Mindy: Welcome to the BiggerPockets Money Podcast, Finance Friday edition, where we interview Sarah and talk about big debt with big future income.
Mindy: Hello, hello, hello. My name is Mindy Jensen, and with me as always is my non-physician co-host, Scott Trench.
Scott: Thank you, Mindy, great to be here with my non-urgent but caring co-host, Mindy Jensen.
Mindy: Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting.
Scott: That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or model out the next 10 years of cash flows with an unusual financial position, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.
Mindy: Scott, that was interesting you said unusual financial position. I think that their future financial position will be unusual in that they do have the potential to make high income, our guests today. However, I think that their current financial position is also rather unusual because they are spending like they don’t have any money. And I think that’s fantastic.
Scott: Absolutely. I I I loved talking to Sarah today. I think that um, what’s Sarah is a physician’s assistant and her husband is a um, student medical student. He’s going to become a doctor. So these are folks they’re going to have a very, very high income in a couple of years. And um what is remarkable about them is that they spend so little of that. They’re so conservative with their spending, which gives them all the options in the world and makes um, financial planning, right, that the strategizing super luxurious. They can really do so many things because of that situation. And look, I hear people poo pooing, oh, I they earn a huge income, of course it’s easy. Well, yes, we talk about every money story here on Bigger Pockets money and these folks are going to have a very high income. Um and again, what’s remarkable about them is that they keep their spending low. And let’s maximize the freedom and the the the life opportunity that comes with a good situation like this, which by the way is earned from getting good grades and working hard your entire upbringing, uh being an elite student, and then getting into medical school and completing a residency consuming a lot of debt, um so on and so forth and doing the same thing um to a at to a similar degree if you’re going to become a physician’s assistant. So, this is an earned privilege and uh we’re we’re we’re excited to to chat with them and talk about the wonderful opportunities they’ve got.
Mindy: Yeah, you don’t accidentally become a doctor. You become a doctor on purpose through a lot of hard work. All right, Scott, the contents of this podcast are informational in nature and are not legal or tax advice, and neither Scott nor I, nor Bigger Pockets is engaged in the provision of legal, tax or any other advice. You should seek your own advice from professional advisors including lawyers and accountants regarding the legal tax and financial implications of any financial decision you contemplate.
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Mindy: Sarah is a physician’s assistant whose husband is graduating from medical school. Her plan is to absorb his medical debt, but she would like to eventually go part-time in her job. Sarah, welcome to the Bigger Pockets Money podcast. I’m so excited to talk to you today.
Guest: Thank you. I’m really excited to be here. I’ve been listening to the show for a while and just excited to kind of go through it all, get your guys’s input on everything.
Mindy: Thank you for listening. Let’s jump into your money snapshot. I am showing a salary of $6,600 a month with expenses that total about 3,300, which to me says we don’t really need to dive into those. Mortgage of 1,500, um, I don’t see anything crazy groceries, my big trigger, groceries $500 a month. I think you’re doing great on expenses. 6,600 coming in, 3,300 going out, plus an additional 300 in guilt-free spending, which I love. I am learning to embrace guilt-free spending. You’re still saving half your income, almost half your income. That is clearly not where we’re going to spend our time. Investments, you have a grand total of approximately $225,000. How old are you?
Guest: 29.
Mindy: 29 with a net worth of 200, well, not a net worth, uh, investments totaling $225,000, you’re doing okay. Uh, emergency funds total $16,000. You are saving an additional $833 a month for six months for Europe trips. We’re going to talk about that. But the big story is the $500,000 in debt that you have. But let’s dive into that a little bit. I see $140,000 in your husband’s student loans, which we already mentioned and $358,000 in a mortgage. I’m not seeing credit card debt, I’m not seeing anything like crazy except the student loans which we’ll talk about in a bit. Your mortgage interest rate is 2.75%. So, and you need a place to live. I don’t consider mortgage to be crazy. 2.75, I wouldn’t pay a dime extra on that particular mortgage. So it looks like you’re in a fairly good position. What are you doing here?
