MtoM #24 - Hospitalist and Obesity Medicine Physician Pays off $156K in 5 years

This is the White Coat Investor Podcast. Milestones to celebrating stories of success along the journey to financial freedom. Here is your host, Dr. Jim Dali. This is Milestones to Millionaire podcast number 24. Jeremiah the internist pays off $156,000 in five years. I estimate that 80% of doctors need, want, and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this. And the White Coat Investor can help. All right, we've got another example of someone who paid off their student loans today. Let's get Jeremiah on the line. Okay, Our next guest on the White Coat Investor Podcast is internist Jeremiah Eisenschenk. Welcome to the WCI Podcast.

Hey, Jim. Great to be here.

Well, we're here today because you have done something extraordinary. You paid off your student loans. How much did you pay off total?

Yeah. So $156,000 in medical school. School student loans.

Awesome. Congratulations on that. And how long did it take you to do that?

Just under five years. We finished paying them off the spring of 2019, so almost two years ago.

Awesome. And what was your average household income over those five years that you were paying them off?

It varied pretty widely. An average of about $300,000 a year.

Okay, and how did this work? Did you have a goal at the beginning? We're going to pay these off, right. In five years. Did you muddle around for three and then get. How'd that happen?

Yeah, no, I think it's the mindset and momentum that it took to do this kind of started years before. And just a brief backstory. I grew up on a farm. My mom was a nurse, Dad a small business owner. They quit working in their mid-30s to raise four kids and build their dream home, their log home. They kind of lived the fire life even before it was really a thing. And so this sort of mindset of frugality, sustainability, and kind of just the principles of compound interest and living essentially were something that I've always kind of thought about. And so after graduation from college, I received a signing bonus from the Mayo Clinic, my first job. And I used that bonus to pay off all My college loans, like in a single day. It was pretty enlightening. I then saved $20,000 that year when I was living and working at Mayo and used that money to help take less loans out for med school. During med school I also kind of side hustled my way to $36,000 in scholarships, applying for grants and volunteer opportunities. And that further reduced my student loan burden. Following med school, I started making payments as an intern. I didn't delay. I wasn't super financial literate at the time, but I knew that from my parents teaching. To avoid the negative compounding drag of interest as much as I could, I used the extra income from ER moonlighting and residency to add my additional principal payments to kind of further work paying off my loans. I think really importantly, and like Jim, you talk about all the time, I married an amazing, beautiful lady, my wife Ashley, who's super hardworking and financially savvy. You know, she had no debt and a really successful teaching career. So huge win there. You know, moving on. I worked as a hospitalist my first year after training and discovered your book. It really changed my life. And this was kind of the blueprint that I needed to kind of live like a resident and develop an intentional plan. You know, I have these, these mindsets and values from my childhood, but my parents weren't physicians and they didn't have this much debt, right. So I had to kind of figure this out. So again, thanks for that awesome step in my journey doing so anyway, I added more principal payments and added more to kind of work down my loan burden. I also started to invest. So this is about five years ago. And then finally we took advantage of geographic arbitrage. I moved to a beautiful city in northern Minnesota. I had a very generous signing and retention package and I've ascended to a couple leadership positions in my hospital. Together, those multiple six figure income increases have allowed my family and I to make additional payments and further invest. We maintained about a 50 to 70% savings rate over that time. And we refinanced the loans with SOFI a few years ago, saving thousands by lowering the rate. Purchased a modest home, you know, less than two times my annual income. And we're diying a lot, from our landscaping to our sprinkler system to our our handmade custom furniture. We just kind of figure that we try to do things ourselves first and then we'll try to hire it out later. And then finally, Jim, I was awarded a really competitive rural Service Scholarship totaling $100,000 tax free over four years. And that really catalyzed this whole process that was kind of the nail in the student loan coffin and just helped us become debt free. Here again, the spring of 19.

Now it sounds like you took a balanced approach. You invested along the way. This wasn't scorched to earth, pay down loans with everything kind of an approach. You invested as you went along. 50, 60, 70% of your @ least net income was going toward building wealth, but a significant chunk of that was going toward investing rather than loans. How did you decide how much to put toward loans and how much to put toward your investments?

