MtoM #140: Vascular Surgeon Lives Like a Resident and Finance 101: Car Insurance

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 140. Vascular surgeon lives like a resident. 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 gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money, start a Solo 401, and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsurveys you can do this, and the White Coat Investor can help. All right, welcome back to the podcast. This is the Milestones to Millionaire podcast where we celebrate your milestones. We want to use what you have accomplished to inspire others to do the same. So apply to come on the podcast whitecoatinvestor.com Milestones. We have a fantastic guest today who has hit not just one, but three milestones and really demonstrates a lot of what we teach here at the White Coat Investor about how you can jumpstart your financial journey right at the beginning of your career. So let's get her on the line. Stick around. Afterward, I'm going to talk to you a little bit about auto insurance. I know it's not that exciting, but you want to make sure you're doing it right. Our guest today on the Milestones Familiar podcast is Danielle. Welcome to the podcast.

Hi. Thank you. Thank you for having me.

All right, like with every episode, tell us what you do for a living, how far you are out of training, and what part of the country you're in.

Yeah. So I am an academic vascular surgeon, and I'm about four years out now. I'm entering my fifth year, and I live in the Southeast.

Four years out is all. Okay, well, here's another doc out there who's done way better than I did. All right, tell them what your three milestones, really, that we're celebrating today are.

Yeah, so the first one that's most recent, I guess I finally got my public service loan forgiveness letter August 9th, and so I got my student loans forgiven is the first one. And then the second one is hitting my milestone of net worth of a million dollars, which I had a goal of doing before I was age 40, and I did it three days before I was 38. And I'm trying to think of the third one.

I think it was, you paid off your student loans. They weren't all forgiven, right?

Right. Yeah. Oh, yeah, that's. So half of them are forgiven, and half of them I actually paid off, which is a little bit more tough, I guess, but wow.

Okay, well, so what? And you're married, right? Any kids?

Yes, married. We just welcomed our first baby girl this past December. So she's eight months.

Congratulations.

Thanks.

All right, so approximate household income over those four years.

Yeah. So when we first got out and I was half of a resident salary and half attending salary, me and my husband made about 235,000, and that subsequently has gone up a little bit every year to the last year, it was about 425.

Okay, let's talk about the student loans to start with.

Yeah, for sure.

How'd you pay for medical school? Was it all borrowed money? Did you get some family money? Was there scholarships? How'd you pay for med school?

So I took out student loans for the whole thing. I actually did a master's right before med school where I also took out student loans. And at the time, it's really funny to say now, I put my head in the sand and told my husband to go to the financial exit meeting. Wanted nothing to do with it. So fast forward, I trained at an academic institution and did three clinical years. And then during my research years, I was like, wow, I have all this debt and I need to figure out what to do with it. So I went to the library, got some books on cd, started listening to your podcast, read your book, and at that point, I got really serious about paying them back. And at the time, I had put my certification in for public service loan forgiveness, and they gave me a letter saying, this is great, but half your loans don't qualify and half your loans do. So great, you've been paying for three years, but if you want them all to qualify, you have to consolidate. But we will erase three years of payments. So I spent quite a few hours of my life on the phone with fed loans and realized at the time that I would maybe take the route of have half not go for public service loan forgiveness, because I didn't know if it was actually going to work out at that point. And then half go for public service loan forgiveness. So that's kind of where it all started.

Split the difference. So were they all federal loans or were some of them private? Loans or how come they didn't qualify?

Yep. They were all federal. I think they were a different type of federal loan that at the time, if you consolidated, you know, if you just did that one step at the beginning, it would have been fine. But I just failed to realize that that was the critical step. And at that point, I was already three years in and my residency was going to be a seven year program. And so I thought I would just split the difference. At the time, my father was seeing the interest, you know, every month, even though I was paying income based go up. And so he helped me and then I paid him back. And that's what made it a little bit easier.

Cool. So when you came out of med school, how much did you owe?

