It’s no secret that many healthcare professionals earn lots of money. So, you might think it’s relatively easy for them to achieve financial independence and retire early (or at least step back from demanding clinical hours).
Aaaand….you’d be right about that!
Sure, earning healthcare money is not a requirement for FIRE. But if you do, you certainly have more options…even if you also have large expenses (like kids).
This week, I talk with Dr. G (anonymized, his request), a dentist with two kids in the midwest who built a $7 million nest egg before stepping back from clinical practice. He explains the actions he took to build his wealth…and what he’s doing now.
- His career path as a dentist
- Net worth after finishing dental school
- Age when he broke even and when he reached FI
- How much he earned right out of dental school, when he broke even, when he reached FI, plus how much he earns passively now
- Spending level over the years, plus how much he spends post-FI
- Asset allocation breakdown
- Main actions he took that had the biggest impact on net worth
- His thought process on stepping back from clinical work with two young kids still in tow
- FIRE tips for people with kids
What type of FIRE profiles (career path, earning level, family/kid status, etc) do you want to hear more about? Let me know by leaving a comment.
Don’t miss an episode, hit that subscribe button…
If you liked this episode, be sure to subscribe so you don’t miss any upcoming episodes!
I need your help, please leave a listener review 🙂
If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!
Read this episode as a post:
Andrew Chen 01:23
Today’s episode is a profile of a medical professional’s journey to financial independence. My guest is “Dr. G,” whom I’m keeping anonymous at his request. Dr. G graduated from dental school in Illinois 20 years ago, then moved to an adjacent midwestern state, where he built his dental practice over the past couple decades.
Now in his mid-40s, he’s financially independent and has since stepped back from clinical work at his dental practice, although he still technically works part time, managing the practice and his associate dentists and staff there. He self-manages his stock and rental real estate portfolio, and is married with a son and daughter in middle school.
Now, I don’t often profile folks in healthcare because that isn’t really the focus of this podcast, and there are other podcasts that do that pretty well already. But I found today’s guest’s story intriguing and wanted to share it here, so without further ado, let’s hop into our discussion with Dr. G!
Dr. G 02:19
Nice to meet you, Andrew. Thanks for reaching out and doing this interview.
Andrew Chen 02:24
Yeah. Thanks so much for taking the time to chat with me. I have a lot of questions I’d love to dive into about your background and your journey to financial independence.
But just to give folks an orientation about where you’re coming from, can you just tell us a little bit about your career path? What do you do?
Dr. G 02:45
I’m a general dentist, and I’ve been a dentist for about 20 years out of dental school. I own my own practice.
Currently, I’m actually not practicing dentistry. I do employ two dental associates that are working with me at my dental practice.
So, I’m running the practice. I’m kind of the CEO, the managing partner of the practice. I have 12 employees, including the two dentists and hygienists and assistants. I do have an office manager who handles the day-to-day activities and issues at the practice.
I work mostly from home nowadays. I do come into the office a couple of times a week, for a few hours, just to check in, catch up with my office manager, catch up with my staff, catch up on some administrative duties, paperwork, phone calls, returning any messages.
I’ve been doing this for about a year now. About a year ago, I decided to step back from clinical dentistry and just totally focus on running the practice. Like I was saying, I’ve been a dentist for 20 years, but it came to a point in my life where I wanted to be home more, with my family, especially with my two kids.
I have two kids. They’re in middle school. And I was finding that I was spending many hours at the practice, working very hard, and it got to a point where I started missing out on a lot of the kids’ activities, such as if they had a performance in the middle of the day, there’s no way I could leave the office and go to their performance because I’m busy with patients.
If they had practices or games in the evenings, it would be very difficult for me to get to those practices or games. And of the games that I do get to, I’m tired and I’m exhausted from working the whole day at the practice, and by the time I get to the games in the evening, I’m just wiped out. It wasn’t enjoyable.
I was able to make it to the games, but I felt really tired. At that point, I decided I’m going to step back from doing clinical dentistry and solely just focus on running the practice, so that I can focus more of my time on my wife, my kids, and the family. So, that’s a short summary of what’s been happening in the last year or so.
