MtoM #74 - Urologist Millionaire

This is the White Coat Investor podcast, Milestones to Millionaire. Celebrating stories of success along the journey to financial freedom. Welcome to the Milestones to Millionaire podcast. I'm your host, Dr. Disha Spath.

Still not sure what to do with your student loans? Overwhelmed with how to tackle that giant debt in an ever changing political climate, the experts@studentloanadvice.com are here to help guide you through the best options to manage your loans. Our experienced staff have consulted on over $250 million in student loan debt, and the average studentloanadvice.com client has saved over $190,000. You will receive a customized student loan plan using the principles of the White Coat Investor. Get answers to all of your student loan questions, gain clarity about your financial future, and start down the right path toward financial freedom. Book a consult today@studentloanadvice.com you can do this. And the White Coat Investor can help.

All right. I'm so excited to welcome our guest on today, Dr. Peter. Welcome.

Hello. Thank you, Disha. It's really great to be here.

It's really nice to have you. Where are you coming in from, Peter?

I'm in the San Francisco Bay area.

Oh, I see. Awesome. So tell us a little bit about yourself. What's your profession, and how far are you out of school?

I'm a urologist and I'm about four years out of training now.

Awesome. So which big milestone are you here to share with us today?

Well, back in April, I crossed the million dollar threshold. Unfortunately, with the market, I'm back down, and so now I'm approximately 950 net worth. So I get to hit that milestone again here in a few months.

Yeah. All right. Congratulations. Just four years out of training and you're already at the million ish power point. That's amazing. I feel your pain. I feel your pain. We definitely did the same thing, too. All right, well, that's great. I mean, you know, that's. You're basically as soon as the markets rebound, you're going to be right back up. It's the thought and the process that counts. Right? A little bit of variation here and there. It's just details and to be expected. Yeah, exactly. And to be expected. So your approximate net worth is about a million dollars. What's that divided up into?

It's about 10,000 in cash. About 450,000 is in retirement accounts. We have about 50 in a taxable account, and then the rest is in our home equity.

All right, and what was your net worth when you Came out of school.

So when. When I came out of training, we owed about. Or I owed about $350,000 in debt. So that was about 300,000 in student loans. And then we had about 50,000 in one car loan and several credit cards, actually.

Okay, all right. And did you own any houses or anything at that point?

We did. I owned my house where I trained, so we had a little bit of equity there.

Okay, all right. And did your parents help pay for your school at all, or did you receive an inheritance?

So they. They paid for undergrad, which was fabulous, and then nothing for medical school. And I got a small inheritance from my grandmother, about $20,000.

Okay, so you had a little help, but you still came out in the typical hole that most physicians come out with. A lot of student debt, some credit card debt, some car debt. So like. So how did you go from all of that to a millionaire in four years of practicing?

You know, I think the. The biggest thing was that we. I was on the same page with my wife, and we made a budget, and we kind of had fun with that budget. And what we found is that we could actually live on her salary. And then we basically saved my entire salary. And so we just kept throwing more and more at the debts and then. And then kept going once. Once that was paid off.

Wow. So speaking of salaries, what has been your range of income, your and your wife's.

So combined right out of residency, so the kind of. With the half year, we made about 350, and then we kind of peaked around 640, and then we moved to the Bay Area to be closer to family and then came down to about 500.

Wow. So Bay Area, that's pretty high, you know, high cost of living. I'm really impressed that you're able to make such great progress while living in such a high cost of living area. Any tips about that?

Well, you know, we moved out of residency to Southern California first, and we actually lived in a one bedroom apartment that was about five minutes from the beach. But it was definitely small and well within what we could actually probably afford on kind of a big resident salary. And then we saved up. We were able to save up a full down payment, and then we bought, you know, I would say, a modest house. So definitely less than we probably could afford to do. And that kind of freed up cash to continue our savings goals.

I see. So when you say a full down payment, do you mean 20%?

Yes.

Okay. So you didn't utilize a physician loan. You put down a good bit Then, yeah.

