MtoM #276: Part-Time Millionaire as a Government Doctor

Summary

White Coat Investor Podcast
Milestones to Millionaire #276: Part-Time Millionaire as a Government Doctor
Release Date: May 25, 2026
Host: Dr. Jim Dahle
Guest: Brian, OBGYN and government physician

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Episode Overview

This episode of the White Coat Investor Podcast’s Milestones to Millionaire series features Brian, an OBGYN physician in Texas, who is celebrating two major financial and career milestones: transitioning to part-time work while remaining a government employee and reaching “TSP millionaire” status (amassing over $1 million in the Thrift Savings Plan, the federal government’s retirement account). Host Dr. Jim Dahle explores Brian’s career decisions, work-life balance, investment journey, and the nuances of building wealth within a government framework. The conversation is filled with actionable strategies for high-income professionals aiming for financial independence without pursuing private practice.

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Key Discussion Points and Insights

1. Career Trajectory and Government Employment

Background and Career Path

• Brian grew up in Texas and completed ROTC as an undergraduate, paying for college via a military commitment. He then took loans for medical school (Tufts), completed residency at Walter Reed, and served in the Army until 2012.
• After fulfilling his service obligation, he stayed in the same Texas-based role, transitioning to a GS (General Schedule) federal employee position rather than private practice.
• “[After leaving the Army] I stayed in the same office doing the exact same job. They decided to pay me more, and no more deployments. So I enjoyed it and continue to enjoy it.” (Brian, 04:15)

Career Milestones

• Made the transition to part-time government work, something Brian hadn’t initially considered feasible, especially after a government-wide push for staffing reductions presented an opportunity.
• Reached TSP millionaire status through consistent savings and investing, capitalizing on government benefits.

Financial Compensation

• “I got out making about $220,000 a year… slowly increased over time, up to $360,000 now.” (Brian, 04:15)

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2. The Switch to Part-Time and Job Sharing

Motivation and Logistics

• The decision to go part-time stemmed from a desire for greater work-life balance, especially to spend more time with family and avoid burnout common during demanding summer rotations.
• Describes the process as arduous, requiring 6-12 months of paperwork, but ultimately fruitful.
• “It actually would make it easier if we had two people that wanted to do part-time to make this happen...now I'm enjoying it.” (Brian, 05:15)
• The arrangement is officially called a “job share.” Brian and his colleague split duties based on workload preference—one focusing on labor and delivery, the other maintaining a broader clinical scope.

Impact on Burnout and Job Satisfaction

• “I actually feel better going into work. I’m more energized...It’s so much better when you’re not, you know, on the verge of burnout.” (Brian, 06:19)
• Working full-time often meant 60-hour weeks, particularly straining during the summer when the military sees significant personnel movement.

Clinical Competency Concerns

• With part-time work, some skills—particularly lower-frequency ones like GYN surgery—may diminish, but core skills (e.g., C-sections) are maintained due to frequency of practice.
• “[On GYN surgery], now it’s like one OR every other month. So, yeah, over time that may diminish some of those surgical skills.” (Brian, 08:02)

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3. Weighing Government Employment vs. Private Practice

Deliberations and Decision-making

• Brian considered private practice when he left the Army and again when the option to take a government buyout arose. Each time, the demands of private practice (e.g., always being on call, smaller support groups) and the benefits of federal employment (large group, supportive environment, pension) tipped the scale toward staying.
• “I thought it was kind of better to stay with a big group...life outside of work was important.” (Brian, 09:03)

Financial Tradeoff

• Although private practice might offer higher peak income, the overall package—competitive pay, pension, and job stability—made government employment attractive.
• The government’s formula for pension calculation counted part-time years as full years for vesting, an unexpected benefit.

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4. Financial Journey: Becoming a TSP Millionaire

Retirement Accounts & Saving Approach

• Brian’s savings rate has consistently been 20–25% of income, which he describes as moderate, not extreme.
• Maximized contributions to backdoor Roth IRAs, his TSP, and his HSA, then invested in a taxable brokerage account once retirement accounts were maxed.
• “The waterfalls that you have in your book and blog—just work my way through.” (Brian, 12:59)

Investment Choices

• Initially invested in target retirement funds for simplicity.
• Became more hands-on later, shifting to a 90–95% equity allocation within the TSP (C, S, I funds) and matching outside investments to maintain asset allocation.
• Took a more aggressive stance on stocks, knowing a federal pension would provide stability.
• “I’ve been able to do a little bit more of an aggressive asset allocation because I know that I’ve got a pension…” (Brian, 15:43)

Utilizing the HSA

• Chose a high-deductible health plan to take advantage of the HSA, which the federal government contributed to, building a six-figure tax-advantaged account.
• “We’ve got those now. Six-figure HSA account and actually starting to use that money as well now since it’s just continuing to grow over time.” (Brian, 12:12)

On “Coast FI”

• Now in a position where investments and pensions will cover retirement needs, with continued contributions mainly adding margin.

