MtoM #65 - Family Doc Achieves $0 Net Worth

This is the White Coat Investor podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Hi, and welcome to another episode of Milestones to Millionaire with the White Coat Investor. Today's episode is number 65, family doc reaches zero dollar net worth.

Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status. And one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the White Coat Investor can help.

All right, today we have a really special guest, Dr. Amanda Whitten, who is here to share her story about how her family reached a $0 net worth, which is amazing given the fact that we have to go so negative into debt in order to get into medical school. She's a family physician and her partner is a social worker. And also they're here to celebrate a second achievement which is paying off their student loans. So, Dr. Whitten, welcome.

Thank you so much for having me. It's such a pleasure. I'm a big fan. So I feel so excited to be on the show today.

Oh, I'm so glad to have you. Tell us a little bit about you. Where are you from, where you're practicing?

I live in Vancouver, B.C. canada, which is a western part of Canada, and I was born and raised here and all my training and medical school here, but I actually moved all across country. Toronto, Ottawa, which is the capital, and now out in Vancouver. I graduated residency in 2020 in the middle of something called the pandemic. So I've been practicing for about, about two years now, doing mostly a practice of women's health, obstetrics and a little bit of family medicine.

Wow. Okay. So how was it establishing practice when you're starting off right at the beginning of the pandemic?

Well, it was very challenging. I guess the truth is I don't know anything else so that at least it wasn't a big transition. I did a two year residency in family medicine and I had planned to do an extra year of focused Practice in women's health and obstetrics during 1920. And that, of course, got rescheduled due to Covid. And so I decided to leave that fellowship and start practice early. And I didn't really know what I was getting into, but I was so lucky to see just many opportunities, to be honest. Yeah, it's been very, very good. I don't have my own practice. I'm a locum, so I have a lot of flexibility in a lot of different types of jobs. But I've been very fortunate to really hit the ground running, and I have many, many different connections and sort of longer term locums that I. That I work with.

Awesome. And what does your partner do?

He's a social worker, so he works in a hospital in the same city as I in I am. And he also recently got a big promotion. He's a social work manager now, so went from frontline to manager quite quickly.

Awesome. Congratulations to him.

Thank you.

Yeah. So tell us about the goal that you reached.

So I initially applied when I reached negative net worth, which is very exciting. So that happened about November, and I was very excited about that. And I most recently reached another goal which is paying off all of our student debt in March. So that was less than two years from practice. So I. Our maximum debt was right before I started working in June of 2020, and that was negative $255,000 Canadian. And at that time, we had a income of about, I would say about $60,000. So it seemed quite insurmountable, quite difficult. And I'm just so excited and pleased to be able to not only be negative. Well, sorry, zero. And also now having a positive net worth in terms of paying off the student debt as well.

Awesome. Congratulations. You guys clearly worked really hard to get where you are. But just for clarity, did your parents pay for your school or did you receive an inheritance?

Yeah, good question. So my parents didn't contribute to my education, so I did have a grand small grandparent gift in my undergrad of about $8,000. And then I had a small inheritance last year which worked up to about $27,000, which is not insignificant. That's quite a good amount of money. But that was the only support I had in terms of my education.

Okay, so how did you decide to pay off your student loans?

Well, I was always very interested in having them be done, and there always seemed to be a big weight on my shoulders, and watching the number kind of tick up every year was very stressful for me. And so it was always a Big priority to pay it off. I initially thought, oh, gosh, you know, if I can pay it off in five years, like, that would just be amazing. Or three years, maybe. My partner was a bit nervous that we would ever pay it off. And so I said, oh, no, listen, like, I swear, we'll pay it off in five years. And so I really had a, you know, set plan. I wrote out a plan in terms of, like, a payment schedule and a monthly amount, but I didn't, to be honest, I didn't really stick to that. What I really did was every money, every paycheck I got, I basically just took half of that. And I thought that was actually. It got into sort of this positive snowball of, like, excitement and motivation that I was. It's sort of a big hobby of mine. Every time I got a paycheck, oh, I can't wait to put it on my line of credit. I can't wait to put it on my, my debt. And it was probably my biggest hobby. But it was very exciting because you could see the effort pay off quite quickly.

Yeah.

And so it's. It was also. You didn't have to think about it. Right. You just, you don't miss that money if it's already gone.

That's awesome. And so you kind of had an irregular income, being locums, but every paycheck that you got, you just took half of that and put it towards your debt. And that's a really good, simple system to go ahead and start paying down your debt. Did you use, you said snowball. Did you use the debt snowball method where you went for the smallest debt first?

That's a good question. So I didn't actually. So I guess I just mean it not in the debt snowball sense, but more of like, I got just really excited about, you know, little things built, building up and adding to more excitement. I had basically just one debt, so I didn't really have many multiple sources to pay back, which was in some ways easier. So everything was on my line of credit and I just paid that directly.