Andrew Chen 06:23
Perfect. I want to jump into some of those details here in a moment. But just so I understand, you’re a general dentist.
Does that mean routine checkups and cleanings, or does it include things like cosmetic dental work, etc.? Because, obviously, compensation differences exist between those.
Dr. G 06:41
I’m a general dentist. That means I do fillings, crowns, and bridges. I do restore implants.
I have hygienists that will do cleanings, and I will do the exams and the checkups. I do some basic root canals, some basic extractions. So, that’s what general dentistry is.
The specialists would be the ones that would be doing extractions all day long, surgeries all day long. The root canal specialists would be doing root canals all day long.
So, I’m just a general dentist. I do different procedures, and there’s just a variation of procedures that I do.
Andrew Chen 07:36
You mentioned, about a year ago, you stepped back. It sounds like, right now, you’re not doing any practitioner work. You’re just operating the business and employees in your practice.
But before you made that switch, you said that you were working long hours, often missing family events, etc. What kind of hours were you pulling down, say, at the worst point?
Dr. G 08:05
I was doing four days of clinical dentistry, so I would always have a day off. Ever since I started doing dentistry 20 years ago, I would always have a day off.
You have to put things in perspective here. Dentistry is a very mentally challenging profession and a physically challenging profession. You work in tight spaces, you’re working on teeth, and a few millimeters make a difference in what you’re doing, so it’s almost like mini-surgical work.
Mentally, you’re concentrating on the procedures all day long. And then, as I’m working on my patients and doing the clinical work, I might have three hygienists waiting for me for exams. So, I’m working out of four rooms: in my own room where I’m doing the procedures, and I have three other rooms with hygienists that are doing cleanings, and they need an exam or there’s an emergency.
So, I’m rotating, I’m working out of four rooms, and it’s very intense. Dentistry is a very intense profession.
And at the same time, I’m doing my procedures, I always have to keep an eye out for my hygienists who need an exam or emergencies, and then I also know that there’s phone calls for me to return from specialists or my patients or business vendors, and so forth. And there are personnel issues going on. So, there’s a lot going on as a dentist.
You’re just not a practitioner. You also have to manage the practice, run the practice, and you have to manage all the personnel and all the personnel issues going on within the practice. So, it’s mentally challenging, and it’s physically challenging.
Andrew Chen 10:24
Makes sense. So, what kind of hours were you pulling down at the worst?
Dr. G 10:30
I started out my career doing 32 clinical hours. In dentistry, when they say clinical hours, what I mean is I was spending 32 hours a week clinically working on patients. And then, beyond that, I would probably put in an extra few hours doing administrative duties a week, whatever administrative duties I need to do: meetings with business partners or vendors, or meetings with other dentists.
So, I would probably say 35-36 total hours with the practice. And then, over the last five years or so, I started spending more time at the practice on the weekends because things got more backed up. I didn’t have enough hours to do everything when I’m there, so on the weekend, I would need to come down and catch up on paperwork.
I’m very hands-on also, so I would fix stuff around the office, and fix up some landscape, and anything that needs to be fixed up. I’m pretty hands-on with those things. That’s why I think I was starting to mentally burn out a little bit over the last few years.
But to answer your question, 32 clinical hours when I started out. And then I started cutting back to about 28 clinical hours, three or four years ago. And then last year was when I tried to step back completely and not do any more clinical dentistry.
Andrew Chen 12:22
I wanted to talk a little bit about your net worth trajectory, given that it sounds like you hit FI about a year ago, or maybe it was even further back. You just pulled the trigger, stepping back from clinical work a year ago.
What was your net worth at different points in time, say, right after you graduated and finished all your schooling, after you finished dental school, and then, at what age did your net worth break even? And at what age did you reach FI (financial independence)?
Dr. G 12:57
It’s not going to be exact, but I would say, just based off of memory, when I graduated from dental school, I had about $120,000 of debt. So, I started off minus $120,000 in debt.
