I Broke A Golden Rule Of Finance: Wealthy Doc
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There is a popular saying in the financial community, “One House, One Spouse, One Job.”
It essentially constitutes one of the “golden rules” of finance and is advice often given to those seeking financial independence.
Breaking one or more components of this tenet implies that you may find yourself in a financial pit with little chance of escape.
It is therefore quite easy to become disheartened, and even give up before starting the journey to financial success, if you happen to be one of the transgressors.
As the purpose of this blog is meant to uplift and not discourage, I thought it would be beneficial to highlight individuals who have indeed broken the rule and still found financial success.
I consider myself one of the major violators of this rule, and have broken all 3 components in grand fashion, exemplified by my 5 part series “I Have Pretty Much Made Every Mistake In The Book.”
These stories are meant to inspire so that others know it is still possible to reach your financial goals despite straying off the ideal path.
The next submission comes from a blogger that should be familiar to us all, he even went under the X-ray beam recently.
So I proudly present none other than, Wealthy Doc.
Background Information: (Please provide your age, occupation and marital status.)
I am a physician and personal finance blogger.
I’ve been happily married for 20 years.
As for my age, let’s just say that I can now enjoy retirement plan “catch-up” provisions.
I like teaching and sharing information about personal finance and investing as Wealthy Doc.
Which of the golden rules did you break?
I broke the “one house” and “one job” rules.
I have had, let’s see, 5 different houses if you count the first one that we rented.
We have owned the other four.
I have had three main jobs.
I moved cities once.
Fortunately, I am still happily married.
I have been lucky in love and have stayed married.
I do think my success in that department has been mostly luck.
I hope to never break that “rule.”
For each golden rule broken, can you please provide the following information:
a) How old you were when you first broke the rule
House Rule: I was in my 30s and 40s.
Job Rule: I was in my 30s and 40s.
b) What is your best estimate for the cost of breaking this rule?
It didn’t really cost us.
One house appreciated. One didn’t.
One we kept for two years and rented out.
It all came out in the wash.
Leaving private practice for academia cost me dearly in financial terms.
But I’m not a profit maximizer.
Money is important but it doesn’t drive all my decisions.
Job #1 taught me a lot, made me money, and helped pay off my debt.
The move to job #2 provided a better city for us, opportunities for personal growth, and improved my qualifications.
Leaving job #2 for #3 was not a loss at all.
In fact, I have made much more over the last 10 years than I would have by keeping job #2 and staying in academia.
Job #3 helped me grow a business, nurture relationships, and build new skills.
c) How many years, if any, do you feel breaking the rule set you back financially?
N/A. I made money on one home sale and lost on another but overall it didn’t really cause a big impact.
A house is just a place to live.
I don’t think in terms of years on a timeline.
Years until what?
I wasn’t in a hurry for either.
I loved my work and was building wealth steadily.
Changing jobs per se wouldn’t impact me much.
Going into academia did cut my salary but that was a conscious voluntary choice.
d) How were you able to overcome the financial repercussions (if any)?
We had trouble selling house #2 at a price we wanted when we wanted.
We rented it out for two years until the market rebounded a bit.
Since that house was paid for, the rental helped us build wealth.
Leaving a private practice that paid me in the top 1% to enter academia was financially crazy.
In retrospect it went fine though.
Academia came with a generous pension.
Tuition was free.
I had enough time off to pursue an MBA.
My investments grew a lot during that time.
The market did well, and I had time to pay attention to investing.
I hung around students, residents, and professors so it was socially acceptable to not spend much.
We saved and invested a ton during those years even though the salary was much lower.
e) What were some of the factors you considered when weighing your decision to break a golden rule?
When just coming out of residency we were broke and in debt.
We rented an apartment since we could afford that, and we were used to living in apartments.
After tiring of some of the downsides of apartment living, we rented a house.
At the time I was paying down debt and saving a down payment for a house.
We weren’t sure how the city and job would turn out at the time.
After demolishing all debt and saving a 20% down payment, we bought a house.
It was comfortable and in an affordable “middle-class” neighborhood.
That house was closer to my wife’s work.
We were used to living well below our means.
House #2 came into being after we moved cities (and jobs).
I went from private practice into academia.
That move was obviously not for financial reasons.
We didn’t know our new city well.
We wanted to buy a house we could afford.
It was older and something was always breaking.
The neighborhood crime level wasn’t great and seemed to be worsening over time.
House #3 came with job #3.
I left academia and started specialty practice offices for a hospital network.
House #3 was closer to my new job and in a lower crime area.
The elementary schools were good.
House #4 came without a job move.
I’m still in job #3.
The middle school for the district of house #3 wasn’t very good.
Private schools were far away and expensive.
The high school would be so-so.
We made our final move (so far) to an area with even lower crime and much better schools.
We then had two children who would benefit from great schools and that was the primary impetus for that last move.
My private practice was extremely profitable.
I learned a lot about how to bill and be efficient and run a business.
It also came with an exhausting work schedule and some financial and legal liability.
I met a visiting faculty member from the medical school and I really liked him.
Soon after they offered me an academic job that matched my skills perfectly.
I was looking for more intellectual stimulation, more opportunities to teach, and wanted to expand my platform and impact on my specialty.
The city for job #1 wasn’t ideal for my family long-term.
My wife really wanted out of that town for many reasons.
I basically had to choose: new job or new wife.
I figured my chances of getting another excellent job were much higher than finding another wife like I scored the first time around.
I left my private practice along with that city and that house.
Looking back, it was clearly the right move and I’m grateful to my wife for giving me the “nudge” – okay ultimatum that I needed.
After getting my MBA I was looking to apply my newfound skills.
Job #3 came along at the perfect time.
