No Fixed Abode: The Doctor's Kia and the Patient's Porsches

Jack Baruth
by Jack Baruth

My father had a lot of career advice for me growing up, all of which I cheerfully ignored as I planned a future as a bike-shop owner or folk guitarist. He thought I should go to work for Proctor&Gamble. Sell soap to the masses. Climb the corporate hierarchy to the C-suite. Own a tasteful but extravagant home in Cincinnati’s most exclusive neighborhood. This was bad advice. I learned a long time ago that I don’t have the bow-and-scrape mentality required for success in a corporation.

You know what Dad should have told me instead? He should have told me to be a doctor. I have all the required characteristics: arrogance, blind confidence, a lack of empathy, and a willingness to forget about people as soon as I walk out of a room. By and large, doctors are terrible people. I should know. I’ve spent more time in the hospital than your average late-stage cancer patient.

Robert Ringer once called medical school “a place where people are trained to think they are infallible” — or something like that. He was right. Doctors are notorious for being poor stewards of their money due to simple overconfidence in their own instincts and innate superiority. Thirty years ago, when long-term open-ended leasing was a veritable art form of forcible financial sodomy, the most sadistic practitioner of that art in my area was a storefront that called itself “Physicians Leasing.” They put our local doctors in loaded W126 Benzes for $400/month. Every two years they’d swap the docs out into new Benzes. Further and further underwater our local physicians went, until the final mid-five-figure bill came due. Luckily, it was an era of skyrocketing home equity.

Doctors love their fancy cars, that’s for sure. But I recently found a website that argues an extreme but interesting case: the most money a physician should spend on a car is five grand, period, point blank.

The article is on a website devoted to investing advice targeted specifically to doctors, because of course doctors need their own investing-advice website, the same way they need their own leasing company. In this case, however, the proprietors of the site make a relatively sound case. Doctors start their careers relatively late in life, often burdened with half a million dollars’ worth of student debt. After years of intense schooling followed by miserable internships and residencies, the idea of rewarding one’s self with a brand-new 911 Carrera GTS has to be very powerful indeed.

Maybe they should resist that impulse. In “ How To Get Rich By Driving A $5000 Car,” the authors argue a doctor shouldn’t buy a new, or even a new-ish, car until he has a million dollars in the bank and is saving 20 percent of his income above and beyond that. I’ve excerpted a few of the arguments below:

A $5,000 car is a 7-year-old Nissan Sentra or Mazda 6 with 100K miles on it. That car will probably run for another 50-150,000 miles over 5-15 more years while needing a few minor repairs and a major repair… Let’s acknowledge for a second that driving a $5,000 car isn’t an awesome experience. It doesn’t have that new car smell. You’re not going to impress anyone with it. There are a few little things wrong with it… The bottom line is that your cost of ownership on a brand new car may be $5-10K a year, whereas the cost of ownership on a $5K car may be $1-2K per year, and possibly less if you get lucky with repairs…

Let’s say there is a difference in the annual cost of ownership of a new fancy car and a $5,000 car of $6K per year. Now, take that $6K a year from age 18 to age 65 and compound it at 5% real. What do you get? You get rich. That’s what you get. That adds up to $1.1M by age 65.

The Aspie in me wants to take issue with a couple of these statements. The steady climb in used-car appreciation means that the car he’s describing is closer to a $7,000 proposition nowadays. I’d recommend spending maybe $8,000 and getting yourself a seven-year-old Corolla if you’re really interested in the proverbial automotive hair shirt. I’d also like to meet these people who are saving $6,000 a year from the age of 18.

I did the math myself using 35 years’ worth of $6,000 annual contributions at a 4% rate of return and a 2.5% annual inflation rate, and I came up with a total adjustment amount of $390,000. That’s still real money — call me in 20 years when I’m the conventional retirement age and feel free to ask me if I’m interested in an additional $390,000 in 2017 dollars — but it doesn’t have the visceral impact of becoming a millionaire just from driving a crappy car your whole life. Let’s go back to the article for another important excerpt.

One other benefit of driving an inexpensive car is you have a daily reminder that you are NOT rich, at least not yet. Expensive purchases tend to run in packs if you don’t spend very consciously. Nice clothes, nice cars, nice vacations, nice homes etc. It seems silly to park that $5K car in the driveway of a $2M house. So if you’ll drive a $5K car for a few years, chances are good you’ll spend a little less on some other luxuries, grow into your income a little more slowly and reach financial independence much faster. If nothing else, it will give you a daily reminder of your financial goals.

