MtoM #42 - Back to Broke as a Resident

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The journey to financial freedom. Here is your host, Dr. Jim Dali. Some milestones to millionaire podcast number 42 back to broke as a resident. If you are finding our podcasts informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate, and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help. All right, we've got a great guest today who has recently gotten back to broke. Let's get him on the podcast. All right, my guest today on the podcast is Colin. He is a second year anesthesiology resident and has accomplished a pretty significant milestone. He's already back to broke. Welcome to the Milestones to Millionaire podcast, Colin.

Yeah, thanks for having me, Dr. Dali. Honored to be here. You've helped me and my family out a lot, so it's an honor.

Awesome. Well, let's. I mentioned you're a PGY2. You tell us what your spouse does.

So. My wife's a nurse. She's been in the nursing field for about four years now.

Okay. And. And tell us what your net worth is.

So my net worth without our current home equity is. Actually, I fibbed a little bit. It's probably around negative 17,000. With our home equity, it's about positive $33,000.

Awesome. So you're back to broke.

Back to broke. That's the goal.

That's a big deal for most docs. You know, I mean, for a lot of people, that doesn't occur until they're attending. For a surprising number of docs, it doesn't occur until well into their careers just because they have massive, massive student loan burdens. So let's talk for a little bit. What makes up your net worth? What's on the positive side of the ledger? What are your assets?

Sure. So the positive side is we actually, after we got married, started funding Roth IRAs, so been doing that for about four or five years. 62,000 there.

Awesome.

In Our retirement accounts, we've been lucky enough to work for hospital system that does 5% match. So we have between our two 401ks 34,000, and then a little bit more in checking and savings. I'd like to admit, but our checking account is about 26,000 right now. And that's most of what our positive is.

I think most residents would be very happy to have that.

Yeah, I think very lucky. And then made some home improvements. We actually own our home here in residency. $50,000 home equity. Our net worth is actually about positive. 93,000 if you count we received some inheritance within the last year. So, you know, whether or not you want to count that.

Awesome. So what's on the negative side of the ledger? What do you owe?

Native aside, 137,000 of student loan debt. I do live in Texas and have lived here all my life, which I think has helped that a lot. And then we have a 12, $15,000 car loan. That's about it.

Okay, so the car loan and you got the student loans, but you're back to broke, so that's pretty awesome. Congratulations on that. I think a lot of residents will find that to be very inspiring. And unfortunately, a fair number of attendings also will find that to be inspiring. What's been your range of income? I mean, you're making resident money. She's making nurse money. So what are we talking about? We're talking about $100,000.

Not quite. Which we probably will be the highest income this year, about mid-90s just for some Covid incentive pay that my wife has received. But when we first were married, she made about 55,000, and then we probably averaged closer to 70,000.

Okay, so it's not necessarily income that's done it for you. What are your secrets to success? How have you managed to get back to broken while still being a resident?

Yeah, a little luck, I think, has gone a long way. And we talk about geographic arbitrage. I hear you talk about that sometimes. I think I was just born into geographic arbitrage, which I have luckily exploited. Living in Texas is affordable. I grew up in a small north Texas town, went to a relatively cheap North Texas undergraduate university in state Texas med school tuition is relatively low, about 20k a year. And then made the conscious decision to go to residency in a place with lower cost of living, which kind of fits in our lifestyle and what we actually prefer.

So how'd you pay for school? Did you borrow the whole cost of your education?

So undergrad I didn't have any Student loan debt. My parents helped me with cost of living, lived at home for a couple years, and then had scholarships, but for medical school. Actually took out pretty much everything for medical school.

And what was your total when you walked out the door? What did you owe?

I've had a little bit of interest now. About 100, I would say. $125,000.

$125,000 is what you owed when you walked out the door of medical school?

Yes, sir.

In student loans, roughly. Okay, well, that's pretty good these days. I mean, the average for an MD student is $205,000. So part of your secret was keeping your loan debt down? How'd you do that during medical school, other than having lower tuition, did you try to decrease how much you spent in any way? Did you feel like you were spending less than your classmates, or how did you keep your total loan burden down?

So I got married at the beginning of second year of med school, so my wife's income was definitely a factor. I had somewhat of a nest egg going into medical school that I planned on kind of slowly whittling down, which inevitably happened. I grew up on a cattle farm, and we had a lot of cattle checks stashed away that help subsidize costs.

So a little bit of family help, a little bit of your wife working, covering living expenses. But do you put it all together and. And you come out with a well below average amount? For sure. Okay, tell us about your upbringing. It sounds like a bit of a rural upbringing. How did that affect how you view money and how you manage money now?

