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The Dark Side of Student Loans
Issue #528, June 25, 2018

The Cost of Out-sourcing Convenience
Issue #527, June 18, 2018

Social Security: 66 or 70?
Issue #526, June 11, 2018

Student Loans: There’s (Unfortunately) a Lot More!
Issue #525, June 04, 2018

Co-signing a Note
Issue #524A, May 31, 2018

The Knight Frank Luxury Index and Collectables
Issue #524, May 28, 2018

The Importance of Diversification: The Myth of Diversification
Issue #523, May 21, 2018

How to Save Thousands on Your Food Bill
Issue #522, May 14, 2018

MoviePass and Other Things
Issue #521A, May 10, 2018

Degree Inflation, Long Training Periods, and “Certification”  Part III
Issue #521, May 07, 2018

Degree Inflation, Long Training Periods, and Certification” Part II of III
Issue #520, April 30, 2018

Follow-up on Several Things
Issue #519A, April 25, 2018

Degree Inflation, Long Training Periods, and “Certification”: Part I of II
Issue #519, April 23, 2018

The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017


By Robert M. Doroghazi, M.D., F.A.C.C.

Live Close to Where You Work

Issue #465, April 10, 2017

    On May 18, I give a talk in Youngstown, OH. I’m confident everyone who attends will learn something that can either make or save them money, but I always aim such talks at the med students and House Staff. You have no idea how many people have said “I wish I heard you 20 years ago”. One of the main topics will concern buying a home. In this newsletter I’ll discuss the importance of why you should live close to where you work, from two points of view: 1) the value of your time spent driving back and forth, and 2) the finances of your vehicle.
    Many people have told me I’m the most efficient person they’ve ever met. I’m always thinking about how I can save time (RMD comment: saving time and saving money are the same thing). In Issue #152 (4/11/11), I discussed “What is Your Spare Time Worth”.
    I was originally going to use myself as an example. My routine weekday was 6 AM-6 PM, 12 hours. (This did not include working late, taking call, weekends, etc. My usual work week was 68-70 hours). However, considering the average male physician in the US works 51 hours per week (the average female physician works 44 hours per week), I’ll use 10 hours per day as the norm. Note the more hours you work, the more important it is to live close to where you work.
    There are 24 hours per day. Sleep, grooming, eating, and exercise take a minimum of 9 hours (RMD comment: Everyone should exercise: you are investing in yourself. Many docs say they don’t have time to exercise. The best comeback I’ve heard is “so you have time to be sick?”). This leaves, at most, 5 hours of discretionary time. If you work 12 hours per day, it cuts your discretionary time by 40%, to 3 hours per day.
    The average MD takes home about $100-125 per hour (10 hours per day x 250 work days = $250-300K per year). But they bill for at least $250 per hour. Overhead averages about 50% (an MD in private practice supports about 5 employees). Remember that after overhead is covered, the vast majority of the billing flows straight to the bottom line. Thus a physician’s marginal time is worth more than $250 per hour. Driving is totally non-productive, dead time. You can’t read, you can’t write, you can’t see patients (and it’s frustrating to boot, because you are thinking of all of the work you need to get done). Driving 15 min each way rather than 45 min. saves 1 hour per day, worth a minimum of $250. Remember also that this represents a quarter of your marginal time.
    Consider: by living 1 hr. per day closer to work, you can either A) save 5 hours per week, to spend with your family, go to the ballgame, read, play a musical instrument, or do whatever you want. B) Save 3 hrs, see 2 more consultations, and bill for another $500 per week = $26,000 per year, or 3) see one more consultation per day = $1,250 per week = $62,000 per year.
    Now let’s look at expenses. You drive 10 miles each way rather than 25 miles = 30 miles per day saved. That’s a minimum of 1 gallon of gas = $2.25 (gas is cheaper in Missouri than most other states) = $67.50 per month. Add in the depreciation of your car. 30 miles per day x 25 working days = 750 miles per month = 9,000 miles per year. Considering the average vehicle, that’s at least $4,000 of depreciation per year. Living closer to your job will save you about $5K/year in gasoline and vehicle depreciation.
    You can 1) Buy a home in the suburbs (where you pay someone like my dad and I to maintain your big yard) for $400K and drive 45 min each way, or 2) a home about 15 min each way of equal price about 2/3 the size, and save a lot of time and expenses, or 3) a home of higher price and equal size about 15 min. away, and pay for the difference by seeing 2 or 3 more consults a week with the time saved in the commute. And don’t forget the expenses and depreciation of your vehicle.
