time we were planning another baby and we didn’t want money to be an obstacle to my wife having all the time she wanted to be home with the new baby).
All this plus the slow trickle of unspent cash at the end of every month and we are sitting on about $36,000 of uninvested cash. Now with the market so high, I really debate what we should do.
My newest idea is to pay off $2,500 of student loan interest and get the tax savings next year, but that still leaves a significant amount. I’ve already maxed out our Roth IRAs for this year, but should I max out our Roth IRAs early next year and then put the rest toward debt? Should I start contributing more to my 401k and live off the cash until I’m more balanced? Should I just splurge a little and spend it?
Since starting my financial education, I have really enjoyed winning both big (obviously) but small, too, so please share anything I can do to optimize.
How is your money invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
I am invested in a total market index fund at 82%, an international index fund at 14%, a small value tilt at 1.89%, REITs at 0.59% and a bond index at 0.26%.
Obviously, I am still figuring out asset allocation and rebalancing. I started by just putting everything into a total stock market fund and am now contributing with an asset allocation of 70% total stock market, 15% international, 5% small cap value, 5% REIT and 5% bonds.
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
Me and my wife both have 401(k)s at work and put in enough to get our employer match.
We both have Roth IRAs which are maxed out for this year and the last year.
I have a small taxable account with less than $2,000.
Do you have investments in an HSA? How about 529 Plans?
What has been your best investment?
Financially, my best investment so far has been learning to live frugally without feeling like I am missing out. When I was younger, I loved to ski but learned early that there was a lot more money for ski passes if I was willing to eat PB&Js instead of lodge food.
It seems small now, but the small things seem to add up and make a big difference. Other things I’ve been caught doing include driving a bit of an older car. Last year, we made sure to get the tax savers credit, and I could go on, but there are many other small victories that don’t really make a big impact on our actual quality of life.
Your worst investment?
Not starting to invest or learn about investing sooner.
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What attracts you to the FIRE movement? Do you think you’ll retire early when you’re in a position to do so?
I think, for us, it is the freedom of time that comes with FI. I feel like knowing what I’m doing day to day is by choice and not because I have bills every month would be very liberating.
I have spent so much time pursuing my career in medicine that I sometimes wonder what other passions I might have stumbled upon if I hadn’t been hard at work in a hospital. I love learning new things and picking up new hobbies, so I am sure there are ample things out there for me to discover.
How do you anticipate your life changing post-FI?
I would love to spend more time on my bike and skiing. I really hope my kids will enjoy skiing. I would also like to learn a few new hobbies.
I have always wanted to learn to surf, improve my fly fishing, and more international travel would be something I’d love to pursue. I’ve lived out of the country for 19 months before, and would love to do that again if I could.
What steps have you taken to hasten your time to FI?
Increasing my financial education has been the biggest hastener for us to move towards FI. I hope this will eventually catapult us forward.
Are your friends, family, or coworkers aware of your interest in financial independence?
I have spoken to a few family members in an inviting way to try to move them toward FI as well, but overall, I try to keep my interest in FI low-key, and as we have a long way to go, it hasn’t been too difficult.
What advice do you have for others beginning their own FIRE journey?
I think choosing to spend money on the things we really enjoy and cutting out other things has made a big difference.
I am a big advocate for deliberate spending and then saving in the areas where others are spending.
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
I already brought up the large amount of cash that we have saved. If anyone has any thoughts, please share.
Also, I know I’m new to all of this, so any other advice I would gladly take. If anything we’re doing right or wrong stands out, feel free to point it out.
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I thank today’s interviewee for sharing their story, and I’ve shared my feedback privately with them. I wouldn’t want my opinions to influence yours. Please give your take and answer any questions they have had in the space below!