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Back again for another episode of the interview series, where we highlight some other personal finance bloggers in Oz to learn more about their journey so far.
The personal finance community here in Australia is small, but it is growing!
Today’s interview is with Aussie Doc, who, remarkably is also an Aussie doc.
She has been serving on the frontlines in our hospitals for many years and a big thank you from me to you Aussie Doc – for just… being there for society.
Aussie Doc runs her blog out of Aussie Doc Freedom
Aussie Doc from Aussie Doc Freedom
Let’s do it!
Hey Aussie Doc! How old are you and Mr Aussie Doc?
I just turned the big 40. Hubby 55, married for 10 years.
Do you have kids?
We have 2 boys, 7 and 4 years old.
What area of the country do you live in?
We live in a regional town.
What is your current net worth?
What are the main assets that make up your net worth and is there any debt that offsets part of these?
AFIC LIC 30,000 (although saving for kids education costs so I don’t count this towards net worth).
Real estate 620,000 brought 2019, equity est 30,000.
Home 570,000 brought 2008, equity est 370,000.
Super (between us) 560,000.
Did you pursue tertiary education and if yes, what are they?
I did. Attended medical school then postgraduate training in emergency medicine.
What is your current job?
Specialist emergency physician.
What is your annual income?
(Editor’s note: W…Wow)
How has your income performed over time? What was the starting salary of your first job, how did you grow your income and where are you now?
My starting salary in 2004 was around $55,000. Salary increases occur each year in medicine if you continue to advance. My salary increased by a healthy amount each year, and doubled around 3.5 years ago once I settled into specialist practice.
Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?
I would recommend those suited to emergency medicine to follow this path. Resuscitating dangerously unwell patients is challenging, but extremely rewarding. Supporting junior doctors develop into confident, independent practitioners is really wonderful. In the ED, you get to work with a huge range of professions, and the team has a real sense of camaraderie.
Telling someone that they, or their loved one, is going to die doesn’t get any easier with practice. Sometimes we can’t do much to help, and this is really hard.
Hospital politics, the inefficiency of the system and difficulty bringing positive change to such a large bureaucratic workplace is enough to drive you mad! The shifts are unsociable, often working weekends and evenings, although thankfully I no longer work nights.
There is now a lot of flexibility in emergency medicine for part-time work. The pay is generous so part-time work is financially feasible, and slows down burn out by allowing more recovery time.
What tips do you have for others who want to grow their career-related income?
I don’t think doctors really have an issue with income. They will fairly quickly earn over the average Australian income, and have potential to earn far more. “Spending like a doctor” is the trap most need to avoid in order to build financial independence in a reasonable timeframe.
Medicine is not a career to enter for the money, despite the generous income potential. It is more a life choice. Six years in medical school, along with a couple of entire years given up to study alongside full-time work to achieve specialist status. There has to be interest and passion to get you through all the hurdles. Plus, nobody wants a doctor who’s there for the paycheque!
What’s your work-life balance look like?
The junior doctor years are pretty unbalanced, with lots of study and teaching preparation unpaid. Night shifts are a killer! After specialisation, life gets a lot more balanced. No more exams, and most of the teaching preparation is performed inside work hours. The flexibility to work part time is a big bonus.
Do you have any sources of income besides your career? If so, can you list them, how much you earn with each, and how you developed them?
- Dividends $1200 reinvested.
- Website Aussie Doc Freedom – pays for it’s own expenses so far.
- Rental income – doesn’t yet cover interest paid.
What is your household’s annual spending?
Can you break-down the main categories this spending relates to?
Tax $120,000 (separate to spending).
Home mortgage $20,000.
Insurance $15,000 (professional indemnity, house, cars, health and boat).
Grocery shopping $12,000.
Kids $12,000 (Private school fees, hobbies).
Fun money $12,000.
Transport $10,000 (two old cars having needed a fair bit of maintenance this year).
Home improvements $10,000.
