Why You Should Die With Zero

Show Trancript

We’re gonna talk about spending money a lot of money on this show.

And it’s going to come from a book, Die with Zero. We’ve discussed this a little bit in the past, but I think this is such an important topic to revisit because it’s something that doesn’t get enough airtime.

Download a free copy!

 

And I think it’s a really helpful way to think through things. So we’re going to talk about some of the concepts in a second. Before we get started, though, I do want to mention, I’ve mentioned in the last episode as well, that I’m giving some free virtual talks to residency and fellowship programs.

And so if that fits your current lead, you’re wanting to get some financial literacy out in front of your learners, your physicians in training that you’re helping with, feel free to email me at Jimmy at MoneyMeetsMedicine .com.

Teaching is what I love to do. So the reason you should do this is because it makes me happy. I’m kidding. You should do this because it’s helpful for other people, but happy to come give talks for you.

Jimmy at MoneyMeetsMedicine .com. You can also point them to download the book if you have trainees at MoneyMeetsMedicine .com. It is free to download there. Justin, I want to start with just the intro hook.

So just to give people perspective, there are two things that I pretty much have an unlimited budget for. And they are supporting my children specifically when it comes to their sports or hobbies. So my daughter playing flute or her playing soccer.

I spent an exorbitant amount of money on my son’s baseball because, by the way, baseball is an expensive sport. The bats nowadays, like just the, like the, the you trip, that’s what it’s called. You triple S a bats that people use for travel ball.

It’s stupid. Like it’s stupid. They’re like three or $400. And so it’s insane. Like back in the day is like, you know, I had like $100 Z core, you know, for my baseball adventures growing up. And I recognize inflation is a thing.

But I think even with inflation, that’s much more expensive than they used to be. And one of the reasons why is because I’ve kind of recognized that that money being spent has a return on investment.

So most people think about money being Having saved, having a return on investment, but they often don’t think about the money that they spend on their family, on their friends, on experiences as something that provides a return on investment.

And that’s what a lot of this book is about. So why don’t we start there and talk about just kind of the importance of spending money and the return on the investment that that provides? Yeah, this conversation was sort of, has its genesis.

And the discussion we had a few weeks back where we were talking about a couple of personal finance books, and I abashedly admit that I’d never read the book, How I Spend My Money, which was the interview 30 financial advisors, and they talk about how they invest and how they spend.

And so I actually, I went and I ordered like six personal finance books that we talk about all the time that I have never read. And this was one of them. And then I read it. I guilt tripped you into reading books.

You did. Yeah. And I feel a little better about myself now. I feel justified in not having read them before, but now I can at least say that I did die with zero. I found to be I would call it my favorite.

because it’s the, in slaying the sacred cows of personal finance, which I always enjoy. And I also think that for this audience, Jimmy, it is uniquely applicable. And it talks about not only how to get, well, actually, it doesn’t really talk about how to get wealthy.

It talks about the sort of using money to its maximum utility in your life, which is a combination of investing for growth and also spending for pleasure or for whatever your goals are. And another reason I like this book is it’s not totally what I would call sanitized, meaning there’s stuff in here that I actually strongly disagree with, or I don’t like how it’s framed.

And I don’t like, um, but I think I’ve actually been giving this away to some people and I tell them, listen, you’re going to need to put on your thinking cap. I’m not telling you to like take this whole thing and do everything in it.

I think, think of it like a buffet. There are things in here that are good. There are things in here you’re going to want to leave, but I think there’s a couple ideas that are so good that it justifies the, uh, you know, the hazard being exposed to some things that are less good in order to potentially have your spending and your ethos around money transformed positively.

So you don’t think everybody should have an annuity? I mean, no, I, I, and that’s the great thing about this is it’s not like about the tools of the tactics. It’s more about the mindset around money and around, you know, most of it’s around like spent the spending and it’s targeted towards an audience that has meaningful discretionary income and who’s likely going to die with more money than they need.

And you know, physicians, because of their high income status, obviously doctors have plenty of problems with money, but on the balance, a lot of doctors are going to die with a lot more money than they, they expect.

