11 Important Ways I Am Fixing My Financial Mistakes: A 3+ Year Update

At this point, I have shared all of my financial mistakes. And, for long time readers of the blog, one of my first posts ever was a discussion of how I planned to go about fixing these very financial mistakes. That post was created in June 2020.

That means it’s time for an update to see how I am doing after 3+ years of fixing my financial mistakes. This includes asking some important questions:

• Is our plan working?
• What results are we seeing?
• Has it all been worth it?

I have to say that I’m really excited to find the answers to these questions!

Back in the beginning…

To review, I never pursued a financial education. I convinced myself that it was not important but, in reality, I was intimidated by the topic and embarrassed to admit it.

Then, finally, after 15 years of college, medical school, and plastic surgery training, I picked up a book which started me on this comeback journey of financial well-being aligned with my passions and purpose to ultimately enhance my overall well-being.

Now, let’s get into some actionable items. And let’s see how it’s been working after 3 years of fixing these financial mistakes and getting on the right path.

How I am fixing my financial mistakes

Keep in mind, I am on this journey with you. I have not yet reached the proverbial finish line – so let’s keep getting there together! Here is my list of 11 financial mistakes and how I am fixing them!

1. Spending up to my paycheck

This was the biggest “A-ha” realization that my wife and I had.

The principle of saving some percentage of monthly income seems so simple now. But we, like many people, just never really gave it any thought. Any increase or decrease in income met an equilibrium with our spending. Our savings rate was 0%. 

To fix this, we sat down and developed two budgets. One was for our current situation as a plastic surgery fellow and a PhD student. It seemed impossible to cut spending when 75% of our income was going to New York City rent and childcare. But we created a savings rate of 5+% and noticed that our lifestyle did not noticeably change. However, we were creating one of the core long-term financial habits that would serve us very well.

We also created a full budget for when our incomes increased within the next year as we became an attending surgeon and professor, respectively. We established a savings rate of 31%.

There are a bunch of ways to increase your savings rate and stop spending everything you make. Because, by definition, this will never lead to wealth accumulation even if you earn $1 million annually.

You can go our route. This means you sit down and budget (using our guide) to establish a chunk increase in savings. Or, you can work to save 1% of your monthly income one month. Then 2% the next month, and so on. Before you know it, at one year, you have a savings rate of 12%.

Now, our savings rate ranges depending on the month from 25-40+%. And remember, this includes debt service, investments, etc.

This savings rate has given us the ability to grow out net worth by investing this margin between what we earn and what we spend.

2. Paying myself last

Fixing this one of our financial mistakes was pretty simple for us.

Instead of spending throughout the month and then saving whatever was left (usually zero), we took out our goal monthly savings (at least 20% of our monthly gross income) at the beginning of the month when the paycheck hit the checking account. Then, we could spend the rest guilt-free.

(To be honest, I still struggle with the last part – spending the remainder guilt-free. I continually have to remind myself of this and resist the urge to save more. Not a bad problem I guess but still a problem…)

We started doing this by having my student loan payments, retirement contributions, and other savings directly removed from our account before we even see it. This is a great way to get on track with your savings.

Now, we have automated the following:

• Retirement contributions to 403b and 457
• Investment contributions to taxable account
• All student debt payments
• 529 contributions for each child
• Extra payment each month to mortgage of primary home

(Here is a nice guide to all of these direct types of investing accounts.)

This has made it super easy for us to follow our financial plan to meet our financial goals…

3. Not paying off any debt

This may be one of the biggest of our financial mistakes that needed fixing.

My student debt seemed insurmountable. This led me to totally avoid it or even acknowledge its presence. This was obviously a mistake since interest works around the clock without ever taking a break whether you acknowledge it or not.

To fix this, my wife and I sat down and set a goal of when we would like our debt paid off. For us, it was 5 years.

In our budgets, we then allocated an amount that would get us to this goal. This initially counted towards our overall 31% savings rate since each dollar that we pay towards debt is a dollar increase in our net worth. I go more into specific student loan strategies here.

Today, we still pay $6k+ monthly to our student loans. However, our plan is working as we project to be students debt free in July 2024, which is about a year earlier than expected.

This was certainly aided by the initial 0% student loan pause and the TEPSLF program for which I qualified to have much of my federal debt forgiven. This was a welcome surprise to me since I had deferred all of my federal debt for 7 years during training due to a combination of fear and lack of awareness/understanding of the PSLF program.