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5. Key Advice for Aspiring Millionaire Government Employees

Automation Is Key

• “Automate everything you possibly can… because you’re going to be spending so much time doing other things.”
• “Putting savings first is huge.” (Brian, 16:02)
• Incrementally increase savings rate with every pay bump or promotion, particularly in the early years.

Balance and Flexibility

• “Have a plan and a backup when you’re wanting to do part-time to say and ready to leave… if this doesn’t work out, I’m ready to go.” (Brian, 10:27)

On Wealth Building for Physicians

• Both government employment and private practice pathways can lead to wealth, if financial literacy and discipline are applied.
• “The truth is both pathways work just fine to reach financial independence.” (Jim Dahle, 17:35)

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Notable Quotes & Memorable Moments

• “I really want to stay around for a little bit longer and just wanted to do part time, and I was like, that sounds good.” (Brian, 05:06)
• “Working 60 hours a week in those summers gets old.” (Brian, 06:43)
• “We’re talking about part-time work for physicians—sometimes it just means cutting back to one job. Of course that’s going to help your burnout.” (Jim Dahle, 07:12)
• “I like having that safe pension option.” (Brian, 10:40)
• “Even the next ten years of doing part-time work count towards the years required to get to the minimum for retirement for government... a year of doing halftime work still counts as a full year…” (Brian, 11:09)
• “Automate all your bill pays. Try to minimize the time you have to spend doing that kind of stuff outside of work because you need time to spend with loved ones outside of work.” (Brian, 16:02)

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Important Timestamps

• 02:18 – Introduction of Brian’s background
• 02:41 – Career milestones: part-time transition and TSP millionaire status
• 04:15 – Transition from Army to GS employment and pay progression
• 05:29 – Description and benefits of government job share arrangement
• 06:19 – Impact of part-time work on energy, burnout, and teaching
• 09:03 – Decision process for remaining in government vs. going private
• 10:40 – Considering pensions, benefits, and financial competitiveness
• 11:09 – Importance of part-time years counting towards pension vesting
• 12:12 – Retirement savings strategies and HSA use
• 14:19 – Investment allocations and approach over the years
• 16:02 – Advice for early-career physicians: automation and savings

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Takeaways for Listeners

• Part-time government work is possible—even in clinical medicine—given planning, negotiation, and a willingness to wait out bureaucracy.
• Government employment remains a competitive and viable path for high-income professionals seeking stability, benefits, and work-life balance.
• Achieving millionaire status as a federal employee is realistic with steady saving, maximizing retirement accounts, and adhering to the principles laid out in the White Coat Investor resources.
• Automation, incremental increases in savings, and prioritizing personal time/family are fundamental habits for financial and personal well-being.
• Multiple paths exist to financial independence; both government and private sector can work if sound financial practices are followed.

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For more resources and inspiration, visit whitecoatinvestor.com.

Transcript

[Jim Dahle]

This is the White Coat Investor Podcast,

[Kyle]

Milestones to Millionaire celebrating stories of success

[Jim Dahle]

along the journey to financial freedom.

[Kyle]

This is Milestones to Millionaire podcast number 276. This podcast is sponsored by Bob Baiani at Protuity. He's an independent provider of disability insurance planning solutions to the medical community in every state and and a longtime White Coat Investor sponsor. He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage or to get this critical insurance in place, contact [e-mail] Protuity today you can email infoartuity.com or you can just pick up your phone. Call 973-771-9100. All right, the One Big Beautiful Bill act passed in 2025. It changed the landscape for medical student borrowing. Federal student loans are now capped at $50,000 per year, $200,000 total for medical and dental students, which means many students will need private loans to cover a significant portion of their total education costs. We just launched a new resource to make this easier. You'll find vetted private student loan companies, plus two bonuses you won't get anywhere else. You'll get cash back from some of the lenders themselves. You take out a loan and they give you some cash and all of them. If you get a loan through our links, you'll get free access to our flagship Fire your financial advisor course, the student version that you can upgrade later if you wish, which is our best selling course for medical students just starting their financial journey. So check out two or three lenders on the list. Go with the one offering the lowest interest rate and the best terms you can find that list. Whitecoatinvestor.com loan all right, we've got a great guest on today. We're always getting requests for regular people, regular docs maybe, not these people that make a gazillion dollars on the podcast or are already deca millionaires or whatever. Well, we've got a doc here who's been working for the government his entire career. Let's get him on the line and talk about some of the milestones he's accomplished. Our guest today on the Milestones to Millionaire podcast is Brian. Brian, welcome to the podcast.