And I’ve referenced this in the past on the show. We call, we have what we call the right tail problem. Meaning if markets do what markets have done in the United States in the last century and a half or longer, and you’re a resident of the United States and you’re a physician here practicing medicine, your job is not going away.

Your income is going to be. Obviously there’s bumps in the road. It’s going to be stable on the balance for at the population level. And therefore it’s hard for the human brain to conceive the power of compounding and you’re probably going to be one of those people with a seven or eight figure portfolio just because you can’t spend money that effectively in your nineties.

And that’s one of the points that Bill Perkins makes your life expectancy is extending. It’s hard to spend money when you’re old. And I was having a conversation recently with a friend’s grandparent and they were actually lamenting like and I knew enough about the family to know that they were of means.

I could I was guessing this guy probably had an eight figure net worth and saying like I’ve got all this money and like I’ll be darned if I can even if I wanted to like what am I can’t buy cars like the other things I could spend my I can’t travel the things I can spend money on don’t make me happy anymore.

And we didn’t you know get much further than that but it was an interesting touch point for this concept of when you have that much money, you have, and this is one of the ways in which I think it’s not totally helpful where Perkins addresses this is like, he’s like hyper engineer, and he says this upfront.

He’s like, he’s all about the optimization, which is problematic in some ways. And I think like thinking about it in a hyper -optimized way is not totally healthy, but I think reflecting on, well, if you die with $10 million and you give it all to your kids and you didn’t really want to do that, was that the right thing to do?

It’s a useful exercise. And I think we would sort of, maybe you might want to leave each of your kids $5 million each, and that’s fine if you do, but if you don’t, what then do you want to do with that money?

And what is the necessary margin of safety that you want to have at the end of life? And then what should you do with your money in the interim? I think these are provocative questions that are not Dave Ramsey approved, but that’s kind of why I love them.

So I couldn’t agree more. And the reason why is because even in this space, we don’t even have to go to Dave Ramsey, to be honest with you, although we can. And I can tell you why I think Dave Ramsey, and I’m going to do a YouTube video at some point on why Dave Ramsey’s advice is terrible for physicians.

Higher legal team, man. Yeah, yeah. Well, maybe I’ll just talk about. Because he has one. Yeah, no, he does. Well, and I think it’s fascinating because you can actually use, and this is a completely tangential conversation at this point, but you can actually use real clips from Dave, giving advice to people like telling people that PSLF is not going to happen.

Yeah. And you’re like, you just cost that person because it did end up happening hundreds of thousands of dollars. And, and in this wise germane to this conversation, Bill Perkins style, the opposite of Bill Perkins style, you made them eat ramen to do it.

Yeah. So not only did they get screwed financially, but on the front end, they didn’t get to make this this lifestyle. lifestyle memory dividend by spending that money on other things that would have provided a lifestyle return on investment.

I completely agree. In this space, let’s take it out of Dave Ramsey world so I don’t get sued. There are phrases like live like a resident. You’ve got this one end of eat ramen, live like a resident until you’ve made substantial progress in your life.

Not bad advice necessarily. When you first start out, it’s probably wise to reel it in a little bit, not to expand your lifestyle and spend all of your money. It’s not probably wise, that is wise. But a lot of people have a tough time, we’ve talked about this before on the show, of making that transition from saving to spending.

So somewhere in between live like a resident and just absolute YOLO hedonism where you only live once and you spend every dime that you make because you’re going to die is something reasonable. And I will say that because you’re listening to the show, listeners of the show are financially minded, you care about financial literacy, there’s a really good chance you’re more on that live like a resident side.

And so because of that, it’s really important to recognize that you’re not always gonna be young. And there are these epochs in your life, these times in your life that are no longer gonna be present.

And so for me, where that really hit home when I read this book was my kids. So my wife and I, I’m 38, for those that don’t know, sometimes people think I’m much older than that, but I’m 38 years old and my oldest is 13.

So you can do the math. We had our first kid when I was 25. And so we had kids really young. And so into my fourth year, excuse me, the beginning of my fourth year of medical school. So the vast majority of time that my kid has been growing up even to date was while I was in training, like more than half of her life so far.

