Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired from their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially!
So let’s introduce our next woman physician rockstar – Cecilia.
Tell us about yourself:
I have been pretty debt-averse my entire life, thanks to hearing my parents argue about money for my whole childhood (my mom, who trusts God and my dad to provide for us, would buy the things her 5 daughters needed, nothing exorbitant, but groceries for 7 are not cheap, and my dad would get mad about how much things cost…while he spent $70k a year keeping the family almond farm going!).
My parents to this day have minimal retirement savings other than the land they own (50 acres in the California Central Valley), which is still mortgaged. They never really taught me to manage money, but it was always pretty apparent to me that spending more than you make is a bad plan in general.
In any case, being debt averse and interested in many, many things (I changed my major 3 times in college and graduated with political science, psychology, a minor in neuroscience, and decided to go to medical school right before my senior year), it made a lot of sense to do an MD/PhD program (the ultimate decision-delayer for people who can’t decide what they want to do!).
I was fortunate enough to have my choice of several programs, and since I had been in California for my entire life, I wanted to see what life was like outside the state. I chose the University of Chicago. It was a long road, but I eventually got through my PhD after realizing halfway through that I really did not want to continue in basic science research! But I also did not want to accrue $100,000 in debt for the rest of medical school, so I stuck with the PhD.
I finished medical school in 2007 and started a general surgery residency. This did not last long, as my contract was not renewed after my intern year. I was devastated. But it turned out to be the best thing that ever happened to me both personally and professionally. I was not ready to give up the dream of surgery, so I did a second year at the only other residency program in the area. I became very close to a co-resident, and he eventually introduced me to his identical twin, who became my husband. After I finished that second year, I had no residency position at all, so I was forced to evaluate my options and choose another specialty.
It was very difficult to get back into a residency program – I spent two years working at an urgent care clinic in the Philadelphia area, and enjoyed it far more than I had thought I would. I knew I wanted a procedure-based but non-surgical specialty, and I hated spending hours and hours rounding on patients – so I considered both anesthesia and emergency medicine. I applied through the Match initially in anesthesia, and when I did not match that year, expanded to emergency medicine and anesthesia the second year.
I thought long and hard about what I really wanted from a specialty, and finally chose anesthesia with plans to pursue critical care fellowship, since I really missed having my own patients. I was lucky enough to have made valuable connections in medical school; they helped me secure an anesthesia spot outside the match, which started 4 years after I had completed medical school and 2 years after I’d left surgery. By the time I finally finished my anesthesia residency, I had been out of medical school for 7 years; my peers who had started medical school at the same time as I had (in 1999) had been attending physicians for as long as 8 years.
In choosing a specialty, you must decide procedure-based or clinic-based, primarily outpatient or primarily inpatient, flexibility with regard to family demands (although I did not think about this since I was unattached during most of this time), and whether you want to be primarily a consultant or “the” doctor for that patient. It’s also very important to consider what life is like beyond residency – this is very hard to do when you have the limited perspective of a 3rd year medical student, but you really need to ask attendings what their lives are like several years out and how they are balancing everything.
I have a feeling many medical students make the mistake of not thinking beyond residency. In my case, I knew I wanted to have some ownership of my patients and relationships with them that last longer than a few hours – anesthesia does not really offer this (unless you go into pain medicine). During my two years of surgery I had spent a great deal of time in the ICU, and I really enjoyed the challenges and rewards of caring for critically ill patients.
As it turns out, critical care and anesthesia are also fairly well-reimbursed fields compared to primary care. I did not consider this aspect at all when choosing a specialty (I needed a residency, any residency!), but it was a very fortunate choice since it now enables me to work part time. The only caveat to this is that outside academic centers, it is difficult to find positions that allow one to do both critical care and anesthesia. So, I have two totally separate part time jobs at two different hospitals, and no benefits with either job.
And in order to be part time, I work in an anesthesia group with very low reimbursement, such that my ICU time actually pays better (for example, the anesthesiologists at the hospital where I do critical care actually make slightly less than double what I make per hour for anesthesia). Nevertheless, I’m currently 1.5 years out of fellowship, working approximately 30 hours a week (in-house time; my actual “work” time involves a great deal of home call too, so I’ve just given the in-house time) between both jobs.
Did you graduate with student loans? How much & what are the interest rates?
