Financial Independence

Img credit: James M, wikimedia commons

I grew up in a financially aware environment. My mother taught me about frugality, savings, and long-term goals. My father taught me about low-cost investments, buying the whole market, and avoiding emotion-based decisions. I also believed that credit cards were inherently disastrous and that all debt was evil. I no longer believe the last two, because I've fallen in with the FI/RE crowd, who aren't as anti-debt and who feel free to use credit cards, especially for travel hacking.

Briefly, FI/RE (financial independence/retire early) is a combination of two choices involving discipline for freedom. People who want to be financially independent invest enough capital to live off of non-earned income. This allows them to retire early, "coast" with a job they enjoy, pursue more risky endeavors with security (e.g. start a business or non-profit), travel the world, or just continue to build wealth. 

I've already applied some good habits to my student loan debts. I went to a state medical school, where I lived frugally and only took out the maximum loans my senior year. The other years, I took only what I budgeted and I returned any extra principal, rather than take it on and pay it back with interest. By this June, I will have paid off--during residency--all of my college loans. (As Dave Ramsey advises, I paid the smallest one first. There really is a psychological benefit to that method when you're new to paying back debt.) By next June, I will have paid off $12,000 of private medical school debt. I'll have $125,000 of federal student loan debt left, which I'll hopefully pay off in 5 or 10 years. I'm saving enough to avoid change in my retirement savings as I approach a $7,000 interview season and a $2,000 board exam cost and (maybe) relocation cost. As soon as I pay off my senior year of TAC, I'm going to max out a Roth IRA. I plan to balance investing with slow repayment of these federal loans.

Img credit: James Petts, wikimedia commons

You can rapidly acquire a bunch of knowledge with a day or two in the FI/RE community, especially if you have an elemental financial vocabulary, like my parents gave me. I learned a lot about tax sheltering by maxing out 403b/401k accounts, traditional IRAs, Roth IRAs, and HSAs. I learned the names of the funds that my dad taught me to look for. And as I approach interview season, I want to travel hack! (This requires the use of credit cards but does not include plans for credit card debt. Sorry not sorry, Dave.)

Unfortunately I think FI/RE has a lot of advantages for intentionally single people and childfree couples. Having children is a big challenge that this community discusses, although it's positive (see Mr. 1500, Go Curry Cracker, ChooseFI). I am reminded of St. Gianna Molla's quote, "we were too happy," and I'm aware of the dignity of work. Although a lot of financially independent people start businesses, write, and give back, others really use their funds selfishly.

I would like to use the principles of FI although I might not retire early. A high savings rate comes naturally to me as a consecrated person, and my income will be relatively significant. I can see using the principles of FI two ways: one, I can spend a lot of money in the first ten years of my career (starting a practice offering a lot of in-office gynecology) and start at 40 with a 90% savings rate to catch up to a modest retirement. Alternatively (and I like this better), I can max out savings early and become financially independent by 50, then ask very little in earned income, allowing me to subsidize low-income patient populations. I love the ideas of tax sheltering to avoid paying for chimeric research, abortion, and contraception. I love the idea of freedom to avoid traditional healthcare insurance and subsidizing contraception, participating instead in healthcare sharing ministries (and perhaps putting in a little more than I take out, since I'm not having babies) and paying ACA fees.

More to come. My finances have not been very exciting during the lifetime of this blog. Basically, college was "Acquire Debt and Work a Few Nominal Jobs for Med School Resume." Medical school was "Exclusively Acquire Debt." Now I'm repaying debt aggressively and I'm going to start investing more formally. I'm in a very important period for my future financial life: I'm beginning to acquire enough capital to start investing, I'm moving my net worth to zero, and I'm preparing to (possibly) start a practice. Expect to see more financial posts in the future!