Medical Student Creates a Budget - MtoM Podcast #171

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

This is Milestones to Millionaire podcast number 171. Medical student creates a budget at PKA.

Insurance Group, Inc. Pradeep Oddho and Matthew Peterson are independent brokers focusing on disability and life insurance. They excel in securing coverage for physicians, including those on visas like J1H 1B, et cetera. Protecting your family in the event of a disability or death is important. There is now an A rated carrier offering up to $10 million of life insurance without labs.

If you're very healthy with limited or no medical issues, approval is likely in five minutes.

Reach out to PKA Insurance to discuss your disability or life insurance needs@whitecoatinvestor.com PKA or by calling 1-800-258-1018 or emailing infokainsurance.com all right, we went over in our.

Company meeting earlier today the results of last year's White Coat Investor Survey, where we surveyed the whole audience and tried to find the ways we can serve you better. A recurring theme was that people want more basic information, so we're doing all kinds of things to try to get that out there, including adding to this podcast episode short snippets of basic information about the basics of personal finance and investing, trying to increase your financial literacy. But there's a whole bunch of other stuff we do as well. For example, we have WCI101 this is the basics email series totally free to you. You sign up@whitecoatinvestor.com basics and basically we email you a couple of times a month for a few months or a couple of times a week. You know, a basic principle about personal finance. You can totally just sign up for that.

You can stop anytime to discuss your disability or life insurance needs@whitecoatinvestor.com PKA or by calling 1-800-258-1018 or emailing infopkainsurance.com all right, we went over in our company.

Meeting earlier today the results of last year's White Coat Investor Survey, where we surveyed the whole audience and try to find the ways we can serve you better. A recurring theme was that people want more basic information. So we're doing all kinds of things to try to get that out there, including adding to this podcast episode. You know, short snippets of basic information about the basics of personal finance and investing, trying to increase your financial literacy. But there's a whole bunch of other stuff we do as well. For example, we have WCI 101. This is the Basics email series, totally free to you. You sign up@whitecoatinvestor.com basics and basically we email you a couple of times a month for a few months or a couple of times a week for a few months. These short little emails that teach you a basic principle about personal finance. You can totally just sign up for that.

You can stop anytime, you can unsubscribe, whatever.

It's totally under your control. It's totally free. Whitecoininvestor.com Basics we also have our Start.

Here page on the website.

It's in the upper left. If you go there, you will find information group by topic that can help you find exactly what you're looking for. Also on that front page of White Coat Investor is a search function. I just found out what we're paying.

For that search function every year and.

I'm debating not using it as much myself. But the truth is it works really well now, so I'm glad to pay for that. But I encourage you to use that search function. Any question you have about personal finance.

Or investing, chances are good I blogged.

About it at some point in the last 13 years. So use that search function to find what you're looking for. We also have a Frequently Asked Questions page if you go to whitecoatinvestor.com faq. Guess what? Most doctors all have the same 50 questions or so about personal finance and investing.

You can read all the answers right there. It's not even that complicated.

You can learn this stuff. It is really very doable. And if you can become financially literate and develop some financial discipline and you combine that with a physician or other high income, professional income, it's pretty powerful. This stuff's worth millions to you over the course of your life, but you do have to learn it, so make sure you do that. On this podcast we interview people who have accomplished some sort of milestone, and it's quite a lot of variation what those milestones are. For example, one I recorded earlier this week was somebody who had an $8 million net worth and today we're talking to a first year medical student. So it's exciting to run the gamut of what people encounter during their careers, but I think it's also instructive and shows that one by one we all tick off the same milestones. So if you'd like to come on and inspire others to do what you've done, you can apply@whitecoatinvestor.com Milestones and we'd love to have you stick around. After this interview, we're going to talk for a few minutes about donor advised funds.

My guest today on the Milestones to Millionaire podcast is Garrett. Garrett, welcome to the podcast.

Hey Dr. Dali, thanks for having me.

So tell us where you're at in your career.

So I'm a first year medical student at the Texas College of Osteopathic Medicine, otherwise known as tcom, in Fort Worth, Texas at the University of North Texas Health Science Center. And I went to Texas A and M for undergrad.

Very cool. I think this is the first time we've had a med student on here. It's certainly the first time we've had an MS.1 on here. So a lot of people are now wondering, what milestone are we celebrating today? What milestone could an MS.1 possibly have hit? So tell us what you've done.

So my milestone is just creating a budget. It sounds very elementary, but I argue it's arguably one of the best milestones to conquer.