[Brian]

Hello.

[Kyle]

Tell us a little bit more about you as far as what part of the country you're in, what you do for a living, how far you are out of your training.

[Brian]

I'm from Texas. I'm an OBGYN physician and got out of residency in 2008. So almost 20 years.

[Kyle]

2008. Okay, so only a couple of years after me. Tell us what we're celebrating today. What have you accomplished?

[Brian]

Well, celebrating a couple of things. I recently went to part time working for the government, which I didn't think it was actually a possible thing to do, and then also made it as a TSP millionaire.

[Kyle]

Oh, that's pretty awesome. Both of those. I'm a big fan of part time work. Tell us a little bit about your journey through your career and how you ended up now being able to work part time.

[Brian]

Well, let's see, I go back. I did ROTC undergrad, so I had undergrad paid for and then did not want to add additional time for medical school. So I took loans from medical school and went to TuftsMed and then Walter Reed for residency training and then the army sent me down to Texas and then I've stayed here ever since once I got out of the army in 2012.

[Kyle]

Okay, so you did the minimum time in the army. It sounds like you paid off your ROTC obligation and did you continue to work for the guy government at that point?

[Brian]

Yeah, I stayed in the same office doing the same exact job and you know, they decided to pay me more and no more, no more deployments. So I enjoyed it and continue to enjoy it.

[Kyle]

So yeah, if you were coming on active duty about that time, you probably had a significant number of deployments. How many times did you deploy in the three or four years you were active duty?

[Brian]

I did one full year deployment in that timeframe.

[Kyle]

So yeah, that's a long time to be away.

[Brian]

Yep.

[Kyle]

Okay, so you stayed on as a, as a government contractor or were you hired as a GS employee or what?

[Brian]

GS employee. So at the time it was, I got out making about 220 a year and just, you know, has slowly increased over time, up to 360 a year now. And I've gotten to the point where I've got enough that I want to take more time to spend with kids, more time to travel. And it kind of came up last year when the whole government was trying to cut employees. We all got the email, said, hey, if you leave the government and we'll pay you for seven months. And I thought about it and one of my colleagues who was getting ready to retire, I was like, oh, it's a no brainer for you, right? You're just going to take this. Why stick around? And he was like, well, I really want to stay around for a little bit longer and just wanted to do part time and I Was like, that sounds good. And the powers that be, they said, well it actually would make it easier if we had two people that wanted to do part time to make this happen, then we could hire another full time employee pretty easily. And was a government, so it took six to 12 months to actually make it happen, paperwork wise. But now I'm enjoying it and I can do this all the way to my government minimum retirement age of 57 and then continue on with a pension.

[Kyle]

Now are you guys officially splitting a job or are you just two part timers? And it happened to be about the same amount of work that that would have been happening from one doc previously.

[Brian]

They call it a job share. And so you just have a job share agreement of. And he really just wanted to essentially work labor and delivery. He didn't want to do clinic anymore. And I said I want to do still, you know, full time and full spectrum OB gyn. And they just worked our schedules around it. And you know, he's actually going to be retiring later on this year and they said, you know, when he retires we'll actually just leave it on as a halftime position that somebody else can be hired into. And I don't think we'll have a difficulty finding somebody wanting to do that.

[Kyle]

Very cool. Okay, so since you started doing part time work, how do you feel about work compared to how you felt about it before?

[Brian]

I actually feel better going into work. I'm more energized. We do have residents that rotate through. We've got ER residents, family medicine residents, we have an FMOB fellowship. And I definitely feel more energized in order to be able to teach and just, you know, taking care of patients. It's so much better when you're not, you know, on the verge of burnout.

[Kyle]

Did you feel burnt out? Were you feeling crispy when you were, you know, just before you went part time?

