Trapped by the Appearance of Wealth

The pressure to look successful can come from many directions

but if not reigned in, it leads to stress and possibly financial disaster.

By sally herigstad Unique Opportunities, March/April 2008

Steve* has a busy practice as a physician. He also has money troubles. Recently, he went to a medical society meeting with his colleagues. He had been agonizing for weeks over the decision to pull his kids out of the expensive private school he can no longer afford, and he and his wife decided this year to limit their Christmas spending to $600. At the medical society meeting, however, he felt obliged to buy a couple of nice bottles of wine for the table. He came close to—or matched—spending the amount he planned to spend on Christmas, just on wine. He would much rather have spent the money on the kids, but he felt pressured to keep up a good front in front of his fellow physicians.

In a doctor’s lounge, physicians will talk about how busy they are, how many patients they’ve seen that day, or perhaps a few complaints about Medicare or insurance. What they don’t do is admit that they have money troubles. In fact, it’s likely just the opposite. Maurice Ramirez, DO, the author of You Can Survive Anything, Anywhere, Every Time (Disaster Life Support Publishing, 2008) says, “Physicians will deliberately brag to the point of making their colleagues feel inadequate—about vacations, cars, gifts for their spouses, and education for their children.” To hear them talk, all doctors can afford Paris in the spring and Maui in the fall. A fiscally conservative doctor listening to the jet-setter (who likely earns a comparable income) might feel like a failure.

Some doctors may even feel like they need to drive a certain car or wear the right brand of suit to fit into the group. The pressure to look successful can cause doctors to spend more than they should. That behavior can lead to trouble when income doesn’t always live up to such high expectations.

Many doctors admit they feel they must live a certain lifestyle to look successful. But who makes them feel that way?

According to Fred Dalgleish, a gynecologist in Fort Lauderdale, Florida, it’s not the patients. Doctors don’t need to impress their patients with the trappings of success anymore. “Patients couldn’t care less in this day and age. The incidence of patients socializing with their doctors is probably less than 1 percent. As far as what the doctors drive or where they live, most patients don’t have a clue.”

Do family members add to the pressure on physicians to look (and spend) like big earners—even if they’re not? Sometimes. It wasn’t that long ago that a doctor was considered the ultimate catch, for both status and financial reasons. “Some spouses couldn’t care less about what neighborhood they live in. Some really put enormous pressure on their physician spouses to give them the things to which they’ve become accustomed,” says Dalgleish.

Sometimes the kids spend money because they see their parents doing it. Fred Katz, a principal and CPA at Braver, a financial services company (www.thebravergroup.com) says, “Several physicians I’m aware of have $20,000 to $30,000 in credit card debt. They can’t pay it off because they’re spending rapidly. The spouse is spending, the kids are spending. They think, ‘If dad can do it, I can do it.’” In some cases, the spending may be a substitute for time spent with the kids. According to Katz, “If you’ve got nannies in the household, if you don’t spend time with your children, if you don’t have time to ask them how was school today…those are the people who are spending well beyond their means.”

Extended family members can sometimes pressure the “successful” sibling unintentionally. According to Ramirez, when the family goes out to dinner, the expectation is the physician is the one with money. “Everybody expects you to pick up the check. If you take turns paying, every time it’s the expensive place, you get the check. It becomes habit over time.” A physician may feel obligated to pay, because while she was in medical school and residency, everybody else picked up the check. “We feel like we should pay because our families helped us,” Ramirez says.

Many physicians say they feel considerable pressure to look successful from fellow doctors. Like the doctors in the lounge bragging about their big expenditures, or the doctor who sent an e-mail to the entire large practice detailing his month-long vacation, some doctors seem to consciously or subconsciously want to make other doctors feel inadequate. Ramirez compares the way many physicians treat each other to child abuse. “Doctors are terrible to each other,” he says.

When asked who makes doctors feel like they have to look successful, Chad Oliver, a certified financial planner in Baton Rouge, Louisiana, says, “I think it’s each other. I have a client who’s a dentist, and he’d see the other dentist drive a nice big Cadillac and think he’s making all that money. Then the client realized he makes more. On face value, people look like they’re doing extremely well, but they’re not doing well on the balance sheet. It’s the pressure within. I’ll go to the place of business and see the Mercedes and BMWs. I think they are aware of it amongst themselves.”

The pressure to look like you have a lot of money extends not just to spending, but to risky investing as well. Oliver says, “They do a lot of talking amongst themselves. When one doctor says he’s doing so well on this one investment, the other doctors all want to jump in.”

The worst taskmaster of all, however, can be one’s self. It’s easy to see how the long journey of becoming a doctor can create a pent-up desire to be able to spend a little money at long last. Add to that a sense of having worked very hard, and being, as Katz says, “better than the average bear.” He says, “I happen to sit on a financial aid committee of a medical school. I’ve had a number of exposures to what I’ll call the students’ ‘mental development.’ ‘I’m smarter than you because I went to medical school. I’ve worked so hard in medical school and absolutely was stressed to the max as a resident. Now that I’m a practicing physician, I feel I am entitled to do what I want.’ After all, they may feel, ‘I’m the doctor, look how much money I make, even though I don’t.’ ”

Ramirez says, “Most new graduates spent a decade in college, medical school, and residency, thinking, “When I get my first real paycheck, I’m going to do this, this, and this.” It’s internal gratification: This is my reward.

The degree of pressure to look like a successful may depend largely on where a physician practices. Dalgleish discovered that when he and his wife moved from Maine, where “nobody cared what you drove,” to south Florida a few years ago. He found in Florida, “The expectation is there that you project a successful image. Every other doctor who parks in the lot drives a pretty nice car. I drive a 1997 paid-for Saturn.”

Dalgleish thinks there’s more pressure for a doctor to look the part of a successful doctor in a small town, where everyone knows what you drive. “In large suburban or urban areas, there’s no pressure. The larger the staff, the less pressure there is.” In rural areas, the pressure may be different. Nobody cares if you have a Cadillac; it’s how

When it comes to finances, everyone has three options: Spend and hope to make enough to make up for it; conspicuous nonspending; or good financial advice and a plan for your money.

big is your pickup or your ranch?

To add to the problem, according to Katz, doctors are often attracted to areas where competitiveness of personal trophies is important. In parts of Florida, for example, if someone doesn’t have a boat with a slip and a house next to the canal, certain people might think he must not be a good doctor.

A generation ago, a doctor was one of the highest earners in town. He tended to look and play the part. Katz tells how the typical doctor used to wear a bow tie and drive a Cadillac, and everyone said, “Dr. Jones is so successful.” Patients trusted a doctor who looked like he was doing very well. They would come in and politely call him “Dr. Jones.” Katz says, “Now, patients come in, and it’s, ‘Hey, Bill, can you take a look at my leg?’ It’s a whole new world.”

Ramirez and his wife are both physicians from medical families. They entered medical practice just as HMOs became common. Physicians had always been at the high end of disposable income. New doctors now face a different reality. Tuition has gone up so much that they may leave medical school owing $200,000 to $500,000. “They’re coming into practice with a mortgage but no house, and an immediate gap between perceived and disposable income.” Paying 6 percent to 8 percent interest, they may pay $3,000 to $4,000 a month on their student loans—more than their housing costs and utility bills put together.

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