I think I probably broke even within two or three years of getting out of dental school. Maybe a couple of years out after dental school, I broke even because I was able to pay off some of the debt, and with my income, I was able to start investing. So, probably after two, maybe three years, I broke even.
I would say, by five years out of dental school, my net worth got to about $1 million. I know that sounds pretty rapid, but I purchased my practice three years out of dental school.
So, for my first three years, I was an associate, and then I think I purchased my practice about three years after dental school. I had a partner back then. I joined the practice with a partner, so it was a two-doctor practice: me and my partner.
And once I purchased into the practice, my income started rising. Because of that, I was able to pay off more debt and invest more with the extra income that was coming in. So, I would say, about five years out of dental school, I think I hit $1 million.
And that’s due to investing in the stock market and the equity that I had in the practice. There’s equity in the practice as I pay the debt down.
I’d say over the next 5-10 years after dental school, my income started increasing. I would guesstimate, during that time period, maybe $250,000, $300,000, or $350,000. And I continued to increase my contributions to stock market investments.
And about the eight-year mark, I bought some real estate properties. I purchased real estate, some apartment buildings, single-family homes, and I’ve added on a little bit since then.
So, that’s how I’ve been increasing my net worth, through leveraging debt to purchase real estate. And because of that leverage, and also because of the wonderful stock market, from 2010 through 2020, even 2022, I know there’s been a bit of a drop in the last few months, but from 2010 to 2022, my stock market investments really just skyrocketed, just because I had a very high savings rate throughout my career.
I started off investing or saving about 30% of my gross income. When I first came out of dental school, I was reading up on investments and I really had a big interest on anything business or finance, and I had a deep passion for it, so I started studying up on small caps, mid-caps, large caps.
Andrew Chen 17:10
Let me get into some of that later. But what age did you hit financial independence?
Dr. G 17:17
My goal was to reach $6 million before I decide to step back from clinical dentistry. It’s gone up to $7 million now, but my goal was to hit $6 million before I even thought about stepping back from clinical dentistry. Because with $6 million, you take 4% of that, that’s an income of $240,000 a year, and we only live on about $85,000 a year.
Andrew Chen 17:53
So, when did you hit that point? What age did you hit that point?
Dr. G 17:56
Andrew Chen 17:57
Mm-hmm. That was your number.
Dr. G 17:58
I would say maybe a couple of years ago. It was definitely a couple of years ago, I hit $6 million. And then the last two years, I got to $7 million.
So, about two years ago, I’d say I got to $6 million. And then, once I got to $6 million, that was my own definition of being financially independent because that would give me an income of $240,000, which is…
Andrew Chen 18:26
Makes sense. Way more than most people need.
Dr. G 18:30
Yeah, way more than we’ll ever need.
Andrew Chen 18:32
I know that you’ve chosen to continue, you’re still working, but just in a different capacity post FI. But at what point, or at what age did you start thinking about financial independence, or possibly early retirement, in the first place? When did the thought first enter your head?
Dr. G 18:50
My first few years out of dental school. I think within a couple of years out of dental school, because I was reading up on business and finances, and I had a deep passion for everything investing.
I started running numbers and using formulas to see, “When can I retire?” I would run the compound interest calculators and see, “At what point can I reach a net worth where I would have enough income to decide not to work anymore?”
So, within the first couple of years, I started having thoughts of “I just want to get to a point where I want to be just financially free.” Not so much to retire early, because that was never really a thing of mine, but get to a point where I can be financially free so I would have the options and the choices to decide which way I want to take my life to and which direction I want to go.
If I wanted to retire completely, I could do that. If I wanted to work part-time, I could do that. If I wanted to switch careers and do something else that I totally love, I could do that.
So, I wanted to get to a point where it gave me options to do what I wanted to do. Again, so I got to that point when I hit my $6 million mark, which was a couple of years ago, and that’s when I knew that I would have plenty to live on. That’s when I decided to just step back from clinical dentistry and just run the practice.
