The good doctor realized that we were once good at reverse engineering our lives, but many of us lose our way as we start living the life that is expected of us by our peers, employers, or an invisible but all-too-common life script. How can we do better?
This post originally appeared on Passive Income MD.
Use Reverse Engineering to Achieve Your Life Goals
When did you know you wanted to be a doctor or practice the profession you’re in?
Whenever that point occurred, you started reverse engineering your life without knowing it. You started with the goal in mind – to be a doctor for example – and you figured out what steps it would take for you to get there. Then you went out with relentless passion and drive and made it happen or are making it happen. That’s exactly what it means to reverse engineer something – start with the goal in mind and essentially figure out how to get there.
For some of you, that decision was made in high school and so you figured out that you needed to go to a good college and then to medical school. Of course, you might’ve hit some bumps along the way (maybe you needed to take a year or two off to do research to improve your application), but you never took your eyes off of the prize.
Do We Forget?
However, once most of us reach the promised land, we seem to have forgotten how reverse engineering works. We just let our jobs and others dictate how our lives will end up. Have to work 50 weeks out of the year to get 2 weeks free? Well, I guess I have no choice. Work to the bone until we’re 65 so we can hopefully retire with enough to last the rest of our lives? Sure, I guess there’s no other way.
You don’t know how many doctors I’ve heard express the desire to retire early someday or wish for a different trajectory in life. However, whenever I ask them what their plan is to get there, they don’t have a clue. For some reason, we’ve forgotten how to reverse engineer our way to our goals.
So What Do We Do?
Well, it starts by taking real steps in the right direction. Here’s my simple guide to reverse engineering your life:
1) Start by figuring out what you want your life to be like in 5, 10, 20, 30 years. Consider your career, family, location, and lifestyle as you do this. Write it down.
2) Figure out whether your current situation is likely to get you to those goals. (Be honest.) If it is, then great, you’re good to go, keep doing what you’re doing and stop reading here. If not, continue on and here’s where it gets interesting.
3) This is where you need to work it all out. What exact steps and changes do you need to make to get you on the path to your goals? Maybe it’s a different job/position, maybe it’s making smart investments that produce passive income to free up time, or maybe it’s moving to a different state altogether. Get specific.
Personally, I try to do this assessment at least twice a year just to make sure my eyes are still on the prize.
Realize that this life is the only one you have and it’s never too late to make adjustments.
A generous and temporarily increased welcome bonus of 60,000 points & Peloton membership credits on the Chase Sapphire Preferred & premium card perks with the Chase Sapphire Reserve!
Chase Sapphire Preferred® Card
60,000 Points with a $4,000 spend in 3 monthsPoF Summary
The Chase Sapphire Preferred® Card is an excellent first (or only) rewards card. $50 annual hotel credit for bookings via the Chase UR tavel portal & 5x points for all travel via the portal. 3x points on dining, 2x on other travel. Flexible rewards good for cash, travel, or transfer to travel partners, great travel protection & new Peloton, Lyft & DoorDash perks! $95 Annual Fee
Chase Sapphire Reserve
60,000 Points with a $4,000 spend in 3 monthsPoF Summary
The Chase Sapphire Reserve offers great travel perks including Priority Pass lounge access, a credit for Global Entry or TSA Pre✓ and a $300 annual travel credit. When using Chase Ultimate Rewards travel portal, get 10x points on hotels and car rental & 5x points on flights. 3x points on other travel & dining. Elevated Peloton, Lyft and DoorDash benefits. $550 Annual Fee
What other things have you been successful reverse engineering in your life?
Staying focused on long-term life goals is super important. When you have to make bigger decisions, it should both benefit the future you and the present you. I sometimes have career talks with colleagues and friends and find that some of them unfortunately choose the more short-term benefits (e.g. choosing a higher salary over enjoyable work or over work that will benefit their career in the long term). That is a shame because “future you” will be worse off! Happy New Year 🙂
I think the beauty of the FIRE community is that many of us are natural reverse engineers. It’s great to read all these blogs and watch in real time as people reach and surpass their financial goals using this technique. Mr 1500 comes to mind.
I think that creating a financial manifesto is of supreme importance (and will have written a post on mine and will write one on the importance of a manifesto soon).
PIMD, I think you are exactly right. We are good at planning success in so many other areas. Why are we so bad at doing it financially? I think a big reason may be because we see the doctors ahead of us that we wanted to become and the little planning they did financially. One of my biggest mentors and one of the most intelligent and knowledgeable physicians I knows still works at 63 because he has to. Not because he wants to. Blows my mind.
Good post.
Reverse engineering requires an adequate tool kit. Remember your 63 year old colleague lived in a time of no cell phones and in fact barely a time of MRI’s and personal computers. There were no brokerages like today’s marketplace. A typical stock trade cost $200 and that was through a personal broker who
was always calling you up trying to sell the latest boilerplate stock being pushed by the brokerage or some mutual fund which typically charged 2%, and had a 5% load. There were no ETF’s. If you read Money magazine it was all about stock picking and choosing the right fund manager. Annuities and front loaded funds were everywhere and you could even make 4% on your bank account. My first IRA had a $2000 contribution limit, and SEP’s were limited to about $22,000. You think your going to FIRE on $24K per year pretax? Roth IRA? What’s that? 401K’s were legislated in 1978 and not really implemented till 1981, the year I started medical school. A brokerage account application was longer than my med school application including recommendation letters transcripts etc. The financial industry was about separating you from your money. It’s still about that but in a much more subtle way.
Bogle investing was NOWHERE on the horizon. Vanguard wasn’t even founded till 1975 and it languished as a tiny little company until the value of cheap index investing was realized in the early part of this century. Gene Fama didn’t get the Nobel till 2013. So the particular environment you have inherited with online access and Bogel three fund, and Buying 1000 shares of SPY for a $5 fee from your hand held world wide web connected computer is a very recent phenom, and is the ONLY reason you can even consider FIRE, because you can force the returns in your favor. Given the 1980’s-1990’s investing environment you had to actively seek out the creative destruction which has given us what we have today. Your “manifesto” would have been eaten alive by the gate keepers of 30 years ago. I’m all for a good plan but a good plan is about leveraging a permissive environment. Reagan set the cap gain tax rate to 28% and it has steadily declined since. If you make$101k in retirement your cap gain tax is zero. This makes a huge difference. We are fortunate to live in a permissive environment.
I can only pile on, since I’m among the fortunate. I graduated from residency when anesthesia locums started at $150 an hour and “overtime,” which started at 8 hours, paid $200 or more (via agency). Twelve years later, locums rates haven’t kept up with inflation when I look at Gaswork, but the money I made back then has more than doubleed thanks to a very kind stock market.
I don’t try to pretend my good fortune is reproducible, but the same principles apply. Earn more, spend less, desire less, and a very good life lies ahead.
Cheers!
-PoF
“Earn more, spend less, desire less, and a very good life lies ahead.” Kind of like the Millionaire Next Door, published in 1996 which was based on research from 70’s, 80’s, and 90’s. Of course most of them owned their own businesses. Maybe easier/cheaper to invest nowadays but the principles haven’t changed.
“Have to work 50 weeks out of the year to get 2 weeks free?” That’s one big reason to break away from those golden handcuffs. I’d be reverse engineering like crazy!
I like to reverse engineer many financial aspects of life. Like how much do the kids need for college and how much do we need to save yearly to get there. If I want to buy a new car in 5 years, how much will my current car be worth when I sell and how much of the difference do I need to save.
Of course the biggest one is our FI number! How long and how much to FI