And so I didn’t have a lot of money. We didn’t save any money. In fact, we just had a lot of debt. We had a very negative net worth $300 ,000 on the downside. And so we didn’t spend a lot of money. And on the backside of that, I’ve got all these financial stuff, it’s kind of going on in my mind.

Hey, I need to save in a 529 to pay for college. And oh, by the way, I’m really behind the eight ball because I had kids young and I couldn’t save in training. How in the world am I gonna pay for my oldest college education?

The answer is I might not be able to. And that’s okay, right? I’m gonna try to save as much as we possibly can within reason to be able to help her out as much as I can. And I think with some wise decisions and being prudent about the situation, she may not have to pay anything for college.

That’s my hope. There are kind of multiple levers that we’re considering there. But at the same time, I’ve got to balance those financial stressors, if you will, and those goals that I have to be able to be financially independent, for example, with not spending money on things that provide massive enjoyment right now.

And in one way, let’s just say that you didn’t have kids when you were super young, like me. Let’s say that you are just in this community and financial independence, retire early, gets a lot of air time.

Justin, you and I have discussed. on the show that we’re not huge fans of that. I’m a big fan of financial independence. I don’t know that I’m a huge fan because of Bill Perkins kind of style of thinking of getting to financial independence as quickly as you can because what that means is that you’re not spending money and that spending money provides that return on investment.

So for my kids, talked about baseball, soccer, flute, spending money there, but also experiences and the way that I kind of think about this and my wife hates it, just because she maybe is a little more optimistic than I am, probably a realist with pessimistic leanings.

But for me, my daughter’s 13, right? She’s finishing up middle school. I, in my eyes, have five summers left with my kid. And my mom’s, and her mom’s, not my mom, in her mom’s eyes, she’s like, she’s not dying when she turns 18 and goes to college or whatever she decides to do with her life.

At the same time, it’s like, but right, but this is a period of my life that I don’t get back. And so if I don’t spend money because I’m trying to save as much as I can to get to financial independence by the age of 42, then it’s gone, I don’t get it back.

And so that really, when I read this book and thinking about my kids and the number of summers that I have left, that for me is where it really struck home. One of the notes that Perkins, I think it was from this book that Perkins makes was that you have, you know, 18 years with your kids from zero to 18, and then you’re lucky to cumulatively have one more year for the remainder of their lives, depending on how things shake out.

And for me as a father of soon to be three, this is also a jarring realization that it is worth the trade offs. You know, I’m a business owner and I love setting goals and for growth and financial goals and things like that.

But money is fungible and renewable. Time is not. And it’s wise to consider what are the things that I should give in terms of money in order to capture things in terms of time that are in alignment with my priorities.

And so having an opportunity to sort of stare that in the face in reading this book, I found to be really helpful. And, you know, when I talked about sort of the slaying of the sacred cows, this idea of spending, it’s something I don’t think gets enough airtime.

And for high income households and even high net worth, like if you’re a high net worth household, it’s kind of a no brainer that you probably have more money than you’re going to use, assuming that you built your net worth by living beneath your means for a long time.

So you in particular should consider what does it mean to use these dollars for their sort of optimum desired impact in my life. But even for a high income household who doesn’t yet have a high net worth like the 30 something physician or 40 something in some cases asking the question of asking the same question.

with the understanding that and again advisors are we have to be conservative because we’d rather say hey you died with more money than we thought rather than oh my gosh you’re 92 and you ran out i’m sorry we probably should have spent less like we don’t want everyone to be in that situation which is frankly part of the problem but on the balance um you’re if you’re insured in terms of disability and you live in america and you’re a one percent or maybe a five percent earner then you are almost certainly going to have so much more than you need at the time of your death that the it’s a again to put it in naked economic or naked engineering optimization terms it’s a suboptimal way and so one of the things that i thought was interesting about the way perkins talks about this is like well what about the kids you know and jimmy you and i are talking about kids our children not everyone has kids and or wants kids but the point is you know if you have kids you set aside the money that you want them to have when you’re 40 and maybe you’ve got a You know,

OK, the Roth money is going to be for your kids. They’re going to get a tax free in terms of income tax. That’s their money. And then everything else is sort of fair game. And so he Perkins even accounts for these ideas of, well, what about generosity?

