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Disha Spath and her husband went from $750,000 in debt to a net worth of over $1 million in just a few years.
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They embraced the FIRE movement, cut spending, invested aggressively and paid off loans.
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Spath and her husband are about to retire at age 40, although she’s not sure if she will.
Disha Spath, 38, and her husband had been in debt for about $750,000 for a few years and were spending beyond their means. Now, they have a net worth of over US$1 million and are configured to be able to retire in your mid-40s.
Spath, who runs the blog The frugal doctorsaid she was not a natural saver, noting that she did financial mistakes like taking out too many student loans or being quick to make large purchases. But after having two children and changing jobs, she realized she needed to improve her finances.
She and her husband absorbed as much information as possible about FOGO – financial independence, retire early – movement that they could, cut off expenses In everyday purchases, he invested more aggressively and paid off his student loans through savings and work bonuses. She and her husband paid off their debt by 2021 and are now slowing their journey to retirement so they can enjoy time with their children without making major financial sacrifices.
“I just want one balanced life and not feel tied to my job,” Spath said. “Instead of rushing to financial independence, we’re trying to get more balance.”
“Exaggerated” purchases
Spath said he grew up in a family that struggled financially. She moved to the US with her mother and sister at age 10, with almost nothing to her family name. Money was always tight, but her mother encouraged her to work as much as possible and save whatever she could. She grew up thinking that investing was something only rich people did.
She received scholarships for graduation and entered medical school. She eventually got a job in primary care and internal medicine, which she acknowledged was not the most lucrative medical specialty but still had a good salary. She was the sole breadwinner for a few years while her husband was still at school.
“I thought this salary would be enough to create a very comfortable life for us,” Spath said. “But I quickly discovered that it’s very easy to feel like you’re living paycheck to paycheck, no matter how much you’re earning, if you inflate your lifestyle too quickly.”
Her student loans from the medical school was $191,000, according to financial documents shared with BI. While she was a medical resident, Spath and her husband — an Army first lieutenant — moved to Nashville and bought a home for about $142,000 using a VA loan.
They ended up converting the house into a rental property for passive income, which allowed her to pay her money back. student loans faster. Her first job out of residence paid more than $200,000 a year, but Spath said she made another possible financial mistake — they bought a $350,000 home in an upscale gated community in Savannah, Georgia, which she thought they “exaggerated”.
“We accepted the idea of the kind of lifestyle we should have with the income I was earning, but that lifestyle felt very uncomfortable,” Spath said. “It felt like we couldn’t afford it, and I was really worried that we wouldn’t be able to make progress on our retirement or our savings.”
Her student loan the total grew to $237,000 with interest, including the $25,000 she paid after tutoring during her residency. She and her husband also had $40,000 in auto loans, $335,000 in home equity loans for their home in Savannah and $130,000 in loans for their home in Nashville, according to documents shared with BI. Although her work was well paid, she had to take unpaid maternity leave for a few weeks when her first child was born.
Joining the FIRE movement
In May 2017, when her net worth was negative at $250,000, she discovered the FIRE Movement, who gave them advice on how to budget better and invest for the future. However, Spath found that not all FIRE strategies were “sensational investment strategies.”
“It’s not something that brings 30% returns or anything like that,” Spath said. “It’s a slow and steady investment in time-tested strategies – basically, getting rich slowly.”
She and her husband began increasing their loan amounts and then maxed out their retirement accounts.
The family moved from Savannah to upstate New York — where the cost of living was slightly higher, she acknowledged — to be closer to family who could help them with their young children. Instead of buying a house, they initially rented to “deflate” their lifestyle and avoid taking on more debt. Eventually, they moved to a house near the hospital, where Spath worked for $100 a month less than Savannah’s mortgage, with no maintenance costs.
She said her children, ages 9 and 7, motivated her to improve her financial situation. She opened savings and checking accounts, investment accounts, a Roth IRA and a 529. She taught them how to invest the money they earn from chores and said her son saved just enough to buy an iPad.
They prioritized a high savings rate as their children grew. For their family of four, they spent about $800 a month on groceries and rarely ate out. Changing her lifestyle was initially scary and “kind of invalidating,” she said, even though she knew she couldn’t compromise on costs like daycare for her children, which cost more than $2,000 a month.
“Especially for doctors, the stability of our jobs is rapidly disappearing, so it’s very important in medicine to have a financial cushion and some type of financial independence,” Spath said.
The couple adopted strategies such as eating out less and getting their hair cut at home. They increased her student loan payments to $7,000 a month, and she applied her productivity bonuses and extra income from a new job to pay off her loans. They paid more than $100,000 in six months to July 2018, while also moving to a better house.
Two years ago, after canceling their debts, they accelerated their investments, including in real estate. She said they became much less afraid of investing their money for the long term.
“I was able to reduce my hours, and to do that I took pay cuts,” Spath said. “It’s enabled me to feel comfortable doing this and, every time, my total income doesn’t change because I typically fill my time with other things that end up making money.”
Her net worth is now more than $1 million, and she said they are both on track to retire in their mid-40s — although Spath may not want to, as her love for medicine has been rekindled. They have become less frugal in the last two years.
“When I got into the FIRE movement, I was working so much and feeling so burnt out that the early retirement part seemed very appealing,” Spath said. “But we’ve been able to take our foot off the gas a little bit when it comes to frugality and become more balanced in our lives.”
Are you part of the FIRE movement or do you follow some of its principles? Contact this reporter at nsheidlower@businessinsider.com.
Read the original article at Business Insider
