In today’s episode, Cody and Justin are joined by the prolific Jim Dahle from the White Coat Investor. Jim came full circle from a middle-class Alaskan upbringing all the way to a successful physician with a blog that makes over $1M per year!
Well, that’s what the episode is for so go take a listen, leave that 5-star review and give us some feedback!
Episode Summary
He feels like he made all the same mistakes you’ve heard everyone makes but he did so with small amounts of money and he did so earlyAfter years of feeling like he was getting ripped off, he started reading through finance books at a used book store and was hookedThen he started getting heavily involved with online forumsHe also realized no one was doing this kind of education for doctors so he started White coat investor in 2011He was a resident at age 29 and making around $37k per yearHis first investment ever was $500 into options at age 10 that he got from a fund provided to Alaskan residents and lost every bitHis mom didn’t go to college but his dad was an engineerThey felt like they were middle-class where they didn’t go hungry or anything but after age 18 he was on his ownWhen he started college he took out a $5k loan for his freshman year but he used that for housing and got scholarships for tuition and would work the rest of the time for expensesHe got married at the end of his undergraduate degree but realized he wasn’t going to really be able to provide at the rate he was atHis wife’s family had a heavy military background so he decided to join the military to pay for his graduate degree in return for four years of active duty but he was able to enter active duty as a captain. He would make Major just before getting outHis four-year obligation started at age 31 and would end at age 35While he was on most of the same base pay as other officers he actually made more through incentives which totaled over $36k more per year!If he would have stayed longer, he could have even had more bonuses but it still wasn’t near what he’d make on the outsideNow back to his forum legacy…He had a prolific amount of posts (10k+) over the course of 7 years with a special focus on physicians and militaryHis blog, starting in 2011, was actually at almost the exact same time as Mr. Money MustacheThe goal that started the blog was to make money and to help people get a fair shake on Wall StreetTo stand up his blog he just taught himself how to build the website from the ground upThen we transition into the mindset of high income earners such as DoctorsHe goes through a few reasons why you find broke physiciansThey’re often financially illiterate They go from no money to too much money overnightExpectations from coworkers, patients, and family that they should live richHuge student loan sums ($400k+)No real work until ~31 years oldHe gives us some rules of thumb to help avoid some of these pitfallsThe first is trying to stay under 1x for college debt1 times your eventual income. Ex: Eventual income $250k = up to $250k loans are doable but strive for lower obviouslyThe second is understanding what your potential payments will be based on specialty because the pay can be very different but the school is often the sameWith that being said, don’t burn yourself out because then you probably shortened your career lengthThen we get deep off into taxesThe first step is just flat out understanding your taxes. You can do this by getting more involved in doing your taxes instead of just offloading it each year. He calls out how most of these high-income earners aren’t familiar with some retirement accounts such as profit-sharing plans, individual 401ks, defined benefit plan, health savings accounts, and back door Roth IRAsFor Health Savings Accounts employers actually help you out with the contributions it’s tax-free going in, growing, and if you use it for health, when you use it!Also, don’t forget that health savings accounts can be investedAnd if you either forgot or don’t want to use your HSA money when you actually have a health event, you can always use it later as long as you have proofIf your employer’s account doesn’t have the investment options you’re looking for, you can always roll it over to the account you really want once a yearIt’s also interesting to note that he still does his taxesThen we discuss his “accidental” rental property because he ended up with the house in 2006 and found himself stuck with itThen we shift gears into how exactly he turned his blog into such a profitable businessThis covers advertising, affiliate marketing, your own products, and selling your own timeTo just show his growth, in just 4 years he was making $180k per year and has now grown over $1M per yearEven though he makes more on the blog versus practicing medicine, he still loves his job and wants to keep working at least half timeAll that drives home the fact that he feels like he’s already living his ideal life and has no pressure to retireKey Takeaways
Income doesn’t solve all: We try to put a decent focus on earning potential and not just savings rates but this is another example of which one is a must. If you don’t have a balanced spending plan, no amount of income will save you as we see with so many high-income earners.Get your hands dirty: I loved that Jim recommended getting into the weeds with your taxes. Something that important might be handled by someone else on a larger scale but you should absolutely get in there and learn as much as you can to protect yourself.Retirement isn’t everything: It was so awesome to see someone who wasn’t even focused on retirement. Coincidence that he’s also one of the most successful people in personal finance? I think not. His energy is solely focused on getting better, not getting out.Call to Action
Figure out a way to increase the aspects of your job you love and minimize the parts that you don’t. That could include going off on your own but if that’s not you, just focus on doing this within the bounds of your current employment
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