Sure. I think work ethic is definitely probably the biggest factor that kind of led to where we are today. My parents both had good jobs, but, you know, they probably together made a little. Little north of 100,000. So nothing too crazy, but part of the upgrading, we were just expected to work, you know, get up on Saturday mornings and just help out. That was just expected with the kind of delayed gratification that we would see some sort of, you know, like I said before, like a cattle check or just good birthday presents or whatever. We never got allowances, but I think the idea that you put in the work and you do the right thing and you're going to reap the rewards down the road. Maybe not necessarily immediately, but over time, those values were definitely instilled in me.

Okay, so you've got a growing nest egg, you've got a shrinking student loan debt, and it sounds like you're well on your way to building a significant amount of wealth. During your career, what do you look at going forward? What are your financial priorities now that you've come back to broke?

I think just keep doing what I'm doing now. I think the biggest thing that will lead to our success is maybe you said I could have started paying on our student loans sooner, but I think just dabbling in the least the Roths and having some market exposure for at least eight years. I don't see myself taking more than one to two years to pay off my student loan debt. And then at that point, I'll have had at least some exposure maybe to a beneficial market, but at least some market exposure over eight years to see kind of how I react to things. And then so whenever I have relatively larger amounts of money at my disposal, I'll be more prepared.

Awesome. Okay, so let's go back to somebody that's thinking about going to medical school, worried about the cost, maybe a medical student now seeing their debt going up and up. What advice do you have for them if they want to get to where you're at today already being back to broke as a resident? What advice do you have for him?

Kind of on my upbringing and where I come from, I'm a big believer and you get out what you put in. So I would be very careful about going to, you know, all things remaining equal, choosing the cheaper medical school, that would go a long way. I think I hear some of my, even my classmates of what they had to pay. So I feel very lucky to live in Texas and not to have to have paid that amount. I think a big thing for me too, just. And, you know, having matched into anesthesiology, I think there's, at least for me, my standpoint. There's a lot of pressure to kind of go the more prestigious route, or there's always that pressure to do better. But if that's not in line with your personal, emotional, social goals, to be really careful about that or financial goals. Be really careful about the decisions you're making, why you're making them, who you're making them for. I think that would be some good advice I would have.

Make sure you're only spending money on the stuff you care about. Did you have the. Did you get into more than one medical school? Did you have choice there or just get into one?

I did. Ultimately, it came down to the. I pre matched TMDSAs. I pre matched to a school, and then I actually matched a school that I didn't end up going and I got off the waitlist. The school I ultimately went to because it was closer to my now spouse we were dating at the time.

Did it end up being a cheaper school or more expensive school than the other one?

Slightly more expensive but minimally different. Definitely worth it in the long run.

Minimally different? Yeah. You didn't have to choose between a really expensive one or a really cheap one.

No, sir. The difference was I think three or four grand at the time.

Okay, awesome. Well, congratulations on your success. Congratulations on getting back to broke. I suspect we may have you back on this podcast in very few years with millionaire status. That would not surprise me one bit. Maybe after you become an attending anesthesiologist. Anyway. But congratulations on your success and I'm sure others will find it very inspiring.

Thanks, Dr. Lally. I hope you've helped me and my family out a lot and I hope this helps someone out there.

All right. It's great to have people on here no matter what your financial accomplishment. I think we've demonstrated over the episodes we've had here. What are we on? 42? 42 episodes we've had now of Milestone to Millionaire. We will celebrate any milestone you've had. I don't care if you paid off your pet loan, we'll celebrate it with you because there's somebody out there that your story can inspire. We want to build a community here of white coat investors that can buoy each other up to reach our own financial goals. Investing is a one player game. It's you against your goals. It's not you against anybody else. So it's all about figuring out what you value and what you want out of your life and figuring out the best pathway to get there. And we want to be there to assist you no matter how you do that, no matter what your goals are and celebrate those with you. So I hope you enjoyed that. And that was great to have Colin on. And congratulations to him on being back to broke. Really probably the first milestone on the pathway to a millionaire, on the pathway to financial independence. And you know what, the sooner you get there, the sooner you can start building a positive net worth. If you are finding our podcasts informative and helpful, check out our website. Since 2011, we've been working hard to provide valuable personal finance and investing information. Through thousands of blog posts written by an array of authors, you can find information on how to manage your student loans, fix and avoid common financial mistakes, understand your retirement accounts, optimize your investments, find professional help at a fair price, get started investing in real estate and so much more, all at no cost to you. You can find out more about the courses we offer, the conferences we put on, the newsletters we provide, and interact with other WCI readers through our online forum. Head on over to whitecoatinvestor.com to start learning today. You can do this and the White Coat Investor can help. See you next time on the Milestone to Millionaires 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.