Binge read all things wealth building, debt reduction, & lifestyle.

If you're a healthcare professional, especially one who worked through the pandemic, the traditional idea of working until you're in your late 60s  might not be appealing. Constantly seeing patients can take a toll, and the thought of being work-optional—where you don’t have to work for a paycheck unless you want to—can be very enticing.

But achieving this freedom isn’t about age; it's about reaching a specific financial milestone known as your financial independence number or financial freedom number. This means having enough assets to live comfortably without needing to earn another paycheck- something to look forward to, right?

I’m a critical care PA who worked through every wave of the pandemic in an ICU. Even before the pandemic, but especially by the end of it, I knew I didn't want to work until I was 65. So, I dove into figuring out how to become work-optional much sooner. My initial goal was to retire by 45, but it looks like...

When you're planning for your financial future, one big decision is choosing between a Roth and a Traditional 401(k). It's a common question - don’t worry - especially for medical professionals who are looking to maximize their retirement savings. Let's break it down in a way that’s easy to understand and apply to your own situation.

The Basics

1. Traditional 401(k): Contributions are made with pre-tax dollars, which means you get a tax deduction now. However, you will pay taxes on the withdrawals during retirement at your ordinary income tax rate.
2. Roth 401(k): Contributions are made with after-tax dollars, so there is no immediate tax benefit. But, the withdrawals during retirement are tax-free.

It's All About Taxes

Remember, choosing between Roth and Traditional doesn’t change the actual investments you make. It only affects how your contributions and withdrawals are taxed.

A Simple Guideline

Here's a quick rule of thumb:

• Choose Roth if your...

I'm a firm believer of automating most aspects of personal finance, but I also believe that what gets measured gets improved and managed. Over the years, I've developed end-of-month and end-of-financial-quarter routines that have guided me from paying off $161,000 in student loan debt to reaching millionaire status through investing. Today, I'll break down my monthly routine that ensures long-term financial success.

CLAP: A Simple, Effective System

To remember this routine, I use the acronym CLAP. It's catchy and easy to remember. Here’s what each letter stands for:

C - Categorize

Start by categorizing every single financial transaction into appropriate buckets. Whether it's on your credit card or debit card, each transaction needs a specific category. This helps you track where your money is going and prevents any single category, like "miscellaneous," from becoming a financial black hole. For instance, if you have a miscellaneous category, keep it...

If you're a medical professional aiming to build long-term wealth, a simple monthly cash flow tracking system might not be enough. To truly secure your financial future, you need a comprehensive approach. I've used a system called BANG to go from $161,000 in student loan debt to becoming a millionaire as a PA. This routine, done at the end of each fiscal quarter, ensures that the big, impactful financial moves are made. Let me walk you through it.

B - Bring Your Financial Partner

First, Bring your financial partner into a scheduled, genuine sit-down conversation. If you handle your finances solo, consider an accountability partner, like a trusted long-term friend, to discuss your goals without sharing specific account details. If you have a long-term partner or spouse, this should be a joint conversation, even if you keep finances separate. These discussions will not only boost your financial success but also strengthen your relationship. Schedule 45 to 60 minutes for...

Unless you plan on seeing patients until the day you drop dead, you need to read this.

Having an understanding of how much money you need invested in order to retire is a basic requirement of success.

If you don't know where you're going, you will definitely not get there.

Let me break down but it looks like to figure out your "financial independence number". First things first, retirement is not an age. It is actually a mathematical destination where you can live off of your investments. We all need to hit this mark (hopefully at least by 65), but some folks (like myself) set themselves up to hit it far sooner. 

So what's your number? 

1) Calculate how much money you spend in one month. Unless you have a budget, you likely do not know the answer to this question. In my experience with working with thousands of medical professionals, when people attempt to guesstimate this number they typically guess a number about 20 to 30% less than the actual number. If you...

