My Million Dollar Mistakes, Your Free Lessons

Top 5 Mistakes Which Made Me Money Wise Today

 

There’s Chinese folktale. There is temple on a mountain so high that people believe it reaches the heaven. In the temple, sits the statue of a Buddha, which took 100 years to build, and towering at 50 feet stature. The 10s of 1000s of steps leading up to the temple where people worship and pray to Buddha is made of the same time of stone.

One day the stone slab worshipers step on to arrive at the temple said to the Buddha, “we are from the same mountain, we are the same stone. Why do people worship you and step on me day in and day out?”

Buddha answers, “Perhaps you won’t want to be where I am today if you knew how many slashes and chisels I had endured to become a statue from the stone that I once was.”

I find this story so beautiful. Perhaps our entire life is a transformation from a raw stone from the mountain into a statue. Or perhaps, we simply become the slabs of stone which become steps of ladders leading people somewhere amazing.

Would you rather be a statue or a slab? I think both have its merits and functionalities.

 

This series of posts is titled “My Costly Mistakes, Your Free Lessons.” I am 100% transparent here sharing with you my mistakes. I hope that you don’t suffer what I had to go through and that you succeed with more ease, grace, and fewer trials and tribulations J

 

Mistake #1

I did not value my time.

  1. Anyone close to me knew about my epic fail of working 7 jobs at once while double majoring at UC Berkeley and writing my Junior thesis in Organic Chemistry Synthesis. My then principle investigator tried to talk me out of my madness, “Don’t worry about your parents’ credit card debt right now. Focus on school and research. Once you graduate, I’ll get a job to pay off your parents debt much faster than your odd jobs right now.” I did not listen, to my own detriment.
  2. History repeats itself. I was tutoring and making $60/hr, so I worked like a dog, some days 14 hours/day + 3 hour commute. I missed precious time I could spend with my kid before medical school started. I should have increased my hourly rate and work fewer hours rather than working myself to death. (I learned that lesson later, now charging $388/hr and limiting my tutoring hours to 26 a year.)
  3. For a few months when Mini was 2, I would collect alumni and plastic bottles to get $0.50 each from the recycling centers.

Mistake #2

I did not value my health.

  1. Since I was 17, I slept no more than 4 hours a night. It worked well in medical school, because I was single mom with 2 jobs. Everyone was amazed at how much I could do, research, volunteer, scholarship applications, 2 jobs, my kid, all the while ranking top 10 in my medical school class. There was no secret. I worked hard and I had 20 hours/day to work… I was killing myself in the vicious cycle of rewards, incredible productivity, and taking on more challenges progressively. After 15 years of sleep deprivation, I finally sought help, pretty much forced by my PD to do so. I am so grateful that she saw that I was an extreme workaholic dangerous to self and others. I am now sleeping 6-8 hours daily and it’s the best investment ever. Sleep. Health.
  2. I spend so much time working and learning about how to manage money that I saved no time for exercise. I did not exercise regularly for a decade. Until recently (June 2016), I started and have been on track for a 30 day yoga challenge with Adrienne. I make conscious efforts to leave the PACS at work and run up and down 7 flights of stairs a few times a day.

Mistake #3

I did not value my mind.

  1. I consume junk TV shows.
  2. I waste time on Facebook. Learning how happy, successful my friends are, and wishing I were them.
  3. I concern myself with the people who makes negative comments on my life/ my effort to reach out with my blog.
  4. I live vicariously through realty TV shows.

Mistake #4

I did not know the time value of money.

  1. I’ve worked and pay taxes since I was 16 in the US. I should have put my $ to work then in ROTH IRA. I waited until I was 30, that was the first time I put my money to work.
  2. I had money sitting in bank accounts bearing less than inflation rate (2-3%) interest rather than investing it.

Mistake #5

I did not know/use the power of corporations.

I thought being employed as W2 worker and get defined (selected by my employer) benefits and health insurance coverage is the better than being my own boss. At 32, I finally learned the power of corporations. Business make money, spend it in investment/buying assets, then pay taxes on what’s left. Employees, make money, pay taxes, and spend what’s left. Without knowledge in tax codes and appropriate deductions, self-employment seems costly, the tax rate is much higher than that of an employee. But if you have a good accountant or just follow TurboTax, you could keep much more of your income being your own boss.

