MtoM #103 - Anesthesiologist Pays Off $369,000 in Four Years

This is the White Coat Investor Podcast, Milestones to Millionaire Celebrating stories of success along the journey to financial freedom. Millionaire podcast number 103, anesthesiologist pays off $369,000 in student loans. If you're looking to boost returns, lower taxes and build wealth, join the WCI Monthly Real Estate Opportunities List for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Hey, if you'd like to come on this podcast, you can apply whitecoatinvestor.com milestones. Whatever milestone you've accomplished, we'll celebrate it with you and we'll encourage others to do the same by using your story for inspiration. By the way, if you need more inspiration, there is a White Coat Investor Store. If you Simply go to whitecoatinvestor.com under WCI plus the first link there is the WCI store. It's shop.whitecoatinvestor.com if you want to go there directly. But you can get cool T shirts like this one I'm wearing today that says Live like a resident or or our most popular one which says VT Sax and relax. It's also a great place to pick up books and the way the pricing works out, we actually make more from each book if you buy it there, yet it costs you less. So it's a really great deal for all of us when you buy stuff from the White Coat Investor Store, so be sure to check that out. Today we have a great interview with somebody who has paid off student loans during that classic two to five year live like a resident period. Let's get Evan on the line and talk to him about it. Our guest today on the Milestones to Millionaire podcast is Evan. Welcome to the podcast.

Thank you very much. Happy to be here.

You have made a great accomplishment that we're going to celebrate with you. But before we tell them what it is, why don't you tell us what you do for a living and how far you are out of training.

Yeah, so I'm a anesthesiologist. I'm a general anesthesiologist without a fellowship and I trained in Portland, Oregon at ohsu and I now moved back home or closer to home. I was from Seattle originally, but now I'm in Tacoma, Washington and I've been out of residency for about four years.

Awesome. And tell us what you have accomplished in short.

I paid off $369,000 worth of medical school debt in four years with the original plan of doing it in five, but I ended up doing it in four.

Awesome. Congratulations.

Thank you.

You know, there are people out there listening going, how am I ever going to pay off my $300,000, $400,000, $500,000 in student loans? And you've done it. Yeah, that's now in the rear view mirror. So congratulations to you on that.

Thank you, thank you, thank you.

So you did it in four years instead of the original plan. What accelerated? Did you make more money? Did you get more focused? How come it ended up being a four year instead of a five year process?

Yeah. So I got a financial planner during residency and he told me that when you stick to this goal, which I had no problem doing, I felt very strong about paying my student loans off within five years. He said that during the, towards the end, in the last period of time, you're going to start noticing that it starts disappearing a lot faster. I'm sure a lot of people don't have this fortune, but in the last, at the beginning of this last year, I had sold my house in the middle of all this pandemic situation and got a hold of unexpected equity and was able to pay off that last portion. I was originally still going to be on track to finish it in five years, but with this extra equity that we got from selling this house, it was just. I'm probably not everybody has that wonderful, wonderful fortune, but I'd say that my plans and whatnot in my original plan still be pertinent to a lot of people for the five year payoff. So I got down to about 100,000 and then just wiped that with the equity that we got from that sale of the house.

Let's get into some of the numbers. I mean, you're now what, eight, nine years out of medical school? Do you remember how much you owed when you came out?

So I had maybe about $30,000 in subsidized student loans. And then I finished undergrad with about 9,000 of subsidized student loans. And then by the end of medical school, with subsidized and unsubsidized total, it was around 240, I believe, all in because I had to do 100% of medical school with all student loans.

240 doesn't sound too bad. That's not much more than average.

Yeah, I mean it was 2:40. The kicker was that the interest rate was 6.75%. And so that grew that it was amazing how fast that grows. In a four year period through residency. I ended up doing public service or I was thinking about doing public service loan forgiveness track. And so I ended up doing the qualifying payments under the income based repayment plan. So I was only doing maybe $400 a month or $500 a month just to be able to stay afloat.

So by the time you got out of residency that had ballooned from 240,000 to 369. Is that what it was?

Yeah. So the thing that I realized is that I realized early on that if I could pick a track, if I could dedicate myself to the public service loan forgiveness track versus I could dedicate myself to paying off fully knowing that I was going into private practice, that would have been the most efficient way of paying off student loans. If I could dedicate myself really early to one specific track, Unfortunately, I think I did it probably the least financially appropriate way, which is you couldn't figure out which way you're going to go, which is just sort of, that's how your self discovery goes in residency. But by the end I couldn't decide one way or the other. And so I think I probably did it the least financially appropriate way, which was planning on doing public service loan forgiveness route, but then deciding at the very end you're going in private practice so that you, you paid as little on that principal at the beginning and allowed the interest to balloon and then say, you know what, I'm going to do this. And the moment that I've planned on private practice, I refinanced with a private lender and got it down to I think 4.1% on a 30 year fixed at that point.

Yeah. So refinanced then how'd that feel? Now you refinanced when you came out. So what that would have been, shoot, 2019. 2018.

