It’s that time of the year for the next installment of the FIRE Community Interview Series!
For anyone new here, this interview series will cover people within the FIRE community who are on their way to becoming financial independent, have already reached financial independence, or who have retired early. If you are reading this and you are financially independent, retired early, or close to reaching these major financial milestones, please reach out to the Modern Fimily! You can check out the previous FIRE Community Guest Interviews here.
I am so excited to have Steph from @prescriptions_and_paychecks on to tackle our interview questions this week. Steph was one of the first accounts I had connected with when we started our Instagram account and I love her go-getter attitude of paying off massive student loan debt that she and her husband took on combined with their FIRE goals to have $70,000 in annual passive income. Shes a Physician’s Assistant and paid off $166,000 in student loans and her hubby is a Pharmacist who started off with $135,000 in student loans and is now down to $75,000. Oh yea, and they have 3 cutie young kiddos and an au pair! She’s extremely open with her numbers and their journey which I find so refreshing.
I hope you appreciate these responses as much as I do and hope you can relate to these guest interviews in some sense to see that there is no cookie cutter way to FI. If you have any follow up questions or would like to get in touch with this awesome lady, please leave a comment below. Steph, without further ado, take it away!
1. Can you give us a little background of who you are, what you do, and how you became interested in personal finance? How did you discover the idea of financial independence?
Hi I’m Steph! I am a Physician Assistant working in Medical Dermatology. I’m 32 years old, married with 3 kids under 5! My husband is a Pharmacist with a dual PharmD/MBA (and a meme lord).
I never really had much interest in personal finance until I got serious about paying off my student loans from PA school. I found the Debt Free Community on Instagram and was introduced to so many different personal finance resources! I first learned about the idea of financial independence while exploring some new podcasts in the spring of 2018. I started listening to The Mad Fientist and ChooseFI and quickly went down the FI rabbit hole.
2. When in your journey did you realize financial independence was actually possible? Was that the original goal at the beginning?
It seemed like a pipe dream when I first started thinking about it. I knew I didn’t want to live like Mr. Money Mustache just to retire early. Then I ran the numbers. I actually made a timeline of debt payoff, and estimated the values of our 401ks and investments. With my rough estimates, we would be able to have absolutely zero debt (including our mortgage) and be financially independent within 10 years. I was blown away!! My husband didn’t believe me, so I made a more detailed spreadsheet and ran the numbers again. We could have over a million dollar net worth and quit working entirely by my 40th birthday (without eating rice and beans for dinner every night).
Originally, the goal was to see how early we could potentially retire. After taking a step back we’ve re-calibrated and adjusted our goals to be more in line with Financial Independence, with less emphasis on Early Retirement.
3. To help put things into context, if you are comfortable sharing some numbers, what is your savings rate, FIRE number, net worth, salary, how many hours a week do you work, etc? How long have you been working towards financial independence and where are you today?
After adjusting some numbers, we’ve landed on a rough FI number of $1.8 million. This would allow us to live on $70,000/year.
Currently our net worth sits at $360k ($820k in assets and $460k in liabilities if you include our home).
My salary is somewhat variable. I have a base salary of $75k and have made bonuses ranging from $60k-100k per year. My highest earning year so far I made $182k total, which was in 2019. I work anywhere from 30-40 hours a week.
My husband works in a specialized area of pharmacy known as Managed Care. He has had gradual salary increases over the past 6 years and has a current salary of $145,000. He typically works 40-50 hours a week, and telecommutes from home.
We have a graduated plan to increase our savings rate as we pay down debt. In 2018 we had a savings rate of approximately 20%. In 2019 that increased to 25%. With my student loans finally paid off, I’m anticipating a savings rate of 35% for 2020. Once my husband’s student loans are paid off (hopefully by 2021) we can increase our savings rate upwards of 40%. We really like the idea of not having a mortgage, so we will likely aggressively pay that down by 2027.
That’s our full FI/RE plan, but we’ve also worked out other scenarios where my husband could leave his job much earlier and I could continue to work a bit longer.
