Today, I write about the golden handcuffs that keep physicians trapped in their day jobs, and what I’m doing to break free.
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I wrote previously about the “golden handcuffs” that keep me dependent on my day job as a surgeon. This was a post from late 2018, when I was still optimistic about the field of medicine and was just learning about the FIRE movement.
At the time, my income was high, but it was equally matched by high expenditures. In an eye opening post from about late 2018, I calculated that my family was spending $340,000 a year! Granted, this included optional expenditures like savings, private school, and money to help my parents with living costs. But seeing that cash outflow total was a scary sight. It suddenly made sense why the Darwinian Dr-ess and I felt such pressure to bring home our paychecks every two weeks.
This pressure made me feel trapped and dependent on my day job. Despite the 60 hour work weeks and 10 hours of commuting every week, I had no choice but to keep on going.
Physician handcuffs are heavy
Medical training in the US seems perfectly engineered to trap physicians with heavy golden handcuffs. Without family wealth to bankroll my higher education, I paid for medical school with student loans alone. Six years of residency training and one big mistake later, I was $300,000 in student debt.
My situation is far from unique. According to the AAMC, your average medical school graduate in 2019 had $201,490 of debt. This debt influences everything from choice of specialty to decisions about marriage and babies.
As a board certified surgeon, my paychecks quickly gave me a heady new sense of financial security. Within two years of graduating residency, I moved my family from our cozy two bedroom bungalow to a five bedroom “doctor house”. In the expensive real estate market of Los Angeles, this added a $1.3 million mortgage to our balance sheet. The payments on just the student debt plus the mortgage cost us $8,000 a month!
The “doctor house” has worked out well as an investment on paper, but this doesn’t change the paycheck pressure from the mortgage.
I’m fortunate that my wife, the Dr-ess, has worked and saved since graduating college. She had a big nest egg by the time we got married, and her parents helped us purchase our first house when I began residency training. Once I became an attending physician, we had a hard time resisting a big upgrade to our lifestyle. Soon after moving to the “doctor house,” I also bought a Tesla Model 3.
I justified these things with various lines of reasoning, like helping out my parents and Tesla’s autopilot. But all my lines of reasoning didn’t change the debt that accrued from these decisions. By the time I looked around and counted up our spending, the numbers were truly shocking.
Physicians are super specialized (and super trapped)
The super specialized skill set of physicians is another factor that contributes to the feeling of being handcuffed. As Robert Kiyosaki says in “Rich Dad Poor Dad:” “the more specialized you become, the more you are trapped and dependent on that specialty.”
After fourteen years of higher education, I’ve gained the skills and experience to perform surgery. This all comes with a big paycheck, but it also ties me tightly to my employer. Theoretically I could switch employers or set up shop on my own, but there’s a lot of risk to a career move like this.
While there are certainly good stories of reinvention or re-specialization, there are enough barriers in place that it’s not a decision that I can make lightly.
The bottom line is that when you spend $28,000 a month, anything that might interrupt your paycheck can seem very scary.
My solution and reawakening
If you follow my blog, you know what’s changed since I first wrote about golden handcuffs in 2018. First, I mapped out a 15 year plan to morbidly obese financial independence (moFIRE) based on brute saving and investing. I later refined this plan when I realized the tax efficient nature of rental real estate investing.
Now about two years later, I have 10 rental units in my portfolio. My SMART goal is to grow my rental empire within 5 years to a cash flow goal of $100,000. (I secretly plan to be completely financially independent within 10 years, but don’t tell anyone that yet.)
These goals have focused my energies and made me happier, both at work and at home. Each new rental property lightens the golden handcuffs around my wrists. This allows me to enjoy the fun aspects of my day job, because I know that I’ll soon have the freedom to leave behind the unpleasant parts.
I hope this post resonated with you. Are you a high income professional that feels trapped in your lifestyle and paycheck? Despite the specialized nature of your work, know that there are options. You don’t have to do it exactly like me. But you can certainly take action and lay the groundwork to lighten and eventually break free from your golden handcuffs.
First you’ve got to realize the weight of the handcuffs. Next, take stock, make a plan, and take action.