Yeah. So especially during COVID all of the loan requirements became pretty strict, and so. And then we were kind of on a savings goal as it was. So fortunately, we were able to get the full 20% down, which kind of opened a lot of doors for us.

Awesome. Awesome. And so you made a budget. I love that. You know, that, I think, is the key to saving a lot of money. You need to know where your money is going coming in from and where it's going out to, and then start making those changes that really, you know, change the delta. So you definitely didn't inflate your. Your housing all the way up to the maximum you could have, and you put down a good bit of money so that your monthly cost on your mortgage was a little bit lower than if you had mortgaged the whole thing. Now, what else. What else were you doing to save so much money?

I mean, mostly. Mostly it came down to the budget. So, you know, when we came out of residency, my wife had actually made me listen to Dave Ramsey's book while we were still dating. And so we kind of had a plan coming out of residency, that debt was going to be our main, main goal. And then with the budget, it took about six months, but we. We just kept chipping away at things. And in the beginning, you could chip away big things. And then. And then as you get further along, you start really making decisions about whether that next dollar of spending is going to bring you more happiness. And so then you're. You're cutting out all of your subscriptions, and you're cutting out, you know, keeping the same car, so you're trying to really limit all of your payments. And so it just. It just kept. We just kept being able to save a bit more and save a bit more. And then really, it was. Her salary was pretty reasonable, so it didn't feel restrictive. We were still living, you know, very, very, very much kind of a normal lifestyle. We got to travel during that time. We went on several international trips and we got married and paid for the wedding. So, yeah, I mean, it was. It was a good time.

And you paid for your wedding yourself? All of you?

No, we paid half of it. Yeah. So. So. But, yeah, it was a chunk.

Yeah. Yeah. That's amazing. Okay, so you were saving and, like, ch. You were stocking away money that you were saving monthly. What were you doing with it? But what were you. So you paid for your wedding, you paid for a down payment, and then were you investing alongside?

Yeah, yeah. So we were maxing out retirement accounts and so, so those were. So those were growing. We, we definitely benefited from that, from the end of the bull market with. With that savings. So to get some kind of max those out.

Nice. And then what did you do with your student loans?

So the student loans we decided to pay off. We actually, when my wife was very nervous about my level of debt, and so we had a very clear plan when we came out of residency, and I actually did the calculations and found that PSLF, I only needed to make about $40,000 more per year to out make what PSLF. PSLF would have brought back to me. And so we made a decision very early on that, that I would just kind of give up on looking for those jobs and just kind of. We would. We would focus on geography and focus on paying things down. And so that's what we did. And then that was even more motivation to kind of get that debt out of the door as quickly as possible.

Wow. So how quickly did you knock that down?

It took 18 months.

All right.

Yeah, it was pretty incredible.

That's amazing. So were you making those payments and saving in your retirement accounts at the same time, or did you pay the student loans off first and then start with the retirement accounts?

So in the, in the first year, we did both. And then for the last six months, we knew we would finish in that year, so then we stopped all contributions. And then for those six months, we paid down the rest of the, the debt and then. And then kind of caught up in the second half of the year. So. But we were. Yeah, we were motivated.

Yeah, sounds like it. Did you visually depict your debt in any way?

We did. We had a whiteboard and we kind of changed it monthly. And so we just kind of watched. We kind of watched it. Watched it decrease. And. Yeah, I mean, when you're making. We were making 20 to 30 thousand dollars in payments per month. And so, I mean, it was. It was tangible and it was moving. So, yeah, it was very nice.

That's amazing. Did you guys have any kids?

No, we were living in a one bedroom and then we did have one baby. We have one baby and she was brought into that apartment. She lived there for about six months. And then that was a lot of motivation to get that house payment in, that down payment. And then we moved to the Bay Area to be closer to family and. And get some help with her and. And have a bigger. Bigger place than a one bedroom.

Lovely. Lovely. Yeah, that sounds very much like my story, too. We did the same thing. Sometimes just geographic arbitrage means moving closer to family, you know, when you have young kids so you can save a little bit on daycare and, and babysitting costs.

Yeah, yeah.