It was 235,000 ish.

And. And when you finished your training, how much did you owe?

When I finished my training, oh, man, I'd have to go back and look. I guess it was.

Was it more or less?

It was more because the interest. So I guess after med school was more on the. It was over 200, but probably not as much as 2:35 because the interest was just, you know, 6.8% the whole time. I think it was 6.5 because I had signed up for automatic payment. But the other thing that happened when I was in my lab time was when I went to go get my master's during my research time, they did me a huge favor by putting me into automatic forbearance without me realizing it and said all my automatic payments for months would not count because I was in academic forbearance. So after that, it got me really angry and I started giving all the residents a talk about what to do when you're in the lab and to make sure that they don't put you in academic forbearance. So that was another barrier.

Wow, what a journey. All right, for all you young bucks out there that don't have this issue anymore, this is like, might be a surprise to you, but from 2012 until 2023, your loans grew during residency. You know, now everyone's enrolling in save, and so all the, you know, unpaid interest is waived. Basically your loans, your federal loans anyway, won't go up during residency like they used to. Before 2012, a lot of us had subsidized loans, and those went away in 2012. So for a period of about a decade there, people would, you know, finish med school owing 200 and they'd finish residency owing 300. And thankfully, that's kind of gone away all Right. I should also, like, put in an ad here for student loan advice. If you're in as complicated a situation as she is, pay a few hundred dollars, get some advice from this company we started, studentloanadvice.com and you might save lots of money. I mean, they're telling me the average client is saving $190,000 there. So don't be penny wise and pound foolish when it comes to getting advice about that. Okay, let's move on to. Well, I just want to ask you how you felt when you got that letter from Public Service Loan Forgiveness.

It was surreal. I was like, wow, this actually worked. So I was pretty excited. I still, you know, didn't know if it was really going to go through. And that's why I didn't apply to the show until it completely went off and was paid. I think the other thing that was hard to see, which is good for other people, had my loans. The other half of my loans had I kept them in federal instead of having help from my dad and then paying him back, I would have actually probably gotten the waiver when that was passed and I probably could have gotten them all forgiven, which would have saved me $130,000 to my loan to my dad. But, you know, it is what it is.

It's really hard to do student loan planning when they change the rules every three months, isn't it?

Right, for sure.

Yeah, exactly. Okay, well, congratulations on that. Just that alone is a fantastic milestone you should be very proud of. But you have also somehow magically become a millionaire four years out of training on an income ranging from, you know, 200 to 400 ish. This is no small feat. Yeah, tell us about how you did that.

So I think one of the big things was when I came out of training, I had already read your book once and I reread it. And when I graduated, I know my husband really wanted to buy a house. He, you know, the classic American dream, we need to buy a house. It's going to be an investment. But I was going to a different part of the nation and I didn't know the area. And I told him, no, we have to live like a resident, at least the first year. And so I convinced him to rent a house that had a yard. But we saved significantly that year and I was able to put over $120,000, which essentially is like all after tax that I had a way to save for the house. And we lived really on his income. And so because of that, we were able to learn the area and not necessarily be pressured to buy a house when we had to be moving in a certain location. And I felt like it gave us more negotiating ability, number one. Number two, I knew kind of exactly how much we had. And when my husband said, oh, look at this house, I said, we can't afford it. But I said, well, why not? Let's just negotiate. And I probably negotiated way better than I ever would have, just knowing that I had more control.

Yeah. Plus, it's your money. You're like, I saved really hard for this money, and I don't want to give any that I don't have to. So I'm going to negotiate. Yeah.

