Why do physicians fail to focus on their personal finances? [PODCAST]

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“We need to crawl before we walk and walk before we run. The first step is to establish your why. Why do you want the financial freedom to practice medicine because you want to, the way you want to instead of because you have to? Without a why, even achieving financial freedom can be an empty victory.

After this, start your financial education. Pick a personal finance book and read 10 pages a day. Read one finance blog post each day. Small efforts will lead to big rewards.

After this, you are ready to develop your own written financial plan and start your financial well-being journey!”

Jordan Frey is a plastic surgeon and can be reached at The Prudent Plastic Surgeon and on Twitter @jordanfreymd.

He shares his story and discusses his KevinMD article, “Why do physicians fail to focus on their personal finances?”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show we have Jordan Frey. He’s a plastic surgeon, and he wrote the KevinMD article “Why do physicians fail to focus on their personal finances?” Jordan, welcome to the show.

Jordan Frey: Yeah, thanks for having me, Kevin. I’m excited to be here.

Kevin Pho: So we’ll get into your article in a little bit, but first off, can you share your story and journey to where you are today?

Jordan Frey: Yeah. So, as you mentioned, I’m a plastic surgeon based out of Buffalo, New York. I just finished my training, which was in New York City, in July of 2020, so about seven, eight months ago now. My story, beyond kind of clinically what I do, came out of how I found myself at the end of my training, which was experiencing some burnout, which we’re recognizing is more and more common now. But a lot of that, I realized, was because of, I guess I would say, my lack of financial well-being.

I was at the end of my training, where I’d focused solely on clinical stuff, becoming the best doctor I could. I was like half a million dollars in debt. I was about to start a job. Everyone was telling me, “Oh, you’re going to be fine. You’re going to make all this money,” all this stuff. I had like a zero percent savings rate, a wife, kids, no insurances, nothing in place, and I just felt totally like I was not going to be fine despite becoming a high-earning plastic surgeon.

And so I ended up, with my wife, rededicating myself to financial literacy, and I realized that as my financial well-being improved, I became a better doctor. And I was still in my fellowship at this point, so I didn’t make a cent more. I didn’t do anything more except learn and begin to plan and figure out how we could set our financial foundation. And I was so surprised about that. From that, I ended up starting blogging and writing and talking a lot about this with other people, because I realized just how big a part financial well-being is of our overall well-being, but how often it’s neglected by physicians. So that’s a big interest of mine outside of my clinical practice.

Kevin Pho: So of course we’re going to dive into that in a little bit, but just let me first ask: During your medical school training and residency, how much financial education did you get, if at all?

Jordan Frey: Definitely nothing formal. Sort of informal, which I think is relatively common. During our residency, some, and I’ll put it in air quotes here, “financial advisors” or insurance people would come in and talk, and I realize now that the advice they were giving was not so sound and they were more so commissioned salespeople. So that was one aspect. And then there’s, of course, the advice you get from your mentors, sort of in the OR. There’d be our attendings talking to us about how they invest their money, or what we need to do, or how we need to format our contracts, and things like that, which is all well-intentioned, and some of it is very good, and some of it, in retrospect, was not such great advice. But nothing formalized, for sure.

Kevin Pho: So just to summarize that, the financial education that you got was from people who earn commissions, and informally in the operating room, and that advice itself was sometimes suspect. Is that fair to say?

Jordan Frey: Yeah, fair to say. Hit or miss, to put it gently.

Kevin Pho: All right. So let’s get into that KevinMD article, and it’s titled “Why do physicians fail to focus on their personal finances?” And actually, before you get into the article, talk about that wake-up call, or that light bulb going on, that made you realize that you really needed to take care of your finances. Talk about that, and then certainly get into your article after.

Jordan Frey: Yeah, I think it was just, for so long, it was people, my wife or my parents or friends or whatever, where they’d just be saying, “Oh, you’re about to become an attending plastic surgeon. You’re going to be just fine. You’re going to be able to get this huge house, this nice car. You’re going to be able to do all these things.” It’s the sort of picture in someone’s mind when they imagine a physician just in general, and then a plastic surgeon on top of that. People have a certain image in their mind, and that’s the same for plastic surgeons as well, and that’s the image that I had. And I just did not see my life lining up with that, but also I didn’t really want my life to line up with that. I’m just not that person.