It offered fewer teaching and research requirements, no publish-or-perish pressure, a collegial environment, and a higher salary.
The job change was “just what the doctor ordered.”
f) If you went back in time and was faced with the same situation, would you defy a golden rule again or would you instead find an alternative course (and if so, what would it be)?
I have no regrets about any of the houses.
They met our needs at that time.
I have no regrets about any of the three jobs.
I learned a tremendous amount at each.
The skills needed were different enough to keep me stimulated.
The three jobs allowed me to balance financial needs with my quality of life and family needs at those various times.
g) What advice would you offer readers potentially facing a similar decision?
This rule is sometimes linked to the job rule.
Taking a new job may mean moving to a different city.
Moving to a new city will mean a new house.
There are transaction costs when buying or selling a house.
My advice is don’t buy a house unless you have a reasonable expectation to stay in that house for 5 years or more.
It doesn’t mean you can’t move.
Just realize you may not come out ahead financially if you must move before then.
Our reasons for buying and selling houses were good ones.
Better city, better job, lower crime, better schools, closer to family, etc.
We didn’t make the moves lightly because of the time, effort, and transaction costs.
Nor do I regret any of our moves.
Sometimes growth means taking a new job.
Don’t be afraid to step out of your comfort zone.
At job #1 I was getting stressed and tired.
At job #2 I was getting bored.
Job #3 has been great for me.
I learned something different from all of them.
Every practice environment has pros and cons.
Don’t be afraid to experience them all.
I wrote about the different types of practice here.
h) Why do you think the rule that you broke is even included in the financial tenet, “One House, One Spouse, One job?”
There are significant transaction costs when buying and selling a house.
Don’t make those decisions lightly.
You lose momentum when changing jobs.
In the new job you must learn your way around and get re-established.
It may take time to build new referrals.
Marketing your practice can take time and money.
Buying into or out of a practice may cost money.
You may lose on real estate investments or lose retirement funds if you aren’t 100% vested.
i) If you were faced with breaking a golden rule today, would you do it?
The rule is silly.
I would never feel bound to a house that no longer fits my life.
That is a sunk cost.
It is irrational to think you must stay with a bad decision or a decision that no longer works.
Move on if you need to.
The rule is silly.
Sometimes to grow our career and skills we must leave our comfort zone.
Leaving a successful practice for a different one takes courage, but it can be a rejuvenating and great change.
If your job stinks or has worsened over time, you obviously aren’t trapped there.
This is a free country.
Offer your services to the market in a way that helps the most and rewards you in important ways.
Is there one financial rule you would never break? And if so why?
I don’t know that I have a lot of “must-never” rules in finance.
I have never been much of a rule-follower!
There are things I wouldn’t do though like die without a will, run up credit card debt, go without health insurance coverage, or buy an individual stock on margin.
Feel free to include any other pertinent information you felt was not covered in the above questions that would aid in the telling of your story.
[Regarding the “One house, One Spouse, One Job” philosophy]
I think it is one approach, but not a requirement by any means.
It certainly isn’t what I did.
I wouldn’t call this a golden rule.
In fact, I first heard of it only a few years ago.
I didn’t learn it in business school and haven’t read it in any textbooks.
I’m not sure where it even came from!
I know Jim Dahle from the White Coat Investor has written about this.
Since I had never heard of it, I wasn’t trying to follow it or rebel against it.
I have done fine financially even though I “broke” two of the three “rules.”
The more I think about this “rule” the more I hate it.
I can’t imagine staying with a subpar job or house or a city that doesn’t fit your current life.
Now making a marriage work is in a different category for me.
Breaking up a lifetime-commitment and monogamous relationship is, and should be, a big deal.
But trapping yourself into a life that doesn’t work for you just to follow a “mantra” or a “golden rule” would be ill-advised.
Moving to a city closer to home often makes sense.
Buying a small house with a small mortgage can make sense as a broke couple.
As wealth grows and children come along a bigger house and maybe a better school district can make sense.
I just had this discussion with a new doctor in our practice.
He had just heard about the “golden rule” and was realizing he may need to move out of his “starter house” at some point.
I told him that would be fine and to not worry about breaking some stupid rule based on who knows what.
Also, external factors change:
- The partnership falls apart.
- The office manager is convicted of fraud.
- The hospital goes bankrupt.
- The school system deteriorates.
- The housing market falters.
- Climbing the stairs is more dangerous as you age.
- The crime spikes as your neighborhood declines.
- Your professional interests grow and expand, and you are offered a new professional opportunity.
Are we supposed to follow a silly rule and say, “No, I’m sorry? I can’t change my city, house, or job.”
I must follow this rule so I can become a financial success one day?
As for my spouse, I married at the end of residency.
I really lucked out in that department.
Literally I think it was mostly luck.
I knew my wife was cute, talented, and kind.
But I had no way of knowing just how fantastic she is.
She turned out to be much better than I thought and more than I deserve.
Not everyone is lucky in love.
Sometimes divorce is the best or only reasonable option.
Sometimes it is unavoidable for no fault of the doctor.
It doesn’t mean you can’t achieve financial success.
Divorce can be financially devastating, but it isn’t always.
It is sometime better than living in misery for decades.
Even a divorce later in life and without a prenup can be done without financial devastation.
Hatton1 is still in the top 5% of all physicians’ net worth despite a recent divorce, and discussed this in her interview with MissBonnieMD,
As Taylor Larimore says, “There are many roads to Dublin.”
Indeed, there are.
It seems silly that anyone would keep a house or a job or even a marriage that makes them miserable.
Changing any of these factors repeatedly every year could be devastating but breaking one, two, or three of them can still be fine.
If you have an inspiring financial story as a “financial golden rule breaker” feel free to offer a submission so that your story can likewise inspire others.
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