I’m often humbled when medical students and residents reach out to me, eager to share their financial successes to serve as an example and inspiration to my readers.
You know what I did to improve my finances as a medical student? I lived like a college student in terms of housing and I had a keen knowledge of which bars within walking distance had the best food and drink specials for any particular night of the week. That’s about it.
As a resident, I did contribute to a Roth IRA, but I also lived in a swanky downtown condo, bought a mustang convertible, and lived more or less paycheck to paycheck.
Today’s guest author, who wishes to remain anonymous, has done so much more than that, and he’s not officially done with medical school yet. As a final year medical student, that could change any day.
He’s made tremendous progress towards financial independence, using what little free time he’s had to develop several streams of income. More impressive, he is pledging profits from an online business to support COVID-19 relief. More details can be found at the bottom of the article.
It’s Never too Early to Start: The Rapid FIRE approach of one Enterprising Medical Student
Ok, so what does a medical student have to say about FIRE? At this point I should be focused on my education, training, and residency, right? Plus, with limited assets, what steps could I really be taking to set myself up for financial independence aside from waiting for that attending pay bump?
Well, necessity is the mother of all invention as they say, and what I would like to do is talk about some strategies anyone can implement with limited time and limited money. Think of it this way, if a medical student can do it, why couldn’t you?
Before I get into the details, I’d like to start with some background. I’m a 30 year old MS-4 from a middle class family. No trust fund or anything fancy growing up; I paid for college and medical school on my own. I’ve matched into a surgical specialty and have been practicing FIRE for the last 3 years.
In college, I lived at home to save money and while I graduated with an Ivy league degree, I also had Ivy league levels of debt. I took some time before medical school to work in a research lab and paid my loans aggressively.
It was somewhere around this point that I really started to worry about what my debt would mean for the future. I was renting an apartment near the lab and lived on less than $800/month for rent + food + everything else while putting $2500/month toward my loans. Already, I could see my loans (80k) taking a huge chunk of my monthly income. I almost decided against medical school for this reason alone, but in the end I took the plunge.
As a medical student, I was already 40k in the hole from undergrad, and I financed the entire cost of my tuition at one of the most expensive academic programs in the country (approx. $60k + living expenses annually). At this point, it was undeniable that my loan burden would be unacceptably high, and I began to pursue strategies aimed at reducing this total amount.
In the end, I implemented several approaches and reduced my total debt burden at graduation to roughly $195k. But more importantly, I developed some strategies for providing income that were scalable, had flexible time commitments, and in some cases were passive.
Key to this process was the pursuit of side hustles. From working night shift in the lab to starting a biotech company, consulting gigs, affiliate sites, and investing, I’ll go over some of the most and least effective strategies I’ve found while trying to achieve FIRE.
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Time is Money
The most straight forward side hustle I employed during medical school was simply to work. For about 18 months, I kept my job as a research assistant and worked at nights and on weekends analyzing samples for about ½ of my full time salary. In the end, the lesson here was simple. Hard work is great for providing needed income, but trading time for money is not a great long term strategy.
The World of Biotech
Around 5 years ago several co-founders and I started a biotech company. Our aim has been to deploy a novel imaging technique that can be used to replace certain aspects of histopathology. Instead of analyzing stained samples, we have developed hardware and software that can easily identify and classify unstained tissue in seconds.
We’re in the midst of our second human trial and in the last few years have grown into a small operation with a mid 7 figure valuation. Rather than discuss this outlet here, which is largely the result of luck, I will instead focus on something that I think is more generally accessible, and untapped by physicians at large – startup consulting.
There is tremendous demand for people with medical knowledge. This fact is easily demonstrated by the fact that I, a mere student, have served as the medical consultant for 3 different companies in the last 4 years.
Consulting gigs are great because you can really shape the terms and level of involvement. Sometimes people just want to bounce ideas off you and see if they’re heading in a reasonable direction. Other times they want access to specimens, the ability to see inside an OR, or help with coordinating a research study at your site.
Simply knowing how a hospital system works and where the value lies is of tremendous worth. People outside the medical system simply do not have this knowledge and new ventures often fail not because of poor design, or poor technology, but because they solved a problem that did not need to be solved. It was clinically useless and dead from the start. You can help them avoid this hurdle, and they know it.
If you’re a radiologist, think artificial intelligence. Building the algorithm is easy, but finding a solution that hospitals would pay for is another ballgame. Think about what steps you spend the most time on. Contouring a feature? Assigning a severity grade based on feature analysis? There are companies doing this and dying for clinical support to figure out which tasks are the most meaningful to you.
Are you a proceduralist? What slows down your cases (aside from residents and students). Human factors? System factors? The instrumentation? What do you wish you could do to make your case faster/better/cheaper? There are people looking for this kind of insight in designing their product.
So, how to get started as a consultant? My exposure to the community comes largely through my own startup since it ends up being a bit self-reinforcing. However, for others without this benefit, another route would be to try the following: Become a judge at a pitch competition. Your regional university has them and would love an MD on the panel. We’ve turned more than a few judges into advisors. Failing that, search for “biotech startup competitions” or “pitch days” and see what comes up.
Alternatively, accelerators like Sling Health (https://slinghealth.org/) [no affiliation] are national groups aimed at pairing up early ventures with a need (legal, medical, scientific) with expert advisors.