Investment property net loss $7000.
Utilities $4800 (electricity, water, phones and internet).
Christmas & Gifts $3000.
Professional expenses $3000 (required memberships, conferences and courses).
Doctors / dentists fees $2500.
Pets $250 (new fish tank and paraphernalia).
Do you have a budget? If so, how do you implement it?
I’ve never been able to get budgets to work for us – costs always end up blowing out. I have found spend tracking more useful. We do budget discretionary “fun money” each. Hubby is the spender of the family, it’s important we both have some cash to spend guilt free.
What percentage of your gross income do you save and how has that changed over time?
25% of gross income (35% including superannuation).
41% of net income (excluding super contributions) increased from 20% over the past 3 years.
What is your favourite thing to splurge on?
Holidays! It’s great to have a change of scene and take the kids somewhere they can have loads of fun. We were lucky enough to see Santa, build snowmen and go for a husky ride in Lapland (Finland) in January.
What has been your investment strategy/philosophy?
I am highly taxed. There is no need to increase income now as I have a generous salary – so my focus has been on growth investing first. I have focused on paying down the mortgage in order to build enough equity for my first and soon to be second investment properties. After that, I plan to switch to ETF investing before putting everything into superannuation (my husband is only 5 years from preservation age).
What has been your best investment?
My career. Although due to all those years in medical school, student debt, extended maternity leave and slow travel, I have reached my salary potential only 3 years ago.
What has been your worst investment?
Probably my own home. It is in a regional town. I was aware of the limited growth potential when I brought, and did spend far less than I could. It would have been wise renting in the regional town and buying an investment grade property in a capital city. But at the time, I wouldn’t have known where to start! We undertook an extensive renovation in 2016 which cost far too much, but has given us the house we will be happy in until the kids leave home. Definitely a “Lifestyle investment”!
What’s been your overall return?
LIC > 10% – I struck dumb luck by pulling the money out in mid-February in anticipation of my next investment property (to be used an emergency fund). I then couldn’t resist putting it back in when days later the market dropped – delaying my property purchase but capturing great returns! I don’t think I could ever repeat that kind of luck!
How often do you monitor/review your portfolio?
I review my finances, superannuation and property twice a year, at the end of calendar and financial year. Once I have an ETF portfolio, I will rebalance at these times too.
How did you accumulate your net worth?
Mainly through superannuation (I’m so grateful that was mandatory when I was 25!) and aggressive debt pay down of our home mortgage. We increased our repayments each time my salary increased as a junior doctor.
What has been the biggest contributor to your net wealth?
What has been the biggest detractor to your net wealth?
Buying a home in a non-growth area. And a big, expensive renovation on the same home.
What are you currently doing to maintain/grow your net worth?
Buying investment properties before pivoting into ETFs, paying concessional cap into superannuation plus spousal contributions for hubby. I split super contributions with him, to reduce legislative risk I am exposed to being younger (I’m sure they will keep changing the rules) and to ensure I don’t exceed the $1.6 million super cap.
What money mistakes did you make that we can learn from?
I was interested in finance in 2008/2009 during the GFC. I watched with interest and then horror as events unfolded. I was aware of the advice to stay the course, but right at the bottom, I freaked and switched to a less aggressive superannuation option. I don’t think I had that much in superannuation at the time, but I am grateful for learning that lesson early in my investing journey.
How has Mr Aussie Doc Freedom contributed to your net worth?
My husband helped in practical ways – putting up with me going into grumpy study hibernation during my postgraduate exams. He gave up work for the past 4 years to take care of the kids so I could work more shifts.
Do you have a target net worth you are trying to attain for FIRE, will you quit working when you reach this?
I’m aiming to achieve around $3M net worth to achieve financial independence with a reasonable retirement income of $100,000 in 15 years. I daydream about becoming an expedition doctor and volunteering with Medicins Sans Frontiers after the kids are grown and I have achieved financial independence.
What are your retirement plans?