The ordeal of being forced out of residency training and spending time working would have been a financial catastrophe if I had had any loans other than a small amount from my undergraduate time. I went to a private university, graduated in 1998 with about $30K in loans, which were consolidated many years ago at a 2.8% interest rate.
I’m not paying them off quickly because I can earn more than 2.8% investing, and I started saving for retirement very, very late. The time out of residency (prior to completing one) was a dark period in my life because there was no job security as a non- board-eligible physician (insurance companies will not reimburse for your care for the most part), and I had no guarantee that I would ever be able to secure another residency spot.
Financial aspects of kids
When did you have them?
My first was born during my fellowship and went to an excellent and very affordable home daycare about a mile from our house ($270/week). I specifically chose a fellowship program that did not have a significant in-house call requirement. The program also offered weekends off. This was extremely important in terms of work/life balance!
My second child was born during the first year I was in practice. I knew after having my first child that I wanted to work part time, and I wanted to be in private practice rather than academics since I just do not do well at large academic centers with their combination of killer politics and enormous egos.
Spending time with my children is my first priority (although working is sometimes easier!) They are almost 1 and almost 3, and will go to public school (our priority when purchasing a home was excellent public schools, so as a result we are in a half-million-dollar <1,000 sq foot condominium!).
We were able to find an excellent sitter for them, who picks them up in the mornings on the days I work and cares for them in her home, with her own children and one other child. She works with my flexible days, and we pay her a guaranteed minimum every week (two days), with a small bonus for more than 3 days a week and an extra $20/day for pickup. We spend an average of $1800 a month for care at the moment.
We were also fortunate that my husband’s parents came from India for 6 months to help us when each child was born; neither had to go to daycare until age 8 months. We plan to have a 3rd child if we are able (I’m already 40!).
We do not plan to fully fund our children’s college educations; we are saving for state school for undergrad at the moment, which is $400/month/kid with any additional money from grandparents going in as well. We started each 529 account with the $3,000 gift from paternal uncle and grandparents. This is because we have been cautioned that you cannot borrow money for your retirement, but you can for education.
Financial aspects of marriage
Are you married?
I married quite late in life as well – during my 3rd year of anesthesia residency, at age 36. We had many in-depth conversations about our goals and plans for life, including finances, before we got married.
I tend to spend a bit more money than my husband, and enjoy eating out quite a lot more, but overall we are very much in agreement. He is a PhD trained software engineer, and came to the US in 2002. He has been saving money for retirement or a rainy day ever since then, even when he was a graduate student.
Did you get a pre-nuptial or post-nuptial agreement?
My husband and I do not have a pre- or post-nuptial agreement; neither of us cares about money very much, and we trust each other completely. We would both just want the best for our children if we were to separate.
Do you and your husband agree on finances?
We have full access to each others’ accounts, although I do our financial planning. We never really combined accounts; when I was a resident and there was a large discrepancy in our incomes, we split expenses proportionally based on after-tax income.
We have a single joint checking account which we use only to deposit checks with both our names on them; otherwise we pay set expenses from our individual accounts (he pays mortgage, property taxes, shared credit card bill; I pay kids’ expenses, various insurances other than his life insurance, and transfer money to him if we have large purchases on the credit card, like plane tickets or new furniture).
Are you the breadwinner?
Now, we both earn six figures – he is full time and I am part time at two jobs, and I expect to make somewhat more than he does this year for the first time. Last year I took 3 months of unpaid time off (a month total of vacation, 2 months of maternity leave), so I did not make as much as I will this year.
Have you experienced a financial catastrophe?
My boss at the urgent care clinic (before anesthesia residency) was one of the least honest people I have ever known; the only bona fide financial catastrophe I have experienced was a baseless lawsuit he brought against me during my second year of anesthesia residency (for breach of a contract he’d tricked me into signing without realizing it). Hiring a lawyer for the suit, which dragged on for 6 months, set me back $35,000 – money which my fiance at the time ended up paying off for me.
I started my journey of learning about money management in my dark period between residencies, when a friend referred me to the book “I Will Teach You to be Rich”, by Ramit Sethi – I’d never realized personal finance could be so funny! Although it is not specific to physicians, the principles of the book are very accurate and based in how people really live, not how they think they should live or how they think they are living.