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- My Why: family, friends, and freedom
- The real estate empire has grown! Anno Darwinii 1.0
- What is moFIRE (morbidly obese FIRE) and why do I want it?
- Why I’m investing in real estate over stocks – Part 1
- Rental houses vs. stocks: a 25 year portfolio projection
Related Doctor Life posts
- Switching residency programs from surgery to psychiatry
- How to survive intern year of residency: the basics
- Quitting residency after intern year (Life after residency series)
- A chat with an intern about life on the “other side” (Life after residency series)
- Handsfree Blog Post from behind the wheel!
- The Epidemic of Physician Burnout
- The Darwinian Doctor’s 13 Monthly Expenditures (with real numbers)
- Golden Handcuffs: Why I can’t quit my day job (for now)
- Why I chose medicine, and why this is still a good choice for your career
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I enjoyed your post and I agree that a w-2 income is hard to leave behind, especially when things are unknown. I appreciate the candor in your posts and if you’ll entertain me, I’ll present a few points from a slightly different perspective:
-the golden handcuffs are always a little bit relative and I still feel them from a primary care perspective. I come from a research background so my years in learning the skills (research fellowship and MPH) don’t necessarily equate to higher pay as a subspecialty would.
-Nonetheless, devising a professional lifestyle in any field of medicine can be difficult to leave and as a whole, physician handcuffs are truly heavy.
-I appreciate your real estate endeavors as a passive income route. I chose to pay off student debt early (well before the teachings of the White Coat Investor) and then just lived a modest life and saved in the market. Our numbers are different and I appreciate the viewpoints of both and enjoy your story. I have solved my “longevity” problem by going part-time and it’s proven to be a great decision. I’m okay with earning less because I spend less. The other way is okay too.
-I gave up income for lifestyle and primary care has the benefit of handling things remotely and over the phone. I absolutely understand that a surgeon can’t do this. From a wise, older friend (military general surgeon in the 1970’s)- “The only way to heal is with cold steel”.
Keep up the good work.
Thanks for your insightful thoughts, Medimentary.
I absolutely agree that golden handcuffs are relative to one’s situation. Your research background is easy to see in your well cited and composed writing, by the way.
I chuckled at your friend’s quote about “cold steel.” It’s true. While I can do a surprising amount over the phone, when it comes down to it, I still need to meet a lot of my patients in the OR.
I made doctor level money or better as a senior executive at a Fortune 200 corporation but had no trouble walking away when I became super fat FI. I’ve turned down a seven figure annual compensation offer to go back to that life, one that would let me add maybe five or more millions to my nest egg in exchange for five more years of 9 to 5. I pondered that for all of 15 seconds before telling them that I was good, and thanks, but I wasn’t interested because I have enough already. Why would it ever be hard to retire once you have enough, and it doesn’t take that much to have enough. I enjoyed my work right up until I left, but the day I stopped feeling great about it was the day I decided I needed to make a change. The key to getting those handcuffs off is controlling lifestyle costs and knowing how much in terms of invested assets/passive income you need. Once you get there, any additional money is completely meaningless.
I love your inspirational story, Steveark! It’s that freedom of choice that I’m going for with my own investing plan. I’m confident I’ll get there in the near future, and I do think there’ll be a tough choice once I do reach your level of FI. The fact is, there are a lot of things about my job that I enjoy. It’s just those other things like rigid schedules overnight call that make me yearn for the freedom to walk away, or at least change it to a more sustainable situation.
I enjoyed your article. I have been retired at age 58.5 I am a retired urologist but decided early on I wanted to retire early because of the way medicine was headed . My advice to Mds is to live frugally and save as much as possible each year. Some of my best years I was able to put away 300,000 grand rather than buy more expensive house or car. I invested in tax free bonds and now have a nice portfolio that gives us a nice boost to my other retirement from IRAS.
Too many physicians feel they will always have
The same level of income. I realized in the 90s that income was gradually going to decrease as more controls were going to affect the ability to keep our level of income Thankfully I was able to retire in 2006 after 28 years of practice. It was a good decision but I would probably still be working had I did not save in my best years .
