MtoM #222: Engineer and Medical Student Hit Half Million Dollar Net Worth and Finance 101: Different Ways to Pay for Medical School

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 222.

Engineer and medical student get half a million dollar net worth full Disclosure what I'm about to say is a sponsored promotion for locumstory.com but the weird thing here is there's nothing they're trying to sell you. Locumstory.com is simply a free, unbiased educational.

Resource about locum tenants.

It's not an agency, they simply exist to answer your questions about the how to's of Locums on their website, podcasts, webinars, videos and even have a Locums 101 crash course. Learn about locums and get insights into real life physicians doing locums. This also includes insights from physicians, PAs and NPs all@locumstory.com I've often said that the entry drug to the White Coat Investor world is my first book, the White Coat Physician's Guide to Personal Finance and Investing.

You can order that book or other.

Books, our student book, even our asset protection book or the Boot Camp book. You can order them in bulk. Many physicians give these as gifts to their trainees or to colleagues. And if you order 25 plus of these, we'll give you a discount. If you order 100 plus of them, we'll give you an even bigger discount. You can email your order to booksitecoatinvestor.com we get a lot of great reviews on this book. Here's a couple of them. It says he takes the complicated and nuanced topic of asset protection. Gives you a plain English analysis of the topic. This is the book you need to help you sleep at night if you're a high net worth individual or on your way. Straightforward and simple advice with no agenda whatsoever. If your situation is complex, no problem.

You have all the breadcrumbs you need to meet with an asset planning attorney.

And ask the right questions. But for the 99.9% of folks with.

A net worth below 5 million, this is all you need.

Great review for that one's for the asset protection book. We have lots and lots of reviews.

On Amazon for all of these books and they're good. They help people. I wrote the book that I wish.

I could read right. If these books had existed, I wouldn't have bothered writing them. But they didn't exist so I wrote them and I hope they're as helpful to you as the process of writing.

Them was helpful to me.

They've helped lots of other white coat investors.

If you'd like to pass them forward.

To others, bulk orders, email booksitecoininvestor.com if you just want to buy a copy.

Of the books, you can do that as well. You can find the links@WhiteCodeInvestor.com to do that, you can buy them from our store. The address for that is shop.whiteconeinvestor.com or.

You can just go to Amazon.

They're all available on Amazon as well. We might give you a little better.

Price at our shop, but since Amazon's price is always changing, sometimes that might.

Be a better deal too. So it doesn't hurt to look in both places.

All right, we have great interview today. It's kind of a unique interview, but stick around.

Afterward, we're going to talk a little.

Bit about some of the different methods of paying for school along with their pluses and minuses.

Our guest today on the Milestones to Millionaire podcast is Lauren. Lauren, welcome to the podcast.

Hi. Thank you.

Tell us what you do for a living and what part of the country you're in and how far you are out of school.

So I'm an engineer and my husband is a medical student. He's in his third year at Uniformed Services University, so he's active duty military. I'm about six years out of school from undergrad and so is he, but he's currently still, I guess, in his school for med school. And we are in metro Washington, D.C. so we're in Maryland.

Yeah.

Relatively high cost of living area.

Yes. Yes.

Okay.

Well, you've accomplished a net worth milestone that you should be very proud of. Tell us what it is.

Yes. So my husband and I reached $500,000 net worth.

Very cool. And it's particularly cool while he's still in med school. Now, granted being at USUs, he doesn't have student loans, I presume. So that does help with that net worth calculation for sure. But a lot of this is just brute force savings. You guys earned money and didn't spend it?

Yep, pretty much.

Yeah.

He started off with he had about $18,000 of student debt from a post baccalaureate. He decided to go to med school a little bit after we graduated undergrad. So he had that to pay off, but no med school debt. And that's already, that's already gone.

So pretty cool.

How far, how long did you say.

You'Re out of school?

Six years.

Six years. Okay.

I mean, tell us what a structural engineer makes these days.

I make about $120,000 a year Right now I started off out of school, about 70,000.

Okay.

And the USUS salary is basically second lieutenant pay for, you know, a military officer. What is that these days? Including any bah and bas.

Right. So with the stipends, if you adjust it to what a normal salary would be, so if you increase by about 25%, it's close to $100,000 a year for our area. So we make more because we're in a high cost of living area for him. So he makes probably 95 to.

Yeah, that's significantly better than those who are in the HPSP program.

Right.