Yeah, that's a great question. I don't know if I decided on a specific ratio, but I just decided early on in 2015 that we're going to do both. That if we can pull both these levers simultaneously by both paying down debt, avoiding consumer debt, of course, and accelerating investments, we're going to grow the gap. Right. And increase net worth and kind of catapult our path to financial freedom. So my solar philosophy on this is, and this is what I teach residents and friends is that with a physician level income and a high savings rate and avoidance of unnecessary debt and intentional life, most importantly, most people can do this too. Right? And in our case, not only did we pay off the loans that I mentioned, the 156,000 in less than five years, but you know, we've recently achieved a seven figure investment portfolio just in this time. And this is me working on a primary care salary and my wife staying home. So I kind of feel like if I can do this in real Minnesota, you know, a lot of folks can.

You remind me of another Minnesota doc, very interested in financial independence that I happen to know.

I have to say that, Jim, we actually work in the same institution and.

Oh yeah, okay, no surprise there, Close connection. Awesome. So was the process of paying off the debt in particular, was it easier or harder than you expected it to be?

Yeah, it wasn't without like hundreds of hours of self education and thousands of hours of work, including the side hustles that I mentioned before. But I often think of lessons from Atomic Habits and other books that talk about aspiring to your goals, but also like failing to your system. So by implementing the systems that I mentioned, you know, in addition to automatic payments, tracking our available spending, using the backwards budgets to achieve our debt and investment goals, it really became easy. And I think with these systems, other people can do it too. It takes a lot of time and investment as we know, but I think the resources, thankfully from sites like yours are out there and Hope other people can do this, too.

I like that. Failing to your systems. That sounds like when things get really bad in medicine or the military, you go down to your level of training. And that sounds like what the same concept you're talking about there, that if the systems are in place, you'll never be worse than what the systems dictate you do.

Yeah, exactly.

That's a pretty cool concept. I like that. How's it feel to not have student loans? I mean, clearly you've been doing awesome in the rest of your financial life, right? I mean, you got this investment portfolio. You clearly have become financially literate. But now the only thing that's changed is you went from being in debt to not being in debt. And how does that feel?

Yeah, it feels liberating. And this is summarized in a video my family and I made the day we got our zero balance statement from Sofi. We threw on our favorite song by New Radicals and danced. I burned it, Burned the piece of paper in a little candle and held my baby in my hands and it really says it all. It's funny. That was later on a Sofi commercial. And again, we watch it with laughter. But I think most importantly, it's just freed up psychological bandwidth and then, of course, financial capital to just further pursue our aggressive goals for our future.

Awesome. What advice do you have for someone that is just like you were five years ago? What would you tell them if they're like, man, can I do that? Can I be so financially successful just five years from now?

Yeah, absolutely. As I mentioned a few minutes ago, it's looking at this as learning another trade or language. If you can invest the time and energy to become financial literate, you'll become sovereign instead of a pawn. And you can kind of design your life on that level. Life by default, certainly. We all have lots of stress and responsibilities, even more so with COVID But I think this opportunity to invest in yourself now and your future, it's going to pay off by way of having both time and money so that you can have options and autonomy in the future. And again, there's so many great resources like yours out there, Jim, that I think it's really. I mean, anybody can do this if they want to.

Awesome. Well, you dropped a lot of pearls on us in a short time period, so I hope people are able to absorb some of those because there's a lot of wisdom there. But I appreciate you sharing your story.

Yeah, you're welcome, Jim. Can I just add one more thing?

Absolutely, yeah.

So, you know, in terms of what's next. I'll just say, say this, that I think the most important thing as you preach all the time is living an intentional, purposeful life. And that's founded in meaningful relationships, gratitude and stillness and really the pursuit of worthwhile, often difficult goals. And for a lot of us that might be becoming financially independent, or maybe it's in these stressful times, you're seeking out some help to get through this pandemic. But I'm really grateful for all that you do and the opportunity I've had here to talk.

You're very welcome. Thank you for coming on.

Yeah, you're welcome.

I really liked the points Jeremiah made about putting your financial systems in place. You know, there's a lot to be said that you revert to your training. In times of stress, you revert to your systems. So the key, I think, is to train yourself well and put good systems in place. I think that's absolutely some good advice there. And of course, geographical arbitrage does work. If you're in a lower cost of living, you simply have more money to put toward your investments and your student loans. I estimate that 80% of doctors need, want, and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. 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 Milestones to Millionaire podcast.

My dad, your host, Dr. Dahl, 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.