Slow travel with hubby around Australia and the world. A pretty active early retirement followed by a stable base ideally close to children and grandchildren with frequent holidays!
Are there any issues in retirement that concern you? If so, how are you planning to address them?
I need to keep busy. I plan to develop plenty of projects (such as Aussiedocfreedom.com) to keep my brain entertained.
How was your childhood? Was your family wealthy, middle class or low-income?
My parents worked very hard to raise themselves out of their working class / welfare supported backgrounds. Dad worked 7 days a week and mum trained as an enrolled nurse.
How did you learn about finances and at what age did you “get it”?
Mum was a saver and coupon clipper extraordinaire! The one extremely valuable lesson they taught me was that cars are a means of transportation, and to buy a status symbol is dumb! I remember mum mentioning “Saving in case of a rainy day” but at the time I didn’t get it. I did understand living below my means, and apart from some minor temptations along the way have stuck to that.
I really got interested in finance in around 2007 when I read “Rich dad Poor dad”. I’ve been distracted over the years by work and exams but bounce back to learning about money every few years. I got serious in 2017 after returning from slow travelling with two toddlers. I realised I had to get cracking to catch up!
Who inspired you to excel in life? Who are your heroes?
My parents worked so hard when I was a kid. I think most of my motivation to do well was to please them and make sure I used the opportunities they handed me to the max.
How do you think differently than the average person when it comes to money?
Like most of the financial independence community, I think borrowing money to buy depreciating assets is financial suicide! Neighbours have felt the need to explain to me that you can get a loan for a car and easily afford repayments for a brand new SUV (clearly my cars looking a bit scruffy!).
Do you have any favourite money tools and resources you recommend (books, podcasts, apps etc)?
I have found Pocketbook really helpful for tracking expenses, and identifying the big ticket items that can be cut back on. Although based in the US, I found the energy, enthusiasm and practical tips of the Choose FI podcast really inspiring. The property couch podcast for property investing education.
Do you give to charity?
I spent a long time overwhelmed with choosing an efficient and effective charity to donate to. I continue to donate to Save the Children, but am unsure about how efficient their use of funds.
I recently discovered Effective Altruism which has done a great job of narrowing down the options to a selection of charities that will do the most good for your dollar. I donate to Give Direct, a charity that donates cash directly to some of the poorest families on earth.
I am balancing my desire to help with a selfish desire to have more time to spend with my family, but do feel I should be giving more. I plan to increase my donations each year to Give Direct and others.
Do you plan to leave an inheritance for your kids? And/or how do you plan to distribute your wealth?
If all goes to plan, we plan to leave the two investment properties to them. Super is taxed when inherited by adult dependents, so it makes sense to spend this first and try to hold on to the properties.
Hopefully the kids will be very old by the time they receive any inheritance. We would like to give them a step up by starting them investing and paying university fees. My parents lent me their old car for my first year of work as a doctor, which has resulted in me never borrowing to buy a car. I would like to do similar for my kids. They will not be gifted a car, however. I am very intentional about not creating spoilt, entitled kids.
What does money mean to you? Should everyone pursue it?
Money is needed to cover basic needs – food, shelter and safety. After these are paid for, money provides choice, time and flexibility. I’m sure everyone would want this!
Finally, is there any advice you have for The Frugal Samurai readers regarding wealth accumulation?
Think strategically about wealth accumulation – if you don’t actually need income now would it be more efficient to use compounding capital growth to accumulate wealth tax free? Utilize the superpowers of superannuation! Early retirement includes traditional retirement.
Wow! Really incredible insights Aussie Doc, thank you for sharing your wisdom.
One thing that I got out of this is that even though she is on a ridiculous level of income, she is incredibly humble.
Good reminder to subscribe to the “millionaire next door” mentality and not blow it all “to buy things you don’t need, with money you don’t have, to impress people you don’t like”.
And remember to check out her site at aussiedocfreedom.com
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