The newest member of the Whitecoat Investor Network has a solid little book. Ironically, I would call it filled with practicality, not philosphy. He focuses on the “20% you really need to know” to win financially. His compared examples of Dr. Jones and Dr. Early Financial Independent are both realistically reasonable, showing how some simple changes can make you wealthy.
The book’s prime audience is a medical student and is still very useful up until a doctor who is just out of training before they’ve had a chance to forget what “live like a resident” means. Hence not me. So why did I read it? Well, to quote his wedding pastor: “You can never hear true things enough.” And he gives the simple truth. He ends on a clear philosphical note: “the commodity we are really trying to accrue is time; not money.” Content with a sense of enough is more valuable than all the tricks of the trade to piling up the dollars.
To be a true review I must mention my 4 nit-picks.
1) Refinancing Loans
He endorses variable loans for refinancing while downplaying their risks. He even goes on to saying he went with a 7 year variable over a 5 year one because of his limited ability to acquire disability insurance and wanting to keep required payments lower. But variable can go up, hence it’s name! He was blinded by his success, paying off in under 2 years. But his rate would have probably been similar with a 5 year fixed. Many of his readers who will have $500k+ debt, even with discipline, will often NEED at least 5 years to pay it off. You can use variable mortgages too, but you don’t see many people endorse them. Don’t try and time the interest market.
2) Dollar Cost Averaging
He endorses dollar cost average which loses 80% of the time to lump sum investing. Though most DCA by default since they are often paid biweekly, it still stands: invest when you have it. This slightly contradicts his set-it-and-forget-it attitude since it could make one check their investments more regularly.
3) Safe Withdrawal Rate
He favors a safe withdrawal rate under 4% if retiring before 60. To quote Mr. Money Mustache, “above 30 years, the length of your retirement barely affects the safe withdrawal rate calculations.” I like being conservative but he’s being super conservative. And that has big consequences. If you need $100k per year and change your SWR from 4% to 3%, you need $833k more saved up. That’s another decade of maxing out the i401k/famHSA/bdRoths!
4) TPP’s 10% Rule
“For every increase in pay or bonus that you receive, take 10% of that money and spend it on whatever your heart desires.”
I love rules but I find a few flaws in this one even though I love the mentality behind it of enjoying your wealth while growing it.
He doesn’t specify if this 10% increase in spending is forever but he hint it is by setting up car payments and country club dues. I would suggest 1 time splurges can be more satisfying and less costly in the end. Remember, the more continual costs the longer to financial independence and retirement.
To have these treats, he also assumes doctors get regular pay increases but usually a doctor’s pay is quite the plateau after training if not doing side hustles. Some doctors even have substantial pay decreases.
He the ends that section by stating it might become a “20% rule” once all the debt is gone. This why I prefer one time splurges. I set a reasonable savings amount that will make me financially independent early enough and then use the rest to enjoy life now. I try not make multiple splurges at a time to enjoy them even more.
Well there’s my gripes (more like small differing opinions). Still, give Doc Philo some love and read his lovely book.