Family Docs Pay Off $705,000 in Student Loans - MtoM Podcast #166

This is the White Coat Investor Podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom.

This is Milestones from Millionaire podcast number 166. Family docs pay off $705,000 in student loans. As a white coat, you have valuable knowledge. Various companies want that knowledge and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side.

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All right, Megan has asked me to announce the next financially empowered women, aka the FEW virtual event. It is April 25 at 6pm Mountain time. Come learn about taxes. Guest Joanna Turner, who you may know from many years of service on the WCI forum, is going to be there teaching about taxes. You can sign up@whitecoatinvestor.com tax you few. All right, we have got a couple of guests today to bring on the.

Milestones to Millionaire podcast. They've accomplished a recent milestone.

I'm super proud of them. But stick around afterward. We're going to talk about Rich Dad.

Poor dad, and I think you'll enjoy that discussion as much as the interview.

Our guests today on the Milestones to Millionaire podcast are Nate and Danielle. Welcome to the podcast, guys.

Thank you.

Thanks for having us.

So tell us what you two do for a living, how far you are out of training, and what part of the country you live in.

I'm a family physician and I had a fellowship in maternal child health and I finished my fellowship in 2019 and we live in Santa Cruz, California, and.

I'm a family physician and did a fellowship in osteopathic manipulation and neuromusculoskeletal medicine and finished the fellowship in 2018 back east, and we've been living in Santa Cruz now for about three and a half years.

Okay, and you two have done something pretty remarkable in your first few years out of practice. Tell us what you did.

So we paid off all our student debt, which was a total of $705,000 four years after Danielle finished her fellowship in 2019.

Awesome. 705,000. Thousand dollars. Was it evenly split between the two of you? Were you at the same medical school borrowing the same amount, or how did it work out?

Close. I really. I really helped Nate pay off his loans. Nate had about twice. Twice as much as me.

So I went to a private school in California, osteopathic school, and Danielle went to a state osteopathic school in Michigan. So I had about double the debt, as Danielle did when we first started paying it off.

When did you. When did you two meet? What stage of training?

In residency. And we got married during my fellowship.

Okay.

So there's full disclosure. She knew. She knew that I had debt.

I want to hear about that conversation. Do you remember back then when you found out he owed twice as much as you did?

You know, I really. I don't. I do remember we, in the beginning were putting in twice as much into his loans, and I was all. And he was. And I was, like, working while he was in fellowship, and I was thinking, wow, I'm really, really carrying this family. And then about a year or two ago, I was like, okay, we have to evenly pay these off. Like, this is. I want to see mine go down more.

Yeah. And I feel when I started first reading White Coat, probably about five years ago, you had somewhere in there talking about a financial emergency.

And.

And I've very much felt like for the first time after I was in fellowship, like, oh, my God, I'm in a financial emergency, or we're in a financial emergency here, because the income to debt ratio is not there to. You know, I graduated with 380 and swelled to 470 during training with interest at 7%. And. Yeah. And I knew that I didn't really want to go for public service loan forgiveness. I felt like I'd really wanted to do private practice. So, yeah, we had to get on the same page pretty quickly.

I remember meeting with a financial advisor early on, and we told them that plan, and they were like, you need to get something in writing that he'll pay you back if you. If this marriage doesn't work out because you're putting a lot of money into his loans. It worked out, though.

Yeah. I'm glad it's working out. It's true. There's a little bit of risk there. Right. I mean, people are so worried about getting sued for an amount above their policy limits, and that's incredibly rare. You know, in my specialty, it's probably 1 in 20,000 patients, 1 in 10,000 patients, something like that, just to, you know, get sued at all, much less having an above policy limits judgment. And you know, people get divorced all the time. It's actually lower for docs, though. Two doc couples have one of the lowest divorce rates in the country. Did you know that? It's only about 10%.

I did not know that. Perfect.

Most. Most time it does work out. All right. So this is pretty wild. You guys came out of training. You know, it was a little bit of different time period, but essentially, what was your net worth when you came out?

Negative.

Negative 700. 6,000, maybe. Negative 6, 700, 4,000. I think we had about 2,000.

No, it was all debt.

You had some retirement.

I had been contributing to. To a Roth since I was really young. My parents started it for me pretty young. And then so we were probably about.

A half a million, I would say, at least. Yeah, negative.

