# I Have Every Dollar I’ve Earned In My 10 Year Career

In a society where saving 10% of your salary is considered good money management, how do you end up with more than 100% of your take-home pay after a 10 year career? Here’s how one doctor managed this remarkable feat.

It’s true. I’ve got every last dollar. And then some.

Like most who write in the personal finance realm, I spend a fair amount of time contemplating money. As I’ve watched our net worth rise in recent years, I couldn’t help but wonder how much money I’ve taken home in my ten year career as a physician, and how that number compares to our current net worth.

How much would we be worth have if we still had every after-tax dollar earned over the the last ten years?

Less than we have today.

That’s right. As the title suggested, our net worth is slightly higher today than the sum of the paychecks I’ve brought home.

How is this possible? Inheritance? Nope. Lottery? No, sir. Lucky stock picks? No way.

We did it by living well, but well within our means, investing continually through the great recession and gradual rebound, and generally being smart with our money.

I use the term “our” because although we have done this with one income, I am married, and my lovely wife and I are partners in all things, including our pooled nest egg.

While she has contributed little in terms of income, she contributes immensely to our household, and has done the lion’s share of all the work that goes into raising two amazing young boys.

When I crunched the numbers and came to the startling conclusion that I could account for every dollar earned somewhere in my net worth calculation, I knew I had a story to tell. It might be less remarkable if we were talking about a thirty-year career in which those first dollars earned had decades of growth due to compound interest.

But this happened in a little more than ten years.

## The Calculations

Before I dive into how this is possible, I’d first like to share my calculations.

I don’t have every pay stub, and even if I did, I don’t have the time or patience to add them all up. That wouldn’t give the whole picture anyway, since I’ve been paid in different ways with different jobs. I worked as a locum tenens provider and had an S corporation for a number of years. More recently, I have been an employee with a W-2.

For the first eight months of 2016, I used a year-to-date pay stub to figure my take-home pay. To come up with a fair measure of take-home pay for previous years, I turned to my tax returns. I have every 1040 from 2006 (the year I finished residency) to 2015.

Pre-tax income was calculated using Box 22, Total Income.

In 10 years and 8 months, as of Labor Day 2016, my total income has been \$4,301,068. Yes, that’s a lot of income! On average, about \$403,000 per year.

## But It Didn’t Happen Overnight

It took 12 years of education and training to be in the position to make that kind of money as an anesthesiologist.

I’ve worked long hours, given up hundreds of weekends and endured many sleepless nights. I entered a high paying medical specialty, and have wisely taken advantage of geographic arbitrage to earn even more than many of my colleagues who have made every sacrifice that I have.

To calculate taxes paid, I added Box 61, Total Tax, to the Tax Paid from Schedule A, which includes state income tax and real estate taxes paid.

In 10 years and 8 months, I have paid \$1,616,678 in taxes! Yes, that’s a lot of taxes paid!

I do every reasonable thing I can to minimize taxes, but when you are a high wage earner, you simply cannot avoid paying a “fair share” of income tax.

To estimate my take home pay, I subtracted the tax paid from total income.

In 10 years and 8 months, based on the calculations above, my after-tax pay has been \$2,683,390, or about \$251,600 per year.

## How much of that \$2,683,390 is left?

\$2,704,519. Our net worth is \$21,129 more than my after-tax earnings.

While I know it to be true, it still amazes me to see it on the screen in front of me.

## Our Net Worth Calculation

Net worth calculations can be tricky business, but I keep it relatively simple. I add the value of all of our investments including 529 accounts, real estate consisting of a primary and secondary home, and cash.

The only debt we have is a tiny bit of short-term credit card debt, which I count against our cash holdings. Yes, we always pay credit cards in full.

Eventually, the 529 accounts won’t be ours, but I count them because I could access that money with a 10% penalty, and until it pays for tuition, it’s still mine.

What is that “Other” category? I’m a believer in having up to 5% of your money invested in any fun way you choose. For me, beer is fun. So I’ve got a small ownership share in a microbrewery, and have loaned money to another startup brewery.