What about the quest? What about these kinds of things? And this is an area that I did find it to be particularly challenging and useful. And I think I would call it to say revolutionary sounds a little extreme, and I’m not sure I would go that far.

It’s certainly countercultural in terms of the financial advisory prevailing wisdom. But I think it gives freedom to address this challenge that you’re talking about, which is the challenge of spending money.

If you can segment some of your net worth to like, OK, I want my kids to have something, here’s the money for them. If I’m 40, I probably have life insurance and I probably have disability insurance and I’m starting to seed this bucket that is going to be my kids in 50 years.

But the point that he makes is, you know, if I’m 90 when I die, do I want my 60 year old child who as the child of a physician, like it’s probably they’re getting ready to retire. They’re probably doing fine.

They probably don’t need an extra couple of million chucked on top of their 401k. Thank you very much. Probably what they need is, oh, you’re trying to get married. You’re trying to buy a house. You’re trying to like hire a nanny so that you can make it work with two kids and two working spouses.

Maybe the best time is when you’re 50 as a physician and your child is, you know, getting ready to do whatever in that time when they have that we talked about last episode, the maximum human capital and the minimum financial capital, maybe what you should give them is like an acceleration of their inheritance, for example, because isn’t that going to make you more happy than the couple of million dollars that they’re going to get when you die that you don’t even get to enjoy them receiving a life altering amount of money.

To me, that really resonated, and I thought this never happens. I seldom observe this and I. I think it’s hard to argue with this logic. I completely agree and thinking back on my own life, there are definitely times where money would have been really beneficial for us and the older that I get, obviously it’s less beneficial for us because we’ve accumulated our own wealth.

And so this idea of waiting until someone’s 65 for you to die and then give them money that they don’t need because if you’re listening to the show, you’ve probably raised children that are financially literate, I hope.

And so at that point, they’ve been diligent savers. They have not made the same mistakes that I made, for example, and so at the age of 60 or 65, or maybe even 50 or 55, because they know about money, they don’t need the money.

They need the money when they’re 25 and they want to put a down payment on a house, right? And so for me, that definitely resonated as well. And I think that it’s important to consider The reason that this exists, this save over spend mentality, is because of scarcity.

This idea that I’m not going to be able to save enough, that at some point I’m going to stop earning money. I would just point out that you have the ability to earn more money. Everybody has the ability to earn more money.

You can proportionally save more money. As you earn more money, you can also spend more money. If you earn more and you decide that you want to spend half and save half, that’s fine. You don’t have to spend at all.

I completely agree with what you were saying earlier, where Kristin’s grandmother, when she was getting up there in years, her financial advisor was constantly telling her, you need to spend money. You’ve got too much money.

You need to spend money. Spend, spend, spend, spend, spend. She’s getting up there, she’s in a home, didn’t have a long time left. She had a really hard time spending money. This is a common problem for people that know about personal finance, that are saving diligently.

You were just thinking about, oh, I want to get to my goal, so I’m going to save enough to get to my goal without thinking about the actual objective numbers. In the coaching arena, in the financial advisory arena, I’m sure, really making things concrete is always important.

Spend some time and be like, okay, I want to be financially independent by this age. We’ve talked about this on the show before, but I want to be financially independent by this age. In order to get there, assuming I’m going to make 5% in the market, to adjust for inflation, this is how much I need to be saving each year.

Once you actually make it objective, for my family, for example, it was a six -figure number when we first started out, it’s not like $70 ,000, give or take. I know that by saving $70 ,000 a year, we’re going to get to financial independence early.

It’ll be before the age of 60, let’s just say that. So that, knowing the numbers and being objective. and concrete about it allows us to spend every single other dime that comes into our life. And so there is massive freedom in that, that gets away from the scarcity that exists, that prevents people from spending money because we have objectively determined we are saving enough to retire by the age that we want or be financially independent by the age that we want.