Big hole.

Big hole.

Yeah, yeah.

So you looked at each other, you know, you poured some strong drinks, you looked at each other and you started talking about what you wanted to do about it. Tell us about that conversation.

I think we became possessed is a strong word, but I think we became so obsessed with paying off our debt and trying to be free from needing to make clinical income to live. And we. I mean, one of the sample questions they sent was about people saying, oh, you should invest the difference, you know, rather than, you know, pay off your debt. And I think for us, it was a cash flow issue. Right. And so with such a high debt burden, even after refinancing, you know, it's still $6,000, $7,000 a month of a minimum payment. And yes, we. Maybe we would have got a little bit more, maybe somewhere else, but the emotional toll of the debt just, like, drove us to. I mean, we were like, calculating every month, okay, how much more this month? How much more this month? Like, okay, we got a little tax return back and we put that in. Yeah, yeah.

I mean, it was a really nice. It was really nice to have that conversation, though, because we were like, what are our priorities in life? You know, what are the things that we still are really important to us that we want to do no matter what? And what things can we scale back?

And right off the bat, it was like, I don't need a $500 car payment. So we sold that car. We bought an old car from our parents. We had no car payments throughout the whole thing. You know, despite your posts on California being a toxic wasteland for physicians, we still moved to California. We did move to California. And I think that highlights one of the big pieces of Living where we live in Santa Cruz is one of the highest rents in the country. And really for people living in very high cost of living areas is that you have to see your housing or your cost of living as your luxury item. That's what you're spending money on. You don't get a pass on. Also driving super expensive cars and buying a really over budget house and taking super fancy vacations. And so for us, like we knew, obviously our rent is very expensive, but our vacations were always to family. We drove old cars, we wore old clothes. You know, we really prioritized travel to family, good food and living in a beautiful place as our luxury items.

Preach it. Preach it. I'm even more impressed now that I know you paid off $700,000 in student loans while working as family docs in California. This story is getting better all the time. I really like it. So how's it feel? I mean, that's gone. How do you feel?

Really good. Really, really good. Yeah. I think both of us use the word liberated when we've talked to people about it. I think it's exciting to think about we have so much more flexibility in our life. And so if we want to switch jobs or we want to try something new or invest in a different way, we're able to do that, which is so exciting.

And I have a private practice, solo private practice. And so I actually incorporated this year and there's been a huge delay in payments coming in because of the change in tax id and that would have been very stressful if we had our debt burden. But now we're able to float that difference easier and make decisions that down the long road will pay off, contributing more to our 401k. And yeah, I think we just feel super liberated and having a private practice too. There's less pressure in just seeing as many patients as possible and making sure new referrals are coming in, which, you know is great, but it's okay if there's a slow week or it's a slow month or because we have that flexibility.

What was your average household income over the four years you were paying off these student loans?

It started, we both worked in Rhode island for the first year and it was probably around 400. And then we moved here and it stayed around 400, 450. And then as Nate has built his practice, it's gone up to closer to 650.

700.

Okay.

I'm doing pretty good out there. That's pretty awesome. A lot of times people struggle to get their incomes up in California, you're doing pretty darn well.

Yeah, thank you. I think the. The private practice mostly doing osteopathy and OMM in a high demand area with a couple really good payers in an area where people want it has been great.

Yeah.

And our first year here, like, I was working at. I work at a community health center and I was doing also a second job at labor and delivery shifts at a hospital. And Nate was building his practice and doing urgent care. And so we worked a lot, you know, but not, not as much as many. I know.

And I think for us too, the other conversation we had was because it was such a daunting number and we felt like it was going to take a while, we still prioritized the things that were really making us happy along the way. You know, we looked at geographic arbitrage, like, should we move somewhere in the Midwest and just leverage our income and try to get out of this? And just personal decisions and for personal reasons, we felt like, like we were thriving. Every day where we loved living was a drive for us to continue to do what we're doing. So that was a big piece as well.

So it is daunting to stare down $700,000 in student loans. In retrospect, was it easier or harder to pay it off than was going.

To be four years ago?

It was easier, yeah. I mean, I think like every time we'd make a big loan payment, we would recalculate our, you know, how quickly we were able to do it. And so it took a lot of mental energy and time. But in retrospect, it went a lot faster than I was expecting.

