Let me tell you about a story. I’m not going to name the person that this story is about. But they know who they are. In fact, they asked the question: Can Diet Dr. Pepper make a doctor poor?
It seems pretty silly. But, that’s what makes it fun!
The allure of Diet Dr. Pepper
I’ll start out by saying that I actually do not drink diet Dr. Pepper. In fact, I don’t drink caffeine at all. It just makes me too jittery and I don’t like the way I feel when I drink it.
So, I stick to non-caffeinated pop like Sprite if I drink it at all (Yes, pop. I’m from Buffalo – that’s what we call it.)
But, despite not having much personal experience, diet Dr. Pepper does seem to have a hold on a lot of physicians. Throughout medical school, residency, fellowship, and now being an attending, I know a surprising amount of doctors, specifically surgeons, who seem to live on diet Dr. Pepper. Even drinking it at 7am in morning conferences.
Who am I to judge? I’ve eaten pizza for breakfast in a pinch. So, it seems that diet Dr. Pepper has a special place in doctors’ hearts and stomachs.
But that is not exactly what this post is about. We are asking if diet Dr. Pepper can make a doctor poor.
The story behind the question
This question basically came as a joke between me and one of my partners. He is a diet Dr. Pepper fiend. Basically, if I can’t find him in the OR, the next place I check is the vending machines in the adjacent hallway.
I always mess with him by asking why he doesn’t just bring in cases of the stuff instead of always using the ridiculously marked up vending machine to save. He messes with me by calling me overly prudent (I mean it’s in the name, right?!).
And so the question was born. Is diet Dr. Pepper making this doctor poor?
Before getting too far along, let me make it clear that this is tongue in cheek. As physicians, we are high income earners. Joking about this is making fun of ourselves for having first world problems. No social commentary hiding here.
Ok, so lets break down a few facts:
- One can of Diet Dr. Pepper from our vending machine costs $2.25
- While we occasionally operate on weekends, let’s assume we are only operating on working (non-holiday) weekdays. So that is roughly 260 days annually.
- On a regular operating day, this doctors says he usually has 1 diet Dr. Pepper
- However, I do approximately 100 longer flap surgeries each year (conservative estimate). This doctor usually helps in these cases. He states that on “flap days” he usually has 2 diet Dr. Peppers
- Therefore, in a year, he consumes about 360 diet Dr. Peppers from our vending machine [(100 bottles *2 for flap days) + (260-100 bottles on non-flap days)].
We have established our base line rate.
At $2.25 a pop, he is sending $810 annually on diet Dr. Pepper in the hospital (we are not even including his home consumption, which I have on good authority from his wife is similar!).
But that is not the whole story!
Making that diet Dr. Pepper money work for you
Let’s say that instead of spending that $810 each year on vending machine pop, that this doctor invested it in low cost, broadly diversified index funds.
And let’s make the following assumptions:
- He invests the $810 each year into the same fund
- Average returns are 5% (to account for taxes, fees, and inflation)
- He invests it for 25 years during his working career after which he uses it to help fund his retirement
Using my free FIRE calculator download, we can see that under these conditions, he would end up with $38,659.
That’s a pretty nice chuck of change. And for reference, simply saving that $810 annually for 25 years would result in $20,250.
So, is diet Dr. Pepper making this doctor poor?
However, we do need to discuss if these bubbly expenditures are being made intentionally. Because that is the real marker in the determination of this as a good or bad buying decision.
An Updated Formula to Practice Intentional Spending for Doctors
But the question is, to what price are we comparing the subsequent joy of the purchase? The $2.25 purchase price? The $810 annual expenditure? Or the $38,659 future value if invested?
That’s a tough philosophical questions.
However, I would argue that he is making the purchases intentionally. I mean, you should see his face when he gets that diet Dr. Pepper.
But even if were are calling these purchases intentional…
Why is he still buying them from the vending machine?!?!
A quick Google search will show that one can buy a 6 pack of equivalent diet Dr. Pepper bottles for $4.18 at Walmart. That comes out to about $0.70 per bottle.
Compared to $2.25 from the vending machine! That’s a $1.55 mark up making a price increase of 321%!
His yearly expenses would decreased from $810 to $252 by making this simple change. That’s a 69% savings! If he invested those $558 savings annually using the same assumptions above, he would end up with over $26,000!
So, how do we wrap this up?
I have a few conclusions:
- Diet Dr. Pepper has a weird hold over an inordinate amount of doctors
- Vending machine prices are bonkers
- No, diet Dr. Pepper isn’t making this (or probably any) doctor poor
- As high income earners, we are lucky to have the ability to buy such “everyday extravagances” intentionally
- But seriously, vending machine prices are insane
- If you are drinking this much diet Dr. Pepper at the hospital, please just buy it bulk and bring it in!
But wait! Is still a way to turn this liability into an asset?!
He could buy the vending machine. Then at least when he grabs a refreshing DDP, he makes some money back on the sale. Plus whatever other people buy.
Now that’s not a bad idea…
It’s all about understanding the important difference between assets and liabilities and the rules of the game. Then you can start playing!
And if you are looking for some other great posts, here they are!
- How Much Is Enough Retirement Savings?
- Debunking 7 Financial Myths Overheard in the Doctors’ Lounge
- Converting a Healthy Money Mindset into Wealth Building Action
What do you think? Do you love diet Dr. Pepper? What is it about it that you love? Why does it always come diet but others like Sprite never do? Let us know in the comments below!