The Apprentice Doctor

For Newer Doctors, Avoid Lifestyle Inflation

Discussion in 'Hospital' started by The Good Doctor, Sep 16, 2023.

  1. The Good Doctor

    The Good Doctor Golden Member

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    Let me share a story about Dr. Sarah Mitchell.

    Dr. Mitchell, like many of us, started her career with a resident’s salary, which was around $40,000 per year. After completing her residency, she received an enticing offer as an oncologist with an annual salary of $350,000.

    However, instead of succumbing to lifestyle inflation, Dr. Mitchell made a financially savvy decision.

    She committed to living on an annual budget of $60,000 for the first two years after completing her residency, which included her initial resident’s salary of $40,000 and an additional $20,000 raise from her new oncologist position. She saved and invested the remaining $290,000 each year.

    After accounting for taxes, this amounted to approximately $188,500 annually.

    But there’s more to the story. Dr. Mitchell was fortunate to have an employer who provided her with an annual match of $35,000 in tax-deferred investments. So, factoring in taxes and her employer’s match, she effectively saved and invested $223,500 per year, which equates to roughly $18,625 per month.

    So, did this two-year decision pay off?

    During the first two years, Dr. Mitchell saved and invested the difference between her new annual living expenses of $60,000 and her oncologist’s income. This added up to a total of $447,000 over the two-year period. While this sum alone is impressive, the real magic happened when she allowed her investments to grow over time through compounding.


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    Dr. Mitchell invested in a diversified portfolio that yielded an average annual return of 7 percent. With the power of compound interest working in her favor, her initial savings of $447,000 grew substantially. Here’s how her wealth evolved over the next 15 years:

    Year 2: $447,000
    Year 3: $488,470
    Year 4: $534,228
    Year 5: $584,670
    Year 6: $640,230
    Year 7: $701,379
    Year 8: $768,627
    Year 9: $842,537
    Year 10: $923,734
    Year 11: $1,012,905
    Year 12: $1,110,805
    Year 13: $1,218,278
    Year 14: $1,336,272
    Year 15: $1,465,853

    By year 15, Dr. Mitchell’s financial decision had transformed her initial $447,000 savings into an impressive $1,465,853 without any additional savings!

    While this may not appear as astronomical, especially considering her high earning potential as an oncologist, it’s essential to remember that this is money she didn’t have to actively work for during those 15 years. Instead, her investments were doing the heavy lifting.

    This financial cushion gave Dr. Mitchell tremendous peace of mind and the freedom to make choices aligned with her passions and values. She no longer felt the financial pressure that many doctors experience.

    So, what can we learn from Dr. Sarah’s journey?

    It’s not about earning the most money possible; it’s about making smart choices with the money you do earn. By living below your means, saving, and investing wisely, you can create a financial foundation that allows you to live life on your terms.

    To achieve financial freedom, avoid lifestyle inflation!

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