Plus, as an employee, you are trading your time for money. As your own boss, you likely will trade your employee’s time for money and using your assets to make you money even when you vacation.

I’ll be sharing more mistakes in the next post. I hope these are helpful. If you don’t avoid my mistakes and you practice mindful financial practice, you will be much more successful and faster than I am.

 

This series of posts is titled “My Costly Mistakes, Your Free Lessons.” I am 100% transparent here sharing with you my mistakes. I hope that you don’t suffer what I had to go through and that you succeed with more ease, grace, and fewer trials and tribulations J

5 Tips to Reach Your First 100k

As I’m targeting a net worth of 75k (~125k in assets) by the end of 2016 tax, I thought it’s good to reflect back on how I managed to build up 100k in assets as a PGY3.
Old Chinese saying goes, “10,000 things, to start addressing them is the hardest.” The 1st 100k is often harder than the 2nd 100k; first million harder than the 2nd million.
There are many things and people that have helped become educational-debt free (as a PGY1) and on tract to become financially independent by the age of 38. These 5 tips, however, are what I found most impactful and widely applicable.

1.      Be realistic.
Make realistic goals. I’ve always done better than my goals, financially. Money matters are just numbers, much more straightforward than medicine and family life.
Make goals and set yourself up for success by leaving a little wiggle room so that when life happens, you don’t fall behind so much that you feel despondent.
Robert Kiyosaki said, “Failures inspire winners; failures defeat losers” Not making your financial milestones as planned provide opportunities to reflect and do better next time.

2.      Be resourceful.
Make an extra dime.  Learn another skill. Always rise up to more ownership and greater responsibility. Trust me, on one hand it may seem like, you are doing so much more than your peer PGY3 who gets the same W2 pay from the residency program, the truth is by doing more and taking ownership, you are building priceless skills and knowledge that will catapult you to greater income and wealth without you going after the money.

3.      Be creative.
Don’t follow the crowd. Be confident in your frugality. Just because you don’t hop on amazon to buy whenever you need something, doesn’t mean that you should feel ashamed or deprived.
Get in the habit creating rather than consuming. Look at the super duper rich of the America, the ones with wealth so vast to last generations and ability to donate away 99% of their wealth and still live comfortably (i.e. Facebook founder), they create rather than consume, consequently, they build wealth rather than spend money.

4.      Be disciplined.
How many times have all the big name physician finance bloggers like White Coat Investor told us to live within our means? It’s that simple. I don’t need to keep harping the same few important ground rules of building wealth.
You know it all. Putting it into practice and sticking with it is what counts, towards your first 100k or first 10 million in assets.

5.      Have fun.
As you focus your energy on creating rather than consuming and your discipline rewards you with exceeding your anticipated goals, celebrate!
I personally enjoy celebrating with loved ones, whether it’s a small vacation with family to a new place, or a staycation close to home, visiting museums, going on a new hike (plenty of beautiful hiking trails in Tucson), try out a new restaurant or new experience such as sitting in a plane flown by my 8 year old kid with the instructor in her passenger’s seat.

These same 5 principles will get you to your first 100k like it will to your first 1 million. The only difference is that if you practice these tips today while you have “little,” you will master money matters when you reach your first million.
Financial intelligence compounds your income when you make more, lack of it dissipates your income no matter how much you make.

“If they think [making more] money will solve the problems, I am afraid those people will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.” ― Robert T. Kiyosaki, Rich Dad, Poor Dad

 If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

What Resident Meal Card Taught Me about Retirement

 

  • Don’t spend money just because you have it.

I see residents buying $3.50 brownies, $2 surgary, or worst diet drinks from the cafeteria. I would never do that for a multitude of reasons. For one, drinks loaded with sugar is really bad for our health, diet drinks with a combination of caffeine and aspartame/artificial sweeteners create carbohydrate starvation in our bodies, very unhealthy practice than ingesting real sugar.

