Being a black belt in finance means to have a net worth of a million dollars.

Just like a martial arts dojo, Your Money Geek is a place where we can learn about personal finance and eventually become financial black belts ourselves. In this series, we get to hear the stories of actual millionaires and see what it took for them to get to that level.

Now for the interview:

Table of Contents

What degree black belt are you? (e.g. one million = first degree, two million = second degree).

I am a 6th degree black belt.

Give us the break down on your current net worth. What is it invested in and do you have any debt?

We don’t have any personal debt. One day we woke up to find we were $500,000 in debt and realized that we didn’t want debt to be hanging over our head and set out to become debt free.

It took six years using the snowball method to pay everything off. We made our last house payment in 2001 and haven’t paid interest since. We do, however, have some investment real estate debt in our real estate LLC. The tenants are paying that interest.

Our Net worth is made up of 67% real estate, 27% stock mutual funds, and 6% cash. Our real estate earnings have far exceeded our stock market earnings so real estate took over the portfolio as the dominant factor. I see no reason for me to sell off any real estate to “rebalance” my portfolio. 

Your story

How was your childhood? Was your family wealthy, middle class or low-income?

My father was a butcher and my mother was at home when my brother and I were very young and later became a hair dresser. I would say we were lower middle class. We didn’t have any extras or do much vacationing, but I never felt like I lacked anything.

My brother and I played sports all year long and there was money to get new shoes with each new season. We had money to go out for an ice-cream after a good game. 

My parents were very supportive of everything we did and you can read about that in my last mother’s day post, A Lesson From Mom; Family Comes First, and my last father’s day post, Six Lessons I Learned From My Dad.

My parents and grandparents taught me to pay cash for my purchases. Dad didn’t have enough money to waste it on paying interest. 

I was an entrepreneur as a kid. I started my own top 40 cover band at age 13, where I was the lead singer and guitar player, taught piano lessons, babysat, and mowed lawns. I always had spending money in my pocket.

Did you go to college?

I got my bachelor’s degree in biology from Stanford on an academic scholarship and a work study job. Every summer I came home to a job in the local plywood mill. I graduated college with $6,000 of student loans that were deferred until I graduated from medical school.

I attended medical school at OHSU and borrowed $12,000 the first year. I didn’t like where that was headed, so I applied, and was accepted for, a Naval scholarship, after which I didn’t need to borrow any more money for my training. I left medical school with $18,000 in student loans and started my five-year surgical residency in Bakersfield, CA.

Every time a deferred loan came due and interest would start, I paid it off. Except for a 3% loan that I mistakenly thought would be good to keep because it had a “low” interest rate. I should have paid it off when it came due, but I eventually paid it off ahead of schedule.

What is your fighting style? (Career path from first dollar ever made to present).

I am an aggressive offensive player. All my income went toward my education costs until I started residency after medical school at age 26. Then I began to earn a full time salary and started investing in the stock market through my IRA and 403b, maxing each out every year.

I got married a few months out of medical school and we decided to live on only half of our income and save the rest. That gave us a great start on our wealth accumulation.

After I finished residency, I had a good paying job. So we kept up the idea of living on 50% and continued aggressive savings. You can save a lot if you only spend half of your income.

Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?

I had a great time as a general surgeon. I loved my job and practiced for 23 years. Medicine is certainly different now than it was on my first day in practice, but I would still recommend it to people who want to be physicians. Medicine is a fun life, doing important work that pays well.

It does have a tough work schedule though. You do need to remember to keep your job under control or it could take over your life. Run your practice, don’t let your practice run you. That goes for the employed as well as the self-employed physicians. 

Have you had any side hustles?

Yes. After I started my medical practice, my large income allowed us to borrow money. We soon found ourselves $500,000 in debt. I wrote about our experience of getting back out of debt in my book, The Doctors Guide to Eliminating Debt.

The year we became debt free, we decided to use all the money that was paying off debt to buy investment real estate.

That side hustle grew and soon we were managing 64 apartment units while I worked as a full time general surgeon. That story will come out this fall in my new book, The Doctors Guide to Real Estate Investing for Busy Professionals. Real estate soon became our biggest investment. Eventually it produced enough passive income for us to live on without the need for a job. 

If you have a spouse, how have they contributed to your net worth?

My wife was incredibly good at playing defense. She is a saver and a careful shopper. With my offense and her defense we accumulated wealth at a nice pace.

She also helped manage the apartments and was trained as an accountant so she kept the books for not only our real estate, but helped with the books at the church and my medical office. 

How old were you when you became a financial black belt?

I became a financial black belt in 1999 at the age of 37. After starting my medical practice in 1993, it took me six years to become a financial black belt.

My father told me he met one of his classmates from high school who became a physician. He told my dad that if a physician isn’t set for life after ten years in practice, he blew it financially. I thought of this often and worked hard to become “set for life.”