We have been actively pursuing FI/RE for about a year and a half now. The biggest thing that has helped propel our net worth has been contributing to our 401ks enough to get our company match. 2019 was the first year I have been able to max my 401k contributions (and before finding the FI community, I wouldn’t have even known that it was a thing that people do).
4. Do you feel deprived? Do you feel like you are sacrificing and missing out on life? How would you say your mindset has shifted throughout your FI journey?
We don’t feel deprived, we feel more intentional and focused. We recently went on a 10 day Hawaii trip that we travel hacked! We have tweaked a few major things to allow us to save and invest more aggressively. Cooking at home saves money and allows us to eat healthier (and going out to eat with three small kids is no picnic, so all the more motivation to eat at home!) We have cut back on almost all of our discretionary spending on clothes and “stuff”, which we haven’t missed at all. We have financed vehicles in the past, but continue to drive them now that they are paid off. We have large, comfortable house and a cleaning lady. We live richly without spending every dime we make.
5. What do you spend your money on and what don’t you spend your money on? What brings you happiness and joy? How much money do these things cost?
In a nutshell:
We DO spend on—food, travel, family, activities, giving
We DONT spend on — new cars, clothes, tech/gadgets, memberships/subscriptions, luxury items
We have no qualms about spending money on dinners out with friends, and when we do go out, we’ve never been the people to look at the prices on the menu. We used to go out 7-8 times a month, but have scaled back to 2-3 times a month. We also have a hefty vacation fund that we take advantage of a few times a year. Being able to visit family and friends out of state is important to us. We will sometimes spend up to $8,000/year on travel – though after being introduced to travel hacking I’m trying to get that number down! We love being able to give monetary gifts to friends and family for big occasions, and enjoy being generous tippers.
6. Do you use a budget? Do you track your expenses? Do you track your net worth? If so, how often do you update these?
We do NOT have a budget, but I do track expenses to some extent. I have a list of recurring expenses, and we have separate accounts set aside for house expenses or emergencies. Sticking to a strict budget would definitely contribute to a feeling of deprivation or missing out, so we’ve never used one. Our spending is mostly done with credit cards, which makes it easy to track.
I do track our accounts monthly (401ks, HSAs, savings, investments) and keep a monthly log of our net worth (I track it both with and without the value of our house, as this would not play into our FI number)
7. As a FIRE member living in the US, are there any pros to living in America specifically that have helped you along your journey? Conversely, any cons?
There are only a few countries in the world where we would be able to use our medical degrees, so living in the US is necessary for our careers. Thankfully we live in a low cost of living area and in a country with a relatively low tax burden. US healthcare costs will surely be a barrier in the future, and may result in me being employed (at least part time) longer than anticipated.
8. What is your investment strategy? Do you invest in mutual funds, index funds, dividend growth stocks, real estate, other business, etc.? Has your investment strategy changed over the years?
We currently are invested in index funds, individual stocks (including dividend growth stocks), REITs, and a small percentage of bonds. Our current investment strategy does not include real estate. I have moved most of my holdings to index funds, but my husband still prefers to have primarily individual stocks in his portfolio. Our strategy is buy and hold—no day trading here! We have both tax advantaged accounts and personal investment accounts.
9. As a parent to 3 kiddos, what have been some of the most expensive child related expenses from your end? What are some of the best items or experiences you’ve spent on your children to date? What were some baby/child items that you thought you needed by didn’t really need?
We have been blessed with lots of free childcare from our parents. We’ve estimated that they’ve saved us over $45k in childcare expenses over the past 4 years (our kids are currently 4 1/2, 2, and 4 months). We recently got an Au Pair to help with childcare. The program will cost roughly $19k for the year. Financially, it makes mores sense for us to pay for childcare than for one of us to stay home — My husband and I both value our careers and enjoy working full time right now. Not to mention we can use my husband’s Dependent FSA to defer some of our tax burden.