I see. Now, does Canada have something like public service loan forgiveness?

That's a good question. So the short answer is no. The longer answer is that there's different ways you can. There's different provinces that can give you student loan. Like the different regions of the country can give you provincial student loans, and some of them will give you some reimbursement or payment if you basically work in a rural area for a certain amount of time. But from what I understand of the Public service loan forgiveness that seems to be much in some ways more lucrative in other ways more complex. So most people that I know, at least in Canada, don't usually go the rural route and consolidate their provincial or federal loans onto a private line of credit, especially since the interest rate up here has been extremely low. That's one thing that really helped me is that obviously pandemic was not a good situation, but our interest rates were 0.25, like extremely, extremely low. So it was made it very easy to pay off my line. And actually this month, last month, and this month they started to raise the federal interest rate. So I'm feeling very thankful that I have paid off my loans now.

So, yes, you're not subject to that inflection at all.

Good.

So. So what would you say to someone then? You know, a lot of people that hear 0.25% interest rate will say, oh, that's free money. You should just carry your student loans and invest in something with a higher return. So what would you say to those people?

Well, it's a good question because I did have that sort of tension or thought back and forth during it. Especially, you know, you know, their interest rates were so low for so long, even like that was extremely low rate. But even before that in Canada, they were still like 1 or 2%, which is extremely low. And so I kind of came to be in this really low interest rate environment. But I had a feeling, say, gosh, you know, this is not going to last forever. You know, this. I don't know when, but there must be a time when it increases. And just like stocks and ETFs like these also don't infinitely increase. And I think know, learning about, you know, I'm not an economist, but learning about financial education through this podcast or through other sources, I learned, you know, you have to be, you have to have a balanced approach. And I was just, just sick of having the debt on my, sort of on my mind, on my back. It really weighed on me. It sort of was difficult for me to take time off or take vacations or say no to shifts. I always had this sense of, oh, I could do this extra shift, I could work overnight, I could do that weekend, because why wouldn't I pay off my debt? And having that sort of more flexibility was really what I wanted. And I did have some investments along the way. Like I have a very small, like ETF account, but that's also decreased recently in the past few months. So in some ways I sort of, I was not sure, but now it's actually come to bear is that, wow, the interest rates do rise, and stocks and bonds don't always go up. So what you can guarantee is your return on a debt like that will be guaranteed return, whether it's 0.25 or 2% or 10%. There's no, like, you will get a return on that. It's extremely conservative. But that's not. That's a really certain thing. And so that, to me, was a big motivating factor. And I also just didn't want to. Oh, like, triple digits. Like, I'm like, gosh, you know, that's a house in a lot of places. Like, that's people's entire life savings in a lot of places. Like, and I'm so young, so I just was really motivated to have that be done.

Yeah, I mean, paying off that large amount of debt is really a cash flow play. You are increasing your cash flow every month by getting rid of one really large expense. And now that you have that extra cash flow every month, you can do with it what you like, whether it is to pick up less shifts and work less or invest more. But it's a very personal decision, and I applaud you for just picking something and then going for it. That's the hard part, right? Deciding, thank you.

It's true. That's very true.

Yeah. So tell me, like, what did you do exactly, to pay it off so quickly, lifestyle wise? Did you change your lifestyle at all?

That's a good question. So I didn't. And so I, you know, again, through this podcast, you know, I really understood that lesson of, like, living like a resident. And I really didn't have a lot. You know, there's things I would like, but I really didn't feel like I was living very deprived during residency, to be honest. So I really didn't think I had to sort of unleash this tension and buy a bunch of things. So I sort of said, well, gosh, my lifestyle is quite good. Like, even before residency, like, before I went to medical school, I worked in nonprofits for a long time. And my very first job, when I met my partner, I made $25,000 a year, and he made $10,000 a year. And so I know what that's like to live on very low amount of money. And to me, a resident salary of 60 grand in Canada was like, wow, this is amazing. Right? So I basically, I continue to rent. I continue to have a used car, which I bought in residency. We continue to meal prep and buy at the discount grocery Store. I eat most my food at home. Our big hobbies are like walking and running and hiking, which we can do here a lot in Vancouver because the weather's so wonderful.

I'm so jealous.

Well, yeah, not to rub it in, but it's. I really don't feel super deprived. Like, I think, of course, I was mentioning previously the one thing about where I live, which is an extremely high cost of living place, which I think is also the reason I bring this up is because I think in Canada, and I think to a greater than across North America, people think, okay, I have to have a house. I have to buy a house to be successful, to be a doctor, to be an adult, whatever. And yes, that would be nice. I would love to own my own house. But in my city, the average cost of a single family home is $1.8 million, which is extremely high. However, the rent for a house like that is 2,000 or $3,000 a month. So it's a renter's market.