2019, yeah, 2018. So I refinanced and it felt pretty good. Like seeing that 4.1%, that definitely felt a lot better than that 6.7. But it was 4.1% on a five year fixed. So what that looked like was minimum payments, minimum payments of $6,700 a month. And I was planning on doing that and committing to that and saying, you know what, that's what I'm going to see and I will have to figure out my life around that plan after that. So it was sort of a working backwards thing is saying that that was a non negotiable thing from my standpoint and that I need to work backwards from that. And I don't know, it just seemed to me like I just really hated the idea of accruing that much interest for something that is like not an asset, like a mortgage that you could sort of unload easily. I mean, the asset is mine, brain is. What I kind of realized is all this money and lending was for the asset of my education, but it wasn't like something solid that I could disappear from. And so it just didn't sit right to me that I'm carrying around this kind of interest accruing giant. I just felt much more comfortable getting rid of that as fast as I felt was comfortably possible.

So you refinanced in 2018. Couple years later, the pandemic comes along. President Trump declares an emergency and tells all the people with federal student loans they don't have to pay and their rate's gone to zero percent. How did that feel to you, knowing you had refinanced? We're really sacrificing to make $6,700 a month payments. How did you feel in March of 2020?

Yeah, you know, it was one of these things where it was like, again, I committed to a path and I just said that I've got to put blinders on because you don't know what a pretty presidency is going to allow and not allow. And the public service loan forgiveness pathway, I was really not sure whether or not it was actually going to follow through. And so I just was real wary about. I kind of decided that I wanted to, if I wanted to pay down these loans quickly and efficiently, I needed to not rely on another entity to be able to be assured that these are going to be paid off in a public service loan forgiveness plan. And I said the most sure way that I could make this disappear is to do it myself.

Which you did, and I congratulate you on that.

Yeah, so it was just when that, when that happened at the same time, interest rates were pretty low. Like on our house, we had a low interest rate that was happening. And so I kind of looked and thought, you know, what would happen if I refinance my student loans again? Because you can fortunately do that as often as you want, pretty much with private lending. And so I ended up refinancing again, I think at 200,000 left, like two years in, and it got it down to like a 2% interest rate. And at that point I had it on a variable. And I just said, it's so close to. And then I continued to pay with the $6700 a month payments despite that, even though I was allowed to pay at four grand a month or something or less. And I just said that that was my plan that I was going to stick to. And all that that's doing is just making it disappear faster. So it was just sticking to a plan really was what it was.

Awesome. Now you said our. Is there a spouse and kids involved in this picture?

Yeah. So if I was completely single and had no other obligations, those loans probably would have gone away a lot faster just because I was so headstrong about this idea. But I married. My wife is an internist internal medicine physician. We met in residency and we have two children now 3 and 6 years old. So she did not have any student loans. Other reasons that really helped me out is she did not have student loans and she had a financial gift from her parents to help support purchasing a house. So we had to make some balances between what our goals were. Is that her goal? I think was that she really wanted to be a mom and have an adult life as well. And so she was happy. Halftime is what her plan was from the get go is just only halftime so that she could be a mom halftime and be still have an adult use her skills that she's developed and invested in so much. My plan was to be full time and to get rid of these student loans as fast as I could. And so I think that I probably with the type of just fiery focus that I had on getting rid of the student loans, I probably could have gotten rid of them in maybe two years. But we balance this need to have our family to buy a house as her parents helped with and then also to balance that with my student loans.

Yeah. And up at the house obviously did pretty well. You mentioned you got quite a bit of equity out of it that helped as well.

Yeah, yeah, that was very helpful.

What do you think your household income averaged over those four years that you were paying off these loans?

Yeah, so I had a two year partnership track to eventually become partner. And I'd say the first year combined income, we were around maybe 450 at the start. Combined income, that's before taxes and everything. And then by the end now our combined income is probably, probably around 750 now.

So pretty good income to dig out of this whole one. So did it ever feel like you were making a big sacrifice to make that $7,600 a month payment or was it relatively easy for you?

Would you Say yeah. So when we first came out of residency, we could not save for a down payment for a home, make those $6,800 a month payments and put all of the money away into all the residential retirement tax advantage types of funds out there. And it was hard for me because I was just so laser focused on we need to maximize all of our tax advantageable accounts and get these student loans gotten rid of. But we talked about as a family and the things that really mattered the most to us were saving for a down payment and then for me, really getting rid of those student loans. I think my wife probably wouldn't have cared quite as much much if I had gone like a less of a aggressive plan. But it was really important to me. And so for the first year I think it was, we just did not. We took one year and didn't decided that we wouldn't put anything into retirement funds and focus all of that money on those two other elements. So that was really hard because it was just like monetarily and like financial sense, statistics wise and everything. It just seemed like it would make better sense to do it the other way. But emotionally getting rid of that student loan, it just had this emotional need for me.

And you talk about this emotional drive to do it. How did it feel when you made that last payment?