And since we know that, there’s no scarcity. And I think that there was even a quote out there that basically the way to overcome fear is through knowledge, but you can only know something if you know the objective parameters, right?

So in this situation, once you determine I’m saving enough to get to my goals, why wouldn’t you spend everything else? Like why save any more than that? And for me optimizing that, Yeah, I think for me, that that that that’s kind of where I’m at.

And that’s honestly came from this book, I went from saving $100 ,000 a year to saving 70. Because of this book, to be honest, now, I don’t know if I view it as revolutionary as you do. I don’t know if Bill Perkins is paying you or something, but it is a very good book.

It’s it’s very thought provoking. And in that sort of discussion, we could substitute spend for like, you know, there is a and this is one of the things I liked a little less is I think generosity is important.

And that takes many forms. But being liberated to have a lifestyle of more generosity in whatever that means to you, sometimes it’s like literally stroking a check to a 501c3. Sometimes it’s like creating family experiences for extended family that are that is like cutting into your and he gives an example in the book, like he had a 45th birthday party.

He takes everybody to some island in the Caribbean and he flies in this singer that he really likes and he pays everybody’s fair as well as their room and board while they’re hanging out in this resort.

And he said it was like a huge chunk of his liquid net worth, but he deemed it to be a worthwhile expenditure. And he, you know, looking back on that five or 10 years later is 100% like, yes, this was worth it.

And I think the reason that I found this book to be compelling is because it’s sort of talking to the kid that got the A. Like if you’re the one who is the you’ve always lived beneath your means, you’ve always been the saver, you’ve always like you’re the one who is perhaps missing.

And this is, you know, when we talk about the problem, quote unquote, with fire, you’re you’re not asking the right question. And the question isn’t how do I be financially independent as early as possible?

I think what this book does that I like is it reframed, it re asks the question to say, like, how do I have the maximum impact with the resources that I have? Something I think that’s what Perkins like was trying to get at.

And that’s how I would want say the question is like, with everything that I have, how do I live the best life possible? And it doesn’t often mean mash down the gas pedal to financial independence. It means use everything at every step with the long -term in view.

But sometimes it means spend a lot on things that are really, really important and in ways that you’re not gonna regret and that are in alignment with your values. And I think for me, I’m still kind of processing this and I’m looking forward to talking with my wife more about this idea.

But it has been, you know, Jimmy, I think I’m on my journey of what is the number that it is responsible for us to set aside that is not like everything left over, so to speak. Like we pay our bills, we have some charitable goals and we, you know, and then like everything else just gets chucked into the, this is for a rainy day, for some day we’re gonna invest it and build wealth as fast as possible.

I’m ready to begin to question that or to add in another line item that is like. This is an expenditure that right now to me feels extravagant, but it is in support of the values that we have as a family, and it’s going to create memories, and that’s a big part of what Perkins talks about is like, it’s the memories that you have.

When you’re old, you’re not happy about your stuff, you’re happy about the life you lived and the memories of the impact that you’ve had and the experiences. So creating those experiences, creating the sort of the substance of your days to more accord with your values, as I’m even just now reflecting on this, it’s really exciting to consider having more margin, having another line in the budget for something that’s going to be really fun,

I think. Yeah, and maybe a place that we should have started with the show is just like you mentioned the optimization. The entire title of the book, Die with Zero. The idea conceptually is that you would have perfectly achieved your goal if on the day that you died, all the money was gone because you spent it on things that provided the life that you very gratefully look back on with appreciation.

So dying with zero means you’ve totally optimized it. Now if you die a year after you hit zero, obviously that’s not ideal, which goes to that conservative comment you made earlier. But I’ll be honest, the reason that I like this, and I’ll tell you that listeners reach out all the time and one of the things they love about the show is that we don’t take a hardline stance on you got to live like a resident,

right? So like, it is okay to spend money. And the example that I give all of the time, because once you save enough money, in my opinion, once you were saving enough money to accomplish your goals, everything else is for your discretion.

And so I’m a car guy, which in the financial space is like the ultimate taboo. You never waste money on cars because when you waste money on cars, it is a depreciating asset that provides no value. it doesn’t increase your net worth.

