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The Locumstory Podcast: Financial advice for early career physicians with The White Coat Investor, Dr. Jim Dahle

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The White Coat Investor (Dr. Jim Dahle) shares financial tips for new physicians about financial mistakes to avoid, paying down student loan debt, and how locum tenens can play a part in their financial and career success. For more information from Dr. Dahle, visit thewhitecoatinvestor.com.

Rob Hanson

Hi there, and welcome to another episode of the locumstory Podcast. I'm Rob and today I'm joined by a very special guest, emergency physician, Jim Dahle, who is the founder of the White Coat Investor. For those who aren't familiar with it, the white coat investor is a multimedia company geared towards physicians to provide info about personal finance in a variety of formats, including blogs, podcasts, newsletters, books, conferences, and more. You know, I first connected with you back in 2016.

And it has been really cool to watch the White Coat Investor grow and see the huge impact that you've made on people's financial health and overall well-being. So yeah, it's great to see you again, we have got a few questions for you. But I wanted to start off. It seems like all great companies have a cool origin story. You got Apple being started in Steve Jobs' garage, and Nike ran out of Phil Knight's car out of the trunk of his car. So maybe could you start off telling us how and why you started the White Coat Investor?

Dr. Dahle

Well, it didn't start in the garage, it was more of the living room. But, you know, similar story. So l ended up with lots of weekday mornings, in which my time was not really being used. And you can only go skiing by yourself so many times before you start looking for something else to do with your time you know, your kids are at school, your spouse is off doing stuff, your friends are all at work and and vou have a little bit extra time. But I developed an interest starting in residency in finance, got sick of being ripped off by financial professionals and started educating myself. And then over time realized as I spent time on online forums, that I was educating other people more than I was learning. And I got sick of typing the same thing into the internet repeatedly. So, I basically said, Let's start a blog, then I can just post a link to the blog posts and answer their questions. And that was the origin of the white coat investor; I got excited about passive income that year. And so it actually started as a for profit business from day one, for quite a while. But that was kind of the origin story in May 2011, put up the first post, and it has grown since there.

Rob Hanson

I know a lot of your content is geared towards residents, fellows, you know, other early career physicians. But why do you think you focus so much on this audience? And what is typically the first piece of financial advice you give to physicians just starting out?

Dr. Dahle

Well, I think we've tried to move away from there. Like there was a big focus during our conference we had a couple of weeks ago to on Doc's that are pre retirees and even retirees and we spent a lot of time talking about the issues that are specific to them. But the truth is, if you can get this information to a doctor, at the beginning of their career, it is just a lot more powerful, there is more time for compound interest to work. And the truth is your first really good financial book that you read, in your life, for a doctor with their high income is probably worth a couple million dollars to you, you know, it's just really valuable to become financially literate early in your career. And so, you know, everyone always wishes they had learned it earlier. So, we just started trying to get it to people earlier. And that's really the focus on residents, fellows, even students, I wrote a book a couple of years ago called the White Coat Investors Guide for students. And we actually give it away to every first year medical and dental student in the country via what we call our champions program, basically a champion of the class, we send them a few boxes of books, and then pass them out to their entire class, it's just really helpful to get the information early. So, I guess if I had to give one piece of advice to somebody, it's become financially literate. Finance has a language all its own, just like medicine does. And until you understand the terms and what people are talking about, it's hard to even have a conversation, you know, much less start learning anything useful. And so that's my advice to people, you do have to learn what a Roth IRA is. And a mutual fund is an expense ratio is a capitalization ratio. These things are not as hard as what you're learning in your main job as a doctor, lawyer, a dentist or whatever. But you do have to learn them. And so, the sooner you learn them, the better.

Rob Hanson

And typically, personal finance is not something covered off in medical school or in residency or fellowship programs.

Dr. Dahle

Well, Rob, it is worse than that. It's not only is it not covered, but you're actively dissuaded from learning it. You know, it's almost a taboo in medicine that you should not know anything about money, that you shouldn't pay any attention to money. But I found just the opposite to be true, financially secure doctors are better physicians, parents and partners, honestly, because they are less worried about the money, and they can concentrate on their patients and their families and their own wellness. So, you know, it is a problem that nobody learns about this in medical school or dental school or residency or fellowship, or even after they come out of that. But we are trying we're trying to get there, you know, we put the information out there. So, it is just in time learning whether you prefer a blog or email newsletter, or a podcast or books or online courses, however you want to learn. We have packaged it up in that format and tried to teach it to you. So, when the student is ready, the teacher will appear you're fighting the good fight out there. That is what it feels like. I mean, I feel a little bit of missionary zeal about it because I get so mad. When I meet a doctor that's 45 or 50. And they've been taken to the cleaners by a financial advisor or, you know, they've been put in some terrible whole life insurance policy that they don't even need it. And, you know, I just get really fired up about it and try to help them. You know, I mean, when I wrote that medical school essay that I liked science, and Tike to help people, it was true. You know, I do like helping people. And so, it's been a fun journey and I have been able to help a lot of people.

