MtoM #62 - EM Resident Gets Back to Broke

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 62. EM resident gets back to broke. The White Coat Investor is proud to introduce our no Hype Real estate investing course, which will provide the framework for developing further knowledge and experience as you progress in your real estate investing career. We call it an introductory course because there's always more to learn. But this is no short, superficial course. There are over 200 lectures and videos adding up to more than 27 hours of content by over 15 different instructors. We think it just might be the best real estate course on the planet. Continue your wealth building journey today with the no Hype Real Estate Investing course@whitecoatinvestor.com courses. You can do this and the White Coat Investor can help. All right, welcome back to the podcast. This is Milestones to Millionaire. This podcast is about you and what you've accomplished, whatever those milestones might be. Today we're going to be talking to someone who's accomplished the first of the milestones on the pathway for most doctors, which is just getting back to broke. So I'm looking forward to this discussion. Let's go ahead and get our guest on the line. All right, today on the Milestones Familiar podcast, we have Dr. Scott Rupp. Welcome to the podcast, Scott.

Thanks, Jim. It's great to be here.

First, we're going to do a little celebration here because you have hit a milestone. You've gotten back to broke.

Yes, well, like I said, you may have caught me right at the time where we had that market correction. So checking the numbers today, it's real plus, minus, like 5,000.

Yeah, yeah. So we're recording this on March 8th, and we're in the middle of, you know, a bit of a market correction for sure. And so I think when Scott applied to be on the podcast, he'd hit the milestone. And the wonderful thing about this is now he gets to hit it twice. So two celebrations, it's great. But tell us about you and where you're at in your career, your training, et cetera. Tell us the story.

So I am a third year emergency medicine resident living in Philadelphia. I am a captain in the Air Force. And when I graduated, I had a positive net worth. And then I fell in love to another physician who is an intern in internal medicine right now. And so along with that came our net worth of just about even. She was bringing in about 200, $210,000 worth of student loan debt. So I had to had to prepare, but we're both in training and getting back to net zero right now feels really impressive.

Okay, so you guys, when you got. Are you married now?

Yes. Yeah, we got married as of 2020. We got married during the shutdown that March. We got married over zoom with the judge, and our parents were the witness in our own kitchen.

Wow, that sounds terrible. Yeah, sorry to hear that. Were you able to have a celebration?

We have a big ceremony later.

Okay. All right, that's good. So when you got married, what was the total debt? What was your net worth at that point between the two of you?

We were probably about net negative 70,000, give or take. Somewhere in that ballpark.

Okay, and you guys were. Were both interns at the time.

We are actually two years apart in our education, so we're the same age, but I'm a third year, and my wife just started her intern year, so.

She was just starting her intern year just now. She is. So she was still in school at the time?

Yes, that's correct.

So the debt was still climbing, presumably. I assume you weren't cash flowing her school on an intern salary, were you?

Not in the least bit. You know, if it wasn't for this forbearance from the student loans, the debt would still be climbing. But we. We got our plan together, and I think we're going to get it all conquered as soon as possible. So what did the debt peak at right now? I think it's still probably its peak because we've accumulated enough assets to offset the debt, but we're right at about $230,000 in debt, and we're offsetting that with what I believe is about $50,000 in IRAs, 90,000 between my TSP and her 403, about $25,000 in cash, and then about $60,000 in home equity.

Okay, so congratulations. You offset it all and you're back to broke. So that's wonderful. And what's been your range of income over the last few years?

This is probably our biggest year. This is coming up on, I guess last year. We're just over 100,000 between the two of us.

Okay, and how did you manage to accomplish this? I mean, a lot of people don't get back to broke until they're out a year to five years out of training. What do you think allowed you guys to do it while still in training?

Well, I really have to thank the military for that, as, you know, service commitment doesn't count in terms of what your net worth calculation is. And I've got plenty of service commitment to pay off, that's for sure. But starting with a good amount before that really helps offset things. And I think as soon as my last year of medical school rolled around, I really started to emphasize the learning aspect of getting really interested in making sure that my money was working for me. And since then, our savings rate has gone from 10%. I think we're at about 30% of our gross income that we're putting away right now and still managed to have enough to buy a house. We're getting equity. So I did break that rule. I bought during residency.

So far, so good the last few years. It's been a great decision.

Yeah. Yeah. I think we lucked out in that standpoint. But I've very quickly realized what you mean by maybe renting isn't quite as easy as everyone expects. Yeah.

You mean buying as easy as everyone expects.

Oh, as in the plan was to, you know, buy it and then rent it and everything like that.

Oh, yeah, yeah. Rent it out.

Yeah, exactly. Looking at our rental prospects after the fact has been, it's a little bit more daunting.

Yeah. So at some point here, you made a conscious decision. I mean, you guys are operating on a plan. You made a conscious decision to kind of let the debt rise and accumulate assets to offset them. Tell us about that conversation and how you guys made that decision.

I think it's been one of just the conversations that we've had as we've cocked over everything else and just looking at. Well, it's easy for us to make habits to put things away. It's a lot more, I guess, natural to automate our savings than it is to get rid of debt. At this point, we're looking to get larger shovels. And then once we both have a tending income, I think we'll plan on living off of one salary and using another one to pay down debts once we can figure out what our best plan is going to be after this.

Okay, so not counting the home equity, what'd you say your net worth was? As far as your assets, how much have you accumulated in investments?

Right. About $140,000.

$140,000. Both of you still in training. That's pretty awesome. I know we didn't have anywhere near 140,000 when I came out of training, but that's pretty cool to be able to do that. What are you investing your money in? What accounts are you using and what kinds of investments?

