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.
Today’s guest is The Loonie Doctor. The Loonie Doctor is a Canadian personal finance blog focused on professionals wanting to improve their finances. He’s 43, married, and became a financial black belt at the age of 35.
Now for the interview:
What degree black belt are you? (e.g. one million = first degree, two million = second degree).
I actually got my 1st degree black belt in karate at age 40 and in finance at age 35. I am now 43 and training for my 2nd degree in karate and am further ahead financially. Like Mr. Miyagi says, my black belt is mostly for holding my pants up.
Give us the break down on your current net worth. What is it invested in and do you have any debt?
35% home equity, RRSPs 14%, TFSAs 4%, Professional Corp 29%, Personal Taxable Investment Account 16%, Whole-Life Insurance Cash Value 1%. We invest through low-cost passive ETFs via a discount brokerage. We have no non-mortgage debt but still have a mortgage.
How was your childhood? Was your family wealthy, middle class or low-income?
I grew up in a middle-class family. My parents had an average income but were very frugal. They retired at age 55. I grew up in a small isolated community in a low cost-of-living area. We were happy, had a good sense of community, and were on a similar financial footing as those around us.
Did you go to college?
I was doing a BSc/BEd, then went to medical school, followed by residency and subspecialty training. Total 12 years of post-secondary education. All Canadian Universities are publicly subsidized.
What is your fighting style? (Career path from first dollar ever made to present).
I try to work hard, but also efficiently. That also means shaping my workplace. Within my field, targeting areas of need where there is an opportunity to build or improve practice has been my focus. This has been personally and financially very rewarding.
I try to have a diverse clinical and non-clinical (teaching/admin) practice to keep it interesting. My strategy has been to front-load work while I am young and spend way less than I make. That has given me more freedom to alter my practice, scale back, or increase spending as desired without impacting my financial security.
Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?
I feel very fortunate to have had the career that I have. I would recommend it for those who want a variety of opportunities to be stimulated, contribute, and get paid well to do so.
If money is the focus, then there are better ways to make money than medicine and you would have a hard time dealing with the delayed gratification, emotional toll, and the leaner times where you are still working hard.
Have you had any side hustles?
All are related to medicine: teaching medicine and medical leadership. Neither pays well directly, but have been key to improving the workplace in which I have to maneuver. So, they improve the units of money earned/units of frustration or effort in the long haul.
If you have a spouse, how have they contributed to your net worth?
She was the bread-winner while I was in school. We then contributed roughly equally until we had kids and I started independent practice. At that point, my income became much more. However, we have still contributed equally overall.
She has had to pick up the slack at home that has enabled my career to blossom. She also runs the business side of our practice and now our department. That has both the advantage of keeping money in the family and a motivated “employee” with skin in the game.
We are a single financial unit.
At what age did you start seriously saving money?
We have always saved money as a proportion of our income. Our parents instilled this as a habit early on. It really took off when our income did while our expenses stayed roughly the same for the first five years of my independent practice.
What has been your investment strategy?
We started with high-fee mutual funds. Then, we lost money through using active investment advisors and through trying to actively invest myself (trying to stock-pick basically) for several years. Finally, we landed on passive index investing as our best strategy.
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?
We are pursuing FI and are basically there by most standards. However, after careful consideration, we aren't committing to retiring early. We will scale back and likely fully retire long before the traditional age of 65.
Our children are central to our decision-making and we feel that it is important for them to see us working for money and how we handle our money. After they are out of the house, we will re-evaluate.
In the interim, the satisfaction/stimulation/purpose of our work is still there. Making more money beyond FI also gives us a larger safety margin and the ability to continue with philanthropy throughout our lifetimes on a larger scale. The amount of money for that would fall into the morbidly-obese-FIRE range.
For us, FI is a tool to enable us to RE-focus on what matters to us with less consideration to the financial limitations.
Mind over matter
Do you think psychology plays a more important role than math with finances?
Definitely. Earning money and spending control are key to being able to save and invest. These are heavily influenced by behavior and mindset. In terms of the math of investing, mathematical returns of a plan mean nothing if you can't actually stick to the plan. We are hard-wired to sabotage investment plans due to our emotions. Hence, a simple and effective plan is better than the perfect plan.
What was your toughest mental opponent on the path to your black belt?
Myself. The aspect of my behavior that is the most challenging to control is my desire to tinker and perfect my plans. In other aspects of my life, being smarter, working harder, and planning for all contingencies gets better results. However, with investing less is more and it is hard to shift gears.
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?
I think of money as simply a tool of exchange. Our time, effort, comfort, and security is what really matters and we buy or sell that via money. This means thinking not only about our money when we plan, but also our relationships, personal health, and society.
We have a limited amount of time to spend and we may draw from one area to build upon another. That must be balanced both now and for the future. I write about this as holistic wealth on my blog.
What does wealth mean to you? Should everyone pursue it?
Personal wealth means having enough human capital and financial capital to provide for your needs. This occurs in the context of living in a society and economy with enough social capital and economical capital to provide stability for the first two. Everyone should pursue balancing these aspects.
Should people follow their passions or just do something practical?
I would avoid making a false dichotomy. Pursue both. That may require a combination of innovation and some compromise. It can also mean doing multiple things in smaller doses rather than all-or-nothing.
What is your weapon of choice? (favorite money tool/app)
My farm tractor. It has saved me thousands of after-tax dollars through the jobs I have used it for. Saved hundreds of hours of my time. And it's a tractor – how cool is that? Every manual labor job is better with more horsepower.
What has been your favorite way to earn money?
Building something new that fills a need. That is both financially and personally rewarding.
What’s your favorite way to use money?
Same as above. It requires an investment of time and money to build anything.
What’s your one piece of money advice to us financial underbelts?
Spend much less than you make. Be content with what you have and enjoy the good aspects. At the same time, consider carefully what it would take to have more and whether that will bring you lasting happiness. That's more than one – I guess counting isn't my thing.