I rather spend the meal card on a delicious $2.60 deluxe burrito (one would argue just as bad for my health).

While most residents blow $10/day in the cafeteria, I tend to skip the cafeteria on most days, knowing that the food I bring from home is of tremendously higher quality (organic, fresh, not-processed) and that I could use the meal cards for other occasions rather than feeding myself subpar food daily.

  • Spending money may be bad for your health, literally and financially.

Given there are only 2 healthy choices in the cafeteria (sushi and salads), the rest are processed, mass-produced, freezer foods loaded with preservatives and chemicals, I hardly ever eat at the hospital cafeteria.

To apply this broadly to how we use our money, find out where your money going? Eating out too much? (That’s not good for your health). Too much alcohol? Clothes? Accessories? (I personally don’t think retail therapy is healthy and I believe in looking good and feeling good from inside out.)

If you are a shopaholic, it’s ok. Just ask yourself, how long do your happiness or positive feelings last after a shopping spree? How amazing would it be if you did an hour of yoga with free Youtube video instead of charging 3 more dresses worth a few hundred dollars on your visa card?

I have to say I was quite happy to look good in a formal dress I bought 14 years ago at the residency graduation dinner. By caring for my health, eating well, exercising (way cheaper than eating out and upsizing my wardrobe), I am both healthier literally and financially.

  • Use you money to buy assets.

Buy a piece of fruit, that make you healthier rather than a bag chips which will cost you health and medical bills sooner than you know.

This is a new idea. Since I’ll be getting more meal card money as PGY3 than last year. I am going to purchase items in bulk and sell them on eBAY. I will turn that meal card money into cash for me, and I will put it in Mini Wise Money’s 529 in index funds, bearing 8% annualized return. As soon as July 1st hit and I get my 1.8k of meal card, I will execute my plan. Check in here to see how it goes J

Some people may say, you are going to be SO busy as PGY3, with 12 weeks of overnight and weekend calls, better to save some meal card money so you can eat at the hospital cafeteria for convenience.

I beg to differ. The food is convenient for a reason. The pizzas are food like products… not real food. They are empty calories deplete of wholesome nutrition and loaded with chemicals. I think I’m much better off using the cash to hire a cook who makes me home made organic meals.

Applying this more broadly to $, buy assets, items or people that will put money in your pocket.

  • Don’t buy liabilities.

Liabilities take money out of your pocket. So a huge house is a huge liability, unless somehow you figure out a way to make money off of the house.

 

So with my meal card, I’m certainly Not buying unhealthy foods to subtract from my health, literally and financially. Instead of tempting myself daily with the intoxicating smell of fried, chemical-loaded, processed food products and hoping that I will get the more expensive, longer line salads and sushi, I’m liquidating my meal card into cash for purchasing assets, not liabilities.

 

  • It’s sweet to have so much in retirement that you give to charity.

Both PGY1 and PGY2 at University of Arizona, I spotted colleagues who have long depleted their meal cards a few months before the years end. While people are starting to buy 2 $.50 sides for a lunch, I was able to pay for others’ meals with my excess meal card dollars. That’s the position I’d like to be in in retirement.

 

I must have been doing something right with the way I managed my meal card dollars throughout the year. Not only am I healthier literally, but also I have plenty in the last days of the academic year.

  • Live reasonable, vacation rich.

While I don’t spend $10 daily in the cafeteria, depleting the card half way through the academic year, I occasionally spend $50 in the cafeteria. Since the cafeteria offers delicious (though bad for health) pizzas, I bought $50 worth of pizza for Mini’s 8 year old birthday. So many people told me the pizzas were so delicious and where I got them. I told them hospital cafeteria!

While I don’t make my dollars rain on daily basis, I also spare no expense on special occasions. Mini’s 9th year old birthday has a 1k budget, which she wisely used $500 and put $500 in her savings.

Very few people can afford to live lavishly on daily basis, but with good $ skills, one can certainly spare no expense on occasion.

 

Resident meal cards are great way to practice $ management. As Robert Kiyosake said, “More money accentuate money issues.” Someone who can’t manage his money well on 50k annual income, will only have bigger problems when he makes 200k a year.