I get to act like an owner, learn a bit about the business side, and I once participated in brewing a 465-gallon batch of amber ale, which was pretty exciting for this homebrewer who brews batches 100 times smaller.

Do we have assets that we don’t include in this calculation? Sure. We’ve got a couple cars, but those are depreciating assets, so we don’t count those.

We also have two homes chock full of mid-century modern furniture, some bicycles, thousands of Legos, and a Joe Montana rookie card. While there is some value in all of those items, the fact is our portfolio value varies day to day at least as much as the value of all that stuff.

Another asset that I track, but do not count in my net worth calculation, is our Donor Advised Fund (DAF). I don’t count it because it’s money we’ve already designated to be given away, and once you’ve donated to the Fund, there’s no going back.

The current value of this fund is \$85,268.08. We treat it like a separate nest egg, adding to it annually, while giving around 5% away to charities of our choice each year. My website, Physicianonfire.com, has a charitable mission to donate half its revenue, and the DAF will be a recipient of the bulk of our initial giving.

### How did we make this happen?

I’ve shown you how I arrived at the conclusion, but haven’t shared any details to explain how it was possible for us to now have every dollar I’ve earned.

I also need to point out that I started from a net worth of approximately zero when I was a 30-year old new attending in 2006. I had some home equity in a condo, much of which would soon vanish as the housing market collapsed. I also had a Roth IRA worth a low 5-figure sum.

Those assets were easily offset by a high 5-figure student loan debt that had taken turns in deferment and forbearance while I was a resident. I don’t have an exact number, but my net worth was very close to nothing.

#### Relative Frugality

First and foremost, mindful spending and relative frugality over these ten years have been crucial. If we were spending even half of our take-home pay, we would definitely not have it all at this point.

It’s not that we don’t spend money; over the last 12 months, we spent about \$75,000 as a family of four. Perhaps not coincidentally, \$75,000 has been identified as the salary above which you see diminishing returns when measuring happiness. We don’t use a budget; budgets are not sexy. But we are aware of spending, and do our best to spend in ways that will make us happy.

While spending \$75,000 a year may not strike you as frugal at all, relative to my peers, I am a very frugal physician. A recent Fidelity study showed that nearly half of all physicians surveyed were saving less than 15% of their income and not maxing out offered retirement plans. Meanwhile, I’ve maxed out every available retirement account, and have more than a million dollars invested outside of them. My net savings rate (calculate yours here) is approaching 80%.

“The Bean.” A fun and free attraction

#### Investing

Second, we have invested in the stock market, and after a sharp decline early in my career, the market has rebounded nicely. It’s fair to assume that our spending, which we can guesstimate at \$750,000 over ten years, came largely from market returns.

Truthfully, our spending over that time was probably lower. Early in my career, we had no children, and our room and board was covered by the hospitals for whom I was working for as a locum. Our spending in those early years was probably half what it is now. We took the “live like a resident” mantra, advice for doctors not to ramp up spending to match a newer, bigger salary, to heart.

I keep my portfolio fairly simple, investing in Vanguard index funds. I am happy to accept market returns, understanding that it is very difficult for investment professionals, let alone amateurs, to consistently beat the market.

Since my graduation from residency at the end of June, 2006, the S&P 500 with dividends reinvested has more than doubled, with a return of 113% or 7.71% annualized. That includes a period in which it lost about half its value, hitting a nadir in March of 2009.

#### Low Fees

I keep my investment fees extraordinarily low. I have read numerous investing books and websites, and I am comfortable being a do-it-yourself investor.

A weighted average of the expense ratios of my investment portfolio’s funds is 0.08%, which costs me \$1,600 per year. If a professional were managing \$2 million for me with a 1% management fee with funds averaging a relatively low 0.5% expense ratio, it would cost me \$30,000 a year. Fees compounded over a lifetime can cost you millions.

#### Patience

Building wealth takes time. I was investing when the market was dropping like a stone. I invested at the bottom, and on the way back up.

Compounding takes time. If I had tried to write an article like this a year or two ago, the math would not have worked out. Time is on our side. Yes, it is.

