Nod your head “Yes” if you’ve ever said this to a patient, a student or your colleague. “KIS- keep it simple, or “the simple answer is the best answer”, and my favorite “don’t reinvent the wheel”. I adopted K.I.S. a while back. It was my first year of medical school. A classmate was helping me memorize the cranial nerves and specifically the nerve innervations and muscles of the eye. He said “DocToDisco, you are thinking into this too much, just K.I.S.” My internal response was Dude, I am not kissing you. He said “keep it simple”. Ah yes, K.I.S.
Usually when people find out that I retired early, they ask how did I get here, how did I retire so early? The conversation inevitably becomes “how can I do this too, how much do I need to retire?” or “how much do I need to just slow down a bit?” Well – this part is dicey and sometimes, it doesn’t go well. I am lying. Often it doesn’t go well, even when solicited. I tend to blurt out all the helpful tips and tricks like a deranged lunatic who needs to be 5150’ed. And if this has happened to you, I earnestly apologize. In response, I’ve revamped my approach to this question. I am jumping off my F.I.R.E. soap box for now to be a kinder and gentler messenger. Because honestly “…….people can’t handle the truth” (in my inner Jack Nicholson voice).
Don’t blink, because it’s very short.
1. Live below your means
2. Save as much (every dollar) as you can
3. Invest it
Not original, but sadly not commonly executed.
1. Live below your means …………… in my Histo. Professor “pay attention, because this shit is on the test” voice.
My soul screams “Stop acting rich” and “live your wage”. But I can’t say that in public. So, I am writing it here and please pay attention. It is shockingly simple and agreeably cliche. But living below your means is “The Truth” (in my millennial voice describing a new core exercise routine). It’s a hard reality check. This means you have to sit down and think about another well-known concept; wants vs needs. Disclaimer: this gets REAL muddy when we are dealing with doctors as time is our greatest scarcity; not money.
Most people don’t understand how precious our time is
and how little of it “off” we have.
Side note- when we are not seeing patients, not on-call or not in a meeting doesn’t mean we are off, more about that in a separate post. Because “needs” for a doctor may include a chef for nutritious food especially if you are single, it’s worth repeating that the lines are blurry for those of us where time is the scarcity.
I’m sure there’s some fancy math equation I could have found on scarcity for this article, but that is above my pay grade as a burnt-out lowly retired doctor blogger who has better and more important things to do like sewing the sequins on my Disco ball T-Shirt. Don’t get me wrong, I’ve made these tough decisions too and certainly made my share of financial mistakes. However, you have to start somewhere and get real with yourself and your finances if you truly want to make a lasting change.
Are you sick of (fill-in-the-blank annoying admin. task), do you want to sleep in your own bed every single night, have you dreamt of retiring on X-date? If so, I challenge you to find ways to live within or even below your means. It won’t be achieved by cutting the thrice-daily lattes or even the gym membership. It’s big things like moving to a cheaper neighborhood or into a smaller house, giving up that 3rd car you never drive, it’s finally paying off your student loans so that you have cash to invest.
To sum it up, pun-seriously intended, I want you to ask yourself,
“is this a true need or is this a want”?
Does this save me time? At some point, your life may depend on it. I want you to get real with yourself and your finances and live below your means and finally to STOP ACTING RICH. Yeah, I said it, you want a piece of me (in my Fuh-get about it voice)?
2. Save as much as physically possible…………….
As said on this Blog but not on TV…. DO ….. try this at home. Fun fact: on average, and in general if you save 50% of your income for 10 years, you become financially independent. I know, I know, we get slammed in taxes as high-income earners. But I want you to grasp the magnitude of savings I am suggesting.
First, start with a few easy steps and from there hype it up as you gain momentum. One of the easiest ways that boosted my savings rate was to have money taken out automatically from my pay-roll check and deposited directly into my brokerage account.