4,5. Dipping into savings and buying on credit

I’m lumping these two financial mistakes together because we ended up fixing them similarly.

In 2020, we stopped these habits cold turkey.

It was one of those things that we knew we shouldn’t be doing but it was often the path of least resistance. We made a commitment to each other not to do this and wrote it in our personal financial plan. The only allowed exception was for necessary expenses (like my surgery board fees) that we otherwise could not pay outright. If there were other items that we wanted and could not pay outright through our checking, we purposefully saved for it and bought when we could if we still felt we wanted/needed it (a very key concept and strategy called intentional spending).

Research actually shows this practice increases the joy you get from a purchase – that’s been my personal experience as well. Sometimes, after waiting, we realized we actually didn’t need or want them item after all.

We still are very good, although not perfect, at practicing this. Recently, we accumulated some credit card debt when I used it to cover board review courses and fees for my board certification. But we pay that off aggressively to get back to $0 credit card debt.

And, in 2023, we bought out the lease on Selenid’d car so that we have no car debt…

6. Not paying attention to my investments

I remember speaking with my cousin, who is certainly a great example of financial well-being, and him telling me that he managed his own investments. This seemed like such a complex task that I almost dismissed it out of hand. However, after reading three introductory books on the topic (The Millionaire Next Door, The Bogleheads’ Guide to Investing, and The Coffeehouse Investor), I felt knowledgeable enough to do this. 

All 3 books advocate for investing largely via broadly diversified low-cost index funds with a fixed asset allocation that is rebalanced one or twice a year (A full guide to these concepts can be found here).

This approach seeks to approximate the stock market average, which has always gone up over the long term, rather than stock pick, day trade, or otherwise try to guess the market, which is not possible. I also learned about the different accounts that I could invest money in, including tax advantaged and taxable accounts. Within these buckets, you can choose the way that you want to invest the money – for me, it was an 80% stock/20% bond split with stocks invested in broadly diversified low-cost index funds. This has now changed to a more aggressive allocation.

After becoming knowledgeable, I took action

I studied all of my investment accounts (remember, I had one via my personal savings with a financial advisor and another through my hospital that I didn’t even know existed until after I graduated). And I was not in low cost, broadly diversified index funds in either account. I was in moderate cost actively managed mutual funds. Actively managed mutual funds like the ones that I were in underperform passively managed funds (like index funds) 80% of the time. There is no way to know ahead of time which 20% of active funds will outperform.

So, I took the money out of my advisor investment account, opened a Vanguard account, and contributed to a Roth IRA retirement account, selecting broadly diversified low-cost index funds. I finally started paying attention to my investments.

And I still invest the same way. I use broadly diversified index funds according to my asset allocation which I rebalance once yearly. I invest in a 403b, 457, Roth IRA, and taxable accounts. You can see a full breakdown of my investments here. I also created a plan to invest in real estate via cash flowing rental properties.

7. Using a “money person”

I offer another disclaimer like I did in the earlier posts: I do not have an issue with paying a fair price for good advice from a financial advisor. However, you must educate yourself enough to assess if you are getting good advice. Too often, financial advisors are actually commissioned salespeople that have a direct conflict of interest with your goal of creating wealth. 

The financial advisor that I was using is a great guy and very honest. He helped my wife and I a great deal to understand concepts and encouraged us to become financially literate. However, once I learned how to handle my investments on my own and that it was not all that hard, I just didn’t feel the need to pay for those services. Even a 1% fee is 1% less of your hard-earned investment money in your pocket. Especially if they are going to invest it in high cost products that are more likely than not to underperform the market.

If you do want to use a financial advisor, make sure that you know how they are being paid

If you want advice but not necessarily for them to actually invest your money, see if they offer a flat fee for that service. Most of all, make sure that you trust them and don’t feel like you are being “sold.” Good financial advice and good investments sell themselves. Bad advice and bad investments need to be sold.

Here are 7 questions you should ask any financial advisor before hiring them.

Currently, we still manage our investments by ourselves. We have used advisors for tax purposes as well as estate planning and to review our financial plan though. And this has been helpful because we chose the right people (including those herein).

But please make sure you are paying a fair price and getting good advice!

8. Not having a written financial plan

Selenid and I first wrote a comprehensive personal financial plan about 1-2 months after we began our financial education.