We have stayed the course, never panicking and selling low, or buying into a hot stock that had already realized its meteoric rise. From this point on, there’s a good chance my net worth will continue to surpass my career earnings.

That may change if we have a bear market in the near future. And that would be OK. Another buying opportunity.

## What Can You Do?

While our success has been somewhat accidental (I certainly took a meandering path to get here), I can give you some advice. If you’d like to have a chance to replicate what we’ve done, do the following:

• Earn as much as you can. Work a second job or get another degree.
• Live well below your means. Pay no attention to how your friends and neighbors live.
• Trust the stock market. My crystal ball is cloudy, but the markets have generally gone upwards, and have always bounced back after every drop.
• Find reasonable housing. Renting is not a bad option. Note that I have estimated the value of both our first and second homes at a total of \$400,000. That’s about 15% of our net worth.
• Use debt wisely, or avoid it altogether.
• Be patient. Time in the market beats timing the market.

That’s it! I hope you are intrigued by my story. This is the first time I’ve revealed our net worth online. I was hesitant, but I felt this was a tale worth telling. I hope you agree. I look forward to reading your comments below.

## Physician On Fire

The Physician on FIRE is an anesthesiologist, husband, and father of 2 boys who became Financially Independent (FI) at age 39 and has plans to Retire Early (RE) in his forties. He has more hobbies than time to enjoy them, which include experiencing the outdoors, photography, homebrewing, travel, and running. He also enjoys writing, publishing a couple original articles per week on his own blog, along with a weekly compilation of other great articles, The Sunday Best.

1. September 12, 2016 at 5:03 pm

Well, thank you Doctor for providing some homework for me….!! I gotta do this exercise and soon.

I think another blogger (Mr. FireStation??) had mentioned something on this subject a few posts ago. It had slipped my mind but this post has got me thinking again and very intrigued.

I wonder if there is a “savings index” number that buckets extreme frugality vs good saver vs poor saver. You know – Total earned (minus all taxes) divided by net worth.Of course assuming that NW was not driven by a humongous inheritance which would skew the numbers – kinda like cheating. I calculate your index at 0.99 which is good!! . I wonder what it would take in terms of savings and returns to produce an index like 0.75 or even less..?

Thanks for being transparent about your numbers – understand the tricky mental exercise to be able to take the plunge and do this.

2. Physician on FIRE

September 12, 2016 at 5:45 pm

Thank you for weighing in, Mr. PIE. I think Time needs to be factored in to make any kind of apples to apples comparison. For example, after five years, it would be extremely difficult to have seen enough market returns to cover your living expenses. The first few years’ savings need time to let compound interest work its magic. Conversely, after a thirty year career, those early years’ investments could have double three or four times.

I would speculate that most will never see that break even point. It takes a substantial savings rate to make it a possiblity.

Best,
-PoF

3. September 12, 2016 at 8:22 pm

My net worth passed my lifetime earnings a while ago. The thing I think about is this: We’re only beginning. Can you imagine what our eggs will look like 3 decades?

I didn’t realize you had made your savings goal (40x annual expenses which are 60-70K per year, right?). If that is true, will it change how you deploy future dollars? More to charity? Put it the rest on black on Las Vegas?? Vintage Ferrari??? Just kidding. Maybe…

• Mr. 1500

September 12, 2016 at 8:24 pm

Holy crap, my typing sucks. I’m soooo damn tired right now. Berlafkjdslkadf…

4. September 12, 2016 at 8:44 pm

Very impressive, Mr. 1500! Publish that post, but with more pieces of flair like you always do.

The Ferrari will have to wait awhile. I will be detailing a year’s worth of spending in a post @ physicianonfire.com Tuesday morning, but you are correct in your estimate.

I’d like to be retired with 40x invested for retirement. Since I won’t be spending my properties or 529 accounts on my retirement, I subtract those. Also, I will have to account for some small amount of income tax, although it will cease to be a six-figure sum annually, and the cost of health insurance.

