MtoM #73 - Radiologist Pays Off Student Loans

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 73. Resident pays off student loans. Do you ever find yourself wishing there was somewhere to go to ask your finance, insurance or investing questions? The White Coat Investor community is a great place to turn with. We have a thriving community across all of our social Facebook, Twitter, Instagram, Reddit and our WCI forum. We have been discussing solutions to your money problems since 2011. Join the Conversation with thousands of other white coat investors. Follow WCI on your favorite social media platform for financial resources, tips and strategies. Just head to your platform of choice and search for the White coat Investor. You can do this and the White Coat Investor can help create. Got a great interview for you today. We've got a radiology resident who has paid off student loans even before finishing his training. So let's get him on the line and take a listen. All right, I've got our guest for today on this is Zach. Welcome to the Milestones to Millionaire podcast.

Thanks for having me. I appreciate it.

All right, tell us about your specialty and how far you are out of training.

So I'm in diagnostic radiology. I'm not yet out of training. I have, what, a month and a half to go before I finish out my residency and then one year fellowship and then into practice after that.

Well, that makes this story even more impressive because today, what milestone are we celebrating with you?

So we are celebrating paying off my student loans, which happened a little bit earlier this year.

Yeah. So you paid off your student loans before you finished your training?

I did.

That's pretty awesome. How much did you pay off?

So it was about 75,000 I think when I came out of med school.

Okay. So I think the obvious question for most people listening out there knowing the average medical student graduates with over 200, is how did you get out with only 75?

Yeah. So major factor, I think being going to an in state med school that has, I guess comparatively a relatively low tuition. I think it was somewhere between 30 and $35,000 a year. So that helped a lot. Obviously. I guess the other major factor was I had a little bit of money left in a 529. My parents had planned and saved to pay for college for myself. And I got, I think something like a half ride scholarship to where I went to undergrad. So that saved a little bit of money in the 529. So I think I maybe had 40 somewhere. 40 to 60 grand range in a 529. That helped offset a good chunk the first. First couple years of med school. So that was obviously a huge help. Major credit to my parents for, you know, thinking, planning ahead and saving a little bit of money. That. That was an easier, easier journey for me. Another decent size factor was I got married right before med school. My wife's a teacher. She started working around that point, so it's not like she was making any, you know, crazy money, but helped certainly offset cost of living. And I think we managed to cash flow, you know, not a whole lot, but a couple thousand dollars a year. That also helped to keep the total down.

Yeah, so a little bit of everything. Frugal, school choice, some loans, some parental help, some spousal help, and in the end you come out with 75. That's a huge success. I should congratulate you on that alone. That is no small feat.

The planning, I think, is certainly a big portion of. It's a lot of paying off if you kind of aren't able to think about it beforehand. So we did make a couple of prudent financial choices that helped decrease the loan total and the stress by the time I came out, I guess.

Yeah, Even so, you're not out of training yet. You never had the attending physician salary to whack this loan out. You did this on. Presumably your wife is still teaching and a resident income.

Yeah. Yeah. So there were a couple. My wife's actually been home with kids for the last. Well, since COVID I guess, so. We had a couple years where she was working and I was working, and those were years when we made a good chunk of the payments on those loans to knock down the total. We live in a relatively low cost of living area, which certainly helps. And we're relatively low spenders, I think, by. By default. It also really helps. The other thing that I think probably played a role is my residency has sort of a unique. It's not internal moonlight. It's sort of a paid call system where some of our extra kind of off hour shifts are. Are paid. So starting in the. Well, Starting in my PGY2 year, we were able to make a little extra money doing that, and that certainly helped pay down those loan totals as well.

Were you surprised to get it paid off?

I was. I think we were on track. We had gotten the total relatively low. I think it was somewhere between $10,000 and $15,000 kind of at the start of this year, and figured we'd pay it off maybe right at the tail end of fellowship. And then, unfortunately, I Had a grandparent pass away, but they left us a small sum of money that helped us pay off the final, know, 10, 10 or $15,000 of the loan.

So did it end up being, you know, up until you got that inheritance, did it end up being easier or harder than you thought it was going to be to pay them off?

I guess maybe a, maybe a touch easier. I think we kind of had a plan to pay them off relatively early, but through kind of, you know, I guess being relatively frugal and happenstance and we were paying them down a little bit quicker than I'd expected. I certainly wasn't expecting to pay them off before the end of training. I think we were hoping that we could pay them off kind of shortly after the end. But yeah, just, I think just our kind of, our general kind of savers mentality helped us a little bit in terms of kind of just throwing a little bit of money at it whenever we kind of had leftover funds.

So how did it feel knowing this debt was taken care of or just about taken care of as you underwent your job search, did this affect what kind of jobs you considered and how you negotiated? What effect did this have in your life to not have a two or three or four hundred thousand thousand dollar student loan hanging over your head?

Yeah, it definitely did. It definitely did have an impact on what I was looking for. I think if I would have had some sort of real large, you know, six figure student loan burden, I would have more strongly considered that I might have needed to done some, you know, work in a setting that allowed me to, to access some sort of student loan payoff program. I had known relatively early that I didn't think that that's the route that I wanted to go down.

So.

So considering that I probably was going to end up working in private practice and that's kind of the jobs that were going to be accessible to me in the area that I wanted to live. So knowing that I kind of knew that I would probably be paying off the loans on my own going forward, in addition to the relatively small loan burden, I knew that if I was paying on those loans for 10 or 20 years, they would most likely be gone anyway and that I wouldn't be accessing some sort of free student payback, student loan payback at the end, which is why I refinanced them relatively early after I came out of med school. So it was a little bit of planning ahead because I knew kind of the job I wanted and a little bit of being able to take advantage of that because I didn't have the burden of those student loans going forward. So I actually signed already for a private practice job that's probably a little bit more maybe lifestyle oriented than I would be able to if I had some sort of big six figure debt hanging over my head.

