One of the big keys to financial independence is the control you regain over your own life and affairs. No longer are you beholden to an employer or a business for your livelihood. No longer are you trading authority over your waking hours in exchange for a paycheck you need to survive.
In today’s Post FI Notes entry, we meet a dentist with a thriving practice who discovered that once he reached FI, he could take a step back — from just about everything.
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
You’re financially independent. About how much does your household spend in a typical year? How much could you spend while still abiding by the 4% rule?
I would like to thank PoF for inviting me and allowing me to share my story. I hope to entertain and enlighten your readers on my journey to financial independence. My hope is to give a little inspiration to others as they navigate through their own journey.
We spend about $85,000 pre-tax in a typical year. That translates to $60,000 after tax per year, or $5,000 per month.
If we abide by the 4% rule, we could spend about $16,000 after tax each month.
Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?
We are a family of 4. My wife and I are in our mid-40’s, and our 2 kids are in middle school. We live in the upper Midwest.
Are you still working? In what career? Did your work schedule or attitude towards work change once you knew you were FI?
I’m still working, but in a different capacity. I run a dental practice, but I’ve stepped back from my clinical position. I consider myself the managing partner of the practice.
My work schedule and attitude did change once I reached FI. I was working extremely hard and spending many hours at the practice, including catch-up work on the weekends.
I started missing out on a lot of our kids’ activities and events. I became exhausted when I came home in the evenings. I was tired on the weekends and lacked the energy and enthusiasm to attend our kids’ activities and other events with family and friends. Was it possible that I was, dare I say, experiencing burnout? I’ll leave that opinion up to your readers.
Nevertheless, that was when, as a family, we decided I needed to step back from my clinical position and focus on just running the practice, which I really enjoy doing. I’ve been doing this transition for about a year now.
Besides running my practice, I also oversee our portfolio of rental properties. It doesn’t require a lot of time, but it does require me to be in touch with our property management company. I do review the monthly statements that come in and make any phone calls to management when necessary.
I also manage our other investments, including our stock market portfolio. Outside of our 401(k) and profit sharing plan at the dental practice, I manage everything else, including our brokerage accounts, Roth IRAs, rollover IRAs, health savings account, and our kids’ 529 plans.
I thoroughly enjoy doing all of these things, and I have a deep passion for what I do. It keeps me busy and my mind sharp and engaged. My wife would say I’m always crunching numbers. I’m of the mindset that numbers don’t lie. You can’t play the game unless you understand the numbers.
Was financial independence a long-term goal of yours? Did you think you might retire early or be able to do so when you first got started in your career?
Financial independence was definitely a long-term goal. When I first got out of dental school some 20 years ago, I became very intrigued with personal finance and investing.
As I read up on the subject, I discovered that I had a deep passion on that matter. I learned about investing, large caps, mid caps, small caps, asset allocation, and so forth.
As a young dentist (before kids), I would spend many evenings reading and watching whatever I could on business and finance. I was like a sponge, soaking up everything on personal finance and investing, and I loved it. I ran numbers and used formulas to estimate how much of a nest egg I would need in order to retire.
Early retirement was never on the radar for me in my early years, but financial independence definitely was. About 10 years into my career was when I realized that I was getting closer to my FI number, and at a much faster rate than I had anticipated.
Eventually, I did hit my FI number and decided to step back from clinical dentistry. I don’t consider myself retired, as I am still working. But I love and enjoy the work that I’m doing, and I’m living life on my own terms.
The path to financial independence has allowed me to take on projects that give me fulfillment, and I consider myself very fortunate to be in that position.
How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
Our nest egg is divided up into 50% in the stock market, 25% in real estate, and 25% in the dental practice. Ideally, I would like to get that mix back to about 1/3 each.
The amazing run of the stock market in the last few years has skewed the percentages. I would love to get feedback from your readers on what they think an ideal level of diversification would be.
About 8 years into my career, I knew I needed and wanted to add diversification to my investments besides the stock market and my dental practice. Thus, I started adding on real estate to my portfolio.
Our stock market portfolio is allocated 80% equities and 20% bonds and cash.
Our real estate portfolio consists of a mixture of multifamily units, single family homes, and REITS.
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
We have investments in a 401(k) and profit sharing plan at the dental practice.
We have Roth IRAs and rollover IRAs, and we also have “taxable” brokerage accounts.
Most of our stock market investments are in our brokerage accounts.
Do you have investments in an HSA? How about 529 Plans?
We have an HSA. We primarily use it as a traditional IRA, as we don’t currently draw anything out of there. We plan to eventually draw from our HSA in retirement.
We have 529 plans for our kids. The plans are fully funded for college. We don’t contribute to the 529 plans anymore. We frontloaded our kids’ 529 plans for about the first ten years, and once our goals were met, we stopped contributing a few years back. If for any reason our kids needed more money for college, they will need to take out loans, just like what my wife and I had to do for college.
What has been your best investment?
This is a tough one. We’ve been fortunate as all of our investments have done relatively well over the last 20 years. We’re diversified between the stock market, real estate, and the dental practice.
Our stock market investments have given us an 11-14% annual return. Our real estate investments have given us a 15-25% annual return. Our dental practice has given us a 10-12% annual return.
If only going by numbers alone, our real estate investments have given us the best returns over the past 20 years. But I believe our dental practice has been our best investment.
It is the foundation of our investments, and it provides the cash flow needed to jumpstart all our other investments. I would love to hear what your readers have to say on this matter.