And I think that’s really stupid. And the reason why is because some of us are car people. So I would have absolutely no problem. My current car, I spent $75 ,000 on it, paid in cash. And that car is awesome.

And I have no doubt that at some point in my future, I will spend six figures on a car. And people are listening to this and being like, that is the dumbest thing I have ever heard in my life. And I would argue that so long as you’re accomplishing your financial goals, it doesn’t matter what you spend the money on, so long as it’s meaningful to you.

And what that is is gonna look different for everybody. So for us, it’s like an unlimited budget, spending money on my kids to support their desires, their passions, the things that they love. There is a relatively unlimited amount of money that we’ll spend on health and nutrition.

I spend a ton of money on high protein foods that are not cheap. We’ve got… $5 ,000 worth of equipment sitting behind this wall that I’m currently recording on, that we have a home gym, and we use it every day.

Now I don’t recommend spending money on a home gym if that’s not your passion and it’s not something you’re going to use because a lot of people turn their their treadmill into a clothes hanger. But that said, it’s going to look different for you.

Maybe you’re not a health and nutrition person. Maybe you’re not a car person. We do know that psychology says that some things provide more value than others like shared experiences and travel and things that you do with your friends and family, charitable giving, we know that those two things provide increases in well being and life satisfaction.

But it doesn’t really matter, right? If you’re accomplishing your goals, why not spend the rest? Like, for me, like fundamentally, that just makes sense. And it gets away from all of this guilt because there, you know, people talk about like, mom guilt, dad guilt, you know, just all these different kinds of guilt, Catholic guilt, I mean, there’s different names for the kinds of guilt that exist in this world.

And one of them is is the guilt with money of spending it. And for me, it’s like counting calories, right? So as long as I, you know, in meeting my caloric goal, and the amount of protein that I’m supposed to eat to accomplish my health goals, I can eat whatever I want, I can go pound that donut.

And honestly, it’s not going to matter because I know that I’m within the limits of the framework that I’ve set. And so in money, if you are saving enough money to accomplish your goals, spend the rest guilt free.

That’s my view. Totally agree. Die with zero. Die with zero. Yeah, so it’s a great book. I do I do recommend reading it. There are some questionable things in the book. So I like the way that you put that in terms of buffet, pick the things that are helpful for you don’t pick the things that aren’t, I don’t think you need what one of the just as a caveat, as an example, the reason I mentioned the annuities earlier,

one of the things that Bill tries to deal with is that a lot of our lack of spending comes out of scarcity for problems that have solutions. And so for example, he’s like, well, if you think you’re going to run out of money, retirement, just buy an annuity.

If you think you’re gonna die and run out of money, buy life insurance. Basically, make other people take the risk for you if you’re scared of those things. I think that through financial literacy, a lot of that can be overcome and so you don’t need to live on an annuity.

You could just also save enough to know that it’s gonna last. That said, a lot of the philosophical stuff in that book is really thought -provoking and worth reading. Highly recommend reading the book.

Alright everybody, thanks for tuning in. Thanks for considering these ideas. I know that they may be a little bit different than what you hear on a lot of other shows, but that’s what we’re all about here at Money Meets Medicine.

If you want to consider getting a free virtual talk for your residency or fellowship, please send me an email jimmy at moneymeetsmedicine .com. Happy to chat more about that with you. Really enjoying doing some financial literacy at the moment for physicians and training.

You can also send them a free copy of The Physician Philosopher’s Guide to Personal Finance, the book that I wrote. that’s actually geared towards physicians and training as well at moneymeetsmedicine .com.

All right, everybody. Justin and I will see you next week. Cheers. Justin Harvey is a certified financial planner at APM Wealth, where he helps anesthesiologists in pain medicine positions. Dr. Jimmy Turner is a practicing academic anesthesiologist at Wake Forest in North Carolina.

He’s also a licensed insurance agent. However, either Justin or Jimmy are your financial planner, investment advisor, or insurance agent. This show is expressly for general education and entertainment purposes only.

Nothing should be considered financial advice. All views expressed are solely the views of the guests on the show and do not represent the views or opinions of their employer.