This plan included specific goals and when we would like to reach them, our asset allocation and how we would rebalance, as well as advice for how we would handle a bear market (do nothing!) among many other things. Essentially, we laid out our financial philosophy and a “how to” guide with associated goals that we can always refer back to when needed. This is a huge guiding and stabilizing force. Everyone’s plan will be different but I feel it is so important that everyone have a written personal financial plan. Then, when you doubt yourself or someone comes to you saying how they are buying up all the gold they can, you can just look at the plan that you developed and relax knowing your finances are right where YOU want them to be.

Having this financial plan is what really helped improve our financial well-being. You can find our actual financial plan in total right here.

Lastly, I cannot stress enough the importance of you and your significant other both being on the same page with your plan. It’s a good experience to work on developing it together. This is a good guide to help working together with your partner on finances.

Basically, Selenid and I still follow that exact written financial plan today. We’ve made the following minor 7 changes (following the rules for how changes can be made) but overall the plan remains the same!

9. Not developing a side hustle

The need for a side hustle is interesting to think about.

For one, I believe that many people, especially physicians, can reach their financial goals through smart saving and sensible investing. However, other streams of passive income increase financial stability by decreasing the reliance on the income from your “day job.” As we saw with the COVID pandemic (which coincided with me starting this blog), no one, even physicians, have guaranteed job security. 

My perspective is that establishing passive income is a good move. However, it needs to align with your overall life goals, passions, and purpose.

Doing it for its own sake is like reaching financial independence for its own sake…there needs to be a “why” or it’s hollow. I feel very passionate about increasing financial literacy and well-being by sharing my story which led me to this “side hustle.”

Selenid and I realized an interest in real estate and therefore have begun to pursue cash-flowing rental real estate properties as another source of passive income. Neither of these pursuits paid off immediately, but we were passionate about them and enjoyed them regardless, so they aligned with our overall life goals, passions, and purpose. 

Today, I continue to enjoy various side hustles, first and foremost starting with this blog! We also continue to invest in real estate and even recently started a passive real estate company, called Cereus Real Estate, to help other doctors invest in and benefit from real estate!

If you think a side gig may be for you, you can check out all of these Physician Side Gigs to Make You Passive Money!

10. Holding onto a scarcity mindset with money

I have to admit, I continue to work on fixing this one every day.

It takes active reminders as I often find myself thinking in a scarcity mindset regarding money still. I know it will take time before thinking in an abundancy mindset will become more involuntary.

I practice this by trying to focus on the big picture. And I have found that it helps a lot to focus on the big picture when you have a plan in place (see #8). Before I had a plan, the big picture was blurry and I was sweating the small stuff. Now I am working not to.

And yes, I still work on this even now. It has changed a bit in that my problem now tends to focus on being patient as things continue to grow. Rather than trying to hurry them along, which can lead to mistakes. But, overall, my money mindset is much healthier now which has led to massive action and massive changes in everything including our net worth!

We never stop learning! Which leads to…

Bonus #11. Not learning

This one drove me nuts! Why did I not do this earlier?? How could we go about fixing financial mistakes without learning?

The books are not long, the blogs and podcasts are entertaining. My colleagues, friends, and family were very interested and receptive in discussing these topics.

What was stopping me?! What is stopping you? Again, it seems simple to look back and say why not?

But, the reality is that learning about personal finance is intimidating and looking our mistakes in the face can be scary. That is what held me back. However, once I took that first step, I never stopped. I think you will find similar excitement and interest upon starting as well. 

Time is another concern that many people will cite, including my past self

We are all busy and there is never a perfect time to start. The same way that we can always save more money, even when it seems we are at our limits, we can always find time. It’s a matter of what we prioritize and your own financial well-being and future is definitely a priority! Like I always recommend, buy a book or open a blog and just take 10 minutes to read the first chapter or post. You can even check out my best-selling book, Money Matters in Medicine! You will be hooked. Then, set a goal for continuing financial education like trying to read one new financial book a year or subscribing to this blog!

Well, there you have it

That is what I have done and continue doing to correct my financial mistakes of the past.

I’m sure many of you have already taken some similar steps while others may relate to desire to correct your mistakes but are not sure how to do it, like I was.

I hope that I’ve been able to share some actionable steps that you can take to get on the path towards your financial well-being, no matter where you are starting. I’m excited to be on the journey with you!

In the meantime, here are three of my favorite “must read” posts!

• How Much Is Enough Retirement Savings?
• Debunking 7 Financial Myths Overheard in the Doctors’ Lounge
• Origins of the Money Taboo in Medicine

What do you think? What financial mistakes have you made? How do you work on fixing your financial mistakes? Any hang ups along the way? Let me know in the comments below!