Jeffrey, thanks for writing this! This is great advice from someone who walked the walk. Congratulations on your success.
It’s no small feat to save $300,000, no matter how much you make!
I hope you’re enjoying your retirement.
The advice I give any graduating resident is to live like a resident for 2 more years and never purchase a home more than your annual salary.
Growing up poor, and then being a resident, that house is still more luxurious than anything you have had.
When your salary grows and you pay your student loans off, then reconsider new house. Or not.
I know I’ll get crucified, but take over a lease using swapalease or leasetrader. You’ll get a car with a full warranty every 2 years and you won’t save that much by keeping that beater.
Easier to stay out of debt than to get out of debt.
Private practice for 17 years, mortgage and student loans paid off. Kids 529 full to cover any 4 year university.
5 years anticipate I’ll reach FU money, but I’ll stay working part time with my ARNP doing most of the office work.
Hi Cigmd, I hear echoes of the White Coat Investor in your approach, and I love it. I wish I could have lived like a resident longer after I graduated residency, but alas I did succumb to many of the typical “doctor” choices. I’ve found that some choices, like your city of residence and a house purchase, are very difficult to alter after the choice has been made.
It sounds like you’ve put yourself in a great financial position. Congratulations.
Wow that amount of debt would have made me have a breakdown. I come from very modest means and was the first in my family to go to college let alone medical school. My first house was a ranch style with 2 bedrooms and my second was an 8 room farmhouse style house around 2200 sq ft. It has three bedrooms and would be very modest by the author’s views. I am a pediatrician so maybe that helps keep my expenditures lower but I would have been afraid to take on more debt than I could. I also put my kids through private parochial school but it was a bargain compared to all the other private schools in my area. I don’t think the stress is worth the lifestyle. Oh, and all my cars are used – never new.
Pat, thanks for stopping by. Educational debt has a funny way of seeming almost imaginary. The numbers are so big, it’s like monopoly money. It wasn’t until my first year of practice as an attending that I realized that even with a doctor salary, it’s not easy to dig yourself out of $300k of student debt.
Or perhaps you were talking about our mortgage?
Similarly, the housing prices in SoCal are so astronomical, it seems unreal. You know what’s not unreal? The mortgage payment. I learned that too late. I had my reasons, of course, but so does everyone.
I’m glad you avoided my fate!
Don’t get me started on cars… I’ve got a weakness for Tesla.
Why I bought a Tesla Model 3
Know this- YOUR EMPLOYER IS MAKING MONEY OFF YOU!
You are giving that money to your master everyday. Leave while you can and enjoy the full potential of your labor.
Your income can increase as much as $100 K by being independent. Let that sink in and your $30 K per year investing is small compared to what you are missing out on.
William, thanks for stopping by. I do think you’re right that I could make more money as a self-employed surgeon. It probably says something profound about me that I’m more comfortable sticking with my employer and investing aggressively rather than going out into private practice. I’ll ponder that and write a blog post about it.
I’m 19 years post Ob/gyn residency and 17 owning and managing my own practice. One common mistake physicians seem to make is failing to focus on cash flow over revenue. Not only in their practice, but in their personal finances. Tightly managing debt and expenditures is important. Graduating residents should recognize early that they should always compensated appropriately and proportionally to their work ethic and financial risk.. They should always save a significant proportion of their take home and avoid debt. I’ve been debt free for 15 years both in my practice and personal finances. My two sons had bunk beds and debt free private education (Wharton and Notre Dame). My employees and family always have been clear that I expect to compensated properly (cash flow) for my hard work.
Hey Jim, congratulations on your success! You’re so right about cash flow. All the revenue in the world is meaningless if there is no money left over at the end of the day.
Our boys will be sharing a bunk bed too this month. Our 2 year old is so excited to move from his crib to a real bed with his big brother.
Educational debt is one thing, but there’s an old expression that says something like, “when you find yourself in a hole, stop digging.” Financial conservatism works.