Yeah. And so we had saved really 20% down, which I know a lot of people don't do nowadays. So that first year, basically the 120,000 I saved was for the house. So it really wasn't towards loans initially, but that was what I had to do, you know, when we were talking with my husband about buying the home. So that was really the first year. And then we really got lucky because one we negotiated, it was right before the housing spike. So we have quite a bit of equity in the house now. Then the second year was when I said, okay, well, now I know I can save over 100,000 a year. So my second year goal is to pay off the 130 my dad that I had an IOU to my dad. So we did that. And at first I was just throwing little chunks of change. And then I really got serious to the point where I want to eat at all. In the hospital, I would bring my lunch to work. My husband thinks I'm crazy, but, you know, I was able to pay off that 130,000 in the second year. And then our equity in our home obviously got higher. And at the same time, I know a lot of people say, you know, do you invest or save or pay down loans? And I kind of was doing everything initially, at least with retirement accounts. So the first five months I was in attending, I had a meeting with HR and I said, I want to max out all my accounts. And they said, we've never had someone do this. Are you sure you're able to live off this amount of money? And I said, yes, we can do this. So I maxed them all out. Unfortunately, I did it all.

I love this story. This is a great story.

Yeah, I did it all pre tax because I didn't realize at the time I should have done that Roth, because the next year my salary went up, but I maxed them all Out. And so I was maxing out all our retirement accounts and I told my husband, you're going to have to put 80% of your salary in your retirement bucket and I will give you money so that we can get all three buckets filled because we have a 457 available. So we were doing all of that at the same time, which also helped towards this net worth goal, which, like I said, I was trying to do by age 40. So we were able to get there three days before I turned 38.

So it turns out if you live like a resident, you actually can do it all at once. Is that what you're telling me? You can save up a down payment, you can get rid of your student loans, you can max out your retirement accounts. It's weird how the math works, isn't it?

Right. I think just beware of the creeping lifestyle is what our motto is.

Yeah. So how's your lifestyle changed from year one to now? You're four years out.

Yeah, I feel like other than our mortgage is a little bit higher than what our rent was, and I was a stickler for what that max would be. You know, we put the property insurance, the property tax, the insurance and the house payment. And I went backwards with the mortgage people. I said, you know, this is the max I want to spend. So that is higher. But our monthly budget is essentially the same. My husband does all the grocery shopping, and so we now buy jasmine rice instead of normal rice. We get Sargento cheese instead of great value. So a couple upgrades there, but for the most part it's about the same. I just joined a gym other than Planet Fitness recently, which is a big deal for me because they have a pool for my little one. But for the most part we've kept it the same. And the other thing, from your advice, you know, when we bought cars, when I came out of training, I really didn't want a new car to be that typical attending, but my car was leaking from the roof and it was just bad. So I had to get a new car, which I paid cash for after just saving a few months. And then with the welcoming of our little one, we bought an SUV with cash as well.

So is there anything you've done wrong? I mean, maybe the student loan management, a little bit. Maybe you should have used Roth that first year, but basically you've done everything.

Right because of your books and your. And your podcast. To be honest, I think, you know, the student loan management, I definitely had a hiccup, but for the most part I followed Kind of what you preach, and it's definitely done wonders, for sure. And I'm also really, really frugal by nature, so that has helped.

So I did an interview earlier this morning. It won't run for, you know, a few weeks after your interview, but it's basically a doc on the other end of his career who's basically a multi deca millionaire, right? Very, very, very wealthy. And listening to his story, he basically did what you did the last four years. How do you feel knowing that that's probably what your future looks like, that you're going to be so wealthy you're not going to know what to do with the money? You're going to be able to help others and give to charity and leave huge inheritances for your new baby or whatever you want to do. How does that feel? Looking forward to that.

I feel really blessed. You know, I think we're in a position with a higher income that if you do the right thing with the money, it can grow and you can help, you know, multiple charities, which I'm excited about. I know going through medical school, I wasn't always able to say yes to the, you know, the charity at the Walmart cash register. And I'm excited about giving more in the future. And I think having that wealth will give us flexibility of maybe cutting back and spending more time with family and traveling when we're younger and healthier year. And, you know, I just, I feel really grateful and lucky to have that problem. I think the other more mathematical problem is really trying to figure out if I'm truly a super saver or not to figure out Roth versus not. But that's first world problems.