Guest: Well, I guess for me, I have a few questions today. Um, but as someone who I’ve traditionally never had any debt um up until buying our home and then with my husband medical school. That’s something I’m not super comfortable with. Um, so I guess learning kind of how to navigate that, but I’ve listened to the show enough, personal finance, enough to know that our interest rates are pretty, you know, solid. So I guess I’m torn in how to kind of go about paying that back, you know, in timeline wise. Um, I have a lot of other interests outside of healthcare. So ultimately, I too would like to kind of be able to buy myself back some time through wealth, you know, and either work part-time so I have time to do other things or, you know, move on from there. Um, so yeah, I guess my main thing is probably discussing the debt pay down, but then also, um, I did have some unique, I guess health circumstances that I don’t know if we’ll get into or not later, but um, I’ve basically am have been very aggressive in saving for retirement to up until buying our home, but I’m just all of us are only here for a certain amount of time and not all of us, you know, we’re not guaranteed making it to extra retirement age or whatever that may be. Um, so I would like to kind of discuss too maybe options for how to be mindful for saving with for retirement but still utilize some of our money and wealth now.
Mindy: Okay. Well, let’s look at your money story and your medical story.
Guest: Yeah. So, I guess to start, I’ll kind of back up with my money story. So like you said, 29 years old. Um I’m working physician assistant. I alluded to it already, but I have a lot of other interests outside of healthcare. Um, I don’t plan to leave that anytime soon, but I do a sports podcast and I’m also working on developing an app for entrepreneurs. Um, I have a pretty strong money background thanks to my parents. My dad is a CPA um and he’s kind of taught me everything in terms of my personal finance. Um, so I was looking enough to come out of undergrad and graduate school without any debt. So like I said, I don’t really have any experience with that previously. In 2020, I suffered an unwitnessed cardiac arrest while I was out for a run. Um, I was found in a snow bank. I had no previous medical conditions or anything. I was healthy. I was a distance runner in college. I went out for a normal run at 6:30 in the morning and woke up a few days later in the ICU coming out of a coma, a medically induced coma. Um, so that kind of changed my perspective on life. Obviously, it’s something like that does and you know, shows you how fragile life really can be. So that’s kind of what shaped me in terms of I struggle with the personal finance from my age standpoint to be super aggressive and saving, you know, maxing out my 401k, my IRA and such, but I also understand, you know, how fragile life, like I said, life is and that we’re time is not guaranteed for all of us. So I don’t want to, you know, be scraping pennies together, you know, for future funds that we might not even be able to use. So ultimately, like I said, that’s really why I want my wealth to be able to allow myself and my family time to do what we want, when we want, buy back some time and flexibility. Um, and get a balance of, you know, saving for that retirement, but then also potentially utilizing some of it now in kind of getting a delicate, you know, good balance there.
Scott: Thank you for sharing that. Wow, that is really scary. um and a wake-up call to everyone here. Um, what what does doing what you want and living the life that you’re of your dreams look like? What is a perfect day for Sarah?
Guest: Yeah, so um, like I said, I have a lot of interest. I think ultimately what I’ve kind of narrowed it down to would be working in healthcare part-time at about like 10 to 15 hours a week. Um, doing my sports podcast, kind of be able to do what I want, when I want. So like doing my sports podcast, I’m working on this app on the side, um, being able to go out and garden and hike and do whatever I want. Ultimately, work on my own schedule, you know, be my own boss and not have to, you know, ask anyone for time off and things like that as the ultimate long-term goal.
Scott: What your you’re working full-time right now earning 150k. You you’re saving half of your income. Um, what would it look like to is is your husband share this vision as well? Is what’s what’s what’s his goal?
Guest: So his goal is the same, but his timeline is different. He was a physical therapist actually worked in that field for many years or not many years for like three years before going back to medical school. Um, he just completed third year. So he’ll have one more year left of schooling and then a residency for three to four years depending upon the specialty and then that’s when the real career starts. So he’s looking at at least another 10 years, I would say of, you know, solid full-time work, but ultimately he as well would like to do something that allows for flexibility on our own time, whether it’s consulting, you know, where you’re not working, you’re traditional like 50 hours a week in medicine where nights, weekends, and you have no control kind of over that sort of thing.