Yeah, I think it's awesome. What milestone could an MS.1 possibly have hit? So tell us what you've done.

So my milestone is just creating a budget. It sounds very elementary, but I argue it's arguably one of the best milestones to conquer.

Yeah, I think it's awesome and I'll tell you why. We just did our annual WCI survey and it turns out that about half of white coat investors, these are people who are hardcore enough about WCI to actually answer our survey, don't have a written financial plan. So the fact that you have got at least the start of a complete written financial plan done as an Ms. One puts you way ahead of tons of people.

So.

So congratulations to you on that. Let's talk about your budget though. Are you single? Married? Kids? Where are you at in life?

I'm single.

Okay, so tell us about your budget. How much do you plan to spend every month and what's the money going to go to?

So creating the budget, I split it up in wants and needs and ultimately I have to spend money for rent. I have to spend money on gas and groceries and I have a whole column just for those needs. And then I have separate columns for Amazon purchases. And a lot of the wants, like going out with friends, you gotta have some balance in med school, right? So roughly give or take around $2,000 per month for the rent and all those once combined, give or take.

$2,000 total. That's what you plan to spend every month during med school?

Roughly. And then I have. The tuition is separate from that. But for the wants and needs, give or take. It's around there.

Okay, so what's.

What's rent gonna be? What do you expect it to be?

Oh, rent's around. Is around a thousand bucks. And then I have water and pest control and a lot of those extra fees that come with owning an apartment. So it's around like 1100 bucks.

Okay, and is that, is that all by yourself? Is that with the roommate? How did you make that decision, whether to get a place on your own.

Or try to find someone to split that with?

So I did want to have a roommate going into med school. I know that it's just going to cost a little bit less having a roommate, and it's nice to have someone to vent with with classes. He goes to medical school as well with me. So I did want to have a roommate, and I do have a roommate now, and I felt like that's been a strong financial decision. I know people who live alone spend a lot more, and I felt like this has been a good fit for me.

So that thousand bucks, that $1,100, that's.

Just your share of the rent, right?

That's my share, correct.

Okay, so how much do you plan to spend on food?

Food. So roughly, I'd have to double check that. I think it's around 350, 400 bucks. So if I can do around 100 bucks per week for groceries, you know, 400, 4 or 500 bucks, I don't want to spend more than that per month on groceries. But you gotta, you gotta eat. Right? And if you want to spend some nicer deli meat and eat healthy, you're gonna have a little bit more cost for your. For your lunches and whatnot. But I feel like around 400 bucks is solid.

Very nice. What.

What's the most interesting category in your budget?

So I, I do have a separate category just for Amazon, because there's so much stuff that you can spend on Amazon, and a lot of those purchases are needed for med school. I had to buy all the different, like autoscopes and the. All the different medical supplies you needed to get started out with med school. But it's kind of surprising how much you can spend on Amazon. It's right there. And it's so easy to use, and you can find yourself overspending easily on Amazon, for sure.

It's so convenient. One click ordering and it shows up 24 hours later on your front porch. It's pretty awesome. All right, so is there any income in this budget, or are you living.

Completely on borrowed money, completely unborrowed money.

So how much do you think you're.

Going to owe when you come out of medical school?

At least $200,000 for sure. Probably $200,000 to $250,000.

Okay, and what do you think about that? How does that feel here? Sitting at the beginning, knowing that a few years from now you're going to owe more than $200,000 in debt and you're not even going to start paying that back for a few years after that.

When I, when I first started making the budget, I was very worried about that. You hear stories of physicians who still have a lot of debt and they're paying it off into their 50s and 60s. And I didn't want to live that sort of lifestyle. So one of the pieces of advice that I got was from my dad starting out with taking these loans. And he had a great piece of advice which was think of these loans as an investment on your business. So think of it as like a small business. You have to take loans to invest in this business. And this is a necessary sacrifice you have to make in order to one day become a physician and make a lot of money one day and pay off those loans pretty quickly. So I think by creating the budget and being consistent with it is decreased a lot of the stress. And I realized this is kind of the necessary evil that you just have to deal with.

Any idea what specialties you might be interested in?

So right now I, I'm really interested in anesthesia and I know that things can change. I'm still a first year medical student, so during my rotations, third and fourth year, that can always change. But right now I'm really interested in anesthesia.

Well, pretty cool.

