Emergency Physician Family Pays off $311,000 of Student Loans - MtoM Podcast #183

This is the White Coat Investor Podcast Milestones to Millionaire Celebrating stories of success along the journey to financial freedom. Milestones to Millionaire podcast number 183 Emergency physician family pays off $300,000 in student loans in 11 months Today's episode is brought to you by Cirmo, the exclusive online community where healthcare professionals can easily boost their income. With over 1.5 million doctors, APCs, and other HCPs, Cirmo offers flexible paid surveys that fit into your schedule, allowing you to earn extra income on your terms. Cirmo paid over $25 million to its members last year, and some members have even earned more than $15,000. Beyond earnings, Cirmo provides a supportive community where healthcare professionals can connect and collaborate. New members can visit whitecoatinvestor.com CIRMO to take their first two question $20 survey today. That's whitecoatinvestor.com SERMO all right, welcome back to the Milestones Millionaire Podcast. This is where we take your stories and celebrate them with you and use them to inspire others to do the same. You can apply to be a guest on the podcast@WhiteCodeInvestor.com Milestones. Don't forget about our special sale just for podcast listeners. If you use code podcast20 from now through Monday 19th August, you get 20% off all WCI courses and everything at the WCI store. That makes our new Fire your Financial Advisor student course just $79. You can use your CME money and enroll in courses such as Financial Wellness and Burnout Prevention for medical professionals where you get access to the entire Fire your Financial Advisor course content as well as additional wellness and burnout prevention modules. CFE Continuing Financial Education 24 also qualifies for you to use your CME money ACT just like the conference where it was made qualified or CME as a CME expense. So whether you want to write that off as a business owner, whether you want to use a dedicated CME fund to purchase it, it's a great way to do so. You can go to whitecoatinvestor.com courses whitecoatinvestor.com store use the code podcast 20 through the 19th. You get that special discount another seven days from the time this podcast drops. All right, we got a great interview today. This is somebody from my specialty. I'm always partial to people in my specialty, but they've done something pretty awesome. Let's take a listen. Our guest today on the Milestones to Millionaire podcast is Nathan. Nathan, welcome to the podcast.

Thank you, Jim.

Happy to be Here, tell us what you do for a living, how far you are out of training, what part of the country you're in.

I am currently in the Southeast. Pretty low cost of living area, large metropolitan area. I'm an emergency room physician trained at a three year residency down here in the same city that we currently live in. And I am one year out of training as of July, as of this month.

And tell us what milestones we're celebrating today with you.

So we have two big ones. January of this year, my wife and I are, we got back to broke. And so we, we crossed that, that zero, that, that very fun $0 worth threshold. And then just in late May, early June of this year, we actually paid off all of our student loans.

11 months. 11 months out of training. You paid off your student loans. How much did you owe?

We came out of residency owing $300,000.

$300,000. Okay, and you're using. We. What does your wife do? Is she working?

My wife is a stay at home mother. She's a civil engineer, a training, has her master's degree in civil engineering, is one of the smartest people I know and right now is pretty dedicated to staying home with our kids. We have three children. Six, four and two are three children.

This was all on your income in the last year that you paid off these student loans?

Correct. And so a little bit about a year and a half, two years, I was able to moonlight a decent amount my third year of residency, which, which helped significantly.

Okay, so how much did you owe when you came out of med school?

So when I came out of med school, I think it was. So I got really lucky, Jim, because if you think about the timeline, when I finished med school, about three months before I finished med school, our student loans froze. So the day that I took out my student loan, one month later, the interest on my student loans froze. And so the day I finished med school, I owed 298 and the day that I finished residency, I owned or I owed 298. I hit the three year perfect when I maxed out my loans, if that makes sense.

Okay, so did you pay much during your residency toward the loans?

We saved up for when the interest rate restarted at the end of residency. But we didn't pay anything during residency because they were zero percent interest and we were a broke family trying to make ends meet initially.

How much cash did you pile up during residency doing that?

About 80,000 roughly.

So fair amount of moonlighting that last.

Year sounds like decent amount. Yep. Yep.

Okay. All right. So you got 80 grand but you still owe 300 and you come out of residency and you get a job. And what did that job pay?