[Brian]

I was especially, you know, the summertimes as, as, you know, in the, you know, around the military, there's PCs, ETS and everyone's moving around. We're short staffed. It's tough during those summer summers usually. And, and yeah, working, you know, 60 hours a week in those summers gets, gets old.

[Kyle]

You know, the first thing I tell burned out docs is you ought to think about cutting back to full time, you know, because so many docs are like you were working, you know, a job and a half. Really working 60 hours a week is job and a half to the rest of Americans.

[Brian]

Right.

[Kyle]

And even if you're going half of that, that's still three quarters of a job. Right. I mean it's. So let's keep in mind what we're talking about. A lot of times when we're talking about part time work for physicians, sometimes it just means cutting back to one job. Of course that's going to help your burnout and that sort of a thing. Okay, so how long have you been doing part time work now?

[Brian]

They actually let me start kind of scheduling part time last summer. So they just said, hey, you can use some of your leave until the official part time happened in January. So a little over six months of

[Kyle]

part time, so not all that long. Have you given any thought to clinical competency?

[Jim Dahle]

Right.

[Kyle]

And how long you can do part time work at the level you're doing it without worrying that you're not as good a doctor as your patients probably deserve?

[Brian]

I mean, essentially I'm working about 50 to 60%. The one point that it might be a difference is kind of doing my GYN surgery because even for our practice we only had about one or a month in general. So now it's like one or every other month. So yeah, I could say, see, kind of over time that may diminish some of those surgical skills. As far as surgeries that I don't do very often. I mean, C sections, we do them often enough that it's not a big deal for labor and delivery and those kinds of skills. But GYN surgery can definitely take a hit. I mean, I remember that actually when I was gone for a whole year for deployment and then came back. Some of the things just trying to remember instrument names and things can take a hit.

[Kyle]

Were you ever tempted along the way to leave the government and go out in private practice or join a partnership or be employed by a hospital or tell us about if you ever were and what your decision making was when you decided to stay in.

[Brian]

When I first got out of the military in 2012, I was looking around, actually there was a hospital in town that was being built and they were hiring. They already had three OBGYNs. They were looking for a fourth. And I kind of interviewed with them and talked to them. The minuses for me were like they were talking about when you're not on call, you're still expected to come in for your patients that are delivering if you're still in town. So I'm like, okay, so you're on call 24 7. It sounds like I'm like, I'm used to a fairly big group practice of we've got 10 to 15 OBGYNs and I'm on call every 10 nights or so, it's not as daunting. So I think for, you know, life outside of, of work, I, I thought it was kind of better to stay with a big group. And then more recently when I was looking into if I took this seven months, you know, they pay me and I could maybe do some locums or, or join some of the groups around here and there was some part time, you know, some of the hospitals around here. And I again thought about it, didn't really look into it seriously, since I think knowing that I had those options at least when I talk to the administrators and say, hey, I'm looking at this seriously, are you able to give us this part time position? And I think that's one of the keys is having a plan and a backup when you're wanting to do part time to say and ready to leave that, hey, if this doesn't work out, I'm ready to go.

[Kyle]

Do you feel like you left a lot of money on the table by not going out into private practice or do you feel like you ended up being paid fairly for the work you did when you include all the government benefits and pensions and matches, etc.

[Brian]

I think it was fairly competitive. Again, talking to some of my colleagues that got out of the military and either joined other groups or moved and did locums. I'm fairly competitively compensated and I like having that safe pension option. And technically I could still get a pension. If I left now, it wouldn't be as much and it wouldn't start till later. But I did find out. As far as the part time work, one of the things I didn't realize was Even the next 10 years of doing part time work count towards the years required to get to the minimum for retirement for government. So it's 30 years plus reaching minimum retirement age. But a year of doing halftime work still counts as a full year for that. So that was a benefit I didn't

[Jim Dahle]

realize as well, which it probably should

[Kyle]

if we're really talking about halftime being, you know, 30 hours a week. You know, as far as, you know, like public service loan forgiveness, definition of full time work is 30 plus hours a week. Right? It doesn't feel full time when you're, you know, a typical OB GYN that's been, you know, killing it for decades, but it technically is okay. You've become a TSP millionaire. That's pretty awesome that you've acquired that much money in what essentially is the Thrift Savings plan, the government 401k. Tell us about how you've saved for retirement over the years, what kind of accounts you've used and what kind of investments you've used.