Andrew Chen 20:33
We talked a little bit about your net worth trajectory or velocity. Switching over to your earnings velocity, can you talk about what were you earning your first year out of dental school, and then the same kind of timeline: right out of dental school, when your net worth broke even, and then whenever was the peak (maybe it’s now)?
Dr. G 20:57
You’re talking about income, right?
Andrew Chen 20:58
Yeah, just earnings.
Dr. G 21:01
My first job, I was earning $100,000 out of dental school as an associate. And then it became $170,000-$180,000 within a couple of years as an associate. And then, once I purchased my practice with my partner, it just slowly rose.
It went to $200,000, $250,000, $300,000, $350,000, and then it just slowly increased. I would say, I probably peaked at around $500,000-$600,000. That’s my peak.
And I think I probably peaked within five years of purchasing my practice. I don’t have an exact timeline, but probably within five years of purchasing my practice, I started peaking in that range.
Andrew Chen 22:09
So, if my math is right, that’s roughly eight or so years out of dental school?
Dr. G 22:20
You mean when I started peaking in my income range?
Andrew Chen 22:22
Dr. G 22:23
Yeah, I think it was probably close to it. In 8-10 years, I started peaking, but it took time. My partner and I, we’ve built up a very nice practice, which, by the way, my partner retired a few years ago.
I bought him out, and now I’m the sole owner of the practice. So, I think a lot of the reasons why I can do what I can do is because I’m the sole owner of the practice now.
Andrew Chen 23:08
After you stepped back from clinical work, did your compensation decrease overall? Or as the owner of the practice, it has actually maintained that amount, even though you’re no longer doing clinical work?
Dr. G 23:22
No, it dropped. We did the projections way before I made the decision on stepping back. Because now I have two dental associates working, and since I’m not doing the dentistry myself, based on the projections, my income would drop down to maybe $200,000-$250,000 instead of $500,000-$600,000.
But based on those projections, I was comfortable enough that I knew that I could do this, because I still had income coming in at $200,000-$250,000, which again is plenty because we only live on about $85,000 a year. That’s why I felt so comfortable doing this.
Again, based on my projections, based on what I had in my stock market investments, my real estate, and the value of my practice, which I’m not touching any of that. I’m not touching any of my stock market investments. I’m not selling the real estate.
So, my nest egg is still there. I’m not touching it. I’m still living off just current income that’s coming in from the practice, from my rental properties, and dividend income from my stock market investments.
Andrew Chen 24:58
So, we talked about net worth. We talked about earnings. You’ve mentioned a couple of times you’re living on currently about $85,000 a year.
But could you talk a little bit about your spending profile over the years? Again, same timeline: net worth, earnings, spending, so people at least get the basic structure in their head. What were your ballpark household expenses at the time you graduated dental school and you were working for the first time, at net worth breakeven, and then finally, when you reached FI?
Dr. G 25:33
As far as spending goes, when I first started out, my first job was $100,000, so we spent roughly about $100,000, maybe a bit less than that, maybe $80,000-$90,000. And then, as my income increased as an associate, and then purchasing the practice, we probably got up to around $150,000-$160,000 spending-wise.
Andrew Chen 26:09
This is no kids still, right?
Dr. G 26:14
Actually, this is probably before kids, and also with kids. Spending really has not increased that much with kids. We kept our “lifestyle inflation” or “lifestyle creep” under control quite well over the last 15-20 years.
I think the most we’ve ever spent is right around $150,000-$160,000. It’s the most we’ve ever spent in a year, even with kids. And actually, our income has dropped over the last year or so, and a lot of that has to do with us paying down some of our debt.
Andrew Chen 27:01
You mean your spend has dropped over the last year or so?
Dr. G 27:03
Yeah, my spending has actually dropped. My spending probably peaked at around $150,000-$160,000 a year, down to about $85,000 a year now, and that’s because we paid off a lot of our debt, so there’s not much money going off to debt.
And two, we have really kept our “lifestyle inflation” in check. We have not really increased our budget that much over the last 15-20 years. We live a pretty frugal to modest lifestyle.
