Golden Handcuffs: The Ultimate Doctor Restraint

Golden-handcuffs-the-ultimate-doctors-restraint-feature

You finally made it. The grueling and exhaustive medical training is now over and recently you landed your dream job with a six-figure salary that’s going to provide a sweet lifestyle. Not to mention a MUCH better way to pay off that $400,000 worth of student loans and mounds of credit card debt.

However, as time moves on, the difference this makes begins to fade.  The day-to-day grind the last ten years has taken both a mental and physical toll on your body.

Treating patients and dealing with employees all day every day has completely drained the good life and “excitement” out of your system.

You understand and still appreciate that the extra money you’re paid compared to others and have no doubt that you could also earn a comparable salary elsewhere. 

But there’s just one problem. You dread putting on scrubs each morning to face a job that makes you miserable. 

Thinking back, you recall hearing about something called doctor burnout but thought it could never happen to you.

But the constant mandates from the corporatization of healthcare, government, insurance and patient satisfaction score have chipped away at you.

Recently you came across a comment from an online forum by a physician that hates being a doctor:

I hate being in the medical profession in the United States. It’s all about seeing new patient numbers rise, billing more, doing more clinical work, following outdated guidelines or else CMS won’t pay us… I went into clinical medicine to help people, and now I’m at a tipping point as I can’t connect with my patients or the system. I don’t know what else to do because medical practice has been my life. I’m not qualified for anything else.”
 

You’ve now come to the conclusion that if something doesn’t change, that person will become you. 

What are you supposed to do?

Even though you no longer have passion, drive or motivation, the money and benefits are too good to quit.

What other career is going to help pay off that six figure student loan bill? What about finding something that will allow you to continue living the “doctor” lifestyle you’ve become accustomed to?

Welcome to the world of golden handcuffs.


Don’t Miss Any Updates. Each week I’ll send you advice on how to reach financial independence with passive income from real estate.

Sign up for my newsletter

Why Are Doctors So Miserable In The First Place?

Whenever I have a conversation with someone who’s NOT in the medical profession about the alarming number of doctors burning out that hate their jobs, they don’t believe me.

I guess the saying, “It takes one to know one” is true.

Here’s the top 3 top reasons doctors are miserable:

#1 Debt

If the average medical/dental education is costing us $300K – $700K then who can leave the profession

Few of us are raised with a silver spoon in our mouths and most of our parents aren’t in a position to help with our financial problems.

If we decide to quit our jobs, how would we ever make enough to pay off our debt?

#2 Income

A general practitioner (MD) was making $185,000 a year in 1970 (average inflation adjusted) vs making only $161,000 a year in 2015.

Don’t forget to add in the fact that doctors are having to see double the number of patients now than they did in the 70’s.

It seems that this trend is here to stay. If you want to continue to see your income rise, you must continue to work more and more hours trading your time for money. 

#3 The Rise of Bureaucracy

Years ago when we had to switch from paper to electronic records, it forced many “old timers” out that were fed up being told how to treat patients. For many of us, it’s as if we spend MORE clinic time documenting care instead of providing it.

Studies show that doctors spend almost an hour a day and $83,000 a year dealing with paperwork for insurance companies.

Their office staffs spend more than seven hours a day.

Is it any reason why doctors feel like pawns in a battle between insurers and the government?

Unfortunately it’s the patients that are suffering as it’s the government or private insurance bureaucrats treating them without a medical license.
 
Instead of a patient expecting their doctor to recommend the correct treatment, in reality, they’ll receive the recommendation that their insurance carrier allows.
 

What Are Golden Handcuffs?

Unlike a golden parachute which provides long-term employees with a soft landing, golden handcuffs are financial incentives given to employees to discourage them from leaving a company. It’s similar to dangling a carrot over their heads.

 
It’s a trap that many employees fall into, like lifestyle creep.
 

People don’t leave because they can’t get the same retirement benefits anywhere else.  

Examples include:

  • solid compensation package
  • competitive pay

  • matching retirement contributions
  • bonuses
  • insurance package such as disability and life insurance
  • company cars
  • stock options
  • pensions
  • paid vacations
  • severance packages

For doctors, these handcuffs are next to impossible to take off.  Most feel trapped by the security the money and benefits provide.
 
A perfect example comes from a SoCal surgeon AKA the Darwinian Doctor:
 
It didn’t take long for him to realize that he’d been shackled with a golden handcuffs situation shortly after landing a job with a great salary as a surgeon. 
 

Initially his taxable income was high but so were his expenses. He calculated his family was spending a whopping $340,000 a year, yikes!

 Seeing this cash flow out of his pocket was a wake up call making him and his wife understand why there was so much pressure to bring home their paychecks every two weeks.

This pressure made them feel trapped and dependent on their day jobs.  Despite his 60 hour work weeks and 10 hours of commuting every week, he had NO CHOICE but to keep on going.

He understands that he could leave anytime but he’s like others in this situation… he liked the money, benefits and prestige that went along with being a doctor. 

The funny thing about golden handcuffs is that the key is in your pocket. But most don’t use the key because who wants to let go of gold?

What other industries are most affected by the golden handcuffs?

Besides medicine/dentistry, what other industries also wear the golden handcuffs?

Typically you’ll find careers that offer time-related incentives to employees with unique skills such as:

  • Software
  • Law
  • IT
  • Finance

If You’re A Practice Owner, Encourage Your Top Employees To Stay

I’ll admit, as a self-employed periodontist, one of the ways that I’ve kept my best employees from leaving is incentivizing with several different types of bonuses.

Now that I think about it, I’ve put them in golden handcuffs too!

