MtoM #67 - Family Doc Pays Off $184K

This is the White Coat Investor podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Hey, and welcome back to the Milestones to Millionaire podcast with White Coat Investor. I'm your host, Dr. Disha Spath, and we're here on number 67. Family doc pays off $184,000 a day.

@ some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment. These loans allow doctors to secure a mortgage with fewer restrictions and a lower down payment than a conventional mortgage. But if you're further advanced in your career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter timeframe could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. You can do this, and the White Coat Investor can help.

All right, today we have a Wonderful guest on Dr. Serena Brown. She's a family practice physician who has paid off her student loans of $184,000. Welcome, Dr. Brown.

Hi. How are you doing today?

I'm doing well, thank you. How are you?

I'm doing well. I'm excited to be on this podcast. I listen to it all the time. So excited to share my success with you all.

Awesome. We're so excited to have you here, and we're really excited to get to the details. So tell us a little bit about yourself. You're a family practice physician. How far are you out of school?

I completed my residency in June 2017, so about five years out.

Awesome. And what part of the country do you live in?

I'm in the Washington, D.C. area in a Maryland suburb.

Oh, awesome. It's a pretty high cost of living.

Very high cost of living. Very high cost of living. Pandemic does not help.

Yeah. So you paid off $184,000. How long did it take you?

I made my final payment the day before Thanksgiving, 2021.

Awesome.

So it's been a bit of time since I submitted my application to be on the podcast. All right.

All right.

Okay.

Well, that's awesome. Congratulations. You really just took about four years to get it done. Tell us about Your household situation. Are you married? And what was your average household income during that time period?

Yep. So I'm single, no children. For my, my three years of residency, I made about $55,000 annually. And then my first job out of residency, I made 175,000 in private practice, which I did for about two years. And now in my current role as a subacute rehab physician, I make about $185,000.

Okay, awesome. So how did you do it? Tell us the details.

First off, I mean, simply, I generally keep my cost of living very low, as low as I possibly can, which is helped by the fact that I'm single and I have no children. When I was in residency, I did enroll in the Income Driven Repayment PAYE program. So during those three years, I simply just paid whatever the minimum due based on the percentage of my income. Then as soon as I started making that full salary, when I got into private practice after finishing residency, I would kind of just keep tabs on my bank accounts. And anytime I saw that there was a large amount of excess money available, I would just make a large lump sum of payment. Initially, I did consider doing the PSLF program. So I didn't consolidate the federal loans. I did also have these private institutional loans, which were provided by my medical school, which had to be repaid no matter what. So I said, let me just target those first, since, you know, I know they're, they're going to have to be repaid. That was about $40,000. After that, after I finished paying that off, I proceeded to kind of pay off the largest federal unsubsidized loans first, which had the highest interest rates. And as I slowly kind of saw the loans being eliminated one by one, I realized, hey, I could probably just pay this off. I don't need to do this pslf. And I did refinance a couple of times to get lower rates, especially in the pandemic, that was helpful. I got low rates, but I mean, ultimately it didn't make that much of a difference because the best way to pay the less interest was to just pay it off rapidly, which is what I ended up doing.

Wow. So that requires so much, so much discipline to see extra money in your accounts and put it towards your debt instead of spending it instead of taking a nice vacation or something. So, so what was that thought process like where you decided, you know, I just want to get rid of this debt? Why was that?

Yeah, I mean, I really don't, don't like the concept of debt in general and paying Additional money to borrow money. But obviously medical school is very expensive. There was no way that I was going to pay for that. My family was going to be able to pay for that. So debt was necessary. And I just knew that I wanted to pay as little interest to, to the government or the student loan providers as I could. And when you, when you do your taxes and you get those forms in the mail, you see how much interest you pay and it hurts. So that was enough motivation for me to say, no, no, no, no, no. Like, I want to see this number to be as small as possible.

Yeah. It really feels like double taxation, doesn't it? Because you're like paying taxes on your income and then you're paying the student interest. At least you get to write marginal amount of that off, but not very much.

Yeah. So for a few years I was able to write a little bit off.

Yeah. Yeah. So was it easier or harder than you thought to pay it off so quickly?