We’re not big into big, fancy mansions. We’re not into fancy cars. A lot of my friends and colleagues over the years, they’ve upgraded to nicer homes, fancier cars.
Andrew Chen 27:58
But how did your spending not increase with kids? Because kids are expensive. They eat, they go to school, they need supplies and things, clothes.
Dr. G 29:09
We take advantage of a lot of freebies, a lot of passed-down clothes from cousins and all the family members. We don’t take any exotic vacations. We do a lot of camping trips, a lot of local road trips, a lot of activities at home.
Our kids just play outside in the backyard, go play with the neighborhood kids. A lot of free programs that we have in the city, in town, that we took advantage of.
We use the library very often. We check out movies from the library. We check out books from the library.
I don’t have cable. We dropped cable seven or eight years ago. We don’t watch cable.
We don’t do a lot of these subscriptions. We don’t do exotic vacations. We value just our time with the family, and we take advantage of a lot of free programs.
I think that’s how we’ve been able to keep our budget in check.
Andrew Chen 29:28
That makes sense. Just so folks have a sense of the cost of living differs greatly across the country, what is the median home price in the area in which you live? Like what’s a gallon of gas going for right now, just so folks have a sense?
Dr. G 29:48
We’re in Southern Wisconsin. The price for a gallon of gas right now is about $4.80, maybe $4.79. I think the last time I saw it, it was $4.79 for a gallon of gas.
The average price of a home is maybe $360,000. So, I think we’re in a relatively lower cost of living area, compared to California with over $6 per gallon now for gas.
Andrew Chen 30:31
Don’t get me started. There are places in L.A. that have hit $9.
Dr. G 30:37
And then I’m sure a home out in the Bay Area, L.A., it’s probably $800,000-$900,000, maybe $1 million, for an average home.
Andrew Chen 30:47
In the Bay Area, no. The good neighborhoods are definitely quite a bit more than that. But that helps to give people a sense of local cost of living versus your spend profile.
So, we talked a little bit about net worth, earnings, spend. I wanted to get a sense of your net worth composition. You mentioned you’re at $7 million right now. What is that comprised of, in terms of breakdown of stocks, bonds, real estate, alternative assets, like private equity, etc.?
It sounds like you at least have some rental real estate in stocks. But help us understand percentage-wise and the major asset classes.
Dr. G 31:31
Yeah, I’ll break it down. My stock market investments, including some cash, it’s around 50%.
Andrew Chen 31:56
So, it’s $3.5 million roughly?
Dr. G 32:01
No, it’s higher than that. I’m just going to cut my asset at this point without debt, just to make it easier. So, just assets, about $5 million in the stock market, about $2 million in rental properties, and then the practice itself is worth about $2 million.
So, assets are about $9 million. And then I still have debt in the rental properties and some debt in the practice itself because I bought out my partner. That debt is about $2 million.
So, $9 million in assets, $2 million in debt, so we’re at about $7 million for net worth.
Andrew Chen 32:55
And you’re mostly invested in stocks and not bonds or other types of assets?
Dr. G 33:00
I’m about 80/20 for my stock market investments. I’m about 80% equities and 20% bonds and cash. So, I’m still relatively growth-oriented.
Up until a few years ago, I was still 100% equities. A few years ago, I decided to start to trim back my equity position a little bit and take some risk off the table. I’m in my mid-40s now, so I decided to cut back on some equity position, so I’m down to about 80/20 in my stock market allocation.
Andrew Chen 33:38
What kind of holdings are in your stock and bond portfolios?
Do you invest in individual names? Do you invest only in index funds, ETFs, mutual funds, things like that? What are the actual holdings?
Dr. G 33:52
Most of my investments are in index, ETF, or mutual funds. And mainly, it’s stuff like VTI, the Vanguard Total Market Index. I do some positions in the VGT, the Vanguard Information Technology, Vanguard Discretionary Income Index.
So, most of it are in ETFs and mutual funds, just a broad index. And I’m fairly aggressive. Again, I’ve mentioned VTI, VGT, VCR, and MGK, which is the Mega Cap Growth, Vanguard.