At what age did you start seriously saving money?

When I left medical school and started my residency in 1988 at age 26, I got my first steady paycheck. It was $21,000 a year. That year I got married and my wife made about the same amount. We lived on one income and saved the other. We each filled our IRAs, which were capped at $2,000 back then, and I filled my 403b at the hospital. The rest of our money went into the bank. 

In 1993, at age 31, I finished residency and graduated to my big boy income. We moved to Grants Pass, Oregon and my wife chose to be a stay at home mom for our one-year-old son. We continued to live on half of my income and save the difference, filling all retirement accounts to the max.

By the time I was 37, we achieved black belt status. Two years later we were debt free and began to invest in real estate.

What has been your investment strategy?

Initially I invested everything I could get into protected retirement accounts and the rest went into a savings account with a brokerage firm. I invested in stock mutual funds. There was a short time when I was picking stocks and trying to beat the market. I learned first-hand that you can’t beat the market. That wasted a lot of my time and cost me some net worth.

Once we were out of debt, we formed an LLC and started investing in small apartment complexes. After we owned five complexes, 64 units, my wife thought we had enough to take care of our financial needs for the rest of our life, so we stopped buying property. 

At that point we used our excess income to pay down the real estate investment mortgages at a quicker pace. As long as I was working as a surgeon, we felt we didn’t need any of the money the real estate produced. All the cash flow was put back into the real estate to pay down debt and improve the properties. 

By the time I retired from my private medical practice, at age 51, the real estate produced enough cash flow to cover all our expenses. I worked an additional three years on a part time basis to provide some time off to lone surgeons in rural areas in the Pacific Northwest. They liked having an experienced surgeon covering their emergencies and I liked the slower pace of working part time.

I finally stopped medicine all together at age 54 and began to teach doctors about personal finance and debt elimination. I wanted others to have what I had, financial independence.  

Who was your financial sensei? (Most influential person/source of information in your financial life).

I would give that title to my grandmother. She taught me to live within my means, buy enough real estate to cover expenses, and enjoy life on the proceeds. I followed her example. 

I got a good start on my investing philosophy in about 1980 when my uncle gave me a small booklet by A. L. Williams, called Common Sense: A Simple Plan for Financial Independence. That taught me the power of compound interest and investing early. I followed his plan with my stock investing. 

Are you pursuing FIRE (financial independence/retire early)? If so, how much money do you plan to retire on and are you going to quit working for money altogether?

I had set out on a plan from medical school to have enough wealth to retire by age 50. I made it. I guess you can say I was into FIRE a couple of decades before the FIRE movement took off. 

My goal to be able to retire was to have both enough passive income to cover my living expenses and $1,000,000 in my retirement accounts. When I reached that goal, I was financially ready to retire, but I was not ready to give up operating. I was torn. So I went to part time and began a search for what I would do to feel productive if I left my job as a surgeon. 

I ended up starting The Doctor Guide book series and a blog to teach physicians the lessons I had learned that helped me reach financial independence.

So many physicians are not reaching that goal. They have too much debt, spend too much on their lifestyle and didn’t save enough. Then one day they realize they might never be able to retire. I want that process to come to an end. Every physician makes enough money to have a comfortable retirement.

Mind over matter

Do you think psychology plays a more important role than math with finances?

Psychology is definitely the most important player. As a physician, I now know this to be the case. Physicians are good at math. If it was a math issue, they would all be wealthy. They are not all wealthy, and a large number of them live paycheck to paycheck. 

Physicians, and many others, suffer from what I call Debtabetic Neuropathy. They have become numb to debt. We spend so many years borrowing money to get through eight years of school that it becomes very easy to just throw some more debt on the pile.

What’s another $10,000 going to matter anyway? We get to defer our debt payments all through our residency and by the time we actually have to begin paying it off, 11-15 years have passed with no consequences to borrowing the money. By then we are in a mode of borrowing to get what we want, and we are not in the practice of saving.

If this psychological pattern is not stopped, we reach retirement age with no savings and a pile of debt. Debt is too easy to acquire. And since retirement is so far off, we think we can start saving later. The math of compound interest starts off so slowly, that it takes the right frame of mind to make the decision to start saving. 

What was your toughest mental opponent on the path to your black belt?

The ease of borrowing money. After doing so well at avoiding debt all through my training, I went wild and accumulated $500,000 of debt. I needed to break my new bad habit of borrowing to buy stuff. My wife helped me regain control of my spending. 

There are a lot more financial white belts than black belts out there. How do you think differently than the average person when it comes to money?

The average person does not think long term, they think about this week. Consequently, they have a hard time saving to buy a car. They want it now. But since they don’t have the money, they finance it. They keep repeating this process and grow deeper and deeper in debt.

