My Money Mistakes

Sharing is caring!

Money Mistakes; Adventures of a tax-ignorant, overconfident, fickle financial fool.

Despite what some of my audience thinks, I don’t have all the answers. Nor did I do everything right. I have made dozens of blunders along the way. Here I’m airing some dirty laundry and revealing some of my money mistakes.

Debt/Credit/Over-leveraged

• I used credit cards irresponsibly.
• Borrowed an above-average amount of student debt.
• Went into over $500K of debt.
• In residency I ran up credit card debt. It was so bad that I needed a credit card counseling service to help structure my debt.
• My credit card misbehavior trashed my credit. That ruined my credit rating for many years due to the “charge-offs” on my report. A couldn’t get a credit card, car loan, or mortgage for many years.
• Took out a car loan.

Inaction

I created a business model for a profitable physician finance business. But I failed to put it in place. I started a new medical clinic for my employer instead. This was before Jim Dahle created his White Coat Investor Empire.

Delay

• Took a gap year after college. That year of minimum-wage work delayed the start of my six-figure income later.
• I deferred my MBA. That decision postponed the start of my better business and investing decisions.

False Positive

I learned this term from Matt Manero. It implies letting your foot off the gas pedal too soon.

• I cut back to part-time work at age 50. I decreased my hours even further at age 55. Each change required pay cuts.
• I left a private practice with top 1% income to join academia. This required and initial 80% pay cut that later leveled out to about a 60% cut. This came with a loss of investment and equity ownership.
• Stopped my lucrative medico-legal work.
• Dropped a spasticity clinic directorship.
• Dropped multiple medical directorships.
• Cut back to even fewer hours.
• Didn’t use free time or days off to make money.
• Spent money helping relatives.
• Paid rent for my adult brother for two years.
• Set up REIT to pay my father instead of me or reinvest.
• Paid living expenses for my aging parent.
• Cut out high-paying work-comp.

Inadequate focus on boosting income.

• I was accepted into an interventional fellowship after residency, but I declined it. That would have boosted my annual income for the following two decades. After a few years, the country’s most competitive fellowship program accepted me. Again, I declined. This angered the fellowship director, burned bridges, and reduced my future earning opportunities.
• Time teaching and writing.
• Haven’t my monetized blog.
• Declined profitable private practice in Chicago.
• Encouraged spouse to stay home.
• Didn’t lease equipment to employer.

Over-insured

• I continued life and disability insurance long past when I reached financial independence. Even the insurance salesman recommended I drop the coverage.
• Continued paying for many disability policies after reaching FI.
• Continued to max life insurance policies after FI.

Under-insured

I didn’t buy life insurance when I was healthy in my early 30s. This put my family’s finances in jeopardy. Especially since I became uninsurable after being diagnosed with cancer at age 34.

Too Risk-Averse

• I have owned a large portion of bonds in my portfolio my entire investing career. I owned conservative government bonds in the 1980’s and 1990’s when I was young and stocks were booming.
• I have invested too conservatively. I would be much richer now if I had owned more equity than bonds, especially 2009-2022 when I invested 40% – 50% in bonds.
• Too much cash drag.

Poor Timing

• I sold all my gold and precious metals in 2001. That was immediately before 9/11/2001 after which gold prices began their upward ascent.
• I sold stocks after market declines in 2008. I sold individual stocks. I also reduced my allocation to stocks at exactly the wrong time. In 2009 my business school economics professor recommended I buy stocks immediately. I ignored his excellent advice.
• Avoided Microsoft, Amazon, Tesla.
• Bought real estate in 2007.
• Listed house for sale in 2009.
• Sold cash-flow positive rental houses.
• Bought bitcoin late.
• Didn’t buy commodities.
• Sold stocks at the wrong time and then paid a capital gain.

Over-simplified

Didn’t buy I-bonds for family members.

Under-leveraged

I paid off all debt at the first opportunity, even my mortgage, and real estate debt. I would have many more millions with even a tiny amount of prudent leverage.

Overconfident

• I bought and sold countless individual stocks over the years. Some went bankrupt. I sold some at a loss. Others returned a profit which lagged their low-cost index.
• Stopped buying I-bonds.
• Declined Bitcoin purchase.
• Signed worse contracts.
• Agreed to yet another pay cut.
• Didn’t insist on raise, bonus, or even COLA.
• Owned equipment but allowed employers to bill facility fee.
• Accepted all payers for decades.

Emotional Investing

• I was fearful and anxious in the market crashes of ‘87 ‘00, ’08, ’20. I let my emotions get out of control. It made me grumpy, anxious, and fearful. I acted on emotions and tried to time the market at the wrong time.
• I avoided real estate in 2009. I experienced declines in value and was afraid of further losses.

Overly Complicated

I created complicated and suboptimal portfolios and asset allocation. They satisfied my complex theoretical thinking but prevented me from simple, effective investing.

Too Fickle

• I have not been steadfast in my investing. Successful investors like Warren Buffett Jack Bogle exhibit that trait in spades. Instead, I moved in and out of funds.
• Not followed plan.
• Change investments after reading almost every finance book.
• Changed asset allocation often.

Poor Planning/Undisciplined

• Lacked a written plan.
• Never had a budget.
• Don’t track expenses.
• Didn’t apply for Medicaid waiver.
• Used too many financial advisors.
• Didn’t get and follow enough solid professional advice.

Naive

Chose low-paying specialty.

Tax-Ignorant

• Bonds in Taxable accounts.
• Stocks in retirement accounts.
• Didn’t take advantage of TLH.
• Used SEP-IRA then needed to convert to Roth IRA.
• Avoided solo-401K.

Over-Spent

• Bought a new car.
• Pay over $80k for school for daughter.

Despite these money mistakes, I reached Financial Freedom in my Forties. I’m hoping that my blunders give you hope. You don’t need to be all-knowing or perfect to reach financial success through a medical career. Make a few key choices and have faith that you will succeed.

Sharing is caring!