Bottom line, do not underestimate the value of the knowledge you have gained just from being a doctor. I don’t mean the pathophysiology or the biochemistry, I mean the ins and outs of working in a hospital, of ordering tests, and seeing patients. There is so much room for improvement and innovation in a hospital, and companies are willing to pay for your guidance on where to look.
Passive(ish) Income: Affiliate Sites and ATMs
Much has been said about affiliate, or niche sites as a vehicle for passive income. In short, you connect customers with suppliers of a product through reviews, articles, and links to those items. In doing so, you earn a small commission from the seller for sending traffic their way. Picking a market, finding the right keywords, search engine optimization, and website design are all hurdles with a somewhat steep learning curve. Mistakes along the way can mean limited returns from a given website.
However, the upside is clear. A well designed site ranking on the first page of google can make $300 – 1000+ per month with limited recurring time put in. Once the bumps in the design process are smoothed over through practice, one could spend a long weekend pumping out 2-3 sites and make $75-150 per month from each. Odds are that none will be too impressive on their own, but having 10-20 can yield substantial returns. Enough, for example to cover those monthly student loan payments….
The best advice here for those looking to get into affiliate sites is to just start. You will learn more from making a single site than from reading about how to make the perfect one. Over time, defining a niche will be easier and the whole process will be almost automatic.
Additionally, to make it less tedious, pick something you care about. This can be a personal hobby that you are knowledgeable about or a cause you support. For me and a partner, the most recent iteration of an affiliate site is aimed at addressing the PPE shortage during the COVID pandemic. For offices, clinics, and healthcare workers facing equipment shortages, we connect them with suppliers who still have N95s, surgical masks, and sanitary equipment in stock.
We also have refresher guides on the proper use of this equipment. The aim here is to match suppliers that still have equipment in stock with healthcare providers who need them. The site is https://www.n95masksupplies.com/ . Additionally, in light of the current shortage, we are donating all the proceeds from these affiliate mask/glove/etc. sales to go-fund me pages aimed at supporting physicians who are lacking the supplies they need. Most recently: https://www.gofundme.com/f/a-million-masks-coronavirus-support-fund.
Think of this like real-estate lite. Maybe you don’t have the capital to buy a home and rent it out. But you probably can scrape up the cash to buy an ATM. For 2-5k, you can be the proud owner of a middle of the road machine and depending on location, earning $200-400 per month through transaction fees. You may find reports of higher numbers, but unless you have a stellar location, don’t expect too much more. However, as for niche websites, with a small network of machines it really starts to add up. And if you decide to cash out, much like with real estate, the machines can be re-sold to the highest bidder.
The downside with this approach is that an ATM is not truly set it and forget it. They must be periodically maintained and frequently reloaded with cash. However, there are ways around this dilemma. First, some store owners where an ATM is placed may offer to restock the machine for a nominal fee. The belief is that having an ATM on site will help their business anyway, so the restocking costs will be lower.
Alternatively, to continue the real estate parallels, there are “landlords” for ATMs that will do some of the work for you. Essentially, these are services that restock and maintain ATM networks. They will eat into your margin, but can greatly reduce, or eliminate, the time spent managing your ATMs. Additionally, many can address the need for the upfront cash that is needed to consistently restock a small ATM network.
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Investing: So Many Options, So Little Time
Investing is a tricky topic. There are so many different strategies tailored to one’s own risk tolerance, liquidity needs, and investment goals that any insight into my own strategies will be of limited use.
That said, for those at my stage of training, either as students or new residents, the simplest place to start is to understand there are two major strategies you might employ for building wealth. One is just going long. Since its inception in 1926, S&P 500 has averaged roughly 7% real (inflation-adjusted) annual returns.
Consequently, going long on some bluechip stocks or index funds and waiting until you have some more time and money to invest heavily is not a bad idea. preferably, this is done in a tax deferred account. The amount of day to day oversight is low and by the time residency is over you’ll hopefully have a few thousand extra dollars in your account. Don’t underestimate the power of compound interest.
The other strategy, and my go-to, is leverage. This can be in the form of margin accounts or derivatives like options. Here, both gains and losses are multiplied by the degree of leverage employed. However, for those with limited access to capital, using leverage can make investing more meaningful. Using smaller amounts of money, you can control larger sums and thereby take advantage of the larger real gains during swings in the market.
In summary, even as a trainee I hope it is clear that there are ways to generate income that can contribute meaningfully to your financial future. As physicans, we often take large debt burdens in the course of training, and there is no promise that future earnings will continue to offset these costs. Having some flexible and scalable alternatives for generating income offsets the high cost of your education and opens doors to avenues outside of medicine that you may have never considered.
P.S. if you, your colleagues, or the facilities in your area are running short on N95s, surgical facemasks, gloves, or sanitary supplies, please send them our way. Every day we’re finding the suppliers who still have these items in stock and connecting healthcare providers to these resources through our site. While the pandemic is ongoing, any and all profits from the commissions on www.n95masksupplies.com will be donated to go-fund-me pages like this one: https://www.gofundme.com/f/a-million-masks-coronavirus-support-fund, aimed at purchasing the needed equipment in critical areas.
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When did you start down the path to financial independence? What side hustles or entrepreneurial endeavors have worked for you or for others?