So start now, build and refine your money practice. It’s money practice, not money perfect. Acknowledge where you are today, identify areas to improve and build upon.  If you learn to manage small income and prosper, you will be given more and prosper even more.

5 Ways Having More Harms Us

Chinese proverb says, “Grandfather dies of hunger, father dies of exhaustion, son dies of decadence.” What pitiful progression of generations.

 

I’d venture to say that most attending doctors have children who pretty much have everything their heart desire at their fingertips. For those who are still in training, residents and fellows or even medical students, many promise their loved ones lots of material comfort and indulgence down the road.

 

Let’s stop and think about this. Is having more making us happier and healthier? Do a google search. The list of study is extensive, evidence staggering.

google search-wealthy depressed

The key is to how to stay healthy and happy as we get richer, not to get rich so that we can become happy and healthy.

 

I still fondly remember the last few days of summer vacation before I start college at UC Berkeley, all of my belongings fit into the trunk of a small Japanese car. My family drove me up to Berkeley. I felt like I was on top of the world, sky was the limit. I was light on feet, not be laden with possessions, but filled with ideals and ideas.

 

  1. We lose sight of what’s important.

When I upgrade from 2 bedrooms to 4 bedroom house, lots of discussion, time, and energy was spent on the possible combination of uses of 4 bedrooms. Thinking back on it, so trivial. I could have went for multiple hikes with Mini Wise Money, or write innumerable posts with that time and energy.

 

  1. We waste time on stuff.

I always tell Mini. Spend time on things with souls, things that teach us lessons and expand our horizons. Don’t waste time tinkering with lifeless, loveless material objects.

 

  1. We lose time with people we love.

As we allow our riches to possess us, we get so caught up in the numbers, performance, appearance of owning stuff. We think about, calculate and project, constantly seeking ways to maximize wealth building. The one equalizer between Bill Gates and you is 24 hours in a day.

 

Let money make money for you. Once you do the homework, set up your simple DIY personal finance, let it auto-pilot with periodic checks, don’t lose time to frequent, compulsive, inconsequential checks (i.e. if you are not acting on the market correction by selling, why even check on market corrections?).

 

  1. We are stressed out.

Nothing wrong with possessing riches. Everything wrong with riches possessing you. The former leads to freedom and greater success, the latter to enslavement and stagnation.

 

A great saying goes, “when wealth is lost, nothing is lost; health is lost, something is lost; character is lost, everything is lost.”

 

Let’s not become stressed out, mean people because we own too much.

 

  1. We are paralyzed.

Choices are paralyzing. When you can afford “nearly” anything under the sun, the array of possibilities in material possessions and comforts is dazzling. Beneath the shining surface of glamour of choice, lies the crouching lion devouring your soul, trapping you in paralysis rather than liberation.

When you get to the point money is no object, you can have anything money can buy, find ways to quickly limit your options. Then you will find yourself truly free, beyond financial independence.

 If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

How I Paid off My Student Loans at 30 as PGY1.

I hate debt with a vengeance.

It all started when I was about 5 years old. I became aware of the dire financial situation my family was in. Debt collectors paid daily visits at our apartment door. I was scared when my dad would go off to negotiate pay back terms with the creditors because the Chinese Mafia movies I watched people’s extremities get amputated as warnings for missed debt repayments.

I came up with a plan. I started collecting coins around the house. Taking them out of my dad’s pants pockets, jacket pockets, finding them under the refrigerator or behind the cabinets. I was gaining momentum as my pile of coin built up, dreaming of the day when I would free my family from the threats of the creditors like a hero. It was kind of my Mulan fantasy.

But my mom caught on, sat me down one day and said, “I appreciate your effort in collecting coins, but we need that money for food… we can’t afford to save those coins, or we will have to skip dinner tonight.”

My dream was shattered. Even my most valent and brilliant (in my 5 year old mind) efforts weren’t helpful. I felt utterly powerless. I knew not how exactly, but I knew I’d avoid debt at all costs.

