Should I Work Extra Shifts

Should I Pick Up The Extra Shifts For Extra Income?

 

This question will come up in residency once you get your medical license and it will come up when you get the opportunity to pick up extra shifts as an attending. Let’s discuss this in detail because it will touch on the ‘doctor mentality’ of working 80-100 hour weeks and it will touch on the true value of money. I’ve put in my own dues over the years by moonlighting prolifically during residency and making $420k last year as an attending, $170k of which came from extra shifts. More importantly, I am not here to persuade you either for or against extra work for extra income.

 

How It Affects Taxes

The following are the arguments my colleagues have made against picking up extra shifts. I have heard every permutation you can imagine but these are the most recent comments that I can recall.

  1. “Extra works means I’ll have higher taxes.”
  2. “Extra shifts bump me into the next tax bracket.”
  3. “You lose more money in taxes than you make in income.”

None of these statements are fully true. I wrote a great “Taxes 101” post that will give you an overview of the taxes you pay on income from our job. However, let’s dissect these statements briefly to dispel any myths. In reply to #1, all employment income is taxed, so working extra shifts doesn’t necessarily raise the taxes. You may end up paying a little more on the last portion of your income if it falls in the next income tax bracket. Consider statement #2, your entire income cannot get ‘bumped’ into the next bracket. Your income is incrementally taxed at specific rates.  If your taxable income is at 28% then for every $1.00 you make you will pay $0.28 to the gov’t. And finally, the last argument is completely incorrect. Some believe that because of your higher income you would end up owing more taxes than the extra money you made. This isn’t possible.

 

What Are You Going To Do With The Extra Income

Now that you have a good idea at what rate your money will be taxed at you should be able to figure out your take home hourly wage. This is important because without this how can you put a value on your time? My hourly wage comes out to $57. It sounds like very little but if I take all my hours worked and divide by all my take home income after paying taxes then this is what I’m left with. Some of you may get overtime for working extra but most physicians will essentially make the same amount no matter how much extra they work. It is either calculated per shift or per hour. So, what are you intending to do with the money? If I work an extra 10 hours per week then I can enjoy an extra $570 per shift or a total of $2,280/mo. In my case I would increase my income by an extra 15%. I would take this money and put it towards my student loans. Or I could invest it. What would it be worth for me in the next 4 years of work that I have left? It would  be worth an extra $118,000 in my case. This could afford me a small house somewhere in the middle of nowhere or it could be the money I need to invest in a business or it could make me a passive income of $393/mo if I invested the money in the broad stock market.

 

The Extra Money You Could Have

Let’s look at this extra $118,000 that I could have in 4 years. Boy, it’s a lot of money. And boy, it’s a lot of work to make that extra $2,280/mo. That means I have to work an extra 25% of my time for 4 years straight. What’s another way to accumulate wealth? We just talked about the first method, earning more money. The other option is to work longer. Instead of stopping work in 4 years I could work 10 more months at the same pace and make that exact same amount, $118,000 (perhaps even more since likely I will get raises along the way). In return I wouldn’t have to work as hard these next 4 years, I wouldn’t miss out on personal time, exercise, family and peace.

 

Where It Might Make Sense To Work More

It’s a little easier to do bursts of extra work. After all, if you just picked up 2 extra hours a week for 4 years that would only be worth $23,000 more. That’s tedious labor and grueling for a mere $23k. If instead for one month a year you really buckled down and worked a lot of extra shifts you will get a better result and you won’t feel as burnt out. This is beneficial especially if you have a credit card you want to pay off, a loan you want to pay back early or extra income you need to put into a bear market.

 

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