That's pretty awesome to be able to have that sort of freedom right from the beginning of your career. Yeah. So you refinanced early, which a lot of people don't do. A lot of people don't refinance at least their federal loans until they're finishing training. And then March 2020 came along and everybody's federal loans went on. No payments, 0% interest. How did you feel?

Yeah, was not really a huge deal deal for me. I guess a little bit of a missed opportunity there, but couldn't have planned for that in hindsight. So nothing really that I could do. Happy for all my colleagues who don't have to have that 0% for their loans right now. But it was something where I was always going to have to pay them off at some point just because of the size of the loan and not being able to. Not planning to do any sort of forgiveness program. So it would be nice to have a little bit of a free ride on the loans. But you know, it's all kind of water under the bridge now. But still so glad to have them gone.

Yeah, of course at this point you don't have any principal and even if they haven't been paying interest the last couple of years, they've still got those loans, so.

Yeah, exactly. They'll have to worry about them at some point. It's a nice headache to have gone even regardless of kind of just the financial aspect of it.

How does it feel to have them gone? Is there a stress or a weight gone from your life or is it just like, yeah, I knew that was coming, no big deal.

It's certainly nice to have them gone. A little bit less to worry about. Gives us a little bit more freedom. We have a couple of kids so it's important to have a little bit more freedom with our money than we would have if I was still making the loan payments and would have to kind of worry about making larger ones coming up as I got out of training. But not, you know, I wasn't necessarily feeling the, the weight of the world with those loans on a day to day basis when they were around. So I think part of that's the function of the relatively small loan burden. So I wasn't, I was never really concerned about like, oh, no, how am I ever going to pay these off? It was, it always seemed like a manageable amount.

So what advice do you have for somebody that's just like you were five years ago, six, seven years ago, whatever. What, what would you tell them?

I think a couple pieces of advice. Maybe the main one being, like, having some, having some foresight and thinking ahead about kind of where, where this journey is going to end and if kind of the steps that you're taking are going to lead you to the place you want to be at. I think my wife and I did a pretty good job of looking ahead and trying to plan things out so that we ended up where we wanted to be. Because there's a lot of easy decisions you can make regarding school choice, specialty choice that can lead you into a place where you have big student loans that you're kind of wondering about how you're going to have to deal with. You might need to take some steps that aren't ideal for your life to have to deal with. So I think sitting down and thinking a lot of years in advance, I guess five, ten years in advance, is really important to making that, that, that journey seem manageable. The other thing, just kind of a general, you know, financial, you know, finances tip is to just make your priorities kind of a lead point of your financial choices. I think that's a lot of, that's another really easy thing that way for people to get sucked into, you know, spending more money than they have, you know, is just not prioritizing. Because if you're not thinking actively about what you, what you and your family want, you kind of end up getting sucked into spending the way everyone else does on things that may or may not matter to you.

Yeah. Awesome. That's good advice. Well, congratulations to you, Zach. You've accomplished something. Very impressive.

Thanks.

Not only getting your med school paid for, but getting it paid for before you even finish your training. So you should be proud of yourself. And I appreciate you coming on and sharing your story with our listeners.

Yeah, thanks. No problem. I appreciate it.

All right, that was a great story. Remember, the average debt for someone coming out of an MD school, at least what they're reporting on their fourth year exit surveys, is just over $200,000. It's $250,000 or so, $240,000, $250,000 ish for dos, and about 270,000 ish for dental students. So those are the averages. And the bad thing about averages is that everybody doesn't get the average right. A lot of people have dramatically more than the average. As you know, there's people with three, four, or $500,000 in student loans, but that also means half the people have less than the average. And this is a good example of that. He comes out with $75,000. And I know what a lot of you are out there sitting there thinking, 75. If I only had 75, I could have knocked those out too. Well, recognize that the fact that it's only 75 comes from a lot of sacrifice. It wasn't just his sacrifice, although he probably lived pretty frugally during those med school years and was smart about how that 529 money was used and about which loans were taken out. But there's also sacrifice by other people that happened here, right? His parents sacrificed to save up that 529, like many of you are doing now so that your kids can come out of medical school or dental school only owing $75,000 or something like that. His spouse sacrificed. Right. You know, while I was in med school, there were a couple of years there where Katie wasn't in school and she was working to help support the family. And so there's other people sacrificing to make that sort of a thing possible. So you shouldn't just say, oh, I had much less than average. That was easy. I'm not impressed. You should take them from where they're at and apply what you can to your situation. Keep your student loans down as much as you can, get them paid off, and have a conscious plan as you do it. He gave a lot of good advice there at the end, so I encourage you to apply it in your life. No matter where you're at with student loans and your finances, do you ever find yourself wishing there was somewhere to go to ask your finance, insurance or investing questions? The White Coat Investor community is a great place to turn. We have a thriving community across all of our social Facebook, Twitter, Instagram, Reddit and our WCI Forum. We've been discussing solutions to your money problems since 2011. Join the Conversation with thousands of other White Coat investors. Follow WCI on your favorite social media platform for financial resources, tips and strategies. Just head to your platform of choice and search for the White Coat Investor. You can do this and the White Coat Investor can help. Thanks for listening. Keep your head up, shoulders back. You can do this and we can help. We'll see you next time on the Milestones to Millionaire podcast.

The hosts of the White Coat Investor Podcast are not licensed accountants and 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.