There are of course many wild cards (it’s like playing cards with my brother’s kids). Still waiting for that market correction, might have some online income, still wearing some golden handcuffs to be fully vested in my 401(k) for another 2.5 years. Want to see the boys through a few years in their elementary school before making life changing decisions.

But your point is well taken. I believe the average outcome after 30 years with a 4% withdrawal rate is a portfolio 2.9 times larger than it was on day one. I decided I would retire early when I realized I had no use for an eight-figure portfolio. There’s a real chance I could end up with one anyway, which is an issue I can deal with. I might take the Financial Samurai’s advice, and give enough to keep my net worth within the federal estate tax exclusion.

Cheers!
-PoF

• Mr. 1500

September 12, 2016 at 10:27 pm

Ahhh, thanks for explaining. I’ve never liked factoring my home equity into my calculations either. While I’m thrilled my home’s value goes up, that won’t buy me even a cucumber at the grocery store: https://www.youtube.com/watch?v=FBwly6Qa5oo

And the market correction! That sure is taking a long time to get here. Trump grumbles, Hillary stumbles, the DPRK flexes its nuclear muscle and Mr. Market just chuckles.

And yes, the number after 30 yeas is almost 2.9x! Crazy! That came from Kitces: https://www.kitces.com/blog/the-ratcheting-safe-withdrawal-rate-a-more-dominant-version-of-the-4-rule/

May I have a ride in your Ferrari when you get one? I’ll give you a cucumber!

• Mr. 1500

September 12, 2016 at 10:55 pm

And the thing I keep forgetting to say, my big, deep profound conclusion for your post is…. Ready?

It’s always way better to have money work for you than the other way around.

Ok, I probably could have come up with a better way to say it. That kinda sucked, but like I said before, I’m tired. In 2 of the past 3 years, my portfolio gains have been greater than my gross wages. I just love it. Go money go! I love it when you run faster than me!

• September 13, 2016 at 9:11 am

I want nothing to do with your cucumber, Mr. 1500. But thank you for the link and the laugh.

You’re clearly in a great spot now. When passive income outpaces your solid active income, it’s pretty clear you only need the one (passive) income to get by. Unless you really love the job that produces the active income, I imagine you would feel ready to let it go.

Cheers!
-PoF

p.s. Thank you for the Kitces article on the ratcheting 4% rule. I don’t know if I’ve read it or have just seen it referenced.

5. September 12, 2016 at 9:06 pm

Thanks for airing your dirty laundry PoF! I love reading this type of stuff. It’s really crazy how simple this stuff is. I’ve worked hard this year at increasing my income and decreasing my expenses and for those reasons I’ll almost double my net worth in 2016 alone (if the stock market stays flat from here). I max out my tax deferred accounts each year and then sock away as much as possible into my brokerage account every paycheck. The problem some people have is they let their cash build up in their checking/savings account and then are too scared to invest it because it’s a large number, end up buying a car with it, or are afraid the bull market is over. That’s why I invest in my brokerage account every payday like clockwork, no matter what the market is doing.

• September 13, 2016 at 6:59 pm

Oh, my laundry’s not that dirty, but thanks for the comment. Dollar cost averaging is a great way to build wealth. You get the highs and the lows, but that generally beats money sitting on the sidelines.

Cheers!
-PoF

6. September 12, 2016 at 9:39 pm

Great post PoF! Thanks for getting into the weeds. I love numbers and charts. I manage my finances similar to you. But being early in my career, my net worth is well below my lifetime earnings (in the negative actually). I’ll have to revisit this topic 10 years from now and see how I stack up. 🙂

• September 13, 2016 at 7:00 pm

I remember the negative net worth days like they were Eleven years ago. Because they were. It won’t be long before you start digging yourself out of that hole.

Happy shoveling!
-PoF

7. September 13, 2016 at 5:54 am

It’s a good thing to save money but you should also spend it sometimes. I mean, you work to afford a better life and not to save every penny.

• September 13, 2016 at 11:47 am

You make an excellent point, Trader. I detailed every dollar we spent over the last year, the first year we tracked it. I wouldn’t say we saved every penny; the market gains have supported a pretty comfortable lifestyle for us.

