The Hamster Wheel and Golden Handcuffs
Dr. Joel J. Napeñas
6 minute read
Using the example of fellow dentists like me, I wanted to take you through the usual life cycle of a high income earner.
You get your first job after dental school and residency, and it is well over six figures. You completed 4 years of undergraduate school, 4 years of dental school and for some, 4 years of residency. The contract for that first associateship job, or that first attending job has been signed. You are about to settle down with your partner and hopefully build a family. All those years of hard work, and the six figures you’ve accumulated in student loan debt are finally going to pay off with that first six figure job. You feel like you made it!
You’ve been eyeing that nicer car that you’ve always dreamed of eventually owning. The monthly payments don’t seem to be that much, besides they’re only a few hundred dollars a month. You might as well buy that first home, because it’s the American dream, it’s the thing everyone else is doing, and you have been told that you are simply wasting your money and ‘throwing it down the toilet’ every month paying rent when you can build your own equity. Besides, at the rate that home prices are going, you are afraid of missing out and being priced out of buying a home in the future.
The first few years, everything is new and you’re humming along in your practice and new career. You take a couple of trips a year with your friends, maybe go out to nice dinners on the weekend. A few years later, you’ve got that life with the ‘Instagramable’ home with the white picket fence, with that sleek SUV that is lugging around your toddler children, whom you are grooming to go to that private school.
A few years later, you’ve upgraded to your dream house (because you’ve outgrown your other house), driving the nice cars, with the kids in private school engaged in their extracurricular activities, whether it is ju-jit-su, piano lessons, football or Mandarin classes. You do take those nice vacations, maybe twice a year, and you’re still slowly chipping away at paying off your student loans. Perhaps you buy a practice.
With practice ownership or a steady career comes the responsibilities and accountabilities. Patient, staff and associate issues, or dealing with a partner owner. Sure you enjoy what you’re doing, and you consistently go to CE courses to learn how to do new things, or obtain some nice bright shiny objects for your practice. It’s all about the production and revenue. The more revenue, the more you earn. The more you earn, the more you take home to pay for that home, cars, shiny new objects, your kids’ private schools and those vacations you maybe take twice a year. You dread that Sunday night leading up to the Monday morning, and count down the days as the week approaches your weekend.
But you have personal responsibilities and obligations to fulfill. The home mortgage and house expenses. The monthly car payments. Your children’s education, not to mention saving up enough so they can afford to go to that good college in the future. You’ve attained a lifestyle and standard that you need to maintain for yourself and your family. And that requires that you continue grinding it out in your office, practice or job for the next 20-30 years. You find yourself in the vicious cycle of waking up, going to work, earning more money to pay for your place to sleep, so you can simply wake up again to go to work so you can earn more money. That is what we call the hamster wheel of life.
Sure you meet once a year with your financial planner. They tell you that you are probably in good shape, and IF the stock market generates the historical returns, (and/or you sell your practice) then maybe you will be able to retire in 20-30 years, and hopefully not run out of money in retirement.
Maybe you love what you do and where you work. But you know that it is a must that you are there. You have to be there so many hours, so many days in the week, and only have so many days you can take off in the year. You have a full slate of patients or clients that you need to serve. There is a trade off in that. The trade off is time, the most valuable asset that, unlike money, cannot be re-earned once spent. If you love what you do, then your time is well spent. But there are always trade offs.
The time spent in your vocation is at the expense of time spent with your loved ones. Late nights doing extra work is at the expense of being at your child’s recital or soccer game. Time in your office serving is at the expense of time you can spend doing other meaningful, memorable things in life. What if you wanted to travel somewhere? You know that it would take a significant amount of time away. How many times have you said to yourself, “I can’t afford to take that much time off.”?
As long as you are obligated to be working, with it being a trade off sacrificing time you wish you had more of doing other meaningful, memorable things with your loved ones, even if it is work that you love, it is a hamster wheel. Coupled with the fact that there are obligations and a lifestyle that must be maintained, you are restricted by the ‘Golden Handcuffs.’ There is no way you can scale back, until you think you have accumulated enough to hit that target nest egg number to sustain your chosen lifestyle. But you hope that, maybe you can scale back…one day. But you don’t know how… you just hope. Maybe if your financial planner is right, it will be in 20-30 years, and with a guaranteed lower income in retirement.
It doesn’t have to be that way. You can have a plan to build up that nest egg even faster. Or better yet, you figure out ways to make your money work for you on its own. That means that the money earned does not directly correlate with your quantity (and time) at work. Instead of what we are taught, which is to solely work more to earn more income so you can spend it and hopefully have enough for the future, accumulate assets that work on their own and generate income independent of your time.
As Warren Buffett famously said:
“If you don’t find a way to make money while you sleep, you will work until you die.”
It’s your choice. Learn how to accumulate assets.
Dr. Napeñas, a practicing academic dental specialist in Oral Medicine, is founder and managing partner of 5DH Partners, a real estate investing firm that educates and helps dentists and other professionals generate passive income and build wealth through investing in real estate.
Want to learn more about investing in real estate without being a landlord?
Subscribe to our email newsletter here.
Set up a time to talk with us personally here.
Download a copy of our free e-book here to learn how dentists and other professionals can replace their income by passively investing in real estate.
Visit our Facebook and LinkedIn page, or join our newsletter mailing list for articles, updates and opportunities.