So the. For emergency room physicians, it's actually an average paying job. Where we live there's kind of hard to attract positions here. And so while it's an average paying job, you know the 250 to 265, which is pretty good I think. I don't think that's. I chose it is with a larger group. They do have a tough time getting docs here. And so there tends to be a lot of open shift, a lot of bonus shifts that this group offers for people to pick up. And being a young hungry doc who fresh out of training, for me it was still an hour reduction to pick up every month on top of what I was making just as my base salary, I was able to kind of maximize my earning potential by picking up extra shifts. That was kind of how I made more money than kind of that average ER doctor this year.

So how many shifts were you working a month for the last year?

Yeah, so this was something that I advised. So I actually stayed on. My position is partially academic still. So I'm still one of the academic faculty at the university that I graduated from here. And this is something I talk to my residents about a lot is I, I actually signed my contract to be their full time contracts are required that you work 120 hours to be full time. A lot of people signed 140. But knowing that I was going to pick up, you know, extra shifts every month, I signed a 120 hour contract. That way I could kind of have more control flexibility over my schedule and taper down as I realized that I kind of met some of these early financial goals. On average I was working anywhere from 180 to 200 hours a month. But still a lot of shifts.

That's like 18 twelves.

Well, yes, yes. But it was also a reduction from being a resident, you know. So our residency here, I was working on average probably 2:20 depending on the month and where I was at. And so I felt like it was a break and the paycheck didn't have, didn't hurt with the, with kind of the burnout side of it.

Yeah. So live like a resident truly is what you did.

I did, yeah.

Okay. So I mean typical average emergency physician, it makes, you know, 375 or something. You were working about one and a half jobs, so I'm assuming you made about 50% more than that.

I did. That's Correct.

So how do you feel about that tax bill?

The first one was okay. My wife and I are pretty disciplined. We save exactly 35%. We also have an obligation to our church and so we save an extra 10% on top of that. And that's something we feel passionate about and love doing. But both the tax bill and our bill were big numbers, but it made us blush just a few years ago. And I'm grateful to you. I used a lot of the advice from the website and trying to structure my life in a way that would be as tax efficient as possible. Maxing out my solo 401k. We have a high deductible health insurance plan. Luckily, my children and my wife and I are all pretty healthy right now in this stage of life and we're able to kind of benefit from that. So while we save 35% of my income, you know, from that moonlighting year, that's really the only year that I paid taxes on so far. The, the real kicker is going to be this next year. We've got a lot of money saved up for taxes, but we're doing everything we can to, you know, legally and ethically save for taxes and make sure that we're kind of all above board there. But I've got a big cash amount right now sitting in a high yield savings account, just paying my quarterly taxes, ready for that to hit next April.

Well, so we know about what you made. Half of that went to the student loans, a third of it went to taxes and charity, and you lived on a sixth of it.

It sounds like we live in a really low cost of living city in the southeast. And at the beginning of the pandemic, we were able to purchase our house. It's a nice four bedroom, two and a half bedroom, two and a half bathroom house here in the city. And we paid $150,000 for the home.

And that's.

Those are numbers even, even I know with like inflation, this house would only go for 250, 300,000. We're incredibly comfortable. It's got over a half acre lot. My kids love living here. Schools leave a little bit to be desired where we live, but we're able to manage that by. We had our oldest test into a good public school nearby. And so we were really playing the cost of living game hard. Still, we're very happy. We feel very, very content where we are. We've got a good community, really close neighbors and friends. But keeping that cost of living down has been key to what we've been able to accomplish in this year?

Yeah. Now six months ago you reached back to broke and, and that in and of itself is a huge accomplishment for doctors. What would you estimate your net worth to be now?

So I did the calculations and actually went back and kind of estimated the calculations over the past 10 years since my wife and I. My wife and I have been married for 10 years and you know, going through undergrad and all the way through medical school, our lowest net worth was when our student loans were maxed out. We hadn't, we had just bought our house. So we were kind of net there. If you want to include that in your net worth calculation, which I did. So if you include our primary residence in our net worth calculation, right now we're at about $400,000. But a lot of that, if you take out our home, that's about 150 of that. Right now our net worth is up $250,000.

Yeah, that's a big swing from minus 300 though.

Yeah, yeah, definitely.

Yeah. Congratulations on that. That's pretty awesome. Well, you're no longer making student loan payments. You basically just freed up a huge chunk of income and obviously some of that is going to just working less.

Exactly, yes.

What's the rest of it going to.