Other than childcare and birth expenses, our kids haven’t been that expensive! We get a ton of hand-me-down clothes from family, and have re-used car seats/cribs/baby gear. Formula can definitely be expensive, but I’ve found ways to get it at a deep discount at our local grocery store. We keep a lot of extracurricular activities to a minimum, but have an annual zoo/museum pass.
We splurged on a fantastic carseat/stroller combo called a Doona —it’s been worth every penny and saved my back.
10. As an American pursuing FIRE, what are your post-FIRE thoughts/plans regarding health coverage? As a reference, what do you currently pay annually or monthly for health related costs (be it insurance, co-pays, deductibles, etc.)? What do you estimate your post-FIRE health costs to be per year?
Currently my employer subsidizes most of my healthcare—I pay $100/mo. My husband and kids are on his employer’s high deductible health plan with a HSA with a premium of about $130/mo. He maxes out the Family HSA contributions every year.
We’re honestly not too sure what our plan is for healthcare once we hit FI/RE. Its hard to estimate where costs will be in 8-10 years. We will keep re-evaluating as we go.
11. If you could go back in time and change things, what would you have done differently?
We might have reeled in our spending sooner. I could have taken out slightly less in student loans and more aggressively paid them off. I wish I had done more self education on personal finance early on!
12. Has discovering financial independence changed how you view your job and life overall?
I love my job and my goal for financial independence is not to be able to leave my job entirely, but to rely less on my earned paycheck. Right now I worry about missed days as missed income. I’m looking forward to more flexibility. My husband, on the other hand, has a much more stressful job and would love to be able to forego work entirely at some point. The idea of financial security without having to go to work is very appealing. It’s really cool to have such a specific goal that we can work towards—that has been really motivating for us.
13. Do you take advantage of tax advantaged accounts offered to you? If so, which ones and how so? Do you have a game plan to be able to withdraw from these funds without getting hit with a penalty?
My husband and I have both been good about contributing to our employer sponsored 401k plans. Our income precludes us from being able to contribute to an individual Roth IRA, so we may look into backdoor contributions or a Roth conversion ladder in the future. We maximize our HSA contributions because we are unsure what our healthcare coverage will be like in the future.
My Father In Law recently retired, and he says that he regrets not having more money outside of his IRA—he feels frustrated not being able to access a big portion of his money. We are taking this point of view into consideration when looking at balancing our taxable and tax-advantaged accounts.
14. Where do you see yourself in the next year, 5 years, 10 years?
Over the next few years, we will just be chugging along, slowly investing and paying down debt.
Within 5 years, we should have a net worth over $1 million with our only debt being our mortgage. Our kids will all be in school at that point, so our childcare expenses will taper off.
In 10 years, at the ages of 42 and 44, my husband and I will be financially independent
15. Have you come out of the FIRE closet yet? Meaning, do your friends, family, co-workers etc. know about your financial independence goals? If so, how did you bring it up and what were their reactions? If not, why not? Why do you struggle with this conversation and why do you feel that money such a taboo topic?
Our parents know that we are working towards early retirement, but I’m sure don’t believe that we will be able to do it as early as we say we could. People seem to think that you need a lot more money. We have a few close friends that know we are going towards FI/RE, but some of them don’t believe it can be done without eating beans & rice and riding our bikes to work—ha! I joke with my coworkers that I’ll retire before my supervising doc, who is 14 years older. A few of our friends are interested in Real Estate investing as supplemental income, but haven’t been actively pursuing FI/RE. I just want all my friends to be financially independent so we can all hang out during our early retirement!! I love that I have an online community of people to talk money with! The money taboo is real —I don’t want to be perceived as bragging about our wealth.
16. What pieces of advice would you suggest to someone who is just starting out or someone who is working toward reaching financial independence?
Don’t beat yourself up about what you COULD HAVE DONE. Just start making small changes NOW. You don’t have to live like anyone else to make Financial Independence a reality—but you do have to spend some time reflecting on what is important to you.