You shouldn't have any trouble paying off a 200 or $250,000 debt as an anesthesiologist. Certainly no doub. Have you thought about that? Do you expect you'll be paying your own paying your loans back or do you think you'll be chasing after public service loan forgiveness or something similar?

I think I'll be paying my loans back the straightforward traditional way. I don't anticipate doing another route.

Did you give any consideration to paying for school with a contract like MD, PhD or a HPSP contract with the military or something like that? What was your thought thoughts behind deciding you were going to borrow the money.

To pay for school?

I didn't want to do any of those other routes. I, I've had some friends do the, the military route for and then they're in dental school, actually. And. And I've heard pros and cons weighing those out. I figured the most straightforward route is just to take on the loans and one day paying them off pretty quickly.

Very cool.

So.

What are you going to do if you're having trouble staying within your budget?

You know, you.

You get going at it, you look at it, and you're like, wow, I'm not spending $2,000 a month. I'm spending $2,700 a month. How will you adjust?

So when I first made the budget, it was less than the $2,000 per month, and it was too strict. And I was. It wasn't necessarily due to unnecessary spending, but you have to anticipate maybe like an emergency fund or something that just comes up that you have to spend for. And I dialed it back a little bit to the 2000 or maybe a little bit more than 2000. But I don't necessarily anticipate a whole lot of ripples in the budget. I've been doing this now for a few months, and I've gotten into my rhythm of things. I check it every Sunday and add up all my expenses and add it all together. But if there was something that comes up, I guess I just have to ask my parents for help and see if they can help out with that. But as of right now, things have going relatively smoothly, which is nice.

When did you get interested in finance and start thinking about things like the white coat investor and forming a budget? Because this is pretty unique among your classmates, I'm sure.

Well, there's a lot of classmates that are much more versed in finances than me. I'm just getting in the start of things with creating a budget. That's the one thing that you learn going into med school is that a lot of my classmates are married and some of them have kids, and they have different priorities in life than me. Right now, their budget probably has buying diapers for their kids per month, and I don't have to worry about that. But I first got interested in the white coat investor right before starting med school. So this summer, before med school, just doing some googling on how to take care of your finances. And you were one of the first people who came up and bought your book, read your book, and got the audiobook too. And by reading that and doing a little bit googling online, and you can use ChatGPT too, and learn more about finances, it's pretty empowering, and it helps de stress during med school. And I can focus more on my grades and Ultimately work to become a great physician one day.

Do you have any financial goals that you can share with us?

So, first goal is to pay off loans as soon as I can. Whether or not that's four or five years after residency, I'm not entirely sure. Kind of depends if I'm married, where I'm living, cost of living. I guess I'll cross that bridge when I get closer to fourth or fifth or fourth year. One of the things that I also have to take care of closer residency is figuring out how to balance saving my money and paying off the debt while trying to learn how to invest in a 401k or trying to invest in the company and try to make money on my money but still pay off the debt pretty aggressively, which is something that is kind of difficult to manage. And I still have much to learn about that. And one of my other goals is to become more financially knowledgeable. I think at this stage of the game, it's important. Just read a finance book every year and I'm going to read that Millionaire Next Door book probably soon and, and try to go from there.

Very cool.

Do you have a WCI champion in your class? Has somebody passed out a copy of the White Coat Investors Guide for Students to everybody in your class yet?

So it's funny you say that. We've had at least two different lunches with some excellent faculty who have talked about the White Coat Investor and have given free copies to a lot of students. I'm not sure if it was a White Coat Investor student who's gotten that yet, but we've had some great faculty who really want to emphasize creating a budget and starting to take control of your financial life. And a lot of the students are aware of the book and a lot of them have read the book and a lot of them are way more in depth with their financial knowledge and they can speak more about finances than me, but I don't. I'm not sure if someone has actually done the actual White Coat Investor Champion yet.

Awesome. Well, we'll double check. Otherwise we're going to. We're going to elect you champion and send you a couple of boxes of books to pass out.

So. Awesome.

Pretty awesome to be thinking about this stuff right from the beginning. Because the beautiful thing about it, as you mentioned, is it allows you then focus on what matters most. Right? You can quit worrying about all that debt because you've got a plan to take care of it. You know, hey, yeah, it's a quarter million dollars. It's a lot of money. But with my plan, I'm going to.

Be able to knock it out and it's going to work out fine.

So, awesome job putting a budget in place and making sure you don't borrow more than you have to for medical school. I want to congratulate you and thank you for coming on the Milestones to Millionaire podcast to inspire other students to do the same.

Thank you for having me. It's been a pleasure.