From there, I worked with a financial adviser who collects residents via free dinners and offers them free advice during training, then wants 1.2% of AUM plus $2,400 to do a “life” plan once done with residency. I broke up with him after I realized the 529 he’d steered us toward for my firstborn cost ~6+% and a state plan I set up myself would cost about 0.3%.
But I do credit him with helping me get life and long-term disability insurance, as well as pointing out the need for umbrella (and therefore high-limit home and auto) insurance. I’ve not yet needed to use my long-term disability coverage, and it is quite expensive ($4800/year for a $7,200 monthly benefit). I just don’t want to take the risk of getting rid of it. It is cheaper, incidentally, if you pay for it annually rather than monthly (mine is about $20/month less).
What’s your FI (financial independence) number?
I am still trying to figure out what our financial independence number is; probably somewhere close to $4 million, assuming we spend about 25-30 years in retirement and need about $150K/year. It is very difficult to know exactly what this number should be, since it depends on how old we are when we retire (husband wants to be done around 60, I am thinking perhaps 65, and we expect to live to be at least 90 since I have two grandparents still living in their early 90s), as well as what happens to Medicare in the next decades.
If we are unable to gain insurance through Medicare, the numbers will be VERY different. It also depends on where we want to live and when/whether we end up buying a bigger house (anything in a good school district is about 1.5 million right now, and if we wait to buy, it will only go up).
What is your net worth?
I’m not sure exactly what our net work is but it is somewhere close to $1 million given my husband’s 15 years of dedicated saving. The current plan is to save like crazy for another 7-8 years to try to hit $2 million, then reduce our contributions to more like 50K/year and buy a larger house, with extra payments to the mortgage if we can afford them.
The flaw in all of this is that we will have to sell our current condo to afford a down payment, but we would prefer to keep it to make money. I will also very likely have to take a full time job since there will be simply no way to afford payments on a 1.5 million dollar mortgage (with $2,000+/month of property taxes) without a combined income of at least $500K – housing expenses will be $12,000 per month once extra expenses, insurance, and taxes are factored in. This compares to $2,900 a month on our tiny condo. Running those numbers makes me think perhaps we will just stay here forever and find a way to squeeze our hoped-for three children into our 2 bedrooms!
How are you saving for FI/retirement?
Our savings goal at present is $100K/year (we were at about 90K last year, which was about 35% of post-tax income). This is a combination of a solo 401K for me (lower fees and up to 25% of net profits as the employer contribution, a better deal than the 401K offered by my W2 anesthesia position), my husband’s 401K (with a paltry $3,000 employer contribution), backdoor IRAs for both of us, and his discounted employee stock purchase program (17,500/year).
The remaining amount goes in taxable accounts (Vanguard brokerage account). I have a few individual stocks, but the vast majority of my portfolio is Vanguard index funds (I like the Target Retirement Date funds since they automatically rebalance as the target year approaches). I have a little money invested with Lending Club and Ariel Investments; the fees for the latter are quite high (about 1%), but their average returns are about 10%, so I figure it is worth a try for a few years.
One thing you wish you knew/regret:
One thing I wish I had realized about marriage is that there is a tax penalty for it unless only one spouse works, since the total household income determines the tax bracket! We both have zero exemptions and extra withholding on our W2s, and I pay very large amounts of estimated taxes on my 1099 income because I do NOT want to be unpleasantly surprised by a large tax bill at the end of the year. Since I have been doing this we have gotten large refunds.
My greatest financial regret is that I did not save any money during my MD/PhD years – I was earning a stipend for living expenses, and making extra money by doing TA-ships and working as a waitress…but I spent it all. I saved nothing until I started residency, and even then it was only about 5% of my paltry salary. I didn’t even save much during the two years I worked in urgent care and earned $125,000 a year!
On the other hand, doing MD/PhD has saved me from the crushing debt burden of most physicians, and I never had any credit card debt either. But the magic of compound interest is something I truly wish I had harnessed in my 20s instead of my late 30s.
Any parting words of wisdom?
I feel thankful every day that I have finally achieved the dreams I had as a young woman – working part time, in both my chosen specialties, a mother, a wife, and in the area I’d always dreamed of – close to home but not too close. I hope that by participating in this series I have offered some insights that may be able to help others do the same.
And … that’s a wrap! If you’re interested in doing this please send me an email – I’d love to hear from you!
I hope you enjoyed reading Cecilia’s story!