It was weird. I had made sure that my wife was videotaping me when I was made the last payment of $109,000. And it was a little surreal. I mean, I think the moment that I did it, it was, you know, there was definitely a brief moment of excitement. The period of time that followed after that, it was, it's actually been. I'd like to say that it was happy and exciting and all that. And like it's really amazing. It's hard to fathom first of all, now suddenly getting this cash flow that's happening every month and we're still trying to figure that out. But at the same time though, I think that for me I had focused so hard and made that such a part of my identity to pay off that student loan that now I almost feel like I have an identity crisis that I have to work through now because the requirements on my day to day are I just don't have that same kind of like very clear motivating drive that's happening right now. And I need to start shifting focus onto something that has the same kind of sustainability because I mean, I just have so much vigor and enthusiasm in things that I do. And it was so easy to channel it into this is what I'm going to do. Almost to the point of I was at moments feeling almost neurotic and pathologic in the way that I was doing it, which created its own problems, but now it's gone. And so I could see that that could create your own problems of losing your identity on what you were so focused and determined to do. But now it's like I have to do a lot of soul searching, which I'm pretty good at, just in general in my past life of soul searching and really diving deep into what's interesting and important to me and starting to channel that energy into those other pathways too. So one other thing that was really hard was, was cutting back on work and like, trying to realize that money is one thing, but money is a means to create time for me. And you only have so much time when you're 30 years old or in your 30s. And that's really valuable, valuable time. And it was. I felt so guilty when we were picking vacations for this next year, but I added seven weeks extra of vacation onto my base vacation. And it was. It felt so guilty doing it. But it really is the right thing, and I'm so glad that I. That I'm doing that and choosing me over student loan payments now. So that feels good.

Do you feel more free to be able to make that decision now that you don't have to come up with that $7,000 nut every month?

Yeah. Yeah. And that's just. It is that just knowing, having that every now and then realization of, like, oh, yeah, I can. I mean, I'm so close to the point where I could say I just. I can just quit and do whatever I wanted or choose whatever I want to do. And just knowing that I have the flexibility to choose my own destiny was really helpful. And all of this was kind of to create more security in my life and having this flexibility. I mean, I only have to pay a mortgage payment right now, and I don't have any cars to pay for. And it's like just the questions that come up of the possibilities and opportunities are just like coming up left and right all the time. And it's pretty awesome. Plus, every time that I see a student loan ad or commercial online, it's just a little extra blip of happiness for me when I say, oh, I don't have to care about that stuff that's happening.

Yeah, that's pretty awesome. Well, there is somebody out there that is like, you were four years ago. You know, maybe they're a senior resident in anesthesia or emergency medicine or OB GYN, they're staring at $350,000 or $400,000 in student loans. What advice do you have for them?

So one is to, for me is to have really good communication amongst the people around you of your support system and make sure that your vision is clear with people and that people agree with you on your pathway because it's a monstrosity of a accomplishment or hurdle to try to overcome. The other I'd say getting a financial advisor early, that's a fiduciary advisor that works primarily with physicians and has a set fixed monthly rate of like for ours we pay 150 bucks a month, doesn't matter what he does for us or anything, and we can email him, ask him questions all we want. So having that kind of person that doesn't have to work on commission and is a resource independent third party arbiter that you can interact with on a regular basis with your spouse is very helpful because they give unbiased advice and can, can work through discrepancies between you and your significant other if you have one. But I'd say being really mindful along the whole way of knowing what is enough of how hard you're working and being conscientious of how much is this going to this pathway or intense desire, how is it defining who you are or are you able to keep your own identity while you're going through it is really important. So just kind of being careful about yourself. And along those same lines, make sure that you continue to have fun along the way. Give yourself the opportunity and the permission to have fun along the way so that you don't forget or get so driven. Driven by it, I guess.

Yeah. Awesome. Well, good advice. Thank you so much for coming on the White Coat Investor podcast or the Milestones to Millionaire podcast rather. And congratulations on a great accomplishment. You deserve the kudos and have done something awesome. There are plenty of docs that are 10, 15, 20 years out of medical school still making payments. You knocked yours out in four years. So well done and keep up the good work.

Thank you so much.

All right, so that went a little longer than most of our interviews on this show, but I thought it was so good because we were getting into so many different issues there of how to know how much of your income to dedicate to it, what to do when you have a windfall. You know, they had a couple of windfalls, one when the house was sold and then some money from parents, what to use that for. You know, especially when you get money from parents, it's kind of dedicated to one cause, so you kind of have to use it there. And just how to balance it all, because that is the tricky thing for many docs is just figuring out what's going to emergency funds, what's going to retirement accounts. Like they didn't contribute to retirement at all for a year, how much toward a house down payment, how much toward the student loans. Just very difficult issues that a lot of people struggle with. By the way, he mentioned a video that they shot when he looked at his last payment, and he's promised to send that to us. So we're going to incorporate that into the video version of this podcast. So if you go to the White Coat Investor YouTube channel, you'll be able to see that video of when he paid off or realized he paid off his student loans. And I think you'll enjoy that, but that'll be incorporated in there. If you're looking to boost returns, lower taxes and build wealth, join the WCI Monthly Real Estate Opportunities List for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities. Expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. We'll see you next time on the Milestones to Millionaire podcast. Keep your head up, shoulders back. You've got this and we can help. The hosts of the White Code Investor podcast are not licensed accountants, attorneys or financial advisors. This podcast is free 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.