Of course after all of the tax-advantaged retirement buckets were filled up to the rim. It avoids a lot of “noise” and pressure to spend. Alternatively, it creates a “scarcity mindset”. It curtails the starry-eyed “I’m a baller” sparkle in your pupil when you see that huge amount. Hahahaha of course before you see the next line where the taxes were taken out. It ensures you’re saving money you don’t even see, now who’s the baller?
Another trick of mine was to “find money” in the least likely places. What about your kids’ after school activities that they don’t much like anymore and the equipment that comes with it? That wine club you signed up for on the last “girls night out” and yes the dreaded gym membership you don’t use.
Think about how much money you would have if you never,
and I mean never spent your bonus.
Or, spent a good 4 hours shoring up your taxes with the accountant on a rolling basis? Imagine how much you would save by skipping a fancy hotel and instead staying with a relative or a friend during your next conference? Its funny, how simply this can be achieved, we just make it complicated.
I’m not saying get rid of the cleaner or go dumpster diving. But, it won’t kill you to conduct an experiment or two. Just try cutting your expenses for a finite period of time. See if you can live without certain services or amenities you’ve come accustom to. Clear out your amazon cart and “save for later”.
Try to live on 1/2 of what you spend today. At the end, did you, your kids, your significant other, or your pet die? Too harsh? I apologize. Spend all those gift cards in the back of your wallet instead of just throwing down your preferred “points” credit card. Cook a dinner with what you already have in your pantry and Fridge.
It builds character to use that artisan vegan sauerkraut
Aunt Sally sent you for Christmas in a recipe.
My husband and I cook like this from time-to-time, and it’s actually fun. You may surprise yourself. Try conducting this experiment once every quarter and tweak it to what works for you, or maybe just one day per week on a smaller scale. You may end up amazed at how much money you socked away especially if you treat it like a game.
Gamifying your money is fun and a great tool to keep you motivated.
When I was paying off my student loans I used to round up the payments to reflect an even number. Preferably with all zeros at the end if I could swing it, and I would also avoid numbers that I didn’t like. No offense #6, maybe you have other fans out there.
Finally, to drive this concept home for my medical peeps who respect evidence-based medicine; the most common act you can perform to become financially independent is to save more!
Yes, you heard it right here, the literature says that it’s not where you save or invest (mutual fund, savings account, stocks, bonds, own rental property, etc.), it’s how much you are saving. Yes, the amount of acorns you squirrel away will determine if and when you become financially independent. This is in the literature Doctor. Yup, I’m talking to you! Now go log-on to that brokerage account and up that amount until it hurts in my assertive “this baby is coming out, right now” voice.
3. Invest the rest ………………………..
Ha! After writing all of that, I don’t blame you guys for not reading on, but this is also true.
Wait for it………… a no-load (very low fee associated with purchasing and holding the stock or bond at a brokerage house) total-market mutual fund such as VTSAX or your generic S&P 500 stock sold at any brokerage firm makes you the most return. Yup, that simple!
I defer to the God-Father of F.I.R.E. here; J.L. Collins, the author of “The Simple Path to Wealth”. This book is a game-changer. Reading ..…phew for a minute there I forgot my audience, rather listening to “The Simple Path to Wealth” audiobook (because none of us have the time to sit and read a book) is a NEED in my opinion, not a want. All of this is pointed out so eloquently by J.L. that I won’t write anything further on it for now.
This simple concept of investing in the total stock market and/or the S&P 500 fund is especially applicable for doctors & busy healthcare professionals like yourselves. You are too busy, too over-scheduled, and have too little time to take on yet another important responsibility ……………….. investing soundly.
It means you don’t have to get a rental property if you are afraid of what that entails. It also means you don’t have to invest in products, businesses, or things you don’t have the time to understand. Investing in the total stock market and/or the S&P 500 is all you need to do to complete #3 and knock it out of the park on your F.I. journey.
Paraphrasing Dr. Seuss:
“You are dextrous and you are deft, you know your right foot
from your left”.
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