I think the authors have a solid point here. Many was the time in my 30-something life that I said to myself, “I can afford a $5,000 suit — that’s just one month’s worth of my car payments.” The smart thing to do would have been to throw $9,700 into the bank and spend $300 on that month’s used-Camry payment. I don’t live like that anymore; in fact, I’m busy taking steps to insure I at least have my house paid off, my debts gone, and a bit of money around when I’m in my 60s. I drive an Accord and I’ve sold two of my three Porsches. I’ve spent more money on bicycles for my kid in the past year than I’ve spent on Italian menswear, although admittedly in both cases I’ve laid out more cash than was strictly prudent.

Still. I’m trying to think about what I’ll have in the future. It won’t be anything like what I’d have if I had devoted the last 15 years to saving money and living within my means. I didn’t do that. I devoted the last 15 years to having unprotected sex with random women, most of whom were already married, in the carbon-fiber-clad cockpits of leased luxury vehicles. I don’t want to say how much money I spent in that lifestyle. The sum would be inconsequential to Sheryl Sandberg but it would make the average American dry-heave.

You know what? I don’t regret it. I don’t regret any of the money I spent on cars. I don’t regret any of the money I spent on hotel rooms, expensive meals, linen Kiton sportcoats, last-minute flights, or arrive-and-drive expenses. I might be 45 years old but I’m not stupid enough to think of that as “middle-aged.” That implies that I’ll live to be 90. Let’s say I’d saved all that money and I retired at 65 with $5 or $10 million bucks. What would I do with it? Would I go back and sleep with all those women I’d missed out on because I was driving a seven-year-old Sentra and pinching my pennies? Would I enter all the races that I’d skipped in the past to save money? Would I buy my son an expensive bicycle for his birthday, even if it’s his 35th birthday?

And how would I feel if I wound up with a late-stage cancer diagnosis of my own at the age of 61? As I lay dying in a semi-private hospital room, watching my savings disappear at the rate of two Brioni sportcoats a day for amenities to include one IV drip and three assisted trips to the toilet per day, how would I feel about all those days I’d spent behind the wheel of a Sentra, waiting for the future that would never actually arrive?

I only mention the above scenario in the context of financial advice for medical professionals because I was reading that the average lifespan of a male American doctor is 73 years. Compared to the average American man, they are less likely to die from pneumonia but more likely to die from suicide. So if you’re telling me I need to pinch every penny from medical school all the way to the age of 65 so I can have an average of eight years until death… well, my friend, those eight years had better look like the afternoon parties of the Emperor Nero.

In the end, I think it’s best to take advice like what’s presented above, whether from the doctor-money site or from your humble author, in a homeopathic fashion. A little pinch of fiscal responsibility, a dab of outrageous irresponsibility. Maybe you should get an E-Class instead of an S-Class, or a Camry instead of an ES350. Maybe you should ask that girl at work out on a date instead of spending another evening playing Call of Duty. Moderation in all things. And take this advice, too, from a man who knows: Don’t park your 911 next to your doctor’s leased 3 Series and tease him about it. You have no idea how much an annual physical can hurt.

Jack Baruth
Jack Baruth

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  • Dartman Dartman on May 13, 2017

    "You know what Dad should have told me instead? He should have told me to be a doctor. I have all the required characteristics: arrogance, blind confidence, a lack of empathy, and a willingness to forget about people as soon as I walk out of a room. By and large, doctors are terrible people. I should know. I’ve spent more time in the hospital than your average late-stage cancer patient" ...meh.. The truth is you have neither the intelligence or discipline to be a M.D. Your jealousy and disdain for the professionals that have repeatedly saved and repaired you, only highlights your feelings of inadequacy compared to your father. Keep on convincing yourself how "Yeah man, I stayed true to myself, rather than dedicating my life to helping and healing and improving the lives of others" Doctors are human with all the foibles that entails, and they are at the top of the scale for earning power; but that only comes after proving themselves to have the highest levels of intelligence and education and after 10+ years of undergrad, med school, internship, residency and hundreds of thousands in education costs, No, they are not always the most astute "businessmen" or "financial experts", but that is understandable since most have little exposure to the "real world" until they are in their mid 30's You, and I imagine many of your loved ones are alive and healthy today because medical professionals gave you the best care available...they have neither the time nor inclination for kissing your over-inflated ego (and ass).