After performing research, I found out that companies that use golden handcuffs plans can accomplish 6 important outcomes:

#1 Mitigate risk of leaving early

Many companies create future compensation payout to keep employees around longer. A common example is the time required for an employee to be vested in a 401k Employer Match or profit sharing plan. If they leave before becoming fully vested, they give up the right to the non-vested component of the Employer Match/Profit Sharing value.

#2 Sustained company growth

Once employees are incentivized with future compensation payout, it gets them focused on achieving the company’s long-term business goals.

#3 Keeps customers/patients happy

I love traveling and getting to see the same employees time and time again. Your business/practice is no different. Your returning customers/patients become more loyal the longer you can retain the best people possible which helps keep the great culture going in your practice (as long as they are providing great customer service).

#4 Enhance value at exit

For the person or group that plan on purchasing your business/practice in the future, they tend to see greater value if golden handcuffs plans have been effectively implemented.

#5 Express gratitude

As a practice owner, I’d love to see all of my employees stay until the day I exit. By having golden handcuff plans in place, you’re able to do this.

#6 Attract best talent

Owners that offer competitive pay along with other perks can typically recruit and attract the best talent even from their competitors with a great golden handcuffs deal.

Specialists Are (SUPER) Trapped

Back in the 50’s and 60’s, a general practitioner handled everything from chest pain to delivering babies. 

Times have certainly changed. 

Not only do we have specialties such as: dermatology, anesthesia and allergy and immunology, but we’ve also seen the rise of sub-specialties such as:

  • pediatric anesthesiology
  • interventional radiology
  • clinical cardiac electrophysiology

Rich Dad Poor Dad author Robert Kiyosaki said it best, “The more specialized you become, the more you’re trapped and dependent on that specialty.”  

After dental school, I trained four more years to perform periodontal (dental) surgery. This means that I’m NOT allowed to perform the general dental procedures such as root canals, crowns and fillings as I was originally trained to do. 

For physicians in sub-specialties, they also gain skills and experience needed to perform treatment/surgery which gives them a nice paycheck but also ties them tightly to their employer.

Theoretically they could switch employers or start up a scratch practice but there’s a lot of risk tied to a career move like this.  

Many of the docs get used to spending $30,000+ per month and anything that could interrupt their paycheck is downright scary.  

I’ve Got A Pair On Too

If you’ve been a regular subscriber to my blog  (thank you!) then you know I’m open and honest about my mistakes and failures.
 
 
With two teenagers, private school tuition, feeding them :), and multiple other expenses, I’m handcuffed to the dental chair for at least another 4-5 years.
 
But if I hadn’t started investing in real estate (see below for more detail), then heaven knows how long I’d have to continue working. 
 
Getting on the same page with my wife with following a budget and using a financial plan for future expenses have helped unify us to set our sights on financial independence instead of what most couples do…wander aimlessly towards age 65.
 

How To Break Free Of The Golden Handcuffs Forever

If you’ve been following my blog then you’ve noticed a major change on how we’re approaching finances, specifically removing the golden handcuffs.
 
 
Initially I was focused on funneling extra cash towards accumulating a massive lump sum to eventually drawdown on at around age 60. I’ve since refined this plan once I began to understand the massive benefits of real estate investing especially its tax efficient nature.  
 
Breaking free of the golden handcuffs and leaving a high-paying but otherwise difficult job requires two distinct avenues of attack:
 

#1 Get your financial house in order

The first step is simple yet so many doctors won’t do it….getting your house in order for financial security.
 
Doctors make too much to live a paycheck-to-paycheck lifestyle. Yet that’s what most do. When monthly costs require a high salary due to large mortgage payments, car payments, credit card payments, country club dues, etc., then letting go of those things is a must unless you enjoy wearing the cuffs.
 
After I completed training, both my wife and I were on board to cut back on all non-essential spending. I remember her frantically calling me one morning while she was taking our son (at that 5 months old) on a walk.
 
I immediately thought something was seriously wrong and come to find out, he had spit out his pacifier during the walk. When I questioned her about why she was so upset she stated, “We can’t afford to buy another one!”
 
I understand that this type of mindset maybe bit extreme but if you’ve read what happened to us early on in my career (My Story) then you’ll know where she was coming from.
 
We made it a point to where each month we were spending substantially less than being brought home.
 
I instruct new Passive Investor Circle members to look at where their money is going each month and focus on cutting back on things that are least important.
 
Next, utilize the Dave Ramsey Debt Snowball method to become consumer debt-free as quickly as possible after a modest emergency fund is in place.
 

#2 Invest in assets that pay YOU now

Once you have enough “left over” money each month, focus on investing in assets that will pay you (i.e. real estate) regardless of whether you treat patients or not.
 
The key to being able to break free of the cuffs starts with creating multiple passive income streams which will eventually lead you to financial independence.
 
That’s it. Nothing else can help you accomplish this faster (unless you win the lotto).
 
 
Shortly after learning that I could retire on my own terms using passive income, it has focused my energies and made me happier, both at work and at home. My wife likes that part :).
 
Each time I invest in a new real estate syndication, it loosens the golden handcuffs around my wrists.
 
Once you reach financial independence, you can:
  • retire early
  • working at your current job on your own terms
  • seek new career opportunities
  • focus on meaningful work that fuels your purpose

Ready To Remove The Golden Handcuffs For Good?

Join the Passive Investors Circle to learn how to create multiple income streams while continuing to focus on what you know best.
Join the Passive Investors Circle Subscribe To My Youtube
jeff@debtfreedr.com
Posted on:
Post author

Leave a comment

Your email address will not be published. Required fields are marked *