So, a lot of my money are in those indexed ETFs and funds. And as you can imagine, over the last 13 years, they’ve done pretty well.
Andrew Chen 34:47
And you self-manage? You don’t use financial advisors or anything?
Dr. G 34:50
I self-manage. Well, let me take that back. I do have a 401(k) plan at the practice, for me and my staff.
That 401(k) plan at the practice, I do have people managing that. But that’s the only part where I do have a manager managing that. But outside of that, all of my brokerage accounts, HSAs, IRAs, Roth, I self-manage everything by myself.
Andrew Chen 35:24
Between the tax-advantaged stuff, like HSA, 401(k), Roth, etc., if you separate those from the purely individual, investing, taxable, brokerage accounts, what would you say your split is between the taxable versus all the tax-advantaged stuff combined?
Dr. G 35:49
I think more than 50% of my stock market investments are in a brokerage taxable account. If I had to venture a guess, maybe 60-70% of that are in brokerage taxable accounts, and then the rest are in retirement accounts: 401(k), HSAs, and IRAs.
Andrew Chen 36:17
Makes sense. And then it sounds like you have a couple million dollars in real estate. That sounds like you physically hold the asset.
You’re not invested in funds, right? You actually hold the real estate asset. Is that correct?
Dr. G 36:32
That’s correct. Those are actual physical rental properties that I have. I don’t manage them.
I do have a management company that manages those properties. And there’s no way I would have gotten into real estate if I didn’t have a management company. I wouldn’t have the time for it, and I just don’t want all the headaches that come with it, so we’re paying 6% right now for them to manage it, which is a pretty good rate.
Andrew Chen 37:04
It’s pretty good. Yeah.
Dr. G 37:05
Yeah, I would definitely pay the 6% to have them manage it than me managing it.
Andrew Chen 37:13
How many doors are in your portfolio?
Dr. G 37:16
Not many. I only have five units. And those five units, I get maybe about $10,000 a month out of rental income.
Andrew Chen 37:30
Is that a fourplex and a single-family?
Dr. G 37:35
I got two flats, and then I have two single-family homes. And then, actually, one of those buildings is also my dental office, so I also own the building of my dental practice.
So, roughly on an average month, I get about $10,000 of income. It’s about 60%, so I get about $6000 a month that sustains our lives. That’s $6000 a month that sustains our lives right there.
Andrew Chen 38:10
So, that’s a duplex, two single-families, and then your small office building, right?
Dr. G 38:16
Andrew Chen 38:20
I’m curious to get your perspective. What would you say were the main actions you took, or the things you did, or the main driver that had the biggest impact on your net worth and your ability to attain financial independence?
Dr. G 38:41
I think the two biggest driving factors are: I’ve always had a very high savings rate. I started off saving 30% of my gross income, and then eventually, I worked it up to 50% of gross income. And I just stuck with it.
I was very disciplined and determined, and I stuck with it, no matter what. The minimum savings I wanted to do was at least 30% of my gross income. And then eventually, I got up to 50% of gross income.
So, for 20 years, with a high savings rate, and how well the market has been doing, and with the leverage that I had with my dental properties, and the value of my practice, it all adds up. So, high savings rate was the driving force.
And I’d say the second thing is that we didn’t allow “lifestyle inflation” to happen. We’ve mentioned before, we live a very frugal, modest lifestyle, we didn’t allow “lifestyle inflation” to take place, and we’ve been able to manage and live a very modest lifestyle, so that we had a lot of discretionary income left that would go into investments.
Andrew Chen 40:13
I forgot. Did your spouse work, or no?
Dr. G 40:17
My spouse is a fulltime mom. She’s a nurse. She worked up until we had our second kid.
When we had our first kid, she was still working. And then, when we had our second kid, she wanted to be home full time, and she wanted to spend as much time as possible with the kids, which is a wonderful thing.
And we were very fortunate that we were able to do that. With just me working at the practice, she was able to spend her time at home with the two kids.