  • Chan Chan on May 15, 2017

    Hey look! Jack wrote something! About moderation! On a serious note, life is all about goals, compromises, and how to play the hand you've been dealt. I know people who have lived their lives pinching pennies, never graduating from that mindset even at impending retirement. It's not for me to judge, but at this moment I am content that I know where to splurge and where to save. At the same time, we always read about people who are hell-bent on one-upping each other in displaying right-now wealth that they don't have. Sports cars...if you can swing it, you don't want to hold off until you have a bad back!

  • Pau65792686 I think there is a need for more sedans. Some people would rather drive a car over SUV’s or CUV’s. If Honda and Toyota can do it why not American brands. We need more affordable sedans.
  • Tassos Obsolete relic is NOT a used car.It might have attracted some buyers in ITS DAY, 1985, 40 years ago, but NOT today, unless you are a damned fool.
  • Stan Reither Jr. Part throttle efficiency was mentioned earlier in a postThis type of reciprocating engine opens the door to achieve(slightly) variable stroke which would provide variable mechanical compression ratio adjustments for high vacuum (light load) or boost(power) conditions IMO
  • Joe65688619 Keep in mind some of these suppliers are not just supplying parts, but assembled components (easy example is transmissions). But there are far more, and the more they are electronically connected and integrated with rest of the platform the more complex to design, engineer, and manufacture. Most contract manufacturers don't make a lot of money in the design and engineering space because their customers to that. Commodity components can be sourced anywhere, but there are only a handful of contract manufacturers (usually diversified companies that build all kinds of stuff for other brands) can engineer and build the more complex components, especially with electronics. Every single new car I've purchased in the last few years has had some sort of electronic component issue: Infinti (battery drain caused by software bug and poorly grounded wires), Acura (radio hiss, pops, burps, dash and infotainment screens occasionally throw errors and the ignition must be killed to reboot them, voice nav, whether using the car's system or CarPlay can't seem to make up its mind as to which speakers to use and how loud, even using the same app on the same trip - I almost jumped in my seat once), GMC drivetrain EMF causing a whine in the speakers that even when "off" that phased with engine RPM), Nissan (didn't have issues until 120K miles, but occassionally blew fuses for interior components - likely not a manufacturing defect other than a short developed somewhere, but on a high-mileage car that was mechanically sound was too expensive to fix (a lot of trial and error and tracing connections = labor costs). What I suspect will happen is that only the largest commodity suppliers that can really leverage their supply chain will remain, and for the more complex components (think bumper assemblies or the electronics for them supporting all kinds of sensors) will likley consolidate to a handful of manufacturers who may eventually specialize in what they produce. This is part of the reason why seemingly minor crashes cost so much - an auto brand does nst have the parts on hand to replace an integrated sensor , nor the expertice as they never built them, but bought them). And their suppliers, in attempt to cut costs, build them in way that is cheap to manufacture (not necessarily poorly bulit) but difficult to replace without swapping entire assemblies or units).I've love to see an article on repair costs and how those are impacting insurance rates. You almost need gap insurance now because of how quickly cars depreciate yet remain expensive to fix (orders more to originally build, in some cases). No way I would buy a CyberTruck - don't want one, but if I did, this would stop me. And it's not just EVs.
  • Joe65688619 I agree there should be more sedans, but recognize the trend. There's still a market for performance oriented-drivers. IMHO a low budget sedan will always be outsold by a low budget SUV. But a sports sedan, or a well executed mid-level sedan (the Accord and Camry) work. Smaller market for large sedans except I think for an older population. What I'm hoping to see is some consolidation across brands - the TLX for example is not selling well, but if it was offered only in the up-level configurations it would not be competing with it's Honda sibling. I know that makes the market smaller and niche, but that was the original purpose of the "luxury" brands - badge-engineering an existing platform at a relatively lower cost than a different car and sell it with a higher margin for buyers willing and able to pay for them. Also creates some "brand cachet." But smart buyers know that simple badging and slightly better interiors are usually not worth the cost. Put the innovative tech in the higher-end brands first, differentiate they drivetrain so it's "better" (the RDX sells well for Acura, same motor and tranmission, added turbo which makes a notable difference compared to the CRV). The sedan in many Western European countries is the "family car" as opposed to micro and compact crossovers (which still sell big, but can usually seat no more than a compact sedan).