I agree! But our biggest debt by far is our mortgage, and I think most would agree that home ownership as a concept is a good idea. In our area of Los Angeles, a modest two bedroom home literally costs $900,000. This makes buying a home a frightening proposition. If you buy at the wrong time (think 2008), it could be really detrimental. We were lucky enough to buy at the “right time,” and have theoretically profited, but have a huge mortgage as a consequence.
Check out my analysis of how we did: Is owning a home a good investment? 10 years of home ownership in LA, analyzed
Great summary and breakdown on the challenges doctors face. It’s hard to walk away from a paycheck anytime, especially when expenses are high (80k of educational expenses for 4 kids this year for me…!!!) I’ve read so much about the benefits of real estate rental income but have hesitated due to my innate conservative nature….
Can you comment on the risks, especially in this environment? What happens if your tenant loses their job and stops paying? Leverage can dig a big hole very quickly if you are paying multiple mortgages. Evictions have been halted in many areas but I’m assuming mortgage note holders don’t care…. How many missed rent payments knock the plan to the ground?
I wish you the best and hope you have only healthy well employed tenants!
Hey ELS, great questions. I’d agree that rental real estate carries certain risks that index funds do not. Vacancy is certainly a risk, especially in the setting of leverage (mortgages on the rental properties). They way I look at it, vacancy, even from a pandemic, is usually a temporary condition. If I have sufficient reserves or cash flow to cover all my mortgages for 6-12 months, I think the long term risk is manageable.
All of my tenants are paying rent right now, but you’re right — this situation can change quickly.
My overall feeling about the wisdom of real estate investing is unchanged. I invite you to read my series on the matter:
Why I’m investing in real estate over stocks – Part 1
Great post. I admire and appreciate what you are doing. Have really been thinking about this this past year and the pandemic has magnified that I am getting closer to taking the leap about getting into REI to help lighten the golden hand cuffs. Have been watching from the sidelines and waiting for the right time to jump. With the new eviction laws, am thinking of waiting until beginning of next year. Since I am also in HCOL of LA like you, am curious where you are finding success in REI- what city? And I suspect you are not doing SFH so are you doing duplex, tri, quad, or apts? And furthermore what asset protection strategy are you using? DST or umbrella LLC over other LLC’s? What are your thoughts on REPS?
Hey LAERMD, you’re really well educated in real estate investing already! I hope you’re right that prices will drop next year. I haven’t seen it yet.
I mainly invest in Indianapolis, but I’m hoping to branch out to other areas as a hedge. 80% of my portfolio now is made of duplexes, but I’m hoping to buy something with more units next. Asset protection is a tough nut to crack, but as a Californian, I went the Delaware statutory trust route because of franchise tax issues.
As a full time physician, Real estate professional status isn’t possible for me. My wife also works full time. But I agree that it offers a tremendous growth opportunity and tax shelter if you can meet the requirements. Best of luck with your journey! Let me know how it goes!
Great read, with insight.
Indianapolis for rental real estate. Why Indy over, say, Texas, being that you don’t reside in Indy.
Texas is an exciting market, but the price points were a bit higher and I had no network there. I definitely have friends who are finding success investing in Texas, though. I honestly think there’s opportunity in every market if you look hard enough.
Okk. Got it. Didn’t realize Indianapolis is a great place for rentals. Thanks again for all the insight.
Bad decisions make for heavy handcuffs.
Michael, you’re not wrong.
Sound like you must have read “The millionaire next door”
which defines doctors as “under achievers of wealth”
I followed that book to a tee and
got rid of 200 K of debt, paid of my modest house in the bay area, paid off my medical building, and have passive income
which is greater than the income I received from the practice.
I see to many younger physicians still in “residency” and will
never understand that the physician’s signature is more powerful than the corp. system in place now for health care.
Medicine won’t be great again till doctors push back as a group.
The pendulum will swing back as more people demand better care than “corp care” and want more freedom.
Please continue to advocate getting rid of the “golden handcuffs”.
Wonderful comment, thanks RBM. Congratulations on your success.
My Tesla 3 costs less than most pickup trucks.
Quite true! It also doesn’t guzzle up gas like most pickup trucks. It’s still far from the $5000 beater car that the White Coat Investor recommends.