You get a much smaller stipend. You're not getting paid bah and bas and those tax free allowances. So it's a particularly high paying way to go to medical school. Maybe the highest paying way to go to medical school. Of course it comes with a little bit longer commitment. He's got what, a seven year commitment.

When he gets out, he has seven years. And then I think there may be some sort of reserve component as well, but I'm not exactly sure.

Yeah, I think that's the individual ready reserve and I think it's mostly over after seven years. Does he know what he wants to do with his career already? Is he sure he's going to stay in for 20 plus or does he think seven years and out or just isn't sure yet?

Probably seven years in, out, but he's not sure. He's still deciding between these. He's gonna decide soon, but he's deciding between medicine, anesthesiology and internal medicine. So it kind of depends, different residency lengths. Because if he does internal medicine, he'll probably do a fellowship. So the residency portion doesn't count towards payback. So the seven years starts once he's in attending.

All right, you guys have a substantial income but are in a high cost of living area. But you've already accumulated quite a as far as investments and cash goes in just a few years. Tell us a little bit about how you did that.

We started off both right out of college with no student loans. So that helped us a lot. Our parents helped pay for our living expenses during undergrad and then we both went to in state school in Georgia. And Georgia has a program called the HOPE Scholarship where if you make a certain GPA in high school, you get free in state tuition. So we both came out of undergrad starting at basically zero net worth. So that was helpful. And I've been into personal finance for a long time and my dad helped me A lot. He taught me from a young age and helped me open up a custodial Roth account in high school and kind of got me set up with, with Vanguard early out of college. So that helped a lot. And then my husband was just my boyfriend at the time, but we, we kind of got on the same page before marriage with, with finance and savings and investings. And he's been excited to also see our net worth grow and enjoys it as well.

Yeah, it's thrilling. Not even out of school and already not only back to broke, but half a million dollars toward the positive, which is pretty awesome. But I like what you said about your dad kind of helping you start from beginning in a successful way. I mean, you had a custodial Roth account for the money you made as a teenager or whatever. You know, he made sure you weren't investing, you know, with some crappy financial advisor. You were at Vanguard. You know, this sounds like it was part of your upbringing that you were taught finance from an early age and taught how to not throw your money away. What lesson is there for compared to most of, you know, many white coat investors whose parents didn't know that much about money and they really had to learn this all on their own?

Yeah, I would say my parents are kind of the everyday millionaire type of people. My dad is a teacher and then my mom worked in publishing for sales, that kind of thing. So they didn't have extravagant jobs by any means. And they never really had high incomes. They were always less than six figure income. So they just really were good at saving and investing and they did a bit of real estate investing on the side. So they flipped foreclosed houses and that actually funded my little sister's adoption. So they were kind of creative and scrappy, I guess, with making money. But yeah, they taught me a lot about saving and investing.

Give us a sense for what your spending looks like. What do you spend on rent, cars, etc.

We spend about $75,000 a year, so our rent is 2,800 with utilities. We own both of our cars. But actually last year, the calendar year was my husband's clerkship year and I work remotely, so we moved out. We put all of our stuff in storage for the entire year and we didn't have any rent payments. And we traveled TDY basically across, across the country to different military hospitals and stayed in hotels. So with that year we spent probably $30,000 less because we didn't have any rent expenses and, and we saved that up. And then at the end of the Year we bought a car cash, because we were only a one car household. So last year we spent about probably 50,000.

Yeah.

Very cool. I mean, I've been TDY. I've stayed in hotels. It's often the military hotel on base. It's not an awesome place to stay for a year straight. Especially with the spouse. Especially with the spouse trying to work out of that hotel room every day.

Tell us what that experience was like.

Yeah, it was. It was definitely unique. We. I was. Actually got pregnant last year too, and we just had our first baby. So it was definitely traveling while. Thank you. Traveling while pregnant and living out of a hotel. And we definitely don't want to eat another hotel continental breakfast anytime soon. But it was worth it. I think it was. It was a fun experience. We actually got to spend 10 weeks at Tripler Hospital in Hawaii. So that was. That was made the whole year more. More than worth it.

Yeah.

That was the highlight, I bet.

Okay, tell us. You just had a baby. Maternity leave, career changes. What are your thoughts now that you guys are parents?

Yep. So I'm taking 12 weeks. I'm currently in that. And so I'll be going back to work in May. And 10 weeks of that was paid by my job. And then I'm just taking two weeks paid time off. And then my husband gets. He's actually, since he's in his fourth year, he's going to be able to take eight weeks off. So. So that'll be great. And that's all paid. He could. He could take up to 12 with the military, but he's taking eight.