Yeah, definitely easier. I think being on the same page was 100%. You know, if we weren't on the same page and one of us wanted to travel differently or spend differently, I think that would have been really hard. But we both became so into it and recalculating. We refinanced again like we were. We revised financed outside the government, so we didn't have the student loan pause, but we did take advantage of the low interest rates. So when we were paying off our debt for the last probably three years, we were around 2%.

Yeah.

Which isn't all that much different from 0% that other people were getting.

But.

But how did you feel when that came out? Did you feel like a schmuck when the government said nevermind?

No, I mean, we, I think we both knew that, like, we wanted the flexibility outside of having these like 7% interest loans, you know, So I think we, we Were like, did we do the right thing? And then quickly we decided, yes, we. We did do the right thing. And I'm super happy for people who had that pause because the loan, you know, seven. I mean, my. Our loans were 7% interest with the government, and so just brutal.

I felt like I couldn't roll the. For me, I felt like it was just rolling the dice on political pol. Political policy, and just seeing my loans swell every month by $2,000 of interest, where it's like, I can't rely on the government. Maybe it'll happen, maybe it won't, but I can't, you know, I end up in a million dollars in debt. In debt over 10 years, trying to just wait, just, you know, so. But I have to say, I felt a little like, oh, man.

All right, so somebody else out there is in the situation you were in four or five years ago. Maybe it's one doc, maybe it's two. Maybe they owe half a million dollars or $700,000 or $900,000, and. And they've just realized, listening to this episode, that they also have a debt emergency. What advice do you have for them?

I think if you do have a partner or at least a support person communicating with them about, again, just figuring out what your priorities are in life and making sure that you stick to the things that make you happy. Because if you're not happy, it's really hard to pay off $700,000 in debt. And then, I mean, for us, it was just like slow and going slow and steady and putting everything extra into our loans. And we did look at other. Like I had applied to other options for loan repayment as well. And so, like, making sure you realize your value and finding when you, when you get a new job, you know, asking for loan repayment or what those options are and knowing your value and what your. What you're worth is important.

Yeah. And I think for me, I'll give you a shout out. Jim. Just reading Personal Finance, you know, reading the White Coat Investor and hearing other stories and just the basics. I mean, the principles aren't that hard. And I think the investing world especially we were targeted a lot. Freight out of residency with financial advisors, but just the basic principles of sticking to a plan. We wrote down a financial plan. What other things did. We did. Oh, we came very uncomfortable with debt. We learned about personal finance, wrote down our. Our priorities.

Yeah. And we made a list of things early. We were like, we really. We didn't have an emergency fund early on, so, like, that was a priority. So we were, you know, building our emergency fund while putting in money into our loans and then making sure we had life insurance, things like that. And as soon as those we were able to check those off, we just went, like, kind of gung ho into.

The loans and we maxed out our 401k every year.

Yeah.

Very cool as well. Yeah.

Well, congratulations to both of you. You've accomplished something very impressive. You should be proud of yourselves. I have no idea if listening to other people doing this inspired you to do it 100%, but I know your story will inspire somebody else to do it. So I appreciate you coming on the podcast and sharing your story with others.

Thank you.

And I should say, we also had a baby and have another one on the way, so we were able to build our family during this time, too, which is exciting.

Congratulations. Wealth in more ways than one.

Yeah, thanks.

All right.

Great interview. Great people. Super excited for them and their accomplishment.

Not only are they making more money.

Now, but they just freed up, you know, six to $10,000 of income. We talked after the interview ended about what they're going to do with it. They're going to Hawaii. And I encourage you, when you hit milestones, celebrate them.

Right? It's important. Not only does it help you reach.

The next milestone, but it helps you.

Remember that the most important thing in life is not just accumulating a big pile of money. Right? Money is most useful when it actually has a use.

So don't be afraid to celebrate when.

You hit a milestone, whether that's getting back to broke, whether that's becoming a.

Millionaire, whether that's paying off your car, whatever it is, celebrate it. Then apply to come on the podcast at whitecoatinvestor.com/milestones. All right, I promised you at the top, we're going to talk about Rich Dad, Poor dad, written by Robert Kiyosaki. You know, this is a very popular.

Personal finance book many of you have probably read is also a lightning rod, right?

People quoted as their inspiration become financially.

Successful, and other people think it's the worst thing that was ever written.