At the same time they don’t see an urgent need to save for retirement as it is a long way off. This leads to spending all of their money as fast as they make it, which often creates a situation where they are living paycheck to paycheck. I felt the need to start saving for retirement with my first full time income. I was willing to live on half of my income, even though I could have spent the money I saved on a nicer lifestyle. 

The first step to wealth is realizing you cannot spend everything that you make. You must save some to spend in the future. I believe this long-term thinking is what sets me apart from the white belts.

I wrote an article about this called Stop Thinking Like a Dog, it’s Killing Your Future. Dogs only think short term. They will do a trick for a dog biscuit now but not for the promise of two dog biscuits next month. We must not think short term like a dog.

Most white belts earning $50,000 a year are unwilling to live on $25,000 a year like we did in residency. This applies at every income level. Those who make $300,000 are unwilling to live on $150,000 even though that lifestyle is bigger than the average American’s lifestyle.  

What does wealth mean to you? Should everyone pursue it?

Wealth means having enough to meet my needs without worrying about what I spend. I had that long before I was a black belt. It comes from living on less than you make and having a good-sized savings account balance.

I am writing this while flying home from a cruise with my adult children. We were able to take the trip and do whatever we wanted along the way. If we wanted to go out to eat, we did, and did not check the budget to see if we could afford it.

If we wanted to go to a play, we just bought the tickets. That is what it means to be wealthy. It doesn’t take a lot of money to achieve that, it does take some discipline to live on less than you make, so you have money left over for the fun stuff in life. This is something everyone should pursue at every income level.

Should people follow their passions or just do something practical?

You should follow a practical passion. You do need to make a living, so you must do something that pays. You also need to enjoy your life and not live for the anticipation of retirement. So you most have some passion for what you do. I think you need both.

It doesn’t make since to do something your whole life that you don’t like so you can save enough money to stop doing that job. So, if you are only living for retirement, then find a job that you enjoy doing. Since you spend a very big portion of your life on the job, don’t let your job be a burden.

Do something you like to do since you will likely be doing it 40 hours a week, 50 weeks a year for 40 years. If you don’t like what you are doing, you might waste 80,000 hours of your life. Who can afford to do that?

Bonus round

What is your weapon of choice? (favorite money tool/app)

I think you can tell from my portfolio that real estate is my favorite investment. Real, real estate. Something you can walk up to and hit with a hammer because it belongs to you. Not REITs, which is a sector in the stock market. Not syndications, which is using your money to help someone else’s real estate purchase. Buy the property yourself.

Owning real estate makes really good money and it can be greatly leveraged. Real estate gives you cash flow, appreciation and tax benefits. With very little money, you can control a powerful asset that will grow even without your involvement.

I managed my real estate for the first 12 years. That required about 10-15 hours a month of my time. Then I turned it over to a management company and it became totally passive. Now I get paid even when I am backpacking across Spain with my wife.

I did this as a busy professional while everyone was telling me it can’t be done. “Surgeons just don’t have the time for that,” is what they would say. Well, yes they do have time for that. That is why I wrote the book coming out this fall, so everyone could see how a busy professional could invest in the best investment vehicle out there. That’s my weapon of choice.

What has been your favorite way to earn money?

My favorite way to earn money was playing in a rock band. We got to play, sing and have fun while hearing the audience cheer for us and we got paid as well. As a high schooler, I just didn’t make very much doing it. But it was more money than all my friends made and a lot more fun than flipping burgers.

My most effective way to earn money has been real estate. 

Most of the heavy lifting to acquire my investments came from earning money as a surgeon.

What’s your favorite way to use money?

I like to have fun. Lately it is traveling. Since I left my private practice in 2013, I’ve visited about 20 countries. This summer my wife and I walked the Camino de Santiago in northern Spain.

It took us 38 days to walk 450 miles. Before retirement, when the kids were growing up, we boated, raced bikes, camped in the motorhome, visited water parks, amusement parks, and anything else we thought would be fun. I have a time share that I love to trade to places we have never been before, and find out why there is a time share in that location. 

What’s your one piece of money advice to us financial underbelts?

Compound interest is way more powerful than you think. Such a powerful device should always be working for you and not against you. Earn interest, don’t pay interest. I had no idea how nice debt free living would feel until after I achieved it.

So stop managing debt and start eliminating it and you will have that great debt free feeling too. You will reach your financial independence sooner if you are always on the right side of compound interest. I like to say, “I have no interest in paying interest. My interest is in earning interest.”

About the Author

Nathan Clarke

Nathan has been a personal finance writer since early 2018. He and his wife reached a net worth of one hundred thousand at the age of 25 and are on their way to financial independence. His favorite way to make money is selling things on eBay and has grown his eBay business to earn five figures selling part-time. He loves sharing what he learns about finance and any eBay tips he comes across. If you’re interested in becoming an eBay seller, check out his reseller Facebook group.

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