Scott: Okay, that makes sense. Yeah, I think I think look, if you’re going to go and take out 140 grand in medical school debt, you’re probably going to want to be a doctor full-time for at least a few years following that you’d hope, right? Otherwise, why go to all that trouble? So that makes sense. So probably five, 10, at least five to 10 years in that profession and do you have any idea what the income will be, um, including residency? How long will residency last? What will what is the expected income once that finishes?
Guest: Yeah. So residency can be anywhere from three to four years and it’s about 65,000. um, just it varies on the program and where you’re located, which you won’t know, he won’t know until like match day next year. So it’s about $65,000 you get up to about $75,000 by the end of that three year, um per year. But when you’re an actual practicing physician, depending upon the specialty, expectation would be anywhere from 300 to $500,000 depending upon if it was something procedure-based versus in the hospital setting.
Mindy: Okay, let’s talk about these student loans. This seems to be a big weight as it sort of should be, but we were chatting before the show and I know something that everybody else doesn’t know. What is the interest rate on your husband’s student loans?
Guest: So it will just be 1% for the entire duration of the loan because it’s a part of a scholarship to work in primary care or internal medicine.
Mindy: And how long does he have to work in internal medicine in order to get that 1% loan?
Guest: There is no duration. So as long as he goes into a completes a residency in that, then that’s that suffices.
Mindy: And Scott, what do you say about paying off debt early versus not paying off debt early? What’s your, uh, interest breakdown there?
Scott: I think if it’s below three, four, 5%, you don’t pay it off early, right? I mean, maybe 5% you start paying it off early.
Mindy: Hey, Scott, what are high-yield savings accounts paying right now?
Scott: I want to put a couple of, yeah, a couple of caveats on that, right? If if you’re saying you made $65,000 a year and this is this is the debt here, maybe we’re we’re attacking the problem in a different way. We don’t like, you know, maybe we don’t we have to figure out a way around the boogie man. But this is $140,000 in student loan debt that is securing an income stream most likely between 300 and $500,000 a year for 30 years. So this is a very good investment, um, essentially, right? That’s the asset that is backing this this uh, this debt. And I I see no need to pay it off early in any sense if that’s what you’re getting at, Mindy.
Mindy: Well, that’s what I’m getting at a little bit. So we are not Sarah and we are not going to be paying off or we’re not Oprah either. We’re going to pay off your interest rate, your your student loans, yay. That’s going to be Scott. Um, but we’re we’re not here to pay off your loans or to tell you what to do. And and you have to be able to sleep at night. And if having $140,000 in student loan debt at 1%, at 10%, at whatever, gives you anxiety and doesn’t allow you to sleep, then that’s not for us to say, don’t pay it down. What I would like to share with you is a different point of view. Right now, high-yield savings accounts are paying three, four, 5% interest depending on where you are and how much your deposits are. If I were in your shoes, rather than aggressively giving money to the loan company, I would be making as small of payments as possible to the loan company and this goes for the student loans and the mortgage and then putting all of the money that I would otherwise be aggressively paying into a high-yield savings account because then you’ve got $140,000 and you could choose to pay it off. You know what? I just want this loan to be this this to be done. I don’t want to have this debt anymore. Boom, I’m I’m now I’m out. But you don’t have to pay it off. And then you have the money still available should you find a rental property that you want to buy or your car breaks down and you need a new car or then you want to go to Europe for a month or you want to buy back your life and you decide, hey, I’d rather have this $140,000 out on student loans at 1% than and then work 40 hours a week. So it gives you more flexibility plus you’re actually earning money on this because you’re only paying 1% while you’re earning two, three, 4% on the money that’s like the delta that you’re putting into the other account. Um, the same goes for the mortgage when you’ve got a 2.75%, the high-yield savings account is still paying more than the interest that you’re paying in your mortgage. Again, I’m not gonna pay her mortgage for you, so you’re the one who has to make this decision, but that’s something to think about.
Guest: I didn’t think of it from that point of view, I guess to think, you know, that the money I could let the money sit and accrue at something at three, four or 5% and then can still take that at some point if I felt like I want to get rid of that and just pay it out lump sum rather than just traditionally thinking like make extra payments and things like that. So I like that option for sure.
