Just do a quick search and you will see tons of blogs, Physician bloggers, Grant Cardone all talking about being financially independent.
Even our blog has the tagline “Enjoy Your Journey to Financial Freedom”…
So, is Financial Independence something we can actually achieve or is this something that is a used car salesman type gimmick. I would argue that it can be achieved but not in the way it is marketed.
True financial independence requires a complete resolution of expenses. In other words, to be COMPLETELY financially independent you need to have no expenses.
Otherwise you are dependent on income from some source whether it is your w-2 income, stocks or real estate.
How can you achieve complete independence?
Well, one way is to buy a self-sustaining farm and work the land. Use your savings to pay cash for the land. Purchase land with water; a well and preferably a running river or stream. Purchase livestock, cows for milk, chickens for eggs, equipment to assist with planting and harvesting and work the land. You can install solar for power if you want or just use fire. This would be as close to living off the grid and independent as one could get minus living in the backcountry as a nomad.
Now even with this farm scenario you may not reach complete financial independence because you will have property taxes… But maybe you can leave a nest egg large enough to cover that expense. But anyways we are off topic now…
The farm house is a very real dream for some….
But I would argue that this is not what most Physicians are envisioning when they consider financial independence
Physicians in general consider themselves financially independent when another income source, other than their physician income, covers their expenses…
I would argue that this is a fallacy.
In this scenario, you have simply replaced your Physician salary with another income source. If you quit your Physician practice then you are not actually financially independent… You are simply dependent on a different form of income… ie real estate, stocks, a blog, a course, etc. Now that is an OK plan if it gives you more personal time but it does not provide stability or independence.
Covid brought this scenario to the forefront.
If you were completely dependent on rental income from Long term rentals during the shutdown you could have been financially strained without reserves.
If you were dependent on Short-term rentals in markets that shut down then you were in trouble as well.
Physicians with one source of w-2,1099 or partnership income felt the financial stress of the lock downs too.
The same theme runs through each of these scenarios…
You can’t be financially independent and stable with one source of income…
That is why all these property gurus on HGTV etc have property and a course, and a show and a book and so on…
Diversify your income sources and don’t let the temptation of new income pull you out of a lifetime career until you are ready and diversified enough to handle things when they get bad.
Things always get bad at some point in real estate and the stock market. Medicine is forever…
I am not saying that a FIRE goal is bad or wrong I am just pointing out that it might not be what we all initially think. If that is your goal make sure you have a diverse plan and you have knocked your expenses down.
Also, watch out for arrival fallacy by sacrificing too much of today for that goal… You already did that during your pursuit of Medicine. I don’t regret that decision but I am now more protective of my time…
Lauren and I invest in real estate and self-manage which does consume some personal time but we enjoy the process. We are working together to achieve a shared goal outside of Medicine and having fun. (Maybe not every second, but 90% of the time)
Take a moment to outline a goal that allows you to Enjoy your Journey to Financial Freedom and shoot for the stars. If you set a goal you will achieve it.
Once you do…. think long and hard about whether leaving a career in Medicine is a great idea. Especially, if after owning a few successful rental properties. Is that income as stable as your Physician income? Is the work as satisfying? Real Estate may be exciting, fun and less stressful than Medicine but in the long term will it continue to provide fulfillment? These are the questions to ask before leaving Medicine.
Obviously, I am biased because I still find Medicine to be personally gratifying…
But besides that benefit, Medicine provides a massive form of stable income, even in the world of Covid.
Does it not make sense to maintain that option, even at decreased hours?
If you are reaching the sunset stage of your career, then sure maybe it is worth leaving Medicine a few years early…
But for the younger generation is it a risky maneuver?
Some of us middle career Physicians lived through the 2008 crash and saw that Real Estate does not always go up… Neither does the stock market.
Yes, Covid was hard on Medicine but a career in Medicine is still one the most stable and respected callings in the world.
What I am trying to express in this post is that the goal of financial independence is a worthy goal but so is Medicine.
Almost, all of you will achieve financial independence without real estate by simply practicing good Medicine and funding your retirement.
Many of you will achieve this very quickly through real estate.
The question is how fast do want to reach independence?
Just remember that replacing your Physician salary with another income does not mean financial independence… it just means dependence on another source of income.
Consider Diversifying, Decreasing expenses, and continuing to Practice Medicine to achieve the most stable financial state.
Enjoy your Journey to Financial Freedom