Depending on how much you drive, though, fuel cost savings can really add up: How my Tesla Model 3 saves me $200 a month in fuel costs
I’m 40 now and “golden handcuffs” has a more insidious meaning for me. I was a super-frugalist — became a radiologist for the money, worked 90 hour weeks to pay off my loans in two years, have lived cheap since then. Have a couple million in the bank (we’ll see if that survives this market stuff) and could dial back no problem and enjoy life more.
But…. I’m not doing it.
That’s what Golden Handcuffs means to me. The thought of dropping work so I can pursue being a musical theater composer seems frivolous and absurd and reckless. But I’d be so much happier. I live a cheap life so I WON’T be shackled by money, and yet… I keep working.
I suppose it’s practical fear. 10 million is a big buffer for a comfortable middle class life, but 2 isn’t. If I dial back, and anything goes wrong, I’m hosed. But my fear is I’ll always have an excuse to keep flushing my life down the Toilet of Boredom at my workstation and never take the plunge.
Thanks for sharing this, Alex. You’ve built up a nice nest egg.
I fear your fate for myself as well. It’ll be a tough choice in a few years as our investment cash flow increases. Will I have the courage to cut back my work hours? I hope so. We only get one ride on this merry-go-round of life, Alex. I encourage you to slowly extricate yourself from the Toilet of Boredom. You’ve earned it!
Interesting article and thank you! I got a scholarship to my state university, worked in college, and stayed in state for med school, graduating with no student debt. Opened my first IRA account at age 20, and gladly lived below my means for decades. As I moved through time, I saw two things cause doctors tremendous financial stress: Expensive cars and expensive houses. I vowed never to engage in either decades ago, and never have. Far from “playing it safe” this has allowed me to travel at a fairly young age, *before starting a family*, take “career risks” and I am now a happy captain of my own ship.
At some point, perhaps soon, I will cross the financial finish line, but I enjoy working and don’t see that ending just because I can. My wealthiest friends are all in real estate as developers/investors as an FYI., but the seemingly very high daily dollar transactions they discuss, seem par for the course for their career levels. I remain content with my lot and with reasonable control of my time. Although I wish I had learned the importance and enjoyment of not having a “boss” at an earlier age, I am thankful that I figured it out over recent years instead of later. ( mid-fifties).
Congratulations Jeremy. We bought our house before “my awakening”. We had a good reasons for doing so (Retirement via an Accessory Dwelling Unit (My Parental Support Solution)), but I never imagined that we’d be spending THIS MUCH on our house every month (How the pandemic changed our spending).
I’m happy for you that you figured out at a young age the negative effects of a big mortgage payment. Thanks for your comment.
You did what most doctors do, figure you will make a lot of money, so you can afford it. Best advice I can give, also because you never know what life has in store for you, is to live modestly and not go gaga for things you must have, like a Tesla. I even have a splurge too., Dolls.
This is my best suggestion for anyone. Now I am retired and some guys I know from Med School are still practicing. medicine in their 70s.
Great advice, Arleen, thank you. –TDD
It seems to me that the fundamental motivation that has not changed is desire for more. Rationalize it all you want, but living large is your goal. What happened to the physician motivated by the desire to heal? The AMA started to put a stop to that in the 1950s, and has lobbied successfully ever since then to fashion a medical education and and industry that rewards specialiation (high-security rent seeking), a shortage of doctors, and a lifting of ethical restraints that keep physicians from being true healers. Talk about a swamp! Articles like this in medical journals have become commonplace, and it is mostly a reflection of how far from the Hipocratic ideal we have come in medicine, and a reflection of something ugly in the larger society as well. No wonder our reponse to SARS-CoV-2 is in competition for the worst in the world. Even now we refuse to cooperate with the rest of the world to try to help the world be safe and healthy and recklessly call the basically Untried (in historical terms) Moderna vaccine the “US Vaccine.” We shall reap what we sow.