Rob Hanson

What is the biggest financial mistake that you see early career physicians making? And how do you think it can be avoided?

Dr. Dahle

I think the biggest problem is they just grow into their income, right? You go from making 50, or 60, or $70,000, as a resident or a fellow, and then you become an attending. And all of a sudden, you're making 200, 300, 400, $500,000. And amazingly, you grow into that within a year or two. And now you are spending $500,000. It's amazing what doctors can spend, if they don't deliberately spend less than they earn. I saw a Medscape survey recently. And it said 7% of doctors live above their means, meaning they're spending more than they're making. And close to 50% are living at their means. Meaning they're living hand to mouth, everything they're making their spending. And I find that amazing, you know, I mean, it sounds so out of touch to the average American, the average household income is essentially a residence income something like $60,000 a year. And for a doctor to say, I'm having trouble making it on 200,000 plus a year, just sounds deaf to them. And so, what I encourage them to do to try to avoid this problem of growing instantly into their income, having this lifestyle explosion is to try to live something similar to how they are living as a resident for two to five years after they come out of training, and just get some off on the right foot. Suddenly, by mid-career, the doctor who does that has all kinds of choices. And a doctor who does not is still feeling strapped and behind at 45, 50, 55 years old.

Rob Hanson

That's great advice. So I have a brother who's an anesthesiologist. And I remember when he finished training, all of his peers, you know, a lot of his peers were, you know, buying new boats and new cars and multimillion dollar homes. And he was like, what is going on? Like, like, am I the crazy one here? And it turns out, he

Dr. Dahle

He wasn't, you know, he's the odd one. Yeah, but he's not the crazy one, the crazy ones, the majority that they grow into that. And it's hard to cut back on your lifestyle, go backwards, have a shower, and a crummy place to live and have more of a beater of a car and take less expensive vacations. You are far better off growing as slowly as you can into your income, and always feeling a little bit wealthier every year, not because you're necessarily making more. But because you're spending more as you go along. But if you go from zero to 60, you know, instantaneously, you're never going to have that opportunity to gradually increase your standard of living throughout your career.

Rob Hanson

Yeah, that makes a lot of sense. You kind of touched on a little bit. You know, med school debt is a huge challenge for a lot of new physicians. What is your best advice for paying down medical debt efficiently?

Dr. Dahle

Well, you've really got two options these days. The first one is get it forgiven. And a lot of doctors will take a job that qualifies for public service. Loan Forgiveness, the basics are if you work full time for a nonprofit employer not contracted with them but as a full-time employee for 10 years and make payments on your student loans. The rest is forgiven tax free. And that is an awfully good deal for anybody interested in academics or working for the VA or community health center or anything like that. And so that's number one, you know, if someone else is going to pay off your debt, you shouldn't be paying it off yourself. If that is not your career path, then you're most likely going to be paying it off yourself. And the best way to do it is to do it quickly. I mean, that's basically if people treat student loans like a pet, they keep it downstairs for 10 or 15 years. And you do not need to do that. If you will live like a resident for two to five years after residency, every doctor can be free of their student loans. By the end of that two-to-five-year period, I have met lots of Doc's who paid off 200 300 400 plus $1,000, in 234 years, it can be done. And once you believe that, and you discipline yourself enough to not increase your lifestyle dramatically. When you come out of training. You can do it you can get in paid off pretty quickly. And that feels pretty good. It's also kind of a test run for early financial independence. I found that those people that can pay off their student loans in three years can be freed from having to work by mid-career. It's a pretty cool medicine, a lot of fun, but it's even more fun when you don't have to do it. And and you have the option to work as many days or as few days as you want to adjust your call schedule to tell an administrator to stuff it. If you don't like the way they're telling you to practice medicine. It's nice to have options and by mid-career, you'll value those a lot more than maybe you do coming out of training.

