I know one doctor who is like that as well. As long as they are working, they can paper over their financial issues. He makes $1mm a year and have saved exactly $1mm. He can not retire. With his lifestyle, he will run out of money 2 years after retirement. Is this financial freedom or financial straight-jacket?

Lambo, Ferrari and a couple of Mercs cost a ton of money and bring nothing of significance to life. Your uncle has done some very bad trades. He needs my help.

my uncle has a lambo, ferrari, and a couple of mercs and a 4 story house, are you saying he’s not rich? and yes he can afford these things because he bought them and still has enough money to pay the bills and his children’s highly expensive private school tuitions. he doesn’t put money in stocks cause he thinks that’s too risky

you don’t make any sense, you’re just trying to get more clients

I know a doctor (a potential client) who is making $1.5mm a year and have only $120k in the bank. All his money has been invested in real estates that are producing between zero incomes or negative incomes. He is rich but he is not financially free just like you said.

Michael

Some doctors may feel that owning a property + having a luxurious car to drive in using their regular monthly salary is considered rich.
These people “may have planned to work their own life off” without considering “retiring”.

Though we say these doctors may not be financially free , but to them , they may still call themselves ” Rich”

Our society have trained our mind to say “Doctor is a noble profession” ” Because of that , doctors should be well paid for their efforts”
These used to be true in 1900s when there is absence of insurance companies. But now with insurance companies “putting caps” how a doctor can be renumerated , the game changes completely.
With very little advanced financial education , the poor doctor is in no position to negotiate with these financial/insurance institution.

I wholehearted agree with the reasons ( in point form) that you have put up , Michael.

I guess sometimes it’s really the way you say it or put it.

If i were you , i will say ” Why doctors can enjoy a good salary but find it difficult to be financially free” Does that sound better?

Great clarification! Thanks! and Happy New Year!

Michael

It’s a lot like expecting a doctor to fix her own Mercedes or wire her own 10,000 square foot home for electricity; sure she may have brilliant mind and 10 years of post graduate education under her belt, but she hasn’t been trained to do these other things, so when they need to be done, she’s be well served to retain a professional who has.

Good for you. You did not mention your retirement saving, I hope you have that taken care of as well. I’ve seen many doctors with a beautiful house and multiple luxury cars and yet very little in retirement saving.

Michael

1) You should keep enough cash for a emergency fund. The rest you should use to pay tuition.
2) There is no good short term investment at this time that pays anywhere near what your student loan will charge. So avoiding student loans IS a the best investment.

Your financial goal when you are at school should be to keep your loan as small as possible, that would set a good foundation once you graduate.

Michael

Thanks so much for your paper. I have learned something new from your analysis. If you don’t mind, can I ask you for your advice?
Here is my situation and I think many medical students also have the same situation like me:

During undergrad, I worked and lived below my means. Therefore, I have accumulated about 50K to 60K in saving account. However, I am debating whether I should use my savings to pay for my medical school, which is about 60K per year. Take into account that beginning next year, the government will terminate subsidize loan and rebate loan fee. Therefore, my Unsubsidized student loan interest will be 6.8% for the first 20 K + 1% loan fee, and the rest 40K (Grad plus loan) with 7.9% interest + 4% loan fee.

When looking at that number, I think I should limit my student loan as much as I can, especially the Grad plus loan. However, if I spend my saving now, I will not have cash for future investment like down payment for house or something like that. In the current economic, I think having cash is a huge advantage. Moreover, there are some programs or hospitals that give incentive or bonus to reduce my government student loan after I graduate medical school.

So, here are my questions:
1) What is the best way I should do? Should I using my savings to pay for my school?
2) If I keep my savings for the next 4 years, what should I invest in with low risk and reasonable profit?

FYI, beside savings, I don’t have any property or assistance from my family.

I would appreciate your time and advice. I am also welcome other expert’s advice.

Sincerely,

Khoi

Try the new medical management book: http://www.BusinessofMedicalPractice.com

and, the doctor-investor book:
“Financial Planning for Physicians and their Advisors”

Best.
Ann Miller RN MHA
http://www.MedicalExecutivePost.com

I can’t speak about management since it’s not my area of expertise. However simply knowing it’s important already give you a leg up. Speaking about investment, you can learn a lot follow my blog, and my Google+ public post. You may also like to get a book by William Bernstein, who is a neurologist-turned investor.

Michael