And so I had this sort of disconnect in my mind that was leading, again, to this burnout and this sort of overall, I don’t know what you’d call it, but just discontent, because I felt I had to live up to this image that I couldn’t live up to, because of how poor a position my finances were in, from me being just negligent of it and not understanding it and ignoring it. But also, I didn’t even really want to live up to that image. It didn’t jive necessarily with what made me happy, but I was trying to live up to it just because that’s kind of what I thought you had to do.

And so then, I can’t pinpoint necessarily one specific moment, but over a long time of introspection, I was just realizing, “Hey, this isn’t what I have to do. This isn’t the way. I don’t have to.” Cars are not super important to me, so I was planning to budget out and put on loan this really expensive luxury car. And so I had to go and think to myself and say, “Well, why the heck am I doing that? It’s not even something that’s bringing me joy.” I ended up buying a used 2011 Toyota Avalon. There are probably not a ton of plastic surgeons out there driving that, but I realized I don’t really care about that, and I can use my money in a much better way to bring joy to our lives currently while also securing our financial future. So it’s kind of a long-winded answer there.

Kevin Pho: Now, what about your peers during training? How much interest in financial literacy was there among your peers?

Jordan Frey: It was outwardly none, and I say that in the sense that throughout my training, it wasn’t something that was talked about very frequently, certainly not on a very serious or, I don’t know, educated level. There was a lot of kind of that, and in contrast, there was a lot of emphasis on that consumerism, or that physician image. I always used to laugh. We had weekly conferences, like I’m sure every other residency program in the country, and we were probably the only one where every resident was trying to dress in the most expensive suits, with expensive watches. At most other ones, you just show up in scrubs, but because we were to be plastic surgeons in New York, it was very different.

But then, once I started learning about this, and I wasn’t blogging about it yet, but it was something that people knew I had begun to take an interest in, then all of a sudden residents or even attendings were coming up to me on the side and saying, “Hey, Jordan, what do you think about this?” or “This is something I’ve been wondering about,” or “Am I investing the right way?” And that’s when I realized there is this sort of underlying current of interest in it.

But as physicians, we’re so used to being right that we don’t like to be wrong, and we feel embarrassed when we have to admit we don’t know something. And finances are something we never learn about, so how would we know anything about it? But still, just because there’s that perception, or that, I don’t know, attitude among physicians, it can be difficult to bring that up and to open yourself up to learning about it, which often starts with just facing our mistakes head-on. That was definitely the most difficult thing in my path: looking at everything I did wrong and really summing up my financial situation, which was very difficult to look at at first. But then that allowed me to move forward. So I think those are a lot of the roadblocks.

Kevin Pho: Now, what would you say are some of the biggest mistakes that you see physicians make financially?

Jordan Frey: Yeah, I can talk about myself, because I made just about all of them, I’m sure. A lot. But number one, we don’t pay off debt. We look at debt as just a way of life, or a means to an end. In certain respects, it can be that, but I had half a million dollars of student loans. I paid for college and medical school completely with loans. At the end of my residency, I ended up looking retrospectively and realizing that for every dollar that I did not pay off as debt my intern year, in a seven-year training period, that decreased my net worth by $8 by the end of my training period. And so now I have a plan to pay that off aggressively. And I think I see too many people as attendings stretching that out over 25, 30 years, not realizing that if you just pay it off quicker, your cash flow increases immensely, and you’re just much more free, within your practice, to practice medicine on your own terms, which is a really important thing, and I think it would change the future of health care in the country. So that’s a big one.

And I mean, this sounds kind of obvious, but even bigger than that is probably that we just don’t even pay attention to it. It’s so easy for us to just say, “Oh, we’ll just get a money person. Just have someone else manage our finances.” And unfortunately, most of the time, most people are not doing as good a job as we could be doing. For instance, I’ll just use as a quick example investing in the stock market. We know, because there have been academic studies, that 80 percent of the people who try to actively manage their stock investing do worse than people who just passively invest, which means just putting money in an index fund, letting it sit there, and once a year just rebalancing your percentages. Super easy. Any physician that got through medical school and residency can do that. But we just don’t spend that time to get that initial knowledge, which will just allow us to, again, set our financial future, increase our financial well-being, become financially free, and practice medicine on our own terms, which is a better way to practice medicine.