[Brian]

When I got to the point that I was making enough to the backdoor Roth IRA for myself and my spouse, so doing those retirement accounts and then generally saving about 20 to 25% a year. So not super saver but enough that we could take trips and do the things that we wanted to do. And also maxing out the HSA account as well. We've got those now. Six figure HSA account and actually starting to use that money as well now since it's just continuing to grow over time. So pretty much the waterfalls that you have in your, in your book and blog just work my way through. And then once I've used up all the retirement accounts, go into the brokerage

[Kyle]

account and using that up, I guess I'm interested. I'm kind of surprised to hear that you were able to use an hsa. Did the government not provide you a traditional lower deductible health care plan that wouldn't allow you to make HSA contributions?

[Brian]

Yeah, the government. You have a bunch of different choices. You can do Blue Cross Blue Shield or you can do a high deductible health plan. That actually was, it was one of the least expensive choices. But they also, they also contribute, I think maybe 1500 a year. I forget exactly. Towards the HSA. Yeah, it's a nice option to have and max that out. And of course towards the TSP you get the 5% matching, you know, on a doctor salary is, is a good amount of. Good amount of money in there every year in order to get up to the TSP million now.

[Kyle]

But you're also qualifying for a pension. I like that you describe yourself as not a super saver, but you save 20 and 25, 20 or 25% a year in addition to qualifying for a pension and of course Social Security down the road as well. So I imagine you're on track for a pretty comfortable retirement.

[Brian]

Yeah, yeah, I think so. At this point I said I can probably be coast fi. I'm still contributing to the accounts at this point since. Since it hasn't really made a difference with the decrease in salary at this point.

[Kyle]

Okay, let's talk a little bit about how you invested over the years. I mean the TSP is known for these rock bottom cost index funds. The C fund which is an S&P 500 fund, and the S fund which is basically an extended market index fund. And the I fund, which is currently a developed markets international index fund, and then the F fund, which is a total bond market fund, and of course the unique G fund, which is kind of a money market fund on steroids. But you had other investments you had to mix it with in the IRAs and your brokerage account. So what did you invest in over the years?

[Brian]

When I started, I again didn't know very much. And the simplest thing was doing the target retirement funds. And that's what I started with. I started with whatever I think I had started with the 2040 fund and knowing when, when I might want to retire. So I started with that and then over time, I've tweaked a little bit and done it on my own, but it's closer to 90 to 95% equities. So the C, they asked the I fund and then just a smaller amount on the other two and just I've got a spreadsheet with kind of all of my accounts to look at what I've got in the stocks versus the bonds. And, you know, I've been able to do a little bit more of an aggressive asset allocation because I know that I've got a pension that will be coming down the road.

[Kyle]

Well, it sounds like you've been a very successful DIY investor. Congratulations to you on your success. If there's somebody out there that's like you beginning of their career and they want to be on track to have a great retirement, maybe they want to be a 401 or a TSP millionaire. What advice do you have for them?

[Brian]

I definitely recommend automating things. You know, just automating the tsp or 401k from the get go. Increase with each increase in your salary, you know, in the military is new. Every two years or every promotion, you know, you got an increase, bump up those, those amounts until you get to the to the max. Also, as a resident was automate everything you possibly can because you're going to be spending so much time doing other things. So automate bills. That was one of the things, you know, automate all your bill pays. Try to minimize the time you have to spend doing that kind of stuff outside of, you know, outside of work because you need time to spend with, you know, loved ones outside of work. So those are really the big things. Just automating. Putting savings first is huge.

[Kyle]

David Bach, who we had on the podcast a few months ago, wrote the Automatic Millionaire and you've given a good case study for why that method certainly works. Well, well done to you. You should be very proud of what you've accomplished. Thank you for being to come on the podcast to inspire others to accomplish their goals as you're accomplishing yours.

[Brian]

Well, thank you so much for having me and thank you for all that you do to help us along the way to get here.

[Kyle]

Hope you enjoyed that as much as I did. It's always great to talk to people that have made different decisions than I did. Right When I got out of the military, about the same time this doc did, I decided to go into private practice. He continued to work for the government and it's interesting to see the differences in the pathways we've gone down, but the fact that either way we could have been successful if we paid attention to our finances. If we continued to save money. He'll have a pension that I won't have. Maybe I had a higher income that he didn't have, and maybe I had to save more of my money to get to the same place. But the truth is both pathways work just fine to reach financial independence.