So, you know, obviously we're still trying to build up a little bit of an asset. We're being aggressive, trying to front load some of our retirements. We accounts, we've got 529s for each of the children that we're going to get a little bit more aggressive, especially with the new kind of law changes around the 35,000. We do plan on sending our children ideally to a lower cost university as well as the same one that I went to in undergrad. And that's kind of our goal there is to save kind of appropriately for that and let them kind of benefit from our financial success this early and kind of set them up that way. So right now the focus is kids retirement and honestly putting on autopilot. Some of the things that have been tough to do with three little kids for the past few years. Really trying to take the stress off of my wife and make sure that we can be comfortable. Jim, There were times in residency before I was moonlighting when it was middle of the pandemic. Work was obviously pretty hard. As an ER resident at that time and as you know, as an AR doc, there was a lot of uncertainty there. And to add on top of that kind of the financial uncertainty of where we were with three little children, my wife not Working. Luckily we were in a low cost of living area. You know, it was tough for kids and trying to make that work, that. And so honestly I have all of the. Just humility, I mean, and praise for my wife for being able to pull through this journey with three little kids and supporting me all the way through that. So a big part of my goal right now is relieving her stress. She hates debt as much as I do. I think that's pretty evident by how we kind of structured our initial year here and initial income, but trying to support her and make sure that we are balanced moving forward and kind of focusing on the family and relieving that stress of the training years and the. And worried about feeding your kids sometimes, Jim. It was tough. Yeah. That is.

It's a lot of deferred gratification for both of you over the last decade. I'm curious what that looks like in your mind. Does this look like obviously you working less? I think is part of it 100%. Is there a housekeeper involved? Is there an upgrade in. In, you know, what she's driving? What kind of stress reducing things are you looking at specifically?

Very, very quickly. The. The van has to go. It drains a lot of oil into our garage every day. The power steering just went out. We had to replace that a few months ago. It's a 2008 Honda Odyssey that will get upgraded very quickly. It's something she's interested in. But again, my wife would never buy a new vehicle. She would never be interested in that. So it'll be something just a few years newer, I'm sure. I don't know. I think total, we've got less than ten grand into both of our cars and both were paid off throughout residency. We never went into car debt once for vehicles, so that's a big thing. And then yes, the. I think some sort of. What's nice is our kids are all about to start school or in like a mommy's day out right now. And so we're going to get some either housekeeping or something like that to help and just relieve that burden a little bit more.

Yeah. Awesome. Well, given your financial habits, the two of you can probably save up for a brand new minivan in two or three months.

You got to talk to her about that. I tried. I've tried to tell her it wouldn't be an issue.

Just a reminder, you know, I mean, the goal is to be the richest doctor in the graveyard, right?

That's exactly. That's exactly right. That's exactly right.

Money's a tool. And. And you got to learn how to not only earn and save and invest, but also to spend and give and. And you know, most of us that are financially successful, we're good at three or four of those activities and not so good at one of them. And that's.

Sure. Yeah.

All right. Well, you have just done absolutely fantastic. Super impressed. What advice do you have for somebody that's in a similar situation? You know, they're coming out of a emergency medicine or OB, GYN residency or whatever, they owe $300,000 and they're like, is someone going to pay this off for me? Should I go for pslf or can I actually just take this in a corner and drop an anvil on it? What advice do you have for them?

You know, the student loan world is changing rapidly, Right. With the new save plan. I have a lot of friends who are my same year who haven't even started paying on their student loans. Right. A lot of my colleagues that I graduated with have very different kind of mindsets around student loans. For me and my wife, what we did felt best. I don't know that it's right for everybody. It was hard. It was a difficult thing to accomplish in the short time that we accomplished it. And we made a lot of sacrifices to get there and not to get on a high horse or anything like that either. I did feel a need or a desire, Jim, to pay back the debt that I owed. Something inside of me I couldn't stomach. The fear of a, well, Ohio paying back my student loans. Now that. That comes off the back of Jim. I saved about 60 to $80,000 in interest repayment because of the student loan freeze. And I'm not going to act like I'm not grateful for that or that I'm not okay with kind of an interest loan, interest rate kind of manipulation.

Does that make sense? Department of education. An extra 60 grand, huh?

Indeed, I'm not. That will not be happening. So I. But for me, there was something very personal. That's. That's just how my wife and I've decided we view debt. And the reality is, is because we paid off our student loans at 11 months, I've done the calculation both ways, right? And if I had just drug it out and paid the minimum payment for 15, 20 years, whatever. You know that initial calculator that the government gives you before you even sign up for a repayment plan? You know, I was. I saved about $270,000 in interest on my student loans. The average interest rate was 7.3 to 7.8%. That's what I graduated with. You know, I'm fresh out.