The main criticisms of Rich Dad, Poor dad are, number one, Kiyosaki's probably a liar. There probably never was a rich dad.

The people who've looked into it, I think the whole thing's pretty much made up.

The second criticism is that Rich Dad, Poor dad really doesn't give very much concrete advice at all. It's mostly just a collection of cliches about money. And finally, the criticism is that Kiyosaki's.

Just running a cult of personality.

What he's done since the book came out, he's kind of now become known.

As a perma bear. He's also always forecasting doom and gloom, which of course gets him quoted in lots of articles and gets his work out there even more. Not surprisingly, he's pretty darn good at marketing.

So here's my advice to you. The criticism is valid.

The criticism is probably fair. But like anything in personal finance, including.

This podcast, take what you find useful and leave the rest.

And I think there's some useful stuff in the book.

So let's talk a little bit about.

Why the book can be useful for people.

First of all, the book is pretty good at increasing interest in finance, right? My mom read Rich Dad, Poor dad, right? I think I got her to read.

A really short book a few years.

Later called the Coffee House Investor, but that's it. She's read two financial books in her entire life, right? And she picked this one up on her own, read it, and sent a summary out to each of her kids, right? That says something, right?

I think it's good for people to get interested in finance. I think this book's good at getting people interested in finance.

The second thing you can learn from Kiyosaki is how to market stock stuff, right?

He's really good at marketing. Look at the tagline on the book.

What the rich teach their kids about.

Money that the poor and middle class do not.

That's clickbait, right? That's clickbait. Before there was clickbait. A very impressive turn of phase. Some people with marketing degrees never come.

Up with a line that good in their entire career.

Another key concept in the book is that assets make money. A lot of people think their house is an investment.

It's not. It's a liability. Right? Does your house pay you? No, not for the most part. I mean, I guess it pays you dividends in the form of saved rent and it can appreciate over time.

But for the most part, your house costs you money. It's a liability.

You have to insure it, you have to maintain it.

You have to shovel the driveway, you.

Have to mow the lawn, you have.

To pay interest on it. You have to pay property taxes.

On is not an asset, it's a liability. It's a consumption item.

And it's important to know the difference.

Between an asset and a liability. An asset is something that pays you. Maybe it's a rental property.

Maybe it's a few shares of an exchange traded fund.

Maybe it's a TIPS bond, right?

It's something that pays you.

It's not something you have to pay for. Your car is not an investment.

You do not invest in jewelry for.

The most part, right? It's something you pay for. It's not paid paying you. So that's a key concept that I think a lot of people out there just don't understand.

Your stocks, your bonds, your mutual funds, your investment properties, your small businesses, those are assets, they have a positive expected return. So buy those first, become wealthy first.

And then you can go buy some consumption items if you like.

Another concept he came up with, and he actually came up with a whole second book all about this concept is.

Is the cash flow quadrant is what he called it. And he divided people up into employees.

When you have a job, that's the E quadrant. The self employed. When you own your job, that's the S quadrant. The C quadrant is for corporation where you own a business and others are working for you. And the I quadrant is for investors.

Where money works for you. Now granted there's some overlap between those things, particularly for lots of doctors. But as you go along, each quadrant is better than the next when it comes to tax treatment. And for the most part that's true.

Employees get hosed on taxes, right? You can't deduct anything.

You basically are paying payroll taxes on everything you get.

You can't write off business expenses, that sort of thing. So not too awesome.

You're stuck with whatever your employer offers you for retirement plans as you move.

To the self employed, right? At least you can get your own retirement plans. You can get a big nice solo 401k.

You can get a personal defined benefit plan.

You can write off your business expenses. Your tax treatment is just a little bit better.

You could declare it an S corp.

And have some of your income be distributions and not pay medicare tax on it.

There's some benefits there. Being self employed with a corporation, you.

Know, the idea here is you now.

Got other people working for you and you're able to stick scale your own efforts in that respect. And it's pretty cool when you go on vacation and come back wealthier than when you left. And the way you do that is by having your money and your people working while you're sleeping. All right. The final quadrant of course is the investor quadrant. Whether you're investing in rental properties and you're using depreciation to cover the income.

Or whether you're investing in retirement accounts.

And don't have to pay any taxes on that money. As it grows, or whether you're taking.