Mindy: So that’s, you know, that’s a conversation to have with your spouse to see if he likes that too because maybe you never pay this off or you know, you pay it off in 100 years or whatever at 1% making tiny little payments and that’s cool too. So just something to think about. Uh you said you were creating an app for entrepreneurs. Are you writing the app or are you hiring that out?
Guest: um, so I’m creating an app with my friend’s husband who’s an engineer and we’re actually using a no-code website. So he’s creating it all online. So we didn’t have to hire, we have I have not spent a dime on this yet and we actually are almost ready for the beta launch. So we’ve been able to do it entirely through there. Yes. Um so it’s a very cool It’s I think it’s a dollar so a website that he’s using for the no code. I’m doing all the marketing and the prep and social media and everything like that, but yeah, it’s called work your way. It’s basically actually, I was thinking about getting into real estate. I’ve been, you know, adding it to my thing about adding it to my portfolio for quite some time. And one day in the shower, I was like, okay, why am I taking forever to pull the trigger on this? And I realized it was because I just was intimidated by the fact I didn’t want to be involved in any property management, like I didn’t want to be responding to plumbing issues at 2:00 a.m. Um, but I didn’t know how to go about vetting out a good property management team or you know, building people around me. So basically the app is um, essentially able to connect entrepreneurial, likeminded individuals um, who are either idea owners, providers of skill or services and it’s a feed-based system where it matches you with what you’re looking for. So if you’re an investor looking to invest in a company, um, you know, property management services, all of that. So it’s a one stop shop. Um, I figured I like to just be able to go quickly on my phone and search for what I’m looking for. So this is an app where you basically can sign up into any of those categories and be matched with, you know, what you’re looking for.
Scott: Awesome. So, so I mean, on the surface right now, my observation is like you don’t really have a financial problem here. You’ve got uh, you you’re you’re spending half of what you earn. You’ve got a great mortgage on your property. What’s your what’s the home value?
Guest: um, 408,000 about is what I was estimated at.
Scott: Okay, so you got about 25, 20, 25% equity, maybe a little bit more in the property. Um, you’ve got a great investment thing. You’re spending half of what you earn. Uh, your husband’s going to graduate in a year from now and you’re going to double your income or not double your income, you’re going to add another 65,000 that that at that point in time. and then three years from then, you’ll be generating 300 to $500,000 per per year. So, like right now, there you have lots of good options in your current state. I think the goal as I understand it is how rapidly can you transition from your current situation to one in which you’re uh living your ideal day. and your ideal day as you articulate to us is part-time work as a physician’s assistant with the meat of your time being spent on entrepreneurial activities like this app. Is that correct?
Guest: Yes, yep, exactly.
Scott: So I think the only thing holding you back from doing that right now. Like if you if you wanted to be like, if you wanted to wait at all, you’d wait a year for the residency to begin and the residency will cover all of your living expenses and still allow you probably to make the payments on this student loan debt, um alone. Like that single income will work. So it’s however much you want to work um on there would all be gravy that you could save and then the app construction is still an asset. You’re still like, my ideal day is building an asset um that that that will go here. So I’m I’m not seeing too much of a of a problem here. I would the one thing that I think would be maybe more helpful than that is if you just allocated a bit more to cash and less to investments for a period of time. Like if you had, if your emergence, if your cashing was 50 grand, I think you’d probably be looking at the world very differently in terms of your work. So, and and that would be super achievable for you in a in a within a 12 month period for example, or you could really reallocate to it now if you really wanted to. What what are you, what what are you kind of struggling with or what’s your reaction to what I just said?
Guest: Yeah, no, I think that makes sense. I guess my biggest hesitation was always thinking about like the nervousness of cutting down my income with this impending debt, you know, coming into play soon. It’s not, you know, not having to make the payments right now. But I guess when you put it mathematically like that, I did honestly just recently discover the high yield savings account. My previous savings account was paying me nothing in interest. Um, so I am more comfortable now keeping more money in that and I’ve been utilizing one um with the higher interest rate. So I’m looking to kind of build that emergency fund a little bit more um rather than feeling guilty about wasting my mo wasting my money in there quote-unquote, I guess. Um, so yeah, I think that is also sounds definitely very reasonable. I guess the like main other thing I’m I would be struggling with then too would be it’s another card into play, but what are your thoughts on in terms of like should you continue to max out our retirement accounts, you know, at what point or is like, is it benefit always, you know, outweigh, I guess not the risk, but tying up the cash, you know, in terms of both of us continuing to max out our retirement accounts or if we ever want to access those funds early just going to like an employer match or things like that.