That's.

That's kind of our most recent number there. And for me, the savings was the peace of mind of not having the student loans. But b, also knowing that I borrowed that money and, you know, and I paid it back. And again, let's switch back over to the royal we there. My wife sacrificed an immense amount to be able to help, you know, and she felt the same debt was ours and that's okay and that it's okay to pay it back there. We could have tried to fan angle way to reduce payments or stretch it out. And I'm not saying that's wrong. I am absolutely not saying that wrong. It depends on your situation, where you're at, what's going on in your life. For us, the answer was drop an anvil on it.

Yeah. Well, congratulations to you. You've accomplished something remarkable. You should be proud of yourself. You guys deserve to go out and celebrate these mil you've accomplished, and I hope you do. And I hope that that minivan will not be leaking oil in your garage for much longer. Somebody else to come to their garage and leak oil. Just passing it on to them. Thanks so much for being willing to come on the Milestones podcast and share your success with others to inspire them to do the same.

Thank you, Chad.

All right. That was pretty awesome. I mean, I tell people what to do. It's not that hard to tell you what to do, right? To tell you to live like a resident. It's tell you to work like a resident. To tell you that your greatest wealth building tool is your income. To tell you if you can just, you know, keep your lifestyle somewhat similar to what you did as a resident, that you can do all kinds of incredible stuff in the first year or two or three coming out of your training. But this is somebody who's not just listening to that. They have actually done it. Right. Both of them. It's not just the doc. Right? And the doc's working 200 hours a month. You know, there are some sacrifices being made at home as well, especially when there's three small children. I know how that is. I had three small children at home and I was working 200 hours a month. You know, I was in the military. I wasn't even getting paid nearly as well as Nathan was while I was doing that, but I suppose it was taking care of my med school debt in the same way. This is hard to do. It's not easy. It's easy to tell you how to do it. The math certainly works. Nobody's going to deny math works. The hard part is actually doing. And so I thought this was a great example of someone that just went out, busted his butt, right? Worked a job and a half essentially, and then dedicated all of the extra income toward building wealth. And you can see what happened, right? $300,000 in student loans in 11 months. I mean, it's incredible. What does that work out to be? That's sending in like what, $27,000 a month to the lender, Something like that, right? Practically speaking, that's how it happens. It has to happen that way. That's just the way the math works. But if you do that, your student loans go away very quickly. If you can send them 5 and 10 and 15 and $20,000 a month. These things do not have to be carried throughout your entire career. You do not have to owe student loans when you are 45, when you are burnt out, when you were thinking about cutting back on work. You know, after we stopped that recording, I was talking to Nathan and he's telling me, you know, I love what I do. It's so fun. And it's exciting to me to hear that. Right? It's exciting to me to see pre med students and their excitement when they get into med school and to see MS.4s on match day when they're excited about their specialty and people that are practicing a year or two out and they just love it. They love going in and operating or seeing patients or whatever they're doing. But you know what, let's be honest, for the vast majority of us, that excitement does not continue for 30 years. It's very difficult for us to project at 25 or 35. What's going to make us happy at 35 and 45 and 55 and 65. We change, the job changes. Sometimes it's hard to be as excited about something as you were many decades before. You start feeling burned out and you want to make some changes in your career and in your life. There's other things that become interesting to you, other things you want to accomplish in your life. The way you have the flexibility at mid career that I promise you you are going to want is by taking care of business at the beginning of your career in the way that Nathan and his spouse have done, right? They took the student loans in a corner, dropped an anvil on them, they're gone. 12 months out of residency, the student loans are gone. Right? Use that same sort of focus to get a Down payment for your dream home, or if you live in, you know, the Midwest, maybe pay off the entire home. You know, boost your retirement savings. All of a sudden, within just a few years, you're a millionaire, a multimillionaire, you're financially independent, you have options. And I promise you, if you're a resident fellow, you're a few years in your career, you're going to want options 10 or 15 years out. I hope you still love medicine. I hope you're one of the relatively small percentage that if I wrote them a check for $10 million, that they would still practice medicine the same way they're doing it today, next month. But we know the vast majority of doctors do not feel that way. They would at least cut back, and about a third of them would punch completely out of medicine if they had the money to do so. Something changes along the way, and you need to prepare yourself financially as you go through your career for you to be one