Kevin Pho: How long did it take you before you became confident in managing your own money?

Jordan Frey: Yeah, it took me about three months, I would say. I started in April of 2020, when this sort of, whatever you want to call it, enlightening happened, and my wife and I read a few books together. We started reading some blogs. At that point, we did have a financial advisor who was managing a very small amount of money that we had as our investments, and so we stepped away from him. We began managing all our own money. Now, obviously, we have a lot more money than we manage in terms of our investments, and we’re paying off a lot of debt, as I mentioned, and we started investing in rental real estate properties, and we do that all ourselves.

Kevin Pho: And what kind of resources and books did you use?

Jordan Frey: Yeah, there are so many great ones. So I basically decided to go about this in a simple way, and I said, “I’m going to read 10 pages of a finance book every day, and I’m going to read one blog post a day,” because I was still in training. And I still do that today. I’m a full-time surgeon. Some of the books I started out with were “The Millionaire Next Door,” the “Rich Dad Poor Dad” book, “The White Coat Investor” book, and “The Coffeehouse Investor.” Those are great books. And then one that’s a little more in-depth, sort of like if you read this book, you almost don’t need to read another one, is “The Bogleheads’ Guide to Investing.” And blogs that I started reading were White Coat Investor, Physician on FIRE, Semi-Retired MD, and Physician Philosopher. There are other ones I’m probably forgetting. There’s a ton of great ones out there, and they all inspired me in starting what I do, and I think those are all amazing resources.

Kevin Pho: We’re talking to Jordan Frey. He’s a plastic surgeon, and he wrote the KevinMD article “Why do physicians fail to focus on their personal finances?” Jordan, one thing you said earlier was that being more financially literate made you a better physician. What did you mean by that?

Jordan Frey: It was amazing, because it’s not something that I expected, and I can remember the moment I realized it. But throughout my training, and I’ve sort of seen this in others, both in training and attending physicians, for sure, when you have that financial stress, and I mean, so many doctors are living paycheck to paycheck despite being high-income earners, when you have that stress, the way you practice changes. I’ve talked to a friend of mine who I’ve met through this journey, and he admitted to, because of financial stressors in his life, rushing through patient visits, trying to see more patients, meet quotas, increase RVUs. And once his financial situation changed, because of how he began managing his financial well-being, he didn’t have to do that. So that’s one extreme example.

But even in mine, like I said, I was just very stressed about what my financial picture was going to look like: how we were going to deal with moving, with getting a house, with getting new cars, with putting our kids through school, how I was going to manage all of that despite making a high income, because of my loan debt that I had, that we had a zero percent savings rate, and that we were primed, if we didn’t make a change, to just have lifestyle creep and overconsumerism rule our life. Once those things got managed, and I just had a plan, and I knew, “Hey, we have this plan that we actually wrote down, and if we follow it, we’re going to reach all of our financial goals,” then that just totally unloaded that burden.

Again, even though I wasn’t making a cent more at the time, I was still a resident, or still a fellow, excuse me, just knowing that I had that plan, that treasure map, I was able to focus so much more just in the moment of what I was doing all the time. That helps outside of medicine but also helps immensely within the realm of medicine, because when we’re practicing, we all know those worries from outside our life, they don’t go anywhere, and a lot of times they can just get magnified because we’re in high-pressure situations, in high-stress situations. So it really truly did have that effect, and that’s kind of why I realized how important it was and started thinking how much of a change in my life, and how much of a change in medicine overall, there would be if physicians were practicing, again, on their own terms as financially free doctors. It would be huge.

Kevin Pho: And my final question: What’s your take-home message that you want to leave with the KevinMD audience?

Jordan Frey: My take-home message is that worrying about money as a physician is not a bad or dirty thing, which is something that I thought up until less than a year ago, and that managing our financial well-being will make us better physicians.

Kevin Pho: And how can people reach you?

Jordan Frey: Yeah, you can reach me anytime. My website is prudentplasticsurgeon.com. You can contact me through there, or email is [email protected], or I’m on all social media as jordanfreymd, and it’s F-R-E-Y.

Kevin Pho: Jordan, thank you so much for sharing your time and insight, and thanks again for being on the show.

Jordan Frey: Yeah, thanks, Kevin, for everything you’re doing, and for having me.

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