Wow.

They let him take it even as a student.

Interesting.

Yeah, I think he has a certain number of kind of electives in his fourth year, and so he just basically doesn't take those electives and takes them as parental leave.

Now.

Your ability to work remotely is a pretty awesome complement to a medical career, particularly a military career. Medical career. I mean, presumably he may be stationed in Germany or Japan or who knows? And you may still be able to keep the exact same job and continue with your career in that respect. Did any of that go into the decision about how to finance his medical school?

A little bit. I started working remotely as he was applying to jobs. So before that I worked in person in Colorado, and then it kind of lined up with COVID to where remote work started to be an option for my company. Before that, it was. It was never really an option. So I don't know how long my remote work abilities will last. It's kind of seems like it might be specific to the project that I'm working on now. And then as I switch projects, it might change. But I've been remote for about two and a half years. So that was helpful in terms of med school because I got the remote position before he had been accepted to med school. So we could kind of go wherever with him and then hopefully that will continue for at least a little bit longer.

What advice do you have out there for. For two professional families finding balance, particularly.

Early in the career?

Yeah, I would say the main thing is getting on the same page as your spouse and so kind of looking at what are our expenses and what can we cut? And then also just seeing, okay, once we kind of know roughly what our expenses are, see how much we can save and kind of try to maximize that savings rate. And I would just say for people early on not to over complicate it in the beginning. What's most important is your savings rate and getting that money invested early. It doesn't necessarily have to be perfect. And I think sometimes, like especially your podcast goes pretty in depth on certain topics and maybe some of that isn't the most applicable to people just starting out. It's more important just to kind of, kind of get in the market and ride it out and then you can kind of deal with those complexities as your income increases and as you get older.

Yeah, absolutely.

Good advice. Well, Lauren, congratulations on your success. You guys are doing fantastic and should be very proud of yourselves. Thank you so much for being willing to come on the podcast and inspire.

Others to do the same.

Yes, thank you so much for your time.

All right, I hope you enjoyed that interview. It's always fun to get the non physician spouse on here and talk to.

Them about their career, what they're doing.

I think this is interesting because there's lots of different ways to pay for medical school. Obviously the best way is to have your parents write you a check, right?

Nothing better.

You come out, owe nothing. You don't have any student loans, you don't owe anybody any time, you haven't signed any contracts, you can do whatever you want. That's a great way to pay for school. If you are wealthy and you have.

A child that's going to dental school or medical school or whatever, that is an incredible gift you can give to them. And if you've taken care of, you know, your more important financial goals, you're well on track for your own retirement, etc. You know, you're, you're in your long term home, you've Got a plan to take care of that mortgage, et cetera.

Putting a little bit extra money into.

529S or whatever to help your kid pay for graduate or professional school is sure a nice thing to do.

You know, those of us who graduated.

And I don't include myself, but those.

Of you who who have graduated, which is about 27% these days, who graduate.

Debt free from medical school, it's not uncommon at all.

The next most common method, of course.

Is just borrow the money.

This has worked out very well in the last few years for a lot.

Of people that only took out federal student loans.

You know, we're always having people on here that receive public service loan forgiveness. They get three to six years of payments while they're in residency and fellowship.

And then they make a couple of years of payments before their payments really.

Catch up to their income and just make like a couple of years of full attending level payments on that and the rest gets forgiven totally tax free.

All you have to do is stick around, be a faculty member at your.

Residency program, or find some other 501.

To pay for it. It works out very well.

But even if you're not getting public service loan forgiveness, or heaven forbid, something happens to that program, it's not like paying these loans back is impossible, particularly on a physician salary.

For the most part, people are getting out of med school owing $200,000, $300,000.

Maybe $400,000 more than that is actually a pretty small percentage these days.

There are a few people out there, but mostly $400,000 or less.

You can pay that off. The average physician income these days is something like $373,000.

Actually, I think that's a 2023 number, so it's probably a little bit higher than that.

So basically a one to one ratio, which means if you put 20% of your income toward that loan for five years, it's gone. If you live like a resident, you.

Might be able to put even more.

Than 20% toward those loans.

We have people on here all the time that pay them off in a.

Year or two years. And that is a totally viable way.

To pay for medical school.

It's still a good deal to go to medical school. You know, you can pay off those student loans.