Andrew Chen 41:03
Makes sense. So, your two kids are in middle school, as I understand. What are their current ages?
Dr. G 41:10
They are 14 and 9.
Andrew Chen 41:14
And what was your thought process in terms of how you estimated that you could successfully FIRE? I know you’re not really actually retired, but you certainly don’t have to work.
How did you estimate that you could successfully FIRE even with young children, knowing that their largest expenses were potentially still ahead of you, if you are planning to pay for college and other things that kids need?
Dr. G 41:50
The college expenses was the biggest factor for us. When we had our kids, the first thing that I did, as soon as I could, was to get a 529 plan going for both kids. That was the first thing that was on my mind when we had our kids, because then we knew that that was going to be the biggest cost factor with kids.
So, I funded their 529 plans. I fund loaded their 529 plans for the first 10 years, and I had a number in mind. The number was once I hit $100,000 for each kid, I would stop contributing.
Andrew Chen 42:45
Is that based on the assumption that it would grow to fill the rest, or that the kid is going to contribute the rest?
Dr. G 42:50
That’s based on the assumption that in the State of Wisconsin, for a state public institution, for four years of college, as of now, it would be around $80,000, maybe $90,000 for four years of in-state tuition for college. Our plan is that we can help our kids out when they go to college.
If they decide to go to a state school, great. There’s enough in the 529 plan to maybe cover most of their tuition or cost for college. If they needed anything more beyond that, it’s going to be on them.
We want them to have some skin in the game. We’re going to help them out with college. But if they needed more than that, they would need to take out loans and have some skin in the game.
And definitely, if they go to grad school or professional school or whatever, it’s going to be all on them. They would need to take out loans and do that, because we don’t want to be responsible for that. And that’s just our philosophy.
I went to school; I took out loans. My wife went to school; she took out loans. You’ve got to have some skin in the game, otherwise, you have no incentive to do well and work hard.
Andrew Chen 44:15
One of the hardest things that I often hear about is “How do you FIRE with kids? How do you FIRE with more than one kid? It’s so challenging.”
It sounds like you’ve done it with many years to spare, and you have a particular philosophy. I’m just curious if you could delve a little bit deeper on some of the elements of that philosophy in terms of what your FIRE plan assumed that you would fund, not just in terms of college education, which I get you’re planning to fund all of in-state tuition, and beyond or grad school, they cover.
But other things that kids need. I don’t know if they’re in private school or public school, or if they do enrichment activities or academic activities or sports activities, things that cost money, lessons and things. What was your FIRE plan assuming in terms of the parents covering those kinds of things?
Dr. G 45:17
One of the reasons why I decided to step back from my clinical position and not retire completely is I like having some structure to my life. I’m not one to just retire completely and not do anything, and just spend seven days a week at home. I do need some structure to my life.
But by doing this, by still having a business, by still running the practice and having rental properties, it gives me structure to my life, and the things that I enjoy doing. I enjoy running the practice, I enjoy overseeing the rental properties, and I don’t want to retire completely. I know that I have enough in my nest egg that we would be fine if I would quit completely and do nothing.
But I feel a lot safer knowing that I still have current income coming in. I still have income coming from the practice, I still have income coming from the rental properties, and I have dividend income coming from stock market investments. Knowing that, I feel very comfortable and very safe because I still have income in excess of what we usually spend a year, so that if we needed extra income or a cushion, that cushion is there for whatever we need.
So, we definitely have a cushion beyond the $85,000 a year that we normally spend. We should have more coming in as current income, so we feel very comfortable with that. I hope that answered your question.
Andrew Chen 47:00
Does that mean that your FI plan then prepares to fund for all childhood expenses, like academic, extracurricular, summer sports activities, things like that?
Dr. G 47:17
Yes, we definitely have enough in current income and a budget to support all of that. And we’re in a low cost of living area. Going back to all the free programs and activities that we have, we live a pretty frugal, modest lifestyle.
So, our expenses are not really that high. We have plenty of income to cover all of those extracurricular activities for our kids.