    This seems so complex. To the contrary!! It is the exact process some people go through when considering where to live. I moved to Columbia in 1982. Five years later we were looking to move up. An elegant home in an older section of town (see below) came on the market via closed bidding. I asked an appraiser to go through the home for me. He said “Doc, I think the home is worth XXX. But—it is 5 min. door to door to the hospital. Over 20 years, how much time will this save you?”
    RMD comment: Buying this home was one of the 5 best strategic decisions of my life.
Live close to where you work.
    Over the course of your 25 year career, you will save thousands of hours to be used at your discretion, and many thousands of dollars in expenses.
    I will finish up a tribute to Thomas Sowell next week with a review of Wealth, Poverty and Politics: An International Perspective.
    On Friday I put out an Interim Bulletin about how device maker Medtronic (MDT) was getting into the business of managing cardiac cath labs. A major concern of the physicians interviewed for the article, and mine, is that physicians would be pressured into using MDT products.
    This is from a subscriber: “Hospitals already pressure physicians to use devices that better the bottom line. Through buybacks, device recycling programs and contracts with device makers, hospitals get large rebates for preferentially using devices. Hospitals will kick the competing reps out and not stock other devices. Employed physicians are “encouraged to choose wisely”.
    My home was built in 1939 by Mr. and Mrs. S. Woodson Canada at a cost of $25,000, at the time the most expensive home in Columbia. It was the first home in Columbia with central air conditioning. Mr. Canada was the Registrar at the U. of Missouri from 1919-1959. Missouri ex rel. Gaines v. Canada (1939) was the most important civil rights case before the Supreme Court between Plessy vs. Ferguson (1896, which said separate but equal was equal) and Brown vs. Board of Education (1954, which said separate but equal was not equal).
    Gaines was the valedictorian at Vashon HS in St. Louis and an honor student at Lincoln U (a traditionally black college) in Jefferson City (about ½ hour south of Columbia), and was accepted at the U. of Missouri Law School. You can imagine (or probably you can’t) the reaction when Gaines shows up for classes and they realize he is black. I highly recommend Lloyd Gaines and the Fight to End Segregation (Endersby, Horner, U. of Missouri Press, 2016).
    I want to point out. Mr. Canada’s name was on this case only because he was Registrar of the University. I have talked to many people who knew Mr. Canada: he was a nice man. I’ve seen it stated in several sources: Mr. Canada said “If I didn’t deny Gaines admission, I would have lost my job”.     
    Several weeks I dissed some books. I recommend the following.
    1) Hero of the Empire: The Boer War, a Daring Escape, and the Making of Winston Churchill. I’ve read very little about the Boer War or this period of Churchill’s life, and author Candice Millard really knows how to make a story exciting.
    2) A Man for All Markets: from Las Vegas to Wall Street, How I beat the Dealer and the Market. At first I thought about making this the topic of a newsletter, but I think it’s one of the best books of the year, so I want you to read it for yourself. Edward Thorp was an MIT math professor when he pioneered the concept of card counting in blackjack. He then ran a hedge fund that made money 20 years in a row, including 1973 and 1974, when the S&P 500 was down 14.7 and 26.5% respectively. .
    The IQ scale is standard deviations from average. An IQ of 110 is one standard deviation, putting you in the top 68.27%. Two standard deviations, an IQ of 120, puts you in the top 95.45%. The average IQ of physicians is about 130, the top 99.73% (about 2-3 per thousand). About 1 in 450 in the US are physicians.
    I’ve met some smart people, but I don’t believe I’ve ever met anyone as smart as Thorp. He shows up at kindergarten, the youngest in the class because he barely made the age cutoff. Of course, what’s the first thing that happens to the really, really smart kids in public school who are bored out of their mind (he could already read, and add, subtract, multiply and divide numbers of any size))—he gets into trouble, and before the week is out, is sent to the principal’s office. The principal talks to him for about an hour, calls in the parents, and puts Thorp directly into first grade. After another week, his parents are again called in: the principal recommends he be put into 2nd grade. His parents decline, he is small physically, and at barely 5 years of age, would be almost 3 years younger than some students. 

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