Earning the Bare Minimum

From the (the free or inexpensive) The Almanack of Naval Ravikant: A Guide to Wealth and Happiness:

If you look at even doctors who get rich (like really rich), it’s because they open a business. They open a private practice. The private practice builds a brand, and the brand attracts people. Or they build some kind of a medical device, a procedure, or a process with an intellectual property. Essentially, you’re working for somebody else, and that person is taking on the risk and has the accountability, the intellectual property, and the brand. They’re not going to pay you enough. They’re going to pay you the bare minimum they have to, to get you to do their job. That can be a high bare minimum, but it’s still not going to be true wealth where you’re retired but still earning.

The problem with employment: “They’re going to pay you the bare minimum they have to, to get you to do their job.”

It’s always in the interest of the suits to pay you as little as they can get away with. It’s always in the interest of the hospital, the university, or the company to either pay you less, push you to produce more, or both. It certainly seems to be a very hard temptation to resist at the moment.

Speaking of retirement:

What is your definition of retirement? Retirement is when you stop sacrificing today for an imaginary tomorrow. When today is complete, in and of itself, you’re retired.

…one way is to have so much money saved that your passive income (without you lifting a finger) covers your burn rate. A second is you just drive your burn rate down to zero—you become a monk. A third is you’re doing something you love. You enjoy it so much, it’s not about the money. So there are multiple ways to retirement.

but…

Lusting for money is bad for us because it is a bottomless pit. It will always occupy your mind. If you love money, and you make it, there’s never enough. There is never enough because the desire is turned on and doesn’t turn off at some number. It’s a fallacy to think it turns off at some number.

When it comes to helping people turn their jobs from just the income-generation game or the I-need-a-passive-income-side-hustle game, we need to move more industries (and here I’m thinking about healthcare) into more of a cooperative venture and less of a competition.

My co-founder Nivi said, “In a long-term game, it seems that everybody is making each other rich. And in a short-term game, it seems like everybody is making themselves rich.”

I think that is a brilliant formulation. In a long-term game, it’s positive sum. We’re all baking the pie together. We’re trying to make it as big as possible. And in a short-term game, we’re cutting up the pie.

The scarcity mindset sours the calling.

WCI Course Sale +CME

The folks at the White Coat Investor are doing one of their rare course-wide sales. Code BIRTHDAY2022 is good for 20% off any course from June 28th-July 11th.

Also worth mentioning: their flagship course, Fire Your Financial Advisor, was totally revamped last year, and there is a now CME-eligible version for those with education funds to burn at the transition of the new academic year.

The COVID-related PSLF boon continues

You probably know by now that the pandemic student loan payment pause was officially extended through Aug 31, 2022. Given midterm elections in November, I suspect there will be one more round of good news announced this summer and payments won’t actually start until–for example–January 1.

So that 0% rate continues to save people lots of money, and those $0 payments still count toward loan forgiveness including PSLF. There is probably no group this helps more than attending physicians.

But for anyone with rising incomes and especially more recent attendings, the additional pause extension news is likely even better than you’d think. From the recent announcement:

You won’t be required to recertify before payments restart, and the earliest you could be required to recertify is March 2023.

You may still see a recertification date that is earlier than March 2023 on your account Aid Summary. We are working to get those updated, and we thank you for your patience. If your recertification date falls between now and March 2023, it will be pushed out by one year. For example, if your account says your recertification date is Dec. 1, 2022, that date will be pushed out to Dec. 1, 2023.

For many borrowers, the next recertification deadline will be pushed even further into the future, potentially way past the point when student loan payments start again. Even if payments begin in August (or January), a lot of doctors will enjoy months if not almost a year of payments based on their last recertification from years ago, which means that a relatively recent graduate may enjoy trainee-sized payments for that much longer, and some residents may enjoy $0 payments for a while even after repayment restarts.

So a lot of folks–especially a lot of attending physicians–will get to benefit from significantly suppressed payments after the $0 period ends, likely resulting in thousands of dollars of additional eventual PSLF savings.

Marriage, Medicine, and Money (a free summit)

My internet friend Brent Lacey of The Scope of Practice podcast is putting on the free Marriage and Money, M.D. Summit 2021 next week November 15-17 (Monday-Wednesday).

It’s even eligible for a whopping 20 hours of CME.

This is one of those entirely free Facebook-based live online summits, and it includes hours and hours of content about marriage and finance from a bunch of physician and physician-spouse speakers. The private Facebook group is already live.

This is also one of those events where you can upgrade to a VIP pass for lifetime access, extra content, and a host of other perks. That cost before the summit starts is $99, $149 when the conference starts, and then $249 after it ends. Since it’s a CME event, you can use your CME funds to upgrade if you so desire.

(And that, dear reader–in case you missed it–would be the typical affiliate part where if you pay for an upgrade you also conveniently support this site.)

Functional Embezzlement

From Charlie Munger’s Herb Kay Memorial Lecture, “Academic Economics: Strengths and Weaknesses, after Considering Interdisciplinary Needs” (University of California at Santa Barbara, 2003):

…I asked the question “Is there a functional equivalent of embezzlement?” I came up with a lot of wonderful affirmative answers. Some were in investment management. After all, I’m near investment management. I considered the billions of dollars totally wasted in the course of investing common stock portfolios for American owners. As long as the market keeps going up, the guy who’s wasting all this money doesn’t feel it, because he’s looking at these steadily rising values. And to the guy who is getting the money for investment advice, the money looks like well-earned income, when he’s really selling detriment for money, surely the functional equivalent of undisclosed embezzlement. You can see why I don’t get invited to many lectures.

Fee-drag is insidious and nearly invisible to the human mind at a glance. As COVID-19 demonstrated, we are not wired to intuitively understand compound growth. When you see your accounts growing, you are happy. Even if you see your fees, they may seem reasonable on a snapshot basis.

What you don’t see, of course, is the effect of those fees year after year. Every loss is another piece that can’t undergo the magic of compounding in your favor. As the saying goes, “it’s time in the market, not timing the market.”

If you ever wonder how nice people can practice in an Assets Under Management model, the same problem works in both directions. Your money is still going up, so they feel they are providing a valuable service, especially in holding you to a plan and preventing you from otherwise hamstringing yourself (like, say, risking your nest egg on chasing meme stocks on Reddit or buying start-up cryptocurrencies).

Psychologically, we’re very good at cognitive dissonance: of not seeing what is inconvenient for us. Those professionals would rather see the “value” they create in terms of investment growth and the end-result financial security and not the excessive value removed from larger investors (and the even larger wealth those clients might otherwise enjoy).