Andrew Chen 47:49
Do you have any overall general tips on how to successfully FIRE with kids? Or is it the same as for FIRE-ing even if you didn’t have kids, which is high savings and live within your means?
Dr. G 48:10
It’s a journey. It takes a lot of planning. It takes a lot of discipline.
Make sure that you have plenty of cushion before taking this road and making that decision to FIRE. I’ve mentioned before, I’m not so much into the RE of FIRE, but I’m into the FI of FIRE. Because I’m into the FI of FIRE, I like to get to the point of being financially independent but I’m not retiring.
So, whoever is taking this road or taking this journey, make sure you have plenty of cushion, way beyond what you would need. Don’t just do lean FIRE (that’s a whole other subject). Shoot for the fat FIRE if you can, so that you have plenty of cushion, so that if you needed the extra income to support the kids…
Andrew Chen 49:25
Makes sense. So, to close out, looking forward in the future, what is your goal with the practice?
Do you plan to keep running it indefinitely, or sell it at some planned point in the future, and completely retire at some point? What are your future-looking plans?
Dr. G 49:48
My thoughts right now are I’m enjoying what I’m doing. I have plenty of time at home with my family, my kids, my wife, and I’m able to do everything that I wanted to do with the time that I have. So, I have a lot of free time.
But it’s funny that I’m finding myself being very busy. All the extra time that I have is being taken up by things that I actually enjoy doing, so I’m finding that I’m staying pretty busy in the last year or so.
But as far as the future goes, I’m going to continue to do this at least until I’m 55 years old, which is about eight years away. I don’t see me changing anything at all until I’m at least 55, eight years away.
By then, my oldest will be out of college, and my youngest would be in college, I believe. Once the kids are out of the house, which is when I’ll be 55, then at that point, I might consider just selling everything off and maybe retire. But that’s the game plan right now.
I’ve got about eight years to go. I am starting to think about an exit strategy. I’m starting to think about how I’m going to exit the practice.
Who am I going to sell it to? Do I sell it to another dentist, a group practice, a corporation (which I would rather not do)? But I am starting to think about my exit strategy.
How am I going to sell the practice? To whom? Do I hang on to the real estate for current income, or do I just want to get rid of the real estate also?
So, all of these things are on my mind as far as how to plan things over the eight years. And that’s one of the reasons why I’m starting to pay off some of my debt and start to become a little bit more conservative, because you just have to start planning things a little bit with about eight years out. I’m starting to think about my exit strategy a little bit more.
Andrew Chen 52:02
Makes sense. By the way, right now, you’re working how many hours, now that you’ve stepped back from the clinical?
Dr. G 52:08
I would guess about 10 hours a week.
Andrew Chen 52:13
That leaves a lot of time.
Dr. G 52:17
That leaves a lot of time, yeah. But remember, all the free time that I have now I’m spending with my kids, my family.
I’m doing projects around the house. I’m working on the yard. I’m out on bike rides.
I’m out hiking. We go up north to Northern Wisconsin. We go to a cabin a lot more.
So, all that free time, I’m doing something. I’m not sitting at home. So, it’s all good.
Andrew Chen 52:47
All right, Dr. G. I really enjoyed chatting with you. Thanks so much for sharing your insights and the breakdown of your journey.
And hopefully, folks in our audience will get a new perspective from somebody in the medical profession, as well as somebody who reached FI with a couple of kids. So, I look forward to sharing this.
Dr. G 53:11
Hey, thanks for inviting me and having me in the show. I really appreciate it, and I’m just hoping I could maybe inspire and motivate other medical/healthcare professionals to at least take a look at the financial independence path. Thank you.
Andrew Chen 53:26
Perfect. Thank you.
Andrew C. says
Thanks John! Glad you enjoyed it. 🙂
John Steiner says
Andrew, really a great interview! You have a unique way of drawing out essential information. Interestingly, Dr. G says he may retire in @ 8 years, but it doesn’t sound like it because he enjoys what he does. Amazing he was able to save 30% from GROSS income from day one. Liked his comment about leverage in real estate assets.