[Jim Dahle]

Hello, my name is Tyler Scott with White Coat planning and today Dr. Dali's asked me to come share the principle of high yield savings accounts with you. A wonderful topic, one I'm excited to talk about. A high yield savings account is exactly what it sounds like. It's a savings account at a bank or a brokerage that offers a higher interest rate on your cash than a savings account at your local average national bank. When I graduated dental school and knew nothing about personal finance, I had our checking and savings account at Chase bank because they were everywhere and I got some kind of bonus to sign up with them. I started building my emergency fund in my savings account like Jim told me to. And I noticed one year I got a statement from Chase showing that I made $1.09 in interest during the year. Closer examination of the statement showed that the savings account paid me an interest rate of 0.02%. 2. 100 of a percent. This is your classic low yield savings account that the vast majority of Americans are using. The purpose of this lesson is to make sure you don't fall victim to this unfortunate hole in our financial literacy. We want you to be earning a reasonable rate on your cash. To do that, don't let your cash sit in a savings account at the local credit union or some enormous national bank. Make sure you're keeping your cash in a high yield savings account. To find a good high yield savings account you can always Google it and a list of banks will come up. The most popular ones I see Clients using these days are Ally Bank, SoFi, Wealthfront, Capital One, Discover, and others. Well, what makes for a good high yield savings account? The first and most important quality is a reasonable interest rate. Right now in late 2025, that means about 3 to 4%. Don't worry too much about finding the highest rate. The difference between 3.2 and 3.9% is

[Brian]

not what we're worried about.

[Jim Dahle]