17. What has been your greatest accomplishment to date?
Graduating with my medical degree and becoming a skilled medical provider.
18. Are there any books, blogs, or podcasts that you would recommend for our readers to check out?
Playing with FIRE and Work Optional are two of my favorites to introduce people to the idea of FI/RE. I wish I had read JL Collins’ Simple Path to Wealth 10 years ago! And I love The Latte Factor as a gift idea for younger adults.
I’m not much for blogs but I’m loving Broke Millennial Blog and, of course, Modern FImily.
I’ve binge-listened to almost every episode of the ChooseFI podcast! While I’m waiting on new episodes, I am getting into Paula Pant’s Afford Anything and Bigger Pockets Money.
19. How can people get in contact with you?
I have a personal finance Instagram account: @prescriptions_and_paychecks. I’d love to connect with more people in the FI/RE community!
Pretty great stuff, eh?! If you enjoy personal finance, like seeing funny memes, want to learn more about her “BroPair”, and want some yummy food recipes, give Steph a follow on Instagram! Here are some of our key takeaways from this interview:
- For anyone new to the concept of FIRE, the idea of saving up enough to retire early may seem way out of your league – which Steph noted and that was also my original thought too. But play with some compound interest calculators and you actually might be quite surprised! Even as a family of 5 who started off with a massive amount of student loan debt, they will likely reach their FI number in their 40s. It’s all about intentional living!
- Steph is very open about her story and numbers, so if you have any interest in joining the world of Physician Assistant’s reach out to Steph!
- As always, I love the responses to question 4. Yet again, another interviewee that does NOT feel deprived.
- We too budget like Steph, we don’t! We absolutely track every single income and expense that passes through our accounts. But we’ve gotten to a point in life where we don’t need to have categories and spending limits as our spending is essentially on auto pilot at this point.
- Steph and her husband saw the benefits of utilizing their tribe and saved a TON of money by living close to their parents and being able to receive free child care for the past few years when the kiddos didn’t outnumber the grandparents. She also dispels the myth that kids have to be expensive (and insider note, we have a a post lined up in June that goes into the nitty-gritty of our tips for new parents).
- It saddens me that the health care system in the States is still tied to your employer and makes me very grateful to be in Canada for this one factor alone.
- I always love the responses to question 16 too, great advice!
Thanks again Steph for being a part of our FIRE Community Guest Interview Series on the Modern FImily blog. I always love learning about how other families are navigating their way to FI. Steph shows that even though you may be starting with a very large negative net worth thanks to student loans, it’s still possible to reach FI in your 40s – with 3 kids nonetheless! Next month’s interview will shift over to a family of 3 who has already FIRE’d and living the sweet retired early life in Wyoming.
Did you enjoy this interview? Are you financially independent, retired early, or close to reaching these key milestones? We would love to have you tackle our guest questions. Thanks for tuning in and check back next month for the next interview.
And in case you wanted to read the previous interviews that make up our FIRE Community Guest Interview Series, here you go!
- FIRE Community Guest Interview # 1 – Empowerment Through FIRE
- FIRE Community Guest Interview # 2 – We Quit Our Jobs To Retire Early & Travel The World
- FIRE Community Guest Interview # 3 – Dividend Investor Reached FI By Living An Intentional Life
- FIRE Community Guest Interview #4 – Pursuing FIRE With Multiple Passive Income Streams in Australia
- FIRE Community Guest Interview #5 – Driving to FIRE Through RV Living
- FIRE Community Guest Interview #6 – From High School Drop Out to Retired at 35
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This was great!!! Love the interview, as a fellow family of 5-er here =) I’ve enjoyed following Steph on Instagram, although I’m detoxing with you all right now! Thanks for sharing this interview.
Hey Hilary glad you enjoyed this one. As you know, Steph is great! It always impresses me to see families with multiple kids reaching/seeking FI, dispelling that FIRE is not possible with kids! And glad to hear you’re not tempted to head over to IG while on the social media detox 🙌🙌
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