And that high income over the decades more than makes up for the cost, both in time and dollars, of acquiring that education.

Another way is to sign a contract. And there's all kinds of different contracts.

You can use to pay for medical school. For example, the spouse of our guest.

Today he's paying for his medical school by attending Uniform Services medical school.

Right.

Essentially he is getting paid as a second lieutenant.

Apparently this is close to $100,000 he's getting paid to go to school. Right.

Not only he's not paying tuition, he's getting paid 100 grand. And he'll have a seven year commitment.

When he gets out. Now, as you start having those longer.

Commitments, you got to start thinking about.

Military pensions and sticking it out for a career. But even after seven years, he's probably coming out looking pretty darn good, even though he'll probably make less money than he would outside the military while he is an attending position in the military.

The other option that is widely used.

With the military is the HPSP program, the Health Professions Scholarship Program. I hate that it's called the scholarship. It should be the Health Professions contract.

Program, because it's not a scholarship.

Right.

A scholarship's free money. This is a contract. They pay for four years of med school and give you a stipend. I think the stipend is $2,300 or.

Something a month these days. And then of course, there'll be a.

Few months that you're on active duty.

During med school that you get paid a little bit more, and then you.

Owe four years afterward.

Yeah, you're technically on the inactive ready reserve after that. But people basically don't get called off that. And I think the time you spend in residency counts toward that.

So it's not as much money up front, but the commitments much less as well. One of the big downsides of going.

Through any sort of military program is you also have to go through the military match.

And that may or may not make you happy. You know, military residents do get paid.

More than a typical civilian resident, but that might not be a program you want to train in. Maybe you want sicker patients and you can find in the military hospital. I don't know. It's very specialty dependent. But keep in mind that is maybe the most significant downside of paying for medical school with a military contract.

There are other contracts out there though, Right.

You can get a contract with Indian.

Health Services, the National Health Service Corps. An MD PhD program operates in a similar way.

Right. You're going to spend a few years doing a PhD in return for not paying tuition as you go through the program.

A lot of states have forgiveness programs. Sometimes a future employer will pay for.

Some of your medical school or at least agree to pay back your student loans for you.

There's lots of different ways to pay for medical school.

They all work for the right people.

As a general rule of caution I.

Would give you when it comes to.

Contract programs is don't enter a contract.

Program primarily to pay for medical school.

If you don't want to be a military doc, don't go to usoos, don't sign up with the HBSP program.

If you don't want to work in.

An underserved area, don't sign up with the NHSC just to pay for medical school. If you don't want to get a PhD, don't sign up to get an MD PhD just to pay for medical school. It's okay to borrow the money. If you can get into a US MD or do school, you're going to be able to pay the money back by just living like a resident for a few years and sending five figure checks every month to your lender.

They're going to go away very quickly.

And you can get rid of those.

Student loans pretty early in your career and still have an awesome financial life.

All right, our sponsor for this episode is locumstory.com and full disclosure, what I'm about to say is a sponsored promotion for them, but the weird thing here is there's nothing they're trying to sell you. Locumstory.com is simply a free, unbiased educational resource about locum tenants. It's not an agency, they simply exist to answer your questions about the how to's of Locums on their website, podcast, webinars, videos, and they even have a.

Locums 101 crash course.

Learn about Locums and get insights from.

Real life positions, PAs and NPs@locumstory.com you.

Know, locums works a little bit like.

This couple that we interviewed today.

Experience in his third year of med.

School where he went around. They lived all over the place and.

Including Hawaii for 10 weeks and basically had all their expenses paid while they were there.

You can really have very low cost.

Of living while doing locums and you often get paid more, right? So this is really a way that.

You can kind of experience some different.

Practice situations and really get started on.

The right foot financially at the beginning of your career.

So it's not crazy to come right out of residency and start doing locums.

And really design the career that you want. In fact, I think maybe combining that with building a short term rental empire.

Might be the fastest route to financial independence for a physician.

But obviously that's got to require you being interested in doing locums number one.

And building a short term rental empire number two. You certainly don't have to do those.

Sorts of things to be financially successful as a physician.

All right, our time is up. Thanks for listening to this podcast.

Thanks for being a White Coat Investor. Thanks for what you're doing during your daily life.

It does matter.

You are changing lives and improving them for those around you. You really are that person you said you were on your school entrance essays and I thank you for it.

Keep your head up, shoulders back.

We'll see you next time on the 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.