We are worried about the difference between 0.02 and 3.2. Just to drive that point home, let me quantify why you don't need to stress about getting the best interest rate. Let's say we're talking about where to keep your $60,000 emergency fund. Getting an extra 1% means an extra $600 a year before considering taxes. Remember that interest paid from a financial institution is subject to ordinary income tax rates. So assuming you have a 40% marginal tax rate, that $600 becomes $360. I'm not here to scoff at that difference of 300 bucks. I just don't think three to four hundred dollars this year is going to make or break any of your short or long term financial goals. But the difference between getting functionally 0% and maybe 4.5% on that same amount is $2,700 pre tax and $1,600 after tax. Assuming that same 40% marginal tax rate. Again, I'm not saying you'll get rich with an extra $1,600 or $2,000 a year. But that buys some nice holiday gifts, a quality weekend away, and that is worth making sure you're earning each year. So it's definitely worth getting the 3 to 4%, but not worth bouncing your money from bank to bank to get a few extra tenths of a percent of income here or there. So a reasonable interest rate is the first quality we're interested in. The second is organizational opportunities. What I mean by that is some banks allow you to create buckets within your High Yield Savings account. I'm not talking about different accounts with different account numbers. I'm talking about sub accounts within the High Yield Savings Account that are earmarked for future expenses that we know will happen, but we don't know exactly when they will occur. For example, we know we will need to replace our cars. Our home will need some updating and repairs. We know we'll go on some bigger vacations and at some point we'll have some larger out of pocket health care costs. To prepare for these episodic expenses, we recommend clients set up what is Commonly known as sinking funds, where you sink away a little bit of cash every month into your high Yield Savings account via automatic monthly transfers. I personally use Ally bank for this purpose, and our High Yield Savings account has different buckets within the account that we deposit specific dollar amounts to every month via automatic transfers from our checking account. You may be wondering how we pick the amounts to set aside each month. Well, for travel, we pick an amount that's some combination of currently true and reasonably aspirational. For us, that's about $20,000 a year. Now, we don't spend $20,000 every year, but we sink away these funds and they roll over year to year to give us a guiding light for an average annual spending target. For out of pocket healthcare expenses, we pick the amount of our high deductible health plan individual deductible. Again, some years we use less, some years we use more. But this is a decent rubric for our otherwise unreasonably healthy family. For home related costs, we save 1.5% of the value of our home each year. This is meant to cover big repairs, upgrades, and sizable furnishings. Obviously, this amount doesn't get used every year, but again, it rolls over year to year. And so when my wife asks me if we can get such and such done on the house, I just open the Ally app on my phone and show her the home bucket balance. That gives us a ceiling on what we can spend and ensures we aren't undermining our other goals with the insidious and corrosive threat that is ongoing home renovations. Same idea for cars. We take the number of vehicles in our family, the number of years we intend to keep each car, and the expected cost to replace those cars. And that helps us come up with an annual savings target. So for us, we have two cars. We plan to keep them about 15 years and spend about $25,000 to replace them. That math produces a monthly savings target of just under $300 to the car bucket. Then down the road, when it's time to buy a new car, we're prepared to pay for it in cash. Other sinking funds that I've seen be useful for clients include Future BackDoor Roth IRA contributions, annual disability or other insurance premiums. Because you often get a discount if you pay annually instead of monthly. Maybe there's a wedding coming up or a big cultural celebration, a bar mitzvah quinceanera, or a down payment on a house. Another one I see a lot of clients use is what I call surprises and demises. And that's Intended for aging parents, pets, or other loved ones whose present uncertainty may result in a large cash demand in your future. The way sinking funds work mechanically is that we pay for the expense with our credit cards so you can get your cash back or your miles. And then we reimburse ourself from the corresponding bucket back to our checking account. Then we pay the credit card bill from the checking account. For example, I just put one of my daughters in braces. It was $5,000. Paid the orthodontist with the credit card at the office, came home, took $5,000 out of the health care bucket, put it back in the checking account, and then paid the credit card off right away. Then the bucket begins to fill up again because of the automated monthly contributions. Now your emergency fund can sit in its own separate bucket. Sinking funds and emergency funds are distinct and separate ideas. Sinking funds are for inevitable future expenses that we know will happen. We just don't know when or how much. An emergency fund is the safety net that sits underneath the sinking funds in case an expense arises sooner or larger than the bucket can handle. Having these sinking funds allows us to automate our financial life and to be reasonably assured that any future expense will not disrupt our normal monthly cash flow. They're a great way to make additional use of your high yield savings account. So now that you've got a good interest rate and some meaningful organization, if you're using a bank, you also have FDIC insurance. FDIC stands for Federal Deposit Insurance Corporation. This government entity guarantees that you can get your money back if your bank fails and bank failures happen. This is not just a problem from the 1920s. There's been some large bank failures in the recent past. And so it is important to know if you have this coverage or not. The FDIC will return up to $250,000 for an account held by just one person and up to half a million dollars for a jointly held account. In some cases, these financial institutions partner with other banks to ramp up their FDIC insurance to 1 or 2 million, depending on the account. You probably don't have a financial plan that calls for seven figures in cash. So it's not applicable to most people. But for some people, FDIC insurance provides a meaningful amount of peace of mind for large sums of cash. For other people like Jim, they don't really care about this FDIC insurance or these sinking funds. They just care about the simplicity and the interest rate. So they don't use a bank at all for their high yield savings account. They use a taxable brokerage account at a place like Vanguard or Fidelity. Jim is especially fond of Vanguard because the settlement fund in a taxable account is the federal money market fund that is currently paying a little higher interest rate than what he could get at a bank. Now, these money market funds are incredibly safe and liquid, but they do not have formal FDIC insurance. In exchange, they often have a slightly higher rate than what the bank will offer. Not always, but often. Where you set up a high yield savings account and what the exact rate at the exact time is is not important. What is important is using any of these options instead of some crappy low yield savings account that most people are using at their local bank or big national bank and they don't even realize there's a better way. I hope that was helpful. Go out and make sure that you've got your cash held in a high yield savings account. That'll be a meaningful way to add organization and long term wealth to your financial plan.

[Kyle]

This podcast was sponsored by Bob Bayani at Protuity. One listener sent us this review. Bob has been absolutely terrific to work with and has always quickly and clearly communicated with me by both email and or telephone, with responses to my inquiries usually coming the same day. I have somewhat of a unique situation and Bob has been able to help explain the implications and underwriting process in a clear and professional manner. Contact [e-mail] Protuity email infoorotuity.com or call 973-771-9100. Get your disability insurance in place today. This is the Milestones to Millionaire podcast. If you'd like to come on and inspire others to accomplish what you've accomplished, you can [e-mail] Milestones thanks for being here. Keep your head up, your shoulders back. You can do this. We're here to help. We'll see you next time on the podcast.

[Brian]

The White Coat Investor Podcast is for your entertainment and information only and should

[Jim Dahle]

not be considered financial, legal, tax or investment advice.

[Brian]

Investing involves risk, including the possible loss of principal.

[Jim Dahle]

You should consult the appropriate professional for

[Brian]

specific advice relating to your situation.