Physicians are some of the worst accumulators of wealth despite being highly compensated. This contributes to financial strain, burn out, and diminished overall well-being.

How do I know this? Well, until just recently, that was me.

Now, I’m on the path to financial freedom and have dedicated myself to helping other physicians in similar financial straits to achieve financial well-being. How did this gigantic turn around happen? And how can you do it? That’s what I want to share!

For those who are not familiar with my story, I’ll give a brief review. I am a plastic surgeon in Buffalo, NY and just completed my 7 year training in plastic surgery and microsurgery in New York City as of June 2020. Before my training, I obviously had 4 years of undergraduate school and 4 years of medical school. I paid for all of that education (except for some scholarships and work study) with loans. Every dollar. Every cent. As you can imagine, I built up a pretty nice bit of debt.

And what did I do in training? I…deferred…all…of…it.

Why in the world would I do this?
The answer is quite simple. I was financially clueless. My strategy could best be summed up as sticking my head as far in the sand as I could and hoping for the best. I knew I was messing up but was scared to see just how bad things were and was intimidated to start my financial education.

But then a funny thing happened.

I picked up a financial book for physicians and read the first chapter. I had owned the book for about a year but had just let it collect dust until now. After the first chapter, I just kept reading and learning…and reading and learning. And I haven’t stopped since.

The weird thing was that once I committed myself to my financial education and set a goal of achieving financial well-being, I wasn’t scared of my mistakes anymore. By looking them in the face, I finally had power over them and could start climbing out of the hole instead of digging it further. I also found that my overall well-being improved along with my financial well-being. I became a better doctor.

But if I could go back, I would do things differently
I’m firmly focused on my future. I know that I can’t change the past so there’s no point in wishing that I had handled my financial life better…or at all for that matter. What I would like to do, however, is to look back at my missed opportunities, emphasizing what I could have done. If you are in a situation similar to what mine was, learn from me!

Start your financial education. Look any financial faux pas in the face. Make positive changes in your life. If I can do it from the huge hole that I dug for myself, so can you!

Here are 6 steps that you can start doing TODAY to get you on the path to financial freedom, to decreasing burn out, and to becoming a better doctor and person!

Step #1 – Start tracking your net worth to increase it
Net worth is the score card of wealth. You need to know how to keep score to play the game. So, this is a very easy first step. There are innumerable online calculators that will compute your net worth, walking you through the whole process. If you are like me, there will likely be a sense of dread upon doing this. I was embarrassed by my mistakes and intimidated by the answers that I was going to find.

Fight through this. Confronting any mistakes gives you power to finally overcome them. And usually, the answer isn’t nearly as bad as you expected. And finally, chances are that I dug myself a deeper hole than you. If I can start digging out of my hole, so can you!

Like I said earlier, once you know your net worth, you know how to keep score. Now you can start to play the game the right way.

This is a huge first step. Do this and you are financially ahead of most of your peers. I guarantee it.

Step #2 – Create a budget (or an anti-budget!) with a 20% savings rate (no anti-savings rate though)
My wife and I like budgeting (OK, maybe that is a stretch). But we definitely tolerate it and look forward to it.

I see a budget not as a limiting thing that stops you from living your life. In fact, I see it as an empowering tool that is helping me achieve my fi- nancial goals so that I can live the life I want. This comes from adopting an abundance, rather than a scarcity, mindset with money.

With this change in mindset, my wife and I sat together one night a few months ago and created a monthly budget incorporating every dollar that we would make on a monthly basis. We first budgeted out our “needs,” such as food, healthcare, and taxes (yes, make sure you include taxes).

Next, we set aside our savings. Notice that we budgeted this before budgeting out “wants,” like entertainment and such. This is called paying yourself first. If you budget everything but your savings, you will invariably have nothing left. It’s human nature. We tend to spend up to our budget. Break this cycle! Set a savings rate of at least 20% and then budget the rest as you see fit. You need to make sure you have enough to retire!

All of this is incorporated in our written financial plan.

Hate the budget? Try the anti-budget!
Ok, ok I know that there are people reading this and saying, “I hate to budget” or “If I have to budget, I’m not living.”

Fine, then use an anti-budget. Rather than having no budget, spend your monthly earnings, and hoping you have enough left over for some savings, set a savings rate up front. Make it at least 20%. When you get your paycheck, take 20% out and place it into a different account to be invested according to your plan. Then, spend the rest as you please. Boom…you just (anti) budgeted.

Whether you budget or anti-budget, just by creating that savings rate, your net worth will increase by that exact amount in the coming month. Invest that money wisely and your net worth will increase exponentially through the magic of compound interest.

Step 3 – Increase your debt pay-down

“..your net worth will increase exponentially through the magic of compound interest.”

For 7 long years after I graduated medical school, I didn’t pay down a single one of my loans. Uninformed people told me that loans would take care of themselves after I became an attending. I’ll burst your bubble – that is not true. Loans don’t take care of themselves; you have to have a loan and debt plan. That’s what takes care of the loans.

Now that you’ve completed step #2
and created a budget with at least a 20% savings rate, some or all of that savings rate should go towards paying down any outstanding debt in the following order:

• Commercial debt (credit cards, etc.)
• Loans with rates >8%
• Loans with rates between 3-8%
• Loans with interest rates <3%

Since you’ve also completed step #1
and calculated your net worth, you know that all of your debt is in the liability column. This means that every $1 you use to pay off your debt increases your net worth by $1. That is a 1:1 net worth increase. Nothing else, repeat nothing else, will give you that immediate return. Factor in the interest rate causing your debt to grow by the second when it’s not paid and debt paydown is the best investment you can make.

My student loan debt of >$400,000 is by far the biggest weight on my net worth. My written financial plan calls for me to pay that down aggressively. I highly recommend that you take the same mindset.

Whatever you are currently paying towards your debt, increase it. Even if it’s by $20. That’s a $20 increase in your net worth. Ordering takeout for one night won’t do that to your net worth.

Visit my website to start YOUR journey to financial freedom.