Advantage of tax loss harvesting and the lower qualified dividend and capital gains rates.

You know, there's some nice tax treatment for investors, and I think that's a good concept that Kiyosaki taught me. Another thing he does is encourage you to be an entrepreneur. An entrepreneur is not. Entrepreneurism is not for everybody, let's be honest. But when it works, it works really well. You know, carving out a chunk of your earned income, investing in a wise way does lead to financial freedom. It takes a little while, it takes some discipline. It takes a little bit of knowledge to do so.

There are other pathways.

I think one of the most reliable quick pathways out of medicine is to build a short term rental empire. Although a lot of short term people are moving to midterms these days. But I think that's probably the fastest reliable way to build wealth and be an entrepreneur.

But there are faster ways if you.

Can come up with a, you know, your own company. For example, we have an interview coming up with somebody who developed a software company. This is a doc who developed a software company and very quickly scaled it so now it's worth millions. Just a few years out of residency. You know, that sort of entrepreneurship does work.

It's risky, yes. It doesn't always work, but it can.

Be very, very profitable. And I like that Kiyosaki and Rich dad, Poor dad encourages you to do that.

Another key concept in there is avoiding the scarcity mindset. This is the idea that the pie.

Is of a limited size, that it can't be grown, and that you have.

To take your bigger chunk of it from somewhere else.

But that's not really the way it works. Right? Truly, the world is much more aligned with an abundance mindset.

When you realize the pie can grow.

Everyone can become more wealthy, and there.

Are no limits on your income. That's not just being optimistic.

I've run into enough people with the.

Scarcity mindset that I think warnings about.

It are completely appropriate. Right?

I mean, imagine a fire blogger saving 90% of their income for 10 years.

To hit the retire button and then.

Live another 60 years washing out their Ziploc bags and reusing their paper towels. At a certain point, it's better to just find a little paid work you actually enjoy and work for a few more years. Seth Godin famously said, instead of wondering when your next vacation is, maybe you should set up a life you don't.

Need to escape from.

All right, the final lesson that I.

Think is worthwhile from Rich Dad, Poor dad, is that real estate's a good investment. Now, that doesn't mean index funds aren't good investments. It doesn't mean the real estate isn't risky.

It doesn't mean that real estate can't be a lot like having a second job. That's all true, but it's still an.

Asset class that I think is worthy of inclusion in a portfolio in some form and in some amount. So if you're looking for something to add to a stock and bond portfolio, I think the logical next choice is real estate.

Bottom line.

You know, there are very few financial books that I regret reading, right?

Just very few.

I have read a few that I'm like, I can never get that time back. This is not one of them.

There's some good stuff in here.

It's reasonably entertaining. I think there's some good lessons to learn. You're not going to learn much from.

It if it's a 25th financial book.

You'Ve read, but if it's the second or third or fourth, there's probably something useful you're going to get out of it.

Take what you find useful, leave the.

Rest, and find your own way to financial success. All right.

As one who wears a white coat.

You have valuable knowledge that companies are willing to pay you for.

So we put together a list of.

Companies that will pay you to take.

Surveys to get that knowledge. If you're looking for a profitable side gig for not too much effort, getting paid for those surveys could be the.

Perfect solution for you. You can make extra money. Start a Solo 401 and use your.

Knowledge to impact new drugs and other products. You can make as much as $30,000 a year doing these surveys.

We've had one of our columnists doing that.

You can sign up today, use a fraction of your downtime to make extra cash.

Might be worth an extra month or two's worth of income. Sign up@Whitecoatinvestor.com Physicianservice. All right, we've come to the end.

Of another great Milestones to Millionaire podcast.

I'm grateful for you out there.

Not only are you guys the guests.

And the content on this podcast, but you're an inspiration to me. I'm so proud of you and what you're doing out there. Whatever milestone you're working toward, you should be proud of yourself. Celebrate those milestones, set your goals for the next one.

You can do this. Yes, the white coat investor is here to help. We'll tell you how to do this.

But you still have to do the hard part, and the hard part is actually doing it.

But I promise you, thousands, tens of thousands, hundreds of thousands, millions of doctors.

Before you have accomplished what you're trying to do. You can do it, too. You are no dumber, you are no.

Lazy than any of them are.

Right. They did it. You can do it.

Keep your head up, shoulders back.

You've got this. 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.