MtoM #11 - $145K Paid Off in 6 Months

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

Here is your host, Dr. Jim Dali. This is Milestones to Millionaire podcast number 11. $145,000 paid off in six months.

At some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment. These loans allow doctors to secure a mortgage with fewer restrictions and a lower down payment than a conventional mortgage. But if you're further advanced in your career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter time frame could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. You can do this and the White.

Coat Investor can help. All right, we got a special guest today for the Milestones podcast. Let's get him on the line.

All right, our Next guest is Dr. Asad Hussain, Emergency physician. Welcome to the White Coat Investor podcast.

Thanks, Jim. Thanks for having me. How's it going?

I'm doing very well. I appreciate you asking. So we have you here because you've accomplished something that lots of docs would like to accomplish. You have paid off your student loans.

At some point in the last year.

How much did you pay off?

So I paid off a grand total of about 195,000. So initially when I graduated med school, I had about 150, 160. With the interest accumulation, by the end of me paying it all, it was about 195.

Wow. And how's that feel to be done with it?

Pretty good. It gives me the, I mean, the ability to do whatever I want now instead of my rather higher volume, stressful job. I'm like contemplating just moving and going to a slower volume, do whatever I want sort of a thing. Focus on longevity of career rather than just the absolute value of money.

Awesome. So you did this over what period of time?

A lot of my loans were paid off as a third year resident. As a third year resident. When I was a third year resident, my wife became a pgy one. So that was the second household income that helped. And then I moonlighted. I made another 5060 grand during third year of residency during moonlighting. So I paid 40, 50 grand during BGY3. And then when I finished being a resident, I had 145 left out of the whole 195 total. And then in six paychecks of being an attending, I basically knocked that entire thing off.

Holy smokes. Six months out of residency, you paid off your loans.

Technically. So six paychecks. So I graduated six paychecks.

So three months.

Well, so my first attending paycheck was August 15th, and then February 10th was my last payment, so just went to town with it.

Awesome. So just slightly over six months. Yeah.

Well, that's pretty awesome.

So what was your average household income at that time? I mean, I guess it's just how you were doing when you came out. Plus your wife's resident salary, huh?

Yeah, so I was on an annual basis, I was getting 450, plus another 50,000.

So you were working a lot of shifts?

12 12s.

12 12s. Okay, so fairly standard amount of shifts.

Fairly standard.

You just get paid well in Ohio, that's what you're saying?

I'm a dedicated nocturnist.

Oh, okay. All right. This explains the income.

And my first job out, I really focused on the job that paid the highest. I definitely could have worked somewhere closer. I drive an hour out to work. I mean, it was basically just geographical arbitrage. I probably make $30 more per hour just by driving an hour out.

So clearly the income had a lot to do with it. You made a lot of money and you used that to pay off your student loans. Right, but it doesn't sound like you spent much during that six or seven month period either. So how did you manage to discipline yourself that well? This brand new fancy attending income. And you chose to pay off student loans with it instead of buying a Tesla. Well, or did you get the Tesla too?

I mean, I kind of bought a new car in residency to begin with, but we never really had much of an inflated lifestyle to begin with. I mean, when I was a resident, I was living in a two bedroom, one bathroom apartment, and I upgraded to a two bedroom, two bathroom apartment. So that was the life upgrade we did. Plus, I mean, just live in northwest Ohio, really low cost of living. So in the grand scheme, we never really intended on staying here for decades. So at some point we were just. We never really bought a home, we just stayed in an apartment. So it just controlled our expenses automatically. When we move next, that's gonna change because we'll probably buy a home and have a lot more expenses.

You're ready to buy the doctor house now.

@ least the wife is. So we'll see how that goes.

Well, you took care of business first though, right?

Right.

That's exactly the right order. Right.

At least we'll probably still live in a low cost of living place. We'll probably still stay within one times of gross income. I mean, you can buy a lot with half a million dollars in the Midwest states.

Yeah, for sure.

So was it easier or harder than.

You thought to pay off this debt so quickly?

Surprisingly easier. I mean, like I said, it was just a few months and I was done with it. I never felt deprived. I never felt like we were depriving ourselves of anything. We still went out and ate out a lot. We, I mean literally we're lazy enough that we have a Pakistani lady in the community cook for us because we're just too lazy and we pay for that. I mean, when we want something, we get it. We never really deprived ourselves of anything. It's just the absolute, the gross income we made was just quite a lot. So it never really felt like depriving ourselves.