Scott: I mean, you you guys are currently doing great and you’re about to be in the top 1% of annual income earners in this country. So the the the the question is really for the next three years, do we want to contribute to the retirement accounts or do we want more flexibility? That that that’s what you’re struggling with, I think fundamentally. And I think that look, like what’s the right answer there? It depends on what you want. If you if you if you said, Scott and Mindy, I would like to have the largest possible pile of net worth at 65 years old, we would tell you max out your retirement accounts, uh, invest aggressively in real estate and and go to town there, right? If you’re saying I want to live exactly the lifestyle that I want to live next year because I have this wakeup call that has changed, changed my my perception. We’ll tell you, build up a, build up a cash position and go do it. um, because your position can you could, you could cut your hours in half, probably make, you you could make half of what you’re making right now and still cover your expenses, right? That you you’d still be accumulating $2,000 a month at that point, this would not be addressing the student loans which will start needing to be paid, but again, that will only start presumably needing to get paid once husband begins working, right, as a physician and there will be And you still can cover the payments with 65,000 um in income from at that point. So that’s 100 and what, 30, $140 grand, 65 plus 75 at that point. Uh if we went to that. There would be no reason that would be irresponsible in any sense of the word as soon as that happens. You could do it today um and it would still be responsible in your position. How how much do you want to work? Does halftime sound like the right amount?
Guest: Yeah, I think it’s a matter anywhere from 10 to like, I guess I’m 40 hours a week now. So 10 to 20 or so from there. Um and I don’t even know if that’s forever. I’m just burnt out, I think from working through the COVID pandemic that I do feel like I am leaning towards sooner rather than later for part-time. And again though, I might, you know, in a few years be like, hey, I miss this, because I love what I do. It’s just, you know, I think the burnout is a component of it. So I don’t even know if that’s forever, but I think I would like a step back from anywhere from like 10 to 20 hours, you know, in the interim for a couple of years.
Scott: And would is there a reason why you wouldn’t do that next week?
Guest: Um, no, I guess, I guess not really. I always in my mind, I guess felt like I needed to wait it until he graduated so we had like a second income, but when you put it mathematically like that, where, you know, cut the numbers down and I I mean, I love my job, but there’s also other opportunities out there too where you can make more per hour doing per DM stuff and things like that. So I don’t even know how much the income would shift going down hours if I found something like that. if I chose to. But yeah, so I guess there’s really no reason. It was just more, like I said, kind of a matter of fact that I have this debt that I’m going to be accumulating looming that I wasn’t really sure if it was right to do something like that with that on the horizon, but now I’m seeing that that necessarily doesn’t have to be paid down immediately and I think I could be more comfortable with that knowing that the 1% interest rate is so very low and overtime, who knows. Like I was telling Mindy before the show, um sometimes depending on where you work in a hospital, they actually pay off your student loans. So there’s a possibility we might not even have to absorb the entire medical school debt depending upon where you work, there’s student loan forgiveness there.
Scott: Yeah, I mean you guys are a great team here. Like you’ve you’ve clearly cash flowed the family during this period of time and continue to build wealth over over this period while an investment’s being made in your husband’s income stream. Once that starts being paid, um, I think it’s very fair to say mentally allocate, hey, that, you know, husband’s income stream is going to be responsible for covering expenses and then paying off this debt here. Um, and like you’re not even going to be like, you know, um, retired or anything, you’re going to be working part-time and working on an app that could be a huge contributor to to your financial position. So I I see no reason why from my seat, that’s not feasible again starting immediately next week. I think the decision if you’re nervous about that and you talk it over and you look through some things, will become easier if you begin allocating a bigger percentage of your savings that you have right now to cash. I think if you had 25, $50,000 in cash, that would be very uh, that that would make this feel much better uh, um about about cutting back on some hours because you’d still see things grow and you still have a big pile to fall back on if if things went badly. And like Mindy’s point, there’s no sense in paying off the debt uh when you can earn 4% in your ally savings account, right? or your money market account. So I think I think that’s right. I think you stick it there, that’s the best investment you can make um, because you’re going to use it to pursue entrepreneurial ventures, not uh, which could be a much better return on on on assets financially and it’s what you want to do, right? That’s that’s the specific of the goal that you set out for us in the beginning of this.