Your worst investment
Our primary home, if you can call it an investment, would be the worst. When compared to our other investments, our home has only appreciated about 3% annually.
I think a primary home should not be considered as an investment, and I have always excluded our home when calculating our net worth numbers. Other readers may beg to differ, but it’s great to live in a world where we can have differences of opinions.
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What do you like to do with your free time? How much free time do you have these days?
Life has slowed down, and time has really slowed down for me. I’m not in a rush to get things done anymore. There’s always tomorrow to get to it–if I’m in the mood.
I enjoy being with the family, working on projects around the house, and working in the yard. I can go to all our kids’ activities and events now, and my wife is plenty happy.
I certainly have much more energy to attend all the activities, including seeing family and friends. I enjoy having a lazy lunch in the middle of the day with my wife.
If there’s a day that I don’t feel like working, I can instead go out for a bike ride or a hike, or I can take a slow drive up to the lake. I enjoy taking short road trips around the Midwest.
I work about 25% of what I used to work. I do have an office manager who handles the day-to-day activities at my practice, so I don’t have to be there on a daily basis.
A lot of my work can be done from home, and this allows for a lot of flexibility in my schedule. This is all work that I truly enjoy doing and am passionate about.
Do you enjoy travel? Tell us about a favorite trip you’ve taken.
I enjoy taking short road trips around the Midwest. I especially enjoy going to Door County, WI. It’s a place I’ve been going to for 20 years.
It’s where I can get away from civilization, regroup my thoughts, and get re-energized. Many of my inspirations and life decisions have been made while in Door County. It’s amazing how clearly I can think when I’m watching a glorious sunset over the bay, surrounded by white birch trees, with just the sounds of the wind and waves crashing against the shore and my favorite beverage in hand.
With more free time, I hope to spend many more days there and make some more important decisions on my next chapter in life. By the way, the Door County Department of Tourism is not paying me for this advertisement.
Do you incorporate giving (money or time) into your post-FI life?
With more time, I’m looking to volunteer more, especially on dental-related missions and at community dental clinics.
If retired, do you miss work? Do you get bored?
I’m not retired. I don’t get bored. I have enough to keep me busy. The path to financial freedom has allowed to me to take on projects that give me fulfillment. I enjoy the work that I’m doing, and the pace is just perfect.
What advice do you have for others hoping to achieve the financial success you’ve found?
Start as early as possible. Become financially literate and financially savvy. Save 30-50% of your pretax income.
When I first came out of dental school, the experts were saying save at least 10-20% of your income. I knew I wanted to reach FI earlier, so I decided to save at least 30% of my income.
As my career progressed, I kept pushing that percentage higher and higher, eventually, getting to 50% during my best years.
Save and invest first, then live on the rest. I found that I got used to that pretty quickly. Live a modest lifestyle and live within your means. The more you save in the early years and allow compounding interest to take over, the sooner you’ll get to FI.
Getting to financial independence takes persistence, determination, and discipline. Understand the why. Take action. Go forth in life with a plan.
Why did I want to reach Financial Independence?
As life goes on, I’ve come to realize that time is the most precious commodity. With time, you can live life on your own terms and do what you want to do. FI has given me control over my time, and I intend to live it fully.
The tragic death of Kobe Bryant (age 41) a few years back in a helicopter crash really affected my opinion on life. At the time, I was close to hitting my FI number and contemplating a decision on stepping back from my clinical position at the practice.
What was the one thing that Kobe Bryant didn’t have? Time. His death reconfirmed my long-term goal of reaching FI, taking back my time, living life on my own terms, and doing whatever I want to do. Life is short, and tomorrow is never a guarantee.
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
There are a lot of doubters and naysayers that think financial independence is folklore. They believe FI is only achievable by the 1% and high income earners. They believe FI is not attainable by the average person. What’s your take on this?
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.
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!
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.
6 thoughts on “Post FI Notes 016: In Control of Your Time and Your Wealth”
May I ask what amount you hit per child when you stopped funding the 529s and let them just grow on their own? I shot for 100k per child for two, have some GI bill to supplement that, while still watching it grow, debating if it is enough. Thanks for the post!
I aimed for $100k for each kid before I stopped contributing. But really, it was about $40K per kid that I contributed. The rest was appreciation. I did 100% equities(60% SP500, 40% Small Caps).
As to the last question, I feel like I’m an average person (working in education, never made above 5 figures) and the math says I’ve reached FI. It’s attainable if it’s a goal and especially if you start early. The power of compounding is a wonderful thing.
I assume he hired dentists to actually see patients at the office, and that he takes a cut. That’s all fine and the American way of course, but professional employees can get jealous of that arrangement in a hurry. Is there stress associated with those negotiations every year?
You are spot on Drbob. I left a very profitable private practice after my military stent. It took 3 months of seeing what I was producing and collecting for the senior dentist that I came to the conclusion to go off on my own. Never have looked back since. My colleagues that have multi-dentist office(s) will quickly admit to the stress of management of the other professionals as well as a larger staff. I have seen it done quite successfully though.
FIRE Crossroads 018
This is very interesting. Today’s younger dentists, I have found, are less and less interested in ownership. They are comfortable with being long term associates. I’m not sure why, but I have a few guesses.
1) High student loans
2) Expensive to purchase a practice and real estate that comes with it
2) Risk averse
3) Noncommital to a location(can move easily to another city)
4) Wants a steady paycheck and no ownership responsibilities
I have accepted that every few years, I might need to find a new associate. But, I will gladly take this option over the daily grind of clinical dentistry.