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How rare are financially savvy physicians?

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  • #16
    RARE

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    • #17
      I don't discuss finances with anyone in my group, but most of my partners seem to live pretty modestly.  A few folks have larger houses or second homes/vacation homes, and one person bought a Tesla, but there's an overall dearth of "doctor toys" in my group.  Many of my younger partners have young kids, and I suspect college savings is where their money is going.  As the one person in my group who takes exotic vacations, I'm probably the one who stands out most as a 'big spender"!

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      • #18
        I think physicians are not savvy with money...many are over confident, overtrustworthy....this is just my opinion. One of my partners lost 1,000,000 a couple years ago in some type of investement scam...which is why I suspect he isn't retiring yet at age 60 but trying to go part time instead...good thing he has a financial advisor.

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        • #19
          ...so being savvy means having to save > 50% of your take-home income and avoiding real estate?

          Shouldn't you be posting on MMM?

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          • #20
            Actually we are dual income physician family and save >75%   

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            • #21




              I guess I will clarify my definition of financially savvy—

              My definition will be someone who is like me–

              • lives below their means (saving aggressively, >>50% take home)

              • invests aggressively (not risky investments per se, but investing large amounts of money monthly)

              • avoiding real estate, and other questionable investments

              • avoiding financial advisors/products

              • DIY mentality, very limited amount of outsourcing


              Click to expand...


              I would use a much different definition for financially savvy.  These rules are more supersaver/maximum wealth-builder.  I would regard financially savvy as having the knowledge to maximize the dollars that are earned to utilize to one's desires.  Want a McMansion?  Go for it.  New boat?  Sure.  Fancy new Tesla?  Why not?

              But if you're using a 0% down doctor's loan with a high interest rate on a home you can't afford, if you're paying a high fee financial advisor, if you're not contributing enough to a 401k even to get the match, these are signs that you're leaving lots of money on the table and don't realize the true cost of what you're buying.  I think excluding income from the definition is necessary (i.e. higher salaries can overcome poor financial decisions).

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              • #22


                My definition will be someone who is like me– ? lives below their means (saving aggressively, >>50% take home) invests aggressively (not risky investments per se, but investing large amounts of money monthly) avoiding real estate, and other questionable investments avoiding financial advisors/products DIY mentality, very limited amount of outsourcing
                Click to expand...


                I my not fit your bill of financially savvy since 2/3 of my investments are in real estate.

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                • #23




                  Actually we are dual income physician family and save >75%
                  Click to expand...


                  I'm curious what your effective tax rates and marriage penalties are.

                  My definition of "financially savvy" was more similar to yours five years ago, but over time I've realized that while it's still important to avoid lifestyle creep and not spend money on stuff that provides low hedonic benefit, working yourself to the bone in pursuit of insane savings rates is a less efficient way of building wealth in the long run.  Remember, tax efficiency is one of the few free lunches you can get, and time and money are directly interchangeable.

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                  • #24




                    Actually we are dual income physician family and save >75%   ?
                    Click to expand...


                    Good for you, bro (sis?), but you don't get to tell me I don't know anything about finances because I don't tuck away every single penny that hits my bank account.

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                    • #25







                      Actually we are dual income physician family and save >75%
                      Click to expand…


                      I’m curious what your effective tax rates and marriage penalties are.

                      My definition of “financially savvy” was more similar to yours five years ago, but over time I’ve realized that while it’s still important to avoid lifestyle creep and not spend money on stuff that provides low hedonic benefit, working yourself to the bone in pursuit of insane savings rates is a less efficient way of building wealth in the long run.  Remember, tax efficiency is one of the few free lunches you can get, and time and money are directly interchangeable.
                      Click to expand...


                      Just wondering if you could expound on your last sentence?

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                      • #26







                        Actually we are dual income physician family and save >75%   ?
                        Click to expand…


                        Good for you, bro (sis?), but you don’t get to tell me I don’t know anything about finances because I don’t tuck away every single penny that hits my bank account.
                        Click to expand...


                        Nope never implied you didn't. No offense implied!

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                        • #27
                          while rapidly changing, i think the topic of "money" among physicians is still taboo. this is certainly true among the residents i work with. dogmatic ideas of altruism are still fresh from medical school and the concept of service above all else is praised among house officers who do a lot for little (perhaps a survival mechanism?). theres also the feedback loop of those who have limited financial knowledge, but are learned professionals, and used to have great knowledge, relative to peers, and therefore shirk the topic of money, lest they reveal their ignorance.

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                          • #28










                            Actually we are dual income physician family and save >75%
                            Click to expand…


                            I’m curious what your effective tax rates and marriage penalties are.

                            My definition of “financially savvy” was more similar to yours five years ago, but over time I’ve realized that while it’s still important to avoid lifestyle creep and not spend money on stuff that provides low hedonic benefit, working yourself to the bone in pursuit of insane savings rates is a less efficient way of building wealth in the long run.  Remember, tax efficiency is one of the few free lunches you can get, and time and money are directly interchangeable.
                            Click to expand…


                            Just wondering if you could expound on your last sentence?
                            Click to expand...


                            Unless you're someone who would work for free (and you don't have other activities you would rather pursue with your time), the whole point of going to work is to accrue capital that allows you free time to live your chosen lifestyle.  The time you spend working is time spent accruing that capital, and the time you spend not working is the time devoted to spending that capital - both over time come out to $/time.

                            Assuming that the outflow (spending) is only a trickle, and you turn on the hose full blast, because we have a progressive taxation system, Uncle Sam is going to scoop in to pick up everything that leaks and spills out.  You may fill up the container faster that way but it's going to take more earning and effort to keep it full.  I'd rather limit the inflow to a larger trickle that takes more time and thus minimize all the spill and waste.

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                            • #29
                              Not a big fan of your personal definition. Overall understanding basic finances and knowing how to leverage yourself to maximize things according to your goals and achieving them is enough for me. Dont understand the not investing in real estate part of your definition, its a solid very tax advantaged asset class. It isnt for everyone, but plenty of savvy individuals have made their mark there.

                              You dont need to be a miser either, I know someone with several million dollar homes on both coasts, used to have ferraris, lambos, (has sold these that i know)etc..etc...lavish trips, but when your revenue is in the tens of millions and you have lots of other investments that could still be living below your means. Everything is relative.

                              Our group talks about money and investments all the time, from practice, real estate, asset classes, etc...maybe thats a plastic surgeon thing but its totally the norm in our group. Everyone else lives modestly in our group.

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                              • #30




                                I would use a much different definition for financially savvy. These rules are more supersaver/maximum wealth-builder. I would regard financially savvy as having the knowledge to maximize the dollars that are earned to utilize to one’s desires.
                                Click to expand...


                                Financially savvy to one person or in one circumstance may not apply to another person or in other circumstances.

                                I have not had a retirement plan for the past 17 years. The costs of opening a 401K plan for my 7 or 8 employees when I am the sole provider was not financially feasible. I could have done solo backdoor Roth but the amounts are not that great. So almost all my savings are in taxable accounts. It was not worth working a 2nd job just to open a solo 401K/IRA.

                                I also keep a large sum in the bank account rather than investing it immediately. For many it might seem foolish and unwise but in commercial real estate investing one needs to have large sums of money to put as payment to grab the opportunity before it slips by.

                                Financially savvy for me might seem be like a putz to the OP.

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