Okay.

I hope you enjoyed that interview.

It's fun to get people early in their careers. This might be the earliest we've had somebody do a milestone. I'm not sure we've ever had a medical student at all, but it's awesome. Be knocking stuff out early in your career. A budget is absolutely critical, right? I mean, in some ways it's training wheels. It's training wheels to teach you to spend within your income. But when you don't have much income, or in this case don't have any income and are actually living on borrowed money, it is so important to make sure that your spending is aligned with your values. Most attending physicians can buy anything they want, but even they cannot buy everything they want, at least not all. Right now you've got to prioritize and all a budget is is your priorities in written form. So I encourage you to do that. I promised you at the top of the podcast that we were going to talk about donor advised funds and these are pretty cool. I'm actually, you know, people sometimes ask, what's one thing you've changed your opinion about over the years? And this is my usual answer. Donor advised funds.

You know, and they first came out.

Or I first learned about them or whatever. I didn't like the fact that people.

Could get the tax break for contributing.

To a donor advised fund, even if the charity never gets the money.

But I've learned to get over that somewhat.

I do think some people with big donor advised funds ought to give a little more to charity each year, AKA the jerk move.

But they're so convenient that it's hard.

For me not to use them for my charitable giving. The beautiful thing about it is it's even easier to donate shares of appreciated stocks, mutual funds, that sort of a thing, to a donor advised fund than it is to donate them directly to charities because the donor advised fund expects them. You can basically have your donor advised fund at the same company as your brokerage account and it makes it really easy to donate appreciated shares. Remember, when you do that, not only does the charity not have to pay capital gains taxes, but you don't either. And you get the entire value of what you're donating as long as you've owned it for at least a year. And as long as it's a publicly traded company or mutual fund, you get the entire thing as a charitable deduction. So they're really convenient that way. Plus, you might only have to make that transfer once a year. So instead of keeping track of every little receipt, every time you give something to charity, you only have to keep track of one thing. And that makes it way easier. You've got this great record when it comes time to do your taxes. But my favorite benefit of a donor advised fund is it has eliminated charity porn from my mailbox. And if you don't know what a charity porn is, you ought to give.

A little more money to charity. But let's say you give some money.

To Doctors Without Borders, for instance. Well, what you will find is that two weeks later you will get a 20 page, glossy, full size, you know, magazine essentially in your mailbox. And you will continue to get one every few months for the rest of your life. Because they use about 10% of the money they raise to try to raise more money. And most charities are like that. In fact, many charities actually raise more money by selling your name and mailing address to other charities. So if you decide you donate to 10 charities directly one year, you will have something from a charity every day in your mailbox for the rest of the year. And I call that charity porn. I mean, it's obviously not pornography. A lot of it's actually really kind of, you know, inspiring. That's the whole point of it, is to inspire you to give more. But it seems like a waste. I want my money to go to whatever the charity's actually trying to accomplish. I don't want it to be used to market to me to raise more money. So the benefit of the donor advised fund is when you make a donation from it, you can check, I want to be anonymous. And then you are. They don't have your address, they can't send you charity porn. They can't hassle you, they can't call you, they can't do anything. And you still get your charitable deduction. And all of your money gets to go toward helping the charity. So I love that aspect of a donor advised fund. Totally encourage you to use one if you donate any significant amount to charity. Vanguard has one. The downside of the Vanguard one is they have a $25,000 minimum to start it. I think additional contributions have a minimum. That's like $5,000 and your actual donations from the fund have a minimum of $500. So if those numbers don't work for you, you probably want to use something different. Fidelity has one that's pretty well thought of has much lower minimums. Dafy D A F F Y is one that I've been impressed with lately. We had their CEO on the podcast not that long ago, but they have some pretty darn low fees and hopefully will become more and more popular as time goes on. But you might want to look into those if the Vanguard numbers are just a little too high for what you want to do with your donor advised.

Fund at PKA Insurance Group, Inc. Pradeep Oddho and Matthew Peterson are independent brokers focusing on disability and life insurance. They excel in securing coverage for physicians, including those on visas like J1H 1B, et cetera. Protecting your family in the event of.

A disability or death is important.

There is now an A rated carrier offering up to $10 million of life insurance without labs. If you're very healthy with limited or no medical issues.

Approval is likely in five minutes.

Reach out to PKA Insurance to discuss your disability or life insurance needs@whitecoatinvestor.com pka or by calling 1-800-258-1018 or emailing infokainsurance.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.