Cheers!
-PoF

8. September 13, 2016 at 10:31 am

That is a pretty amazing feat! Yet also surprisingly attainable, with enough discipline. I’m not there yet, but give me a decade and I might be. I’m starting to see the start of the compounding snowball, and it really is staggering.

Absolutely awesome post. Thanks for sharing.

• September 13, 2016 at 7:03 pm

Thanks, Money Lizard! I mean Wizard!

The first \$[insert round dollar amount here] is the hardest. Whether it’s the first \$10,000, first \$100,000, or first \$1,000,000,000. The next multiple of that comes much more quickly.

Best,
-PoF

9. September 13, 2016 at 3:22 pm

This is so cool to see that you have every dollar you’ve ever earned still. When you add it all up, its crazy how much money passes through our fingers in our lifetimes.

Do you have any thoughts or advice on a 29-30 year old ending up in your position if buying or starting your own practice? Our young family might be in a million dollars of debt if we do that (just making that number up out of thin air, but I don’t think it’s far off). Does it change the path to FIRE at all? Is it better to just be go somewhere, be an employee, and collect a paycheck?

• September 13, 2016 at 7:09 pm

That’s a great question, Financial Panther.

If the buy-in is that high, I think it would only make good sense for someone in it for the very long haul, i.e. more than ten or even twenty years. Otherwise, there just wouldn’t be enough years of the higher salary to make up for that early debt.

If FIRE is definitely in your future, and you wouldn’t be planning to work full-time more than ten years, becoming an employee might be the best thing to do.
An alternative that might exist is to join a small group practice with a handful of other owners. The buy-in would be smaller, and there would probably be a history of people coming and going, so that you wouldn’t have to reinvent the wheel when bowing out prematurely, if that is your intent.

Best,
-PoF

10. September 14, 2016 at 8:57 pm

Hey Doc! Congrats on a huge achievement, and for taking the time to dig through the numbers! Wanna come do mine? (Man, I have GOT to do that! Do you know any good, honest, low cost Virtual Assistants who wouldn’t sell my Social Security Number online??). I know our annual investment returns now far outweigh our annual spending, but I’d never thought to go back and see where I sit vs. the “lifetime earnings” bogey. Cool stuff. And oh, yeah, be ready for a bunch of folks to make the excuse that only Doctors make enough money to save like you have. Baloney. I’d suspect my numbers would come close to “lifetime earnings”, and I’m “just” a business guy. Spend less than you earn. Invest the difference. The wider the gap, the sooner you’ll build a lifetime a wealth. The sooner you’ll achieve FIRE!

• September 14, 2016 at 9:03 pm

Thank you, Fritz. With only 10 years of returns and 1 paystub to analyze, it wasn’t terribly time consuming to add it up. I was already tracking my net worth, so that piece was simple.

I hope to see my net worth eclipse my earnings by a wider margin between now and my anticipated early retirement in a few years. Here’s hoping I didn’t just jinx it!

Let me know if you are able to make the calculation for yourself. With more time for your early dollars to have grown, I wouldn’t be surprised if you have surpassed my feat.

Best,
-PoF

11. September 17, 2016 at 2:24 am

Well done, PoF, and thanks for sharing.

That’s the definition of FI, though, right? That your investments earn enough for you to live on and then some, so from here on out your net worth should continue to increase by the amount of your income or more. It just so happens that you got there amazingly quickly AND are still working and still funneling the \$\$\$ into savings.

Your boys are learning some valuable lessons.

12. Niki

September 22, 2016 at 12:12 pm

I believe that box 61 would only be income tax. You added on real estate and and state income tax from Schedule A, but I think you’re still missing the FICA (Social Security and Medicare) taxes that you’ve paid. So, you’ve saved even more than 20k above what you’ve taken home after accounting for all taxes (obviously still excluding sales taxes)!!

• September 23, 2016 at 12:11 am

I suppose that’s true. Thank you for pointing it out! #winning

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