My family immigrated to the US when I was 16. While I was getting ready to attend a community college given it was cheap and that I was just a Fresh off Boat (weren’t expected by my guidance counselor to blow the SAT out of waters), I scored high enough and get into all colleges I applied to. I applied to 4: UC Berkeley, Irvine, UCLA, and UCSD.

My grandpa gave me 40k for college, I worked 2-7 jobs depending on the semester. I graduated from UCB penniless (net worth zero) in 2007 after 9 semesters and 1 course short of double majors.

I abandoned the idea to pursue medical school and started a family instead when I met Mini Wise Money’s dad. We were not ready to be parents financially. We got into 100k or so of credit card debt, which I spent the following 3 years paying off before starting medical school. This short sprint to pay off my consumer debts reaffirmed my desire to stay away from debt. I learned that debt, no matter in what country, with Mafia creditors or not, is a horrible thing.

I started medical school a single mother, with a sweet 3 year old daughter, and 20k of $100 bills. My medical school cost of attendance from 2010-2014 averaged approximately 90k/year.

 

I remember vividly, crying on the phone and complaining to my mother, [mini quote]

 

I was so debt averse that I really didn’t spend any money beyond the absolute necessities such as food and shelter, my splurges were for Mini’s ballet lessons discounted at the community centers, etc. I worked 2 jobs, mostly totaling 60 hours/week on top of full time study throughout medical school. I got some government assistance for health insurance and food (which was a big deal because health insurance for Mini and me would have cost 4k per year otherwise.)

 

I also kept opening new credit cards every 12 months or so as needed to pay for expenses and ride the debt balance on 0% interest for as long as possible before balance transferring to another card (paying 3% transaction fee for 1.5 years of 0% APR, so effectively 2% annual interest rate). As last resort, when I’m not able to squeeze out more cash flow, I’d take out the minimum amount of student loans at the latest minute possible (knowing that with student loans, the origination fee ranges from 1-4% and the interest rate is 6.8% the day federal government disburses the loan.)

When I was getting ready to purchase a home with a doctor’s loan during MS4, my net worth was -100k. 70k on credit cards with 0% interest rate, 30k on student loans with 6.8% interest rate. I threw every penny I had towards my student loans (my highest interest debt, that’s growing and decreasing my net worth the fastest). When I have a dollar of cash, I pay my student loans. If I get cash rewards from my credit card purchases, I deposit them in my bank to pay my student loans down further. I spare no penny when it came to that 6.8% killer interest rate.

Early 2015, I try to refinance my student loans with DRB, thinking it’s the best way to help me destroy my debt more rapidly since a lower interest rate guarantees that every dollar I channel towards my debt is more powerful, decreasing the debt principle @ a faster rate.

DRB rejected me. They required that I have $3,500 after all bills per month income. (This happened just few months before DRB rolled out their famous resident/fellow refinancing product.) My PGY1 annual income was $50k, and I didn’t have a spouse with income. In spite of my excellent credit history and score, and my unusually small student loan of 20k then, the only way DRB would refinance me was with a high income cosigner.

I was pissed. So I said screw this. I’ll refinance myself.

I open chase slate and got 20k credit limit. I wrote myself a check, deposit it in my checking account, and paid off my student loans. I like chase slate because it is the only card in the market that gives you 0% transaction fee for balance transfer check within the first 60 days of account opening. There, I was officially free of student debt before I turned 31. All my whopping 5 figure debt is at 0% interest rate on my credit cards. This very fact would keep some people up at night. But the 0% interest makes me sound asleep…

Then, I started aggressively attacking my 0% interest credit card debts, especially when they come due. When the credit card companies are “switching” after I took the bait 12-18 months prior, I’d either balance transfer the debt with expiring 0% interest rate to a new card or I’d pay said debt off before hitting the high 16% rate.

As I realize more and more that my happiness is found in things that are mostly monetarily free, I have been just enjoying watching my net worth grow with paying down liabilities and building up assets.

I’m happy to say as of today, I have zero credit card debt and zero student loan. I’m 32, soon to be PGY3, a happy, debt-free, mommy, radiology resident, & personal finance blogger @ drwisemoney.com.