So do you think going to medical school was a good investment for you so far?

Time will tell after 30 years, I guess, but so far the amount of tuition I paid has definitely worked out so far. But at the end of the day, I did delay financial gratification by what, five, six years? More than that. So like seven, eight years. If I had just become an engineer and in hindsight participated in massively in the biggest bull run in history.

Yeah, certainly pluses and minuses both ways, aren't they?

So did you invest any money while you were paying these loans off?

Not much, just a few grand here and there. I mean, my investing, like my paying off time period was a very short time period anyway. I was just laser focused, just paying $20,000 at least every month. And I knew that once I was done, I was just going to massively start investing after that, which is now what I'm doing, but not before that.

What do you say to those people who say you should drag your loans out and invest and try to earn more than your loans are costing? What would you say to someone who says you should do that?

I was tempted to do the same. And in hindsight, my net worth today would probably be another 10,000 or $20,000 more if I had actually done that. But I still do enjoy a lot more financial freedom of focusing on things that matter more, focusing more on quality of life on the next job. And I think it's still a valid strategy if your interest is less than 3% or 3.5%. But at the end of the day, there is a certain amount of financial freedom and a burden off of your shoulders that is a value that you can't really calculate.

Not to mention the power of focus that you had, that you had a goal, it had an end date, you were focused entirely on it and you absolutely crushed it.

Right. If I had invested every single dollar that I had into VTI, then I think on an absolute terms, hindsight being 20 20, my net worth would have been higher today because the market is at an all time high. But honestly, I feel pretty damn good about doing the way I did it. So that's the way I wanted to do it and that's the way I did it.

Awesome. What advice do you have? Somebody that's sitting back where you were, maybe they're a third year resident doing some moonlighting, maybe they're just coming out and they owe a bunch of money, 145,000 or 190,000 or whatever it is, and they can't imagine being debt free seven months out of residency. What advice do you have for them?

You know, control expenses. Just like you say on the podcast all the time, living like a resident. It's really, if you make a high enough income, you can still have an extremely comfortable lifestyle on a doctor's salary and still pay off massive chunks of debt. Even when I was paying $20,000 a month, I still had another. After taxes and everything, I still had another 5,000 per month of disposable income, which is still more than the average household of four. Just focus on expenses and moonlight as much as you can during third year to get that experience and to start snowballing that debt. And really, geographical arbitrage is a real thing. You're probably going to struggle paying off debt and if you're deciding to live in New York, paying high taxes and those high cost of living, good advice.

I appreciate you coming on the show and Congratulations to you, Dr. Hussain, on your success and thank you for sharing your story with our listeners.

Yeah, absolutely. Thank you for having me. Longtime fan and you are my go to podcast during my one hour commute.

Awesome. Well, hopefully you won't have a one hour commute forever, but until then we'll.

Try to keep you entertained.

That's the plan. So next job, 10 months later, we'll see how that goes.

Awesome. Well, thank you so much.

All right, have a great day, man. All right.

I hope you enjoyed that interview as much as I did. A few great lessons to learn there, right? One is just how much benefit you.

Can get from focus.

We can all focus for six months, right? It's a short period of time. Knocked out those loans and he's done done free of the costs of medical school. Pretty awesome geographical arbitrage, right? Simply by driving an hour, he was able to get a higher paying job. He was willing to do basically what residents do, work a bunch of nights, right? He was a dedicated nocturnist, so that helped him make really good money. Didn't inflate his lifestyle, right? I'm always telling you to live like a resident. He actually did it. And also he was in, you know, Ohio. It's a relatively low cost of living area. So now he's got the ability to do whatever he wants. He can focus on the longevity of his career instead of the value of money. So I think that's pretty awesome. It took me four years to pay off medical school in the military. He did it in six months. I think that's pretty awesome.

At some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment. These loans allow doctors to secure a mortgage with fewer restrictions and a lower down payment than a conventional mortgage. But if you're further advanced in your career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter timeframe could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. You can do this and the White.

Coat Investor can help. Keep your head up, your shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Milestones to Millionaire podcast. If you'd like to be a guest, you can apply whitecoatinvestor.commilestones and we'll get you on and use your story to inspire others and to bring success to the entire community. Thanks so much. See you next time.

My dad, your host, Dr. Dalle, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney, or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.