_{This post may contain affiliate links. If you make a purchase, I will be compensated at no additional cost to you. For my full disclosure, click here.}

For many medical professionals, the roadblock to successful investing is just knowing HOW. Understanding what accounts to use, how to select funds, and what fees you are paying are the foundation to becoming a saavy investor - and future Millionaire in Medicine.  

Broad Categories of Funds

When you go to select your investments within your 401(k), other retirement account, or miscellaneous investments, how do you know what investments you're choosing? Remember, a 401(k) or Roth IRA is simply a tax designation for an investment. The tax treatment matters greatly, but so does what you choose to invest in within it. 

HAVING A BASIC UNDERSTANDING OF YOUR INVESTMENT SELECTIONS WILL EMPOWER YOU TO MAKE BETTER CHOICES.

Let's review a few basic investments types:

1. ACTIVELY MANAGED MUTUAL FUNDS
- When you select a...

If your plan is to retire early, you need to make sure you don't have your numbers all wrong.

Retirement has nothing to do with age. I actually prefer the term work optional, as I think it more adequately describes the financial circumstances that create your ability to retire. When you are able to live off investments indefinitely, you are "work optional". At that time, you have the option to retire.

When you decide to quit earning an income and live off your investment portfolio, you're deciding to use a portion of it each year. So how much can you use without running out of money?

For those retiring at 65, the classic answer is 4% of your portfolio per year.

This means that having $1,000,000 invested will provide you only $40,000 per year to live off of. My suspicion is that this may be a lot less than you thought.

Most of the data behind this is relatively old, and there are plenty of critiques on the methodologies used. The pillar study used for this determination...

Roth IRAs are one of the best tax-favored accounts to use for retirement investing. Many have heard that high earners are out of luck when it comes to Roth IRAs! This is a money myth, and one I can't wait to bust.

What is a Roth IRA?

Within a Roth IRA, you invest "after tax" dollars (meaning your contributions are not tax deductible). The contribution limits for this account are much lower than your employer accounts. After age 59 and 1/2, all of the funds in the account can be accessed TAX FREE. Yes, you read that right. Tax free. In addition, Roth IRAs have several other benefits:

• You can withdraw your contributions (not the growth) at any time.
• You can make a withdrawal without the 10% penalty before 59 and 1/2 if you use the funds for qualified educational expenses (you will still pay income tax on the earnings portion).
• You can make a withdrawal of up to $10,000 without any taxes or the 10% penalty before age 59 and 1/2 if you use the funds for a first time home purchase...

I started my career picking up extra shifts to make my financial goals happen. I wanted to pay off my debt early and build wealth. I had $161K in student loan debt to contend with. My income felt like it wasn’t enough, so my solution was to work evenings, weekends, and my scheduled days off to make up the difference. I used that to pay off $161,000 in student loans in 16 months, but quickly realized the downfalls to that strategy.

While the “working extra shifts” strategy may work for short term financial goals, like paying off credit card debt, it’s not a viable long-term solution. It can lead to burnout, and if it ultimately reduces your career longevity it may reduce your long-term income.

The most underleveraged wealth hack is to negotiate more compensation for what you’re already doing, and then use the increased income to reduce debt & build assets.

Here’s a few pearls for the negotiation process itself:

• Calculate...

One of the most undervalued aspects of wealth building is the understanding income "buckets". There are three primary income types you should be using on your journey to Millionaire in Medicine: active income, passive income, and portfolio income.

Active Income: The Starting Point

Active income is the money you earn through direct and immediate effort. This includes your salary, wages, and any income generated from your active participation in a business or job. For most healthcare professionals, this is your W2 salary or money earned from a 1099 gig. While active income is often the most reliable and consistent source of funds (especially in the initial years of any financial journey), it has its limitations - namely you have to work for it.

Thus, you're trading time for money.

To optimize active income, do the following:

a. Skill Development: Enhance your skills and expertise to become more valuable at your job. Whatever it is you do - be the best at it. This could lead to...