Let me give you a hint. You are, unless you're planning to retire or cut back very soon, you are. So I'm curious how you feel about your career now that your financial ducks are kind of all in a row. Has it changed the way you feel about your career in any way?

For sure. I think even as a young faculty, I kind of feel where burnout would be a problem. And so I kind of detected that early in the medical field in general with not just my specialty, but other specialties. There's going to be a shortage of vascular surgeons, and we have a lot of emergencies. We work in the middle of the night a lot. And I wanted to have the med school debt shackle off. I wanted to be able to say, you know what? I can't take this anymore or it's not for me, and be able to exit if I want to. And now that I have my financial ducks in a row, it's made me really enjoy my profession that much more because I don't feel like I'm owing any. Anyone anything.

All right, what advice do you have for somebody that's, you know, four years behind you, six years behind you, you know, told their spouse to go to the financial exit meeting, has their head in the sand? You know, what advice do you have for that person if they're listening to this and they're like, wow, I wonder if I can do that.

Yeah, I would say 100% you can do it. Get your head out of the sand. You want to stay up to date with student loan management is huge. And I would say, you know, go through your Fire your financial advisor course, because that also is huge. Going through and making my financial plan and actually setting goals and live like a resident. If you can live like a resident, and you should be able to, because you've just been doing it, you've delayed gratification this long, and you can still give yourself a little bit of a raise. That if you live like a resident and you set your financial goals and get those ducks in a row and stay up to date with the changing policies on student loans? I think you can 100% do it.

Yeah. Yep. Your exhibit A, that it can be done, that the process actually works. So congratulations to you on your success. You should be really proud of what you've done.

Thanks. Thanks.

And I appreciate you coming on the podcast to inspire others to do the same.

Thanks.

All right, great interview. Live like a resident, right? That's lesson number one. If you do that, you can do everything in your life. You can save up a down payment. You can, you know, buy the house of your dreams. You can, you know, afford to have a kid and afford to replace a car and max out your retirement accounts and get rid of your student loans in less than five years. It works. The process works. It's just math. Run the numbers. It'll work for you just like it worked for her. You can do this. Other lessons there, go into hr. Don't be afraid to learn about your retirement plans. What a bummer that she goes in there, says, I want to max out my retirement accounts. And they're like, we've never had anybody do that before. Really? How many other docs are there? Max out your retirement accounts. You'll be amazed what happens over the coming decades for having done that. That money's not only tax protected. Right. It now grows without tax drag on it. But it's asset Protected. Right. If you get sued, this is unlikely, admittedly, that if you get sued and it's above policy limits and is not reduced on appeal and you have to declare bankruptcy, you still get to keep your retirement accounts. They're asset protected in pretty much every state. Every state for your 401s, every state. And other RICE accounts, most states for your IRAs. So max those out. Right. Don't be afraid to negotiate. Negotiate your homes, negotiate your salary at your job. Don't be afraid to do that and pass the lessons on to those following you. Right. This is what we are. We're docs. We teach. We have trainees and apprentices coming up behind us. Let's. Let's pass on the knowledge to them. All right? I promised you we were going to talk about car insurance, all right? And car insurance is important. The main thing I want you to do with your car insurance, though, is recognize that your car is a huge liability in your life. Bad things happen with cars. And if you've worked in a trauma center, you know this, you know, bad things happen. Cars go fast. They're big hunks of metal. They're not always driven by people who are paying attention or who are competent or who are sober. And things can happen. It's a huge source of liability for you. When you look at the data for umbrella insurance, 80% of umbrella insurance claims are auto related. The big liability is your car. Not people tripping on your sidewalk in front of your house, not you libeling somebody. It's something happening in your car while you're driving it, while your kid's driving it, whatever. That's the big liability. So the first kind of insurance you need for your car is liability insurance. And what's wild about liability insurance is how low the state required amounts are. In many states, they're $50,000 or even less. And imagine how much damage you can do with your car in a fraction of a second. Imagine you are driving down the road and you come across a CEO making $2 million a year driving a Tesla with their three kids. And you smack them and they all go to the ER and one of them ends up in the ICU for a month. And that CEOs disabled and out of work for five years. And the Tesla costs $120,000 to start with. How far is that 50 grand going to go? It's not going to go very far. That's the sort of liability you have.