of those people for whom it changed. It does change for a lot of us. Now, I'm still practicing. I'm financially independent. I still practice because I love it. Right? I was in the emergency department yesterday seeing patients, and I enjoyed it. It was fun. You know, 95% of my day I enjoyed. And I like going to see my friends and the nurses and the docs and, you know, patients and helping them have a better day. But that's not the case for everybody, number one. And number two, it's pretty darn hard to get burned out when you're working six day shifts a month like I am. Right? The financial stability gave me the ability to work on my terms. And when you work on your terms, medicine's way, way, way more fun, way more exciting. And I want you to all have the ability to make those changes if you need to make them at mid career, late career, or whenever. All right. I didn't tell you at the beginning, but I wanted to talk a little bit about what's the best paying hobby out there, and that is certainly not boating. Boating is not the best paid hobby out there, I assure you. Boat stands for bring out another thousand. And if you buy a boat, please, please, please make sure you can afford the boat before you buy it. I love boating. It's a lot of fun, but it is not cheap. You know what the best paying hobby out there is, though? It's acting as your own financial advisor, being your own financial planner and your own investment manager. Let's just consider the cost of investment management. It's not unusual for somebody to pay 1% of their assets under management as a fee. I hope most people will negotiate something smaller than that by the time they're millionaires, but that's not unusual. Let's just use that. It's kind of the industry standard, the average fee that people are paying, although I would hope you would pay less than that. Again, let's say you have a $4 million portfolio, right? You got $4 million, you're paying 1% a year. That's 40 grand. 40 grand, right. Even if you're an emergency physician working a job and a half, that's a whole month's pay. It's a whole month's pay. That's a good paying hobby. If you can avoid that expense, especially if you're paying with after tax dollars, then it might be a month and a half spare. It's just a lot of money. And it's not that an advisor can't provide that sort of value to you. It is possible. 40 is a little on the high side for sure, but it is possible they can provide a lot of value to you. And I'm not against paying for value, especially if you're paying a little more reasonable price, like 5 or 10 or $15,000. But even so, how many shifts do you have to work, or how many days do you have to go to clinic, or how many operations do you have to do in order to come up with what you're paying to a financial advisor? Well, it's quite a few, and it might be worth it to you to learn how to do that yourself, competently. And you can do that by listening to these podcasts, reading the blog, reading our free monthly newsletter, interacting in our forums. You know, if you need a little bit of help, you can take the fire your financial advisor course. It's a great course and it can help you put your financial plan in place and teach you how to manage it yourself. Even if you need to use a financial advisor at times to check in, or you want to use them for certain things, but not everything, you can save a lot of money there. It is a really great paying hobby. If you think about $40,000 a year and you apply some sort of future value of money calculation to that, let's say $40,000 a year, and let's apply 8% a year to that over 30 years of a retirement, how much money does that add up to? Well, it adds up to about $4.5 million over the course of retirement. If you divided that by 30, you know that you could spend each of those years of retirement, that works out to be about $150,000, right? You can have a lot of fun with $150,000. You can run a lot of McLarens for $150,000. You can take all your kids and grandkids on cruises for a lot less than that. And so just keep that in mind. I don't want to say everybody has to be a do it yourself investor. My best estimate is probably only 20% of docs want and are able to do this themselves. But that's a whole lot higher percentage of those of you who are listening to this podcast, right? So I would encourage you to at least consider acting as your own financial advisor, learning how to do it competently. Right? Because if you do it badly, that's not worth the savings, right? It's well worth paying a fair price to get good advice if you don't know how to do this stuff yourself. But I would encourage you to learn how to do it yourself. That is the right move for lots of you that are listening to this podcast and it is by far the best paying hobby out there. Our sponsor for this episode is Cirmo, leading online community for healthcare professionals seeking to enhance their financial well being and contribute to the future of medicine. With more than 1.5 million healthcare providers globally, Cirmo offers flexible paid surveys and other opportunities to help you earn extra income while sharing valuable insights. Last year, loans Cirmo paid over $25 million to members. Join a community of your peers where you can collaborate, share advice and make a difference in healthcare by visiting whitecoatinvestor.com Sermo New members will earn $20 instantly by taking their first survey at whitecoatinvestor.com all right, keep your head up, shoulders back. We'll see you next time on the Milestones to Millionaire podcast. The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.