I've got a lot of boring stuff. Jim, I gotta tell you, I listened to you for a long time. So I think we're 40% total stock market, 20% small cap, 20% total international, and about 15% REITs, give or take a couple percentage points. But that's why it's been such a big hit. It's an aggressive investment, but we've got a long time horizon.

Okay, now I understand you did a little bit of work for your fellow residents. You put together a bit of a financial curriculum in residency. Let's talk about that for a few minutes. Tell me what the motivation was to creating that.

I really think it stems from the fact that I've been trying to teach people about financial literacy since college, when that was easily back when I didn't know anything and should not have been teaching anyone about it. But at this point, I think that having that salary, coming through medical school, it's given me a lot of time to practice and make the mistakes and make small mistakes. And so at this point I just see how difficult that it is for so many positions to get, get ahead because they just don't have the tools and they're not really provided that. I think listening to some of Bill Bernstein's talks of finance is a discipline that's worth all the respect that medicine is. And I really believe that, or hearing us talk about as a finance. I think it was Bill Bernstein, it may have been Rick Barry, but he said he was taught as a financial advisor how to hunt whales, how to go after doctors. And I see it, I see it in my residency. You know, it's difficult to get education and it's even more difficult to get good education. And every time a well meaning administrator says, well, we're going to provide something for our residents, they bring in a financial institution. And I can't tell you how much they would pay to just have a group full of eager doctors that don't know any better and scare them with big numbers and say, hey, we'll take care of this for you guys so you don't have to worry about a thing. It's terrifying because they're out there.

So you had to do something. I mean, you went to your program director, you went to the GME office, you did something to try to get this in place. Tell me about that process.

It was really one of those things where we have to do some kind of scholarly project. And I'm okay at medicine, but I think I was pretty passionate about this other stuff. And so setting up a scholarly project around this, we created a curriculum and it was six months long. It was Six different lectures. We covered basic personal finance topics. We covered student loans, we covered retirement accounts, taxes, insurance, and in general kind of real estate. Things like REITs and how to buy your first home, things like that. All things that I think are very specific to residents, where you should learn it or early attendings. And the feedback that I've gotten from that has been excellent. So we were trying to be academic about it. We've got what people's education was based on a quiz beforehand and afterward. And I mean, I would consider it fairly basic questions that you would pick up just kind of along the way, listening to your podcast of what is Roth versus Traditional? What does it make sense to make Roth contributions? What's a stock? What's a bond? And it was about 50%. The pre test answer on this group of residents that took the quiz, it was all about 50%. And so then we checked it at the end and see how much of an impact we made.

And how'd they do?

13% higher.

So 13%. So they went from an F to a D. Hey, that's improvement. You know, you got to start somewhere.

Yeah, well, that's pretty cool. Exactly. But I think the, the benefit of that is not only looking at those numbers but saying, hey, we did three hours of education and you know, we really only made a dent in some of the, some of these changes. Some people took it to heart. Some people obviously improved 30, 40% on from their pretest and other people, you know, didn't do so much. And obviously you can't make sure that everyone's engaged.

Right.

Maybe I'm just not all that good of a teacher. I don't know. But the other hard that we had was certainly looking at the hard numbers of saying how many more people open their IRAs. We had a 13% increase in the people who have opened an IRA. We had 11% increase in the amount of people that realized they were contributing to a 401k. Our residency requires it or you have to opt out of it. So I don't even think people realized that they were contributing beforehand. 50% of people put together a financial plan, 70% put together a student loan plan, and 13% ended up getting term life insurance. So we, there was definitely a big impact there, even if the numbers don't quite reflect that.

Yeah, I'm a lot more impressed with the motivation and inspiration you gave to them. That's more meaningful probably than just the sheer knowledge, but that's pretty cool. So what's next for you and your financial goals?

I guess Back to broke is our first goal.

Hopefully a week or two on that one.

Yeah, exactly. We'll wait for this correction to even out and we should be okay. I think the next goal is going to be to pay off student loans, so we'll get my wife's student loans taken care of and that's the next big hurdle that I think we'll have to conquer.

Well, very well. Thanks for what you're doing, Scott, both in the financial realm and in the medicine realm. And we appreciate it. And thanks again for coming on the podcast and sharing your story with others.

More than happy to. Jim, thank you so much for allowing me to come on.

Hope you found that as inspiring as I did. It's great to talk with Scott and thank him for his service. He's going to have a full military career. It sounds like he's got quite a commitment he's going to owe, but it's pretty awesome too what he's done for his peers. It doesn't take much to make a big difference in the lives of those around you, so I hope you take some inspiration in that. Take some inspiration in the fact that putting a financial plan in place, even during training, can produce some pretty remarkable financial outcomes. The White Coat Investor is proud to introduce our no Hype Real Estate Investing course, which will provide the framework for developing further knowledge and experience as you progress in your real estate investing career. We call it an introductory course because there's always more to learn. But this is no short, superficial course. There are over 200 lectures and videos adding up to more than 27 hours of content by over 15 different instructors. We think it just might be the best real estate course on the planet. Continue your wealth building journey today with the no Hype Real Estate Investing course@whitecoatinvestor.com courses. You can do this and the White Coat Investor can help. All right, keep your head up, shoulders back. You've got this and we can help. If you want to join us on the podcast, you can apply whitecoatinvestor.com Milestones See you next time on the podcast. The hosts of the White Coat Investor Podcast are not licensed accountants, attorneys or financial advisors. This podcast is free entertainment and information only. It should not be considered professional or personalized financial advice.

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