Imagine your bills were taken care of, and there was a steady stream of income arriving in your bank account each month. You’d be untethered from a work-centric existence. That feeling you can almost taste- it’s financial freedom.
For those who love to travel, they may feel most alive when experiencing new sights, cultures and people. Slow travel is a way to experience locations in a deeper way than a vacation, settling in a place for weeks or months, shopping local markets and chatting with the neighbors. This is the kind of dream financial freedom can provide.
In my twenties, I visited Australia for five weeks with my best friend, volunteering on local projects and traveling up the coast with a bus-load of college students. The combination of friendly people and lovely accents was so charming, I didn’t want to leave when it was over. I still think about the beautiful places I saw, and how fun it would be to live on the Gold Coast for a while, exploring by day, and enjoying pub life by evening.
When my husband and I got married, a friend of his traveled from Hamburg, Germany to attend our wedding. She now has a child who’s close in age to ours. Bob and I talk about taking a trip to visit her and her family, but we haven’t yet squeezed it in between our own family vacations and conferences. What would it be like to be financially free, and spend a few months or years living in Hamburg? While my husband melded into the local music community, I could develop friendships and learn some of the language with my son.
These are the kinds of experiences I dream of; they are the stuff of a well-planned retirement. But what if you could pull this off before the age of 65? As a physician, you can achieve financial freedom if you plan for it.
When financial gurus and investors talk about the drive it takes to learn the principles of personal finance and use them to achieve financial freedom, they talk about the importance of knowing your “why.” Having a clear purpose allows you to sustain the drive it takes to use these strategies over time to reach your loftiest goals, including financial independence. When a family member or onlooker asks, “Why take the risk associated with that investment?” or “Why make extra work for yourself becoming a landlord?,” knowing what motivates you keeps these doubts from knocking you off course.
When I started making six figures, I realized what a huge responsibility it was to care for this new income. I had a six figure student loan balance at the time, and was contemplating marriage. A few years later, we are married with a child. As the family breadwinner, my financial goals center around taking care of our needs while saving for our future. I say my goals, because I am the driving force in this arena. While my husband advocates saving, and is a relatively frugal fellow, I’m the one who is more interested in our long term investing strategy.
Like many doctors, my first encounter with a financial advisor (FA) resulted in the purchase of an expensive life insurance policy. This policy is a type of whole life insurance, pitched as a way to minimize tax burden in retirement. This type of investment is also notorious for charging hefty fees, and making its purveyors a large commission. Like buying a luxury SUV to put money in, I pay large fees each month for the privilege of investing post tax dollars in various exchange traded funds (ETFs) within the policy.
I won’t delve further into the details of this insurance product, but after an independent analysis by an actuary, I decided to keep the policy rather than cashing it out and cutting my losses. To me, its benefits are largely behavioral. Even in my financial naivete years ago, I knew there’d be a benefit to forcing ourselves to save a large portion of my pay every month. It has been a way to artificially constrain our budget. As a result, the cash value has grown to a significant sum. If I pass on, my family will benefit from the life insurance component.
In part because of this misadventure with a financial advisor (a fiduciary, the kind you are meant to be able to trust), learning about personal finance has become a hobby. I realize that unlike our taxes, we can’t really outsource our financial plan to a professional. The degree of trust needed is too great. As my favorite financial bloggers say, “No one will care for your money like you do.”
Also, have you seen how expensive a FA’s advice is? If you don’t understand what they are doing for you, it’s hard to gauge whether they are doing a good job or not. This puts you in a really vulnerable position. The alternative to outsourcing money management is to do it yourself. A straightforward approach is outlined and advocated for in The Simple Path To Wealth, one of my favorite books on the subject.
Physicians are busy, and there are a lot of demands on our time. But a self-directed financial education should be a priority too. There are abundant books, blogs, and podcasts for every level of sophistication. Some of my favorites can be found here. Many niches exist within the field of personal finance, so there is a resonant voice out there for everyone. Some resources focus on the technical aspects of financial planning, like types of tax advantaged accounts or travel hacking, while others focus on the psychology of spending and saving.
What financial bloggers have taught me is that my potential is limitless. People with fewer resources than me have found financial freedom, and are living their dream lives in their thirties and forties, not their sixties.
Chasing financial freedom takes extra time and effort beyond my normal working hours. I’m experimenting with monetizing this blog, in case my next post goes viral. And I’ve begun real estate investing, recently purchasing a rental property in my town. The process I’m learning will allow me to acquire a property overtime, while my tenants pay the mortgage. In this way, I’m building wealth, while my tax bill is decreased by deductions like depreciation and expenses. Some people build their nest egg slowly, while I prefer to take a more aggressive tack.
I like learning about how other people spend money with intention. In this way, they can enjoy it without guilt, while getting the most bang for their buck. For example, many doctor moms benefit from extra help around the house, hiring someone to wash and fold the laundry or run errands. On the other hand, we are not car people, so when a friend shows off her new BMW, I can admire it without considering one for myself. One day the money saved will fund an amazing adventure, maybe an RV trip to Glacier National Park, or a large ski-trip with a slope side nanny. For now, the money saved gives us a cushion, and peace of mind.
Aside from learning to spend intentionally, I want to diversify our income and setup passive income streams. Finding financial freedom is like solving puzzle, but with multiple possible solutions. I’m building a money machine so one day, I can stop trading time for money.
The path can be riddled with failures, even if you're doing it right. In this recording, I share some of my gaffes with you.