Yeah.

You might hit a $3,000 accord and not hurt the person at all in it. And Maybe they only make $20,000 a year anyway, so maybe there's not much liability when you hit that person. But there's some expensive people on the road and some expensive vehicles and $50,000 isn't going to cut it. So the first thing you need to do with your auto insurance, if you're like most people who are hearing this for the first time, is increase your liability insurance. Okay? So you increase that. Typically you're required to increase it to something like $300,000 in order to get umbrella insurance. Umbrella is personal liability insurance. It covers, sits on top of your auto insurance and your homeowner's insurance and provides additional liability protection. So recognizing that you're going to need an umbrella policy and don't worry, it's much cheaper than your malpractice insurance, talk to them about how much do I need to have in order to get umbrella? And it's going to be a lot more than you probably have right now. You probably have 50, maybe $100,000 if you really splurged on it. But you probably need a seven figure amount of liability insurance on that car. Okay? The other main part of car insurance is comprehensive and collision insurance. Collision obviously pays in wrecks where it's your fault, your fault pays for your car. If it's their fault, they pay for your car. If it's their car, your liability coverage covers it. So it replaces your car when it's your fault in the accident. That's what collision insurance is. And you also. Comprehensive is like all the other things that happen to your car. You know, a tree falls on it or whatever. So that's the insurance you use. Your homeowner's insurance actually covers the contents of your car. Someone breaks into your car and takes all your stuff, that's not your auto insurance, that's your homeowner's or your renter's insurance that covers that. A lot of people don't realize that, but that's where you make that claim, which is unfortunate because then you got the damage to your car, you have to pay another deductible to your car insurance company. So do you need comprehensive and collision? Well, we like keeping it on at least one of our cars because then when you go rent a car, it usually covers that. And you don't have to pay extra for the ridiculous insurance. And because we travel a lot and rent cars a lot, that's a big deal. Usually doesn't work in foreign countries, but as long as you're renting in the US you don't have to pay for the insurance. So that's a nice benefit, I find, of having it on at least one vehicle. But the approach most people take is they insure the expensive vehicles they have. You know, they got a car that's still worth 50 grand, they carry comprehensive collision on it when it's worth four grand. Maybe they don't. They figure they can self insure that you'll have to make those decisions yourself. But as your car becomes worth less, obviously that insurance isn't worth as much. But yeah, go take a look at your auto insurance, make sure it's set up properly and if not, add some insurance to it. You need to insure against financial catastrophes. You don't need to insure against that stuff that you can self insure. But most of us cannot self insure running over a CEO and disabling them for life. So get that insurance. All right? Don't forget that we have this list of survey companies, okay? Lots of docs are looking for a little bit of side income, something they can do while they're watching TV or while they're sitting on the train on the way home or whatever. Right? This is a good way to turn that time that you're otherwise not using into money. You can take these surveys, they want your opinion. It affects medical care. You can do some good with it for patients and actually get paid. So if you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make that extra money. That extra money may allow you to start a solo 401, save a little more in a tax protected account and maybe even have somewhere to roll over some IRAs if you got a pro rata problem. But it also allows you to make that impact on new products, new medications, et cetera. So sign up today. Use a fraction of your downtime to make extra cash@whitecoatinvestor.com mdsurveys that's it for this week's podcast. We appreciate you. We value what you're doing out there in your life. It is important work. Keep your head up, your shoulders back. You've got this. We'll see you next time on the White Coat Investor podcast and this division of it, 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.