Yeah, I mean, I, I never thought it would be that hard to do given that I knew, you know, I was going to have a large salary increase after residency. But as I've kind of said before, I think it was easier for me being a single person without children, not having to consider others in this equation, just myself and my own sacrifices. So, yeah, that definitely made it easier.

So how does it feel now that you don't have any student loan?

Well, it feels great to not be dragged down by debt. But in parallel to eliminating that student loan debt, I did decide to become a homeowner. So that brought on a new kind of debt. Especially we talked about this area. Cost of living is quite high. But I mean, ultimately I see the progression of my goals and I'm glad to not have any more educational debt and I don't plan on having any more in the future, so.

Nice. Yeah. The difference between student loan debt and a house debt is that house debt, you actually get something. Right. Going forward, which is something that's actually going to appreciate in value as well.

Yeah, it definitely seems a lot more tangible than my degree. Right. The diploma hanging on the wall doesn't have the same feeling. Yeah.

And, you know, the value of your student loans is that you have your doctorate and you have your earnings that you get from that doctorate, but it's dependent on you working. Right. Whereas now you own your degree, everything that you earn goes directly towards your household building wealth. Right. And you can work as much or as little as you want and you can still maintain a delta and your cash flow is going to be so much more positive at the end of the month. So congratulations.

Thank you.

Yeah, absolutely. So what advice would you give to someone that's just like you before you started?

I think the key was to educate myself. And so I think you got to educate yourself. You got to be willing to study personal finance like you studied medicine with that same dedication. Look for evidence based information just like we're taught to practice evidence based medicine nowadays. You know, I found the White Coat Investor book right at the end of my medical school and I'm very grateful for that because it made me start thinking about it. And I remember in the book it says like, you should read two financial personal finance books a year at minimum to kind of continue to grow in your knowledge. And I really took that to heart and just kept reading and learning about how to be financially independent. So I hope this podcast and whoever listens to it will motivate someone younger, you know, or future doctor to kind of seek out more knowledge.

Awesome. So just what are the two books that you would recommend to someone that's coming up?

I really liked. I mean, it's a brief read and it doesn't get into great depths about like finance, like specifics, but I like. What is it called? The Latte Factor. Sorry, took me a minute.

Yeah, I've heard of that.

And then of course the Millionaire Next Door was a. Was a good book. It kind of helped me set up a good organized system for keeping records and tracks track of things.

Awesome, awesome. Thank you for those recommendations. So what are your next financial goals?

Well, my next goal is really to find alternative streams of income, ideally through house hacking. That was the motivation for me buying a home and then hopefully grow my net worth more rapidly and ideally achieve fire, which is the new buzz word or acronym. So I would like that for myself. I like my job, but I want to choose when I work and how I work.

All right. Yes, the FIRE stands for financial independence. Retire early. It's a movement that's been taking the world by storm, at least this country by storm, the last few years. Now, what's your FIRE number? What's the number that you want to retire?

That's a good question, yet to be determined. Let me get married, have some kids and then I'll figure that number and decide that.

That's a good point. All right, so Dr. Brown, we are so happy to have you here. Thank you so much for sharing your story and inspiring our listeners to follow in your footsteps or take away a little tidbit. I'm definitely you know, I haven't read the Latte factor yet. I'm going to have to. It's been on my radar. So thanks for recommending that.

Definitely. Definitely a quick read. So.

Well, thank you.

Yeah. All right. Yeah. Thank you. Dr. Stauff. I really, I really enjoy talking with you and I'm glad to be able to share my story and my success.

So what a wonderful conversation with Dr. Brown. I'm so glad she took the time to share her story with us. I really loved her idea of reading two financial books a year and just keeping that up throughout your career so you can continue to build your knowledge. That's awesome and I hope we can all keep up with that goal. The way she paid off her debt, which is basically looking at an extra amount in her bank account and putting a lump sum towards her loans, takes a lot of discipline and a lot of motivation and, you know, just kudos to her for getting this done so quickly and hopefully you learned something from that conversation as well.

At some point in our financial lives, it will be time to buy a Home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment. These loans allow doctors to secure a mortgage with fewer restrictions and a lower down payment than a conventional mortgage. But if you're further advanced in your career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter timeframe could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. 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 at the White Coat Investor. We'll 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.