Rob Hanson

Yeah, that definitely rings true. You mentioned this a little bit that you truly enjoy helping people. What's the most rewarding part of all of this, everything that you're doing, and you know, helping doctors and other, you know, high net worth individuals learn how to be financially healthy?

Dr. Dahle

I really enjoy it. And that's part of the reason why I still practice medicine as well, you know, you're helping people, one at a time. And that might not be a good way to scale a business. But it is a very rewarding way to have a career.

Rob Hanson

Yeah, I think those personal interactions are vital, pretty much in anything you do in life. So yeah, I really liked that. What do you think financial success means? You know, is it a long-term goal?

And do you think early career physicians can find financial success along the way? Yeah, absolutely.

Dr. Dahle

You do not have to be financially independent, to be financially successful, you know, financial success looks differently a year out of residency, 10 years out of residency and 25 years out of residency. And so don't you know, go comparing yourself to your partners that came out of medical school 25 years ago, with $15,000 in student loans, you know, that's not going to compare well. And if you're trying to live the same lifestyle they're living, you're going to be severely disappointed with the financial progress you're making. So, what does financial success look like? I think it looks like being at a place in life where you don't worry about money, or money doesn't really affect how you live your life, where you never have a fight with your spouse about money. You never wake up at three o'clock in the morning worrying about money, it doesn't affect the way you practice, it becomes a non-issue in your life. Yes, you still have to pay a little bit of attention to it here and there and make sure it's being managed well, and that sort of thing. But it basically ceases to be a concern in your life. And then you can concentrate on more important things.

Rob Hanson

I think that's true, not just for physicians, but I think for all of us. Really, the big secret,

Dr. Dahle

Rob, you know, is that 95% of what's on the blog, and the podcast applies to everybody, you know, and maybe 4% applies only to high earners, there are a few unique physician specific issues. You know, the student loans are pretty unique. Shared with a few other high-income professions, the asset protection and liability concerns are pretty unique. Doctors also have a few unique retirement account issues, but for the most part, personal finances is the same for everybody.

Rob Hanson

Yeah, I read your book and listen to the podcast and consumed a lot of blog posts. And I totally agree, I think 98% of it has been really applicable to me, unless you have anything else. I've got one last question. All right, let's do it. And since this is the locum strike podcast, I have to ask, How do you think locum tenens can play a role in helping physicians achieve their financial goals?

Dr. Dahle

You know, I think there's a lot of ways that locums can be used. It can be used as your entire career. There are some people that love to travel; they love to do new things. Novelty is a big part of their life. And so, they spend time in Australia, they spend time in New Zealand they spend time in Alaska, you know, the bouncing around and try new things. So, I think that's one way that some people use locums. I don't think that's the majority. I think a lot of people use it as kind of a side gig. You know, Moonlighting, if you will. And they have their regular job, and they take some time off from it or they do locus on weekends, maybe to boost their income a little bit or just try something new. I've seen other people use it toward the end of their career. You know, in particular, I can think of one general surgeon who said, Well, it's really hard for me to cut back right, I've got this practice. I can't go to three quarters time or halftime, you know, in the later years of my career. But what he found was if he dropped that practice, he could do that, using locums. And there are plenty of small towns that would love to have a general surgeon, they've got a general surgeon that's been on call, you know, 24/7 365 for the last five years, and we'd love to go on vacation with his family if someone could come in and cover for a year for a week or two. And so, we did a bunch of those things in the last few years of his career, and really had a rewarding practice and was able to work exactly as much or as little as he wanted to. And so, I think there's a lot of times in your career where locums can be used, you know, profitably and to also boost your longevity in the career, which is really, you know, probably the most important financial thing a doctor can do. You're just way better off, you can practice for 20 or 30 or 40 years. And if you burn out in eight or 10.

Rob Hanson

Yeah, one of the things you said I think is one of the great things about locums, which is the idea that you can work when you want where you want, how much you want, how little you want. I think that's something that a lot of physicians' kind of don't realize, until sometimes it's too late. Well, Dr. Dahle, thank you so much for spending time with us today on the look and stroke podcast. We really appreciate it, and to all of our listeners if you'd like to access more financial tips from Dr. Dahle, visit the whitecoatinvestor.com Check out his podcast. I'm guessing you're on Apple, Stitcher, Spotify, all those good places.

Dr. Dahle

Yeah, we want to be found just like everybody else. So, everything is branded white coat investors. So, whatever you prefer. If you search for White Coat Investor, you'll find us great. Well thanks again for your time and have a fantastic day.

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