Mindy: Do you have the opportunity to do part-time uh, or a temporary work? Have you pursued that at all, looked into that?
Guest: Um, I haven’t like pursued it per se or anything because I I I actually I love what I do. I work at a private practice I’ve been at since I’ve been a PA and I like working there so I think my first choice would be to stay here part-time, but yes, I do. I mean, I get emails all the time for like part-time, the locum tenums positions where I’d be going to hospitals and things like that and they’re really high, you know, they’re much higher paid than my current salary per hour there. So that is always an option too from there, but to me it’s a matter of getting used to going into like a new clinic or a hospital for three months at a time and learning new electronic medical record and all the nuances of it that go into it. I don’t know how much I would enjoy doing something like that.
Mindy: Okay, so it’s like a a three month commitment.
Guest: There it varies. Some will be three months, some will be six, some will be nine or like they have the ability to go full-time. Um, but yes, and then there’s also per DM positions. So I could work out like an urgent care or something, you know, hourly or just pick up shifts as I wanted. And again, those tend to be higher paying but there’s no um benefits or anything like that and that is something that I should mention actually, I can’t believe I didn’t say this earlier is that um, right now obviously my husband school, he’s doing his own benefits through the school. So with my current job, like my health care and everything’s paid for in full. um, so that is something that I would have to take on if I went below a certain number of hours, which I honestly have not looked too much into the cost of that, but from what I know it’s relatively expensive. I I would need to have good health care, obviously given my medical history, um, so I like having the highest plan paid for me and that’s a big asset, you know, to have with my current employment full-time.
Scott: So your employer will likely be able to keep you on their health care plan if you work more than 32 hours a week. That’s at least how it works here in Colorado. So below 32 hours a week, we can no longer offer full-time benefits to our employees. So that might be a potential first step is to say, hey, I’d like to drop down to 32 hours a week and see my pay cut, you know, as a percentage accordingly there and stay on benefits. That might be a way to dip your toe in to how how this feels. and then once your husband begins a residency, most likely that that uh employer will allow you to join that benefits program and switch over. So that might be one way to bridge the gap for the next year.
Mindy: Another point that I wanted to make was maybe you go to that urgent care and check it out. You take a month of shifts or a month of Saturdays or you I’m assuming that med school comes with a lot of studying and maybe your husband is around as much as you would like him to be, so you can use that to your advantage to test it out. Oh, I really like working at this urgent care. This would actually be kind of cool to reduce my hours at my full-time job and then take one shift a week or two shifts a month or something to add the money back in without the time. And then once your husband gets insurance that you can become a part of, then you drop your hours even more at your full-time position while taking, you know, another shift at the one that pays so much per diem. That that could be a way to stay in medicine because I know you have to keep your skills up, stay in medicine without staying full-time in medicine. Um, and it just like any part-time job that you’re starting, you know, or side hustle or, you know, side, yeah, side hustle, you start off while you still have a full-time job because if you don’t like it, then you can just stop doing that. You know, you go to the an Carry, you’re like, wow, everybody here’s nuts. I’m not doing this anymore. I’m just gonna go back to my full-time thing. At least now you know.
Guest: Yeah, I think that’s a good idea. I think the biggest thing I have to figure out one of the reasons I would like to leave like or would see myself leaving healthcare would be I don’t want to work weekends or like after hours or nights or anything like that. So a lot of these positions that come with like the per DM more come could and stuff obviously they’re looking to fill those shifts because no one else wants them either from there. So I think it’d be just a matter of finding one that balances from there because even yes, my husband is studying all the time, but I like using that time for like my app and other things right now outside of that. So, but it’s definitely something to consider adding and just seeing how it goes and supplementing the any income for now for the next year.