Yeah.

And so I don't have to pay property tax. I don't have to fix things. You know, I save so much money and so much stress by renting, and it's maybe less popular, but I honestly think that's a bit of a hack. Like, I think it's a really good idea. Like, especially if you're still new and getting started and have so much debt. Like, I see so many of my colleagues saying, well, how can I take out all my line of credit and put it as a down payment? I said, what? That's interesting. Like, that's just changing debt for debt, and that's everyone's different choice. But I'm just happy to be positive cash flow, to not have to owe many people many things. And it just also gives me lots of flexibility if I want to work in different places or, you know, not feel so inclined to buy a new dishwasher. You know, all these things. So I think renting has been really, really helpful in a city like this.

So I'm so glad you brought that up, Amanda, because I felt like the same thing happened to me when we paid off our debt. We sold our house and the house that we owned, and we actually went back to renting. And it was so much easier. Like, the amount of, you know, extra cash flow, that extra, you know, just expenses that come up when you own a house, and the feeling of wanting to upgrade stuff, you know, keeping up the Joneses when you live in a nice neighborhood and, you know, that kind of thing, you just don't have that. So it makes psychologically things so much easier on you. So they could just, you know, concentrate on paying off that debt, building good habits, building good money management skills and then take that forward and then inflate from there.

Absolutely.

So what is your plan with the extra cash flow?

Well, it's a good question, to be honest. I don't know. In some ways I feel so excited about being done with debt and I'm so thankful. But in other ways, I say, gosh, you know, I was so focused on that goal. I say, oh man, now I have this freedom, truly freedom. I do feel it. But in some ways I kind of think, okay, well, I maybe could have many goals instead of being so focused on one individual goal, like pay off that as soon as possible. You know, I think, gosh, you know, I should build up my retirement bit. Maybe I can start to save for this mammoth down payment. You know, I'm not quite sure, to be honest. We're certain my partner and I are working on an emergency fund, which is a very easy good thing to have. We're thinking about taking some longer vacations, which would be really nice. And we're not quite sure about, I think property is the next move, but we're not sure again because it's, it's quite challenging in the city. We're not sure if we'll save up to buy an actual house to live in or we may buy some land rurally and sort of rent in the city and maybe have like not a secondary property but to have our property in a, in a smaller or lower cost of living place. So we're not quite sure yet. We're going to look into that a little bit. But it's nice to have the option. That's really nice. And the good thing is I could probably do a little bit of all those things. I don't have to be so laser focused on on one of them.

Exactly. Yeah. Now it's just making up your mind, of course, between all of these really good options is the hard part. You don't really have to as long as you automate now and just let the money build up in all different ways that you want to spend it or invest it. But yeah, important to sit down and finally make that decision at some point and put your money to work. So I know you're going to make amazing decisions and go from zero net worth to the double comma club before we can blink. And I'm really forward to hearing back from you and I hope you do update us when you reach that milestone.

Well, thank you. I'm excited about that, too. I was doing the math this morning, too. I said, oh, yeah, gosh, I could just keep going. So that's a really exciting initiative to build on for sure. Yeah.

Awesome. Well, Amanda, thank you so much for coming on our show today and sharing your wisdom and your journey. It's so, so helpful for our listeners to hear the details of your situation and the takeaway, you know, things that they can apply on to their own lives. Thank you so much.

Well, thank you so much for your time. I've learned a lot from your story from your own blog.

Oh, thank you.

And also from White Coat Investor. And I have to say I've listened to almost all the milestones to millionaires. So I feel, and I was thinking to myself if I could make it on that show, that's my own milestone. So I feel like I've reached another goal of mine just from being here. So thank you very much.

So what a lovely conversation we had with Amanda. I am so happy to hear that she took advantage of the low interest rate situation to pay off her student loans. And just to clarify, we talked a little bit more after the interview ended that her line of credit was kind of an adjustable rate so that it would adjust upwards as the interest rates adjusted as well. So it was a very good move to pay it off before the interest rate started going up. And really, she did all the right things that we say here at the White Coat Investor and didn't make the mistakes that many of us, including myself, made of inflating too early. She just continued to live like a resident, took our extra money and paid off her loans. And now she has the whole world in front of her and a lot of really good choices. So I am very excited to be here with you to share all these amazing stories of all these amazing doctors doing great things with their money.

Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status. And one in seven doctors get disabled at some point during their career because these policies can only be purchased through brokers. We put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the White Coat Investor can help.

Keep your head up, shoulders back. You've got this and we can help here at the White Code Investor. See you next time. The hosts of the White Code 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. You should consult the appropriate professional for specific advice relating to your situation.