Elizabeth, thank you for your comment. I would disagree that “living large” is my goal. This more accurately describes my motivation and goals: My Why: family, friends, and freedom
Some of the trends you mention, like the trend for specialization, I think are true. But I’d like more input on the “lifting of ethical restraints” that you cite. I also don’t see your connection to our national Covid-19 response. Every physician I know is devoted to controlling the pandemic with every tool available.
I am a super low-income physician, and enjoy my freedom, if not the respect of higher earning docs who think I am a joke. When they get my H&Ps, though, they are super accurate (if they will read them). The medication lists are correct. I spend as long as I need with each patient. I may take an extra part-time night job at age 62, to put some into retirement funds, if that ever happens. Perhaps I am lucky that I eluded the golden handcuffs every time I saw them…
Sue Osborne, DO recently posted…An Article from The Atlantic “America’s Other Heroes”
It sounds like you have your priorities and are living life on your own terms. This should be applauded! I certainly appreciate accurate H&Ps. There has to be at least one good one in the system for everyone else to copy forward! Thank you for doing this. — TDD
You are right on Dr Osborne!
Sue, you are a woman after my own heart. I too am a family doc and I spend time with each of my patients. You can’t take it with you when you die!
Many thanks for your post which has been very timely for me as I grapple with this issue. I am now in my early 6Os, have lived a modest lifestyle, (used cars, house built in the 50’s, no huge vacations), kids are grown and I am totally debt free. As a psychiatrist that has worked as an employee almost entirely with the underserved while maintaining a very small fee for service practice, I have not made the kind of money that TDD has. I am having some difficulty balancing Covid, undergoing recent preventive tests, managing entitled patients who are never satisfied, stories of school mates that have retired to their country farms which allows them to read and give of themselves against the ability to “Dr. You have saved/changed my life” with relatively little effort on my part, the sense of guilt for not utilizing my gifts, (I really am a damn good psychiatrist) health insurance costs, not really wanting to keep pace with much younger colleagues, some who were born with an iPad in their hands and a brain hardwired for social media, wanting to write the great American novel (need I go on and sorry for the run on) So far, the latter option is winning out, but I notice that weight is shifting with each passing day. Oh, I almost forgot my favorite personal issue- feeling like I have not been productive even if I have reorganized the closets, cooked dinner, gone grocery shopping, done the laundry, cleaned the house (remember; no maids because of covid), tended to my tiny herb garden, etc because I have not volunteered for my choice of candidate, written a blog, exercised and eaten a healthy diet. A dose of self compassion anyone?
Thank you for your comment. It’s clear that for many of us, Covid-19 has exacerbated many of the issues were previously more easily ignored or tolerated. I know of a couple of colleagues who have decided to retire a bit earlier because of these new challenges.
It sounds like you have a tremendous amount still to offer the world! I’d urge you to continue on, yet perhaps be mindful of what brings you the most satisfaction and adequate compensation for your valuable time. I suffer from the same chronic feeling of unproductivity as you. So if you need permission for self-compassion, here it is. It’s OK to cut yourself some slack… once in a while at least.
Many years ago, I realized that needs are very different from wants. Also, I returned to my thrift shopping roots (and passion). My husband and I also acknowled that Iwe had other passions in life.
BTW, we have 20 rental units, but for 10 years we worked the equivalent of two full time jobs to turn our ugly ducklings into swans. Unless you can do the work yourself, and can manage the rental business, figure in the management fees and the surcharge on repairs, etc. It has taken 20 years to turn it into a supporting venture.
The downside (in one sense) is that the property has appreciated so much in our area that we have to plan carefully, as we reach a decision point on time/interest/ enjoyment, to sell, that because of appreciation, value of other assets, the tax bite can be substantial.
Now I look at phase 3 of life, opening a vintage shop (see thrift shop) and farming our land. There has been few greater thrills than finding the first egg.
Wow, congratulations on your impressive real estate portfolio! I’ve definitely already got a couple of ugly ducklings in my portfolio, made all the uglier with Covid related issues. The Dr-ess and I are certainly working hard in our day jobs to grow our portfolio. Hopefully we’ll end up with some swans like you!
Good luck with your decision on how to harvest your equity after all this time. Taxes are certainly a big issue. I’d love to hear one day what you ended up doing!