Mindy: Okay. So I see some homework assignments for the two of you. First of all, sit down and have a conversation about what your dream life looks like and when it’s going to happen, where it’s going to take place uh and start dreaming, start filling out a bucket list. Have a Sarah only bucket list, have a husband bucket list and have a together bucket list because you don’t have to do everything together. But if there’s like you both want to climb the pyramids in Giza, then go do that together, but if he has no interest and you want to do that, like go do that. Uh but start planning for the things that you want to see, see what your bucket list looks like. Maybe your bucket list is like, we can knock everything off in one year. Okay, then what are you going to do? You know, look at your prepare to live until you’re 100, but plan to gosh, this is so morbid. plan to not live to 100 but like prepare to live to 100. And then, okay, there’s 27 trips we want to take. If we take two a year, let’s do 28 trips because that’s easier. We take two a year that’s 14 years. I think 14 years is a reasonable amount of time. So we’re gonna take a trip in the spring and a trip in the fall unless it’s a thing that you have to do in the summer or the winter. And then back that out and start filling up your calendar and then see how that feels.
Guest: I think it’s a great idea. No, definitely. I’ve started my own personal list, but I think it would be good to add to it and you know, kind of get a group list going so we can actually start planning things from there.
Mindy: Yeah. Have you listened to episode 362 where Scott and I sit down to talk about his one-page investment philosophy.
Guest: Yes.
Mindy: Okay. Have you filled out your one-page investment philosophy?
Guest: I do have one on my computer. I did not write it exactly on your form, but I like using I did it in my Google sheets that I have I keep all my finances in there. So it was in one place.
Mindy: Whatever works for you is the best plan.
Guest: I think it’s the best.
Mindy: So, did your husband contribute to that?
Guest: Probably not. He’s been in so I’m we he’s been in medical school about an hour and a half from where our house is right now for the past like year for rotation. So he was not here when I did it, but I could have him help me contribute to it for sure.
Mindy: I would give him some homework to listen to that episode, show him the document, and then show him Scott’s document and then show him your document. Hey, this is what I came up with. What do you think? Because he’s so busy with medical school, having the already filled out document could be a lot easier for him to digest. Oh, you know, I like most of this, but I’d like to switch this one thing. Um, I think that is a great next step, a great next homework assignment. Work on your bucket list, work on your ideal life, and work on your investment philosophy. If your investment philosophy shakes out that you need to be investing $100,000 a year, it’s going to be totally doable on your salary and with your spending habits already. And if it shakes out that you only need to be investing $50,000 a year, then you have more options currently.
Scott: Yeah, you you keep your expenses the way they are and you model out in addition to the great things that Mindy said, you just model out the cash flows that your family is going to produce over the next five to 10 years. You’re gonna be looking at a staggering sum of money. It’s gonna be incredible. Um, if you, if you invest a million and a half, million to a million two of that, which is super doable just from um, the current income streams that you’re you’re making part at halftime plus um husband’s income. I think that’ll be a very freeing exercise for you guys. and you like, okay, great. We’re going to invest a million and a half of this, that’s going to become, you know, two and a half to 3 million by the end of the next decade, um, uh, in additional wealth beyond what I’ve we’ve currently got. Um, and that gives us 800 to a million to spend on lifestyle. We spend $33,000 a year, so that’s $300 grand, so I have 500 grand to spend on fun and goodies um uh over the next 10 years. That’s a lot, right? You can travel to um the pyramids. You you you could do the pyramids, you can do a trip uh a three weeks in France after flying, you know, first class and you can do the Super Bowl um each year uh on on that um that amount um if you’re able to keep your your baseline expenses somewhere in the ballpark of where you’ve got them here. And that doesn’t include upside from the entrepreneurial uh endeavors that you’ll be be undertaking. And that’s at a $300,000 uh assessment there. So on on uh on income uh that’s counting 10 years of after residency, but you know, it could be much higher than that. And so I think if you guys do that exercise, a lot will be clear and you’ll you’ll I think that uh your vision for your life probably needs to expand a little bit in that time horizon. It might be it might be too small at this point in time would be my my guess.
Guest: I think it’s a great idea. I’m like a huge numbers person, love seeing everything out written in front of me. So I think having that for the like going all the way through future income scenarios and stuff and seeing how that plays out will help me feel better too about seeing that there and feeling comfortable, you know, and cutting my hours or having to work or whatever it may be. I think seeing it visually helps.
Mindy: And if you test out cutting back your hours and you hate it, you don’t like the income, you don’t like you feel like, oh, I have all this time and nothing to do, you can probably go back. I mean, I don’t know a lot of uh physician’s uh physician’s offices that are like, nah, we’re good. We don’t need any more help.
Guest: No, there’s definitely demand there. So that that is nice and that’s why I’ve traditionally kept the emergency fund at just like three months just because having a job where it’s relatively easy if God forbid anything happened, but yeah, the demand for the work is definitely there if needed.
Scott: But by the way, this entire good problem um is a result of the low spending baseline that you and your husband have created, right? So, you know, uh, yes, you’re about to earn a huge family income over the next couple of years um, because one of you is going to be a doctor and the other is a physician’s assistant, right? But the real winning that you guys are doing here is the low expenses. There’s a lot of people out there that are in your income and age bracket, um, who are who would come into this, who would not be spending the way that you do, who would be spending two or three times as much counting on that future income as part of the projection model there. So as long as you don’t get carried away with that and fall let the let the goal post move too much. You’re gonna have so many good options and you can, I think, realize the dream that you laid out to us next week, um, if if you so chose.
Scott: Well, Sarah, thank you so much for coming on the Bigger Pockets Money podcast. We hope that this helped um reframe some things and, um, uh, really refreshing to see uh, an awesome, strong financial position and a lot of great options for you. So, wish you the best and uh, thank you so much for listening and for coming on today.
Guest: Of course, thank you for having me and I can’t wait to do the homework that you gave me and I’m excited for everything. And thank you for your time.
Mindy: Thank you, Sarah and we’ll talk to you soon.
Scott: Bye bye.
Mindy: All right, Scott, that was Sarah and that was a really fun episode. I really am excited for the possibilities that they have ahead of them, and I am excited for Sarah and her husband to sit down and truly explore what their ideal life looks like, where it’s going to happen, how much it’s going to cost, when it’s going to start, and then once, like you give this advice over and over again, start out and work backwards. So start at the end, when is this going to happen? Great. How do we get from here to there? Well, in five years that’s going to happen, and three years it’s going to happen. Um, I think that uh, Sarah being a self-professed numbers nerd is going to be able to figure this all out and have a really great life.
Scott: Yeah, you know, look there’s there’s no certainties in anything that you’re planning out in the future, but in terms of other folks that we talked to here, being a physician’s assistant and a doctor is about as predictable of a high income um and lifetime of of work and labor opportunities as you’re going to get. Sarah’s stated goal was, how do I and maximize my life enjoyment right now and here are the things I want to do. And she can do that right away, essentially without penalty. and there were probably a lot of a large number of people who could do that if they were willing to keep their expenses as low as Sarah and her husband. Um, the advice that she asked for was not how do I maximize my net worth over the next 30 years or how do how do I obtain a portfolio that produces cash-flowing assets such that I don’t have to work at all in the shortest period of time. If that were the goals, and there hadn’t been this existential life crisis event that had impacted her, we would have been given a different path, right? We would have said we would have said, okay, how do we apply this? Let’s think, let’s think about real estate, let’s think about assets that we can put in put in place. But right now, if the goal is to maximize enjoyment of the next 10 years and still build a large reasonable, a very reasonable financial position, they just model out the cash flows for the next 10 years and they’re going to have plenty left over and they allocate a certain amount for investment and the rest for consumption and they’re going to have a great time over that period. Again, assuming that um, you know, you want to become a doctor to be a doctor for at least a decade. Um which I think is a very fair assumption. We didn’t talk to the husband though.
Mindy: Oh, yeah, I think that’s I think that’s great, Scott, spot on. Uh should we get out of here?
Scott: Let’s do it.
Mindy: That stitches up this episode of the Bigger Pockets Money podcast. He is Scott Trench and I am Mindy Jensen saying farewell snowbell.
Speaker 1: Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kalyn Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.