Well, wonderful. So you were living below your means. You were geographically arbitraging in some ways. You really knocked down your loans really fast and you paid off that debt. And you were investing at the same time into your 401ks and then sounded like also into a brokerage account. And it sounds like you were doing all the things that successful people do with their money. Are there any secrets to your success that we've missed?

No, I mean, I think the main one is that, you know, coming out of residency, these. This debt can feel like a mountain, but really, you know, living like a resident created this really big cash shovel that we were able to kind of tackle that mountain with. So, yeah, living below your means and, you know, paying down debt was actually super motivating. I don't think that we could have made those same payments into the market to build wealth in that kind of way. So we really use that motivation of not being able to invest or not be able to buy a house or a car to kind of move that needle. And then really, I mean, it was pretty eye opening to me that we didn't need that much more to justify not going for pslf. I think that was a major motivator, was once we made that decision that was. We really had to get rid of it then.

So that's a really big decision. So you looked at the benefit of getting your $350,000 in student loans forgiven over 10 years, of making a lower salary, most likely in a PSLF eligible job, versus going into the private sector making $40,000 a year more and paying it off really quickly. You ran all of those numbers.

Yeah, yeah.

Nice, nice. Yeah. And then you have the untangible benefit also of not being tied to a PSLF sector job for 10 years, having that freedom to kind of do what you want.

It actually ended up being harder. I mean, we. It was very freeing. I actually, I mean, I've had two jobs now, and in both those processes, I still have not even interviewed for a PSLF qualifying job. So I think, you know, I didn't realize that before that decision was made, but. But I think it would have been. It would have been harder and it would have limited where I could have gone. So I'm glad, I'm glad I had done what I'd done. Yeah.

Okay, Peter, so it sounds like you and your wife have a really good head on your shoulders. You made all the right decisions and made some really responsible choices with your money. I want to ask you, do you think your upbringing affected your, the way you manage your money at all? Are you both from families that are also very responsible with money?

I do think that we both come from responsible families. I mean, I grew up in a household with two working professionals. We didn't really talk about money, but they also didn't have a ton of debt, but didn't really know much about investing. And then, and then my wife's family, they, they were, you know, pretty risk averse in terms of debt. And, and that's, that's where she was introduced to Dave Ramsey. And then that's where that came into my life. So.

That's awesome. Yeah. Dave has some really good advice. And you know, honestly, when you, when you listen to him, it's so motivating because he's just so into his message of being debt averse and paying stuff off. And you know, when you're initially in that ph, like, it's so good. My husband and I listen to it all the time too. Of course his tax, you know, his investing advice is not quite geared towards our, you know, it's not the best, but that's okay. You know, I think there's a lot of good stuff to be learned from there and a lot of us get a start on money management by listening to his, you know, his stuff and his books and all of that.

Yeah, yeah. I had read Jim's book and I had absolutely loved it and I thought it was kind of the end all be all. And then she introduced me to Dave and all of a sudden it was like a very, like a very big debt thing. And then, you know, and then us being on the same page for that was really helpful and like, you know, to start a marriage by identifying a goal like that and working together, you know, was, was really satisfying. So. But you know, we did, we did contribute to 401k. So we weren't, you know, we weren't doing the full day ramp the spiel.

Yeah, yeah, that's great. It was balanced. And that's, you know, what the point you bring up is so important. To work with your spouse and have a shared goal and then early in your marriage really annihilate debt like you did and identify those spots where you can save money. It's so, so powerful for the rest of your life. Right. Because you've learned those lessons on money management that you needed to like very early in your career. So that's awesome. What Advice would you give someone, someone that's just like you, that's in, you know, just graduating or just starting residency, what would you tell them?

You know, I would just reiterate that, you know, it feels overwhelming when you come out, but, but really living like a resident and below your means is, is going to be a powerful tool towards this and, and just keep chipping away. And you know, that's, I mean, I think that's the biggest thing is live, live below your means.

Love that. What are your next financial goals?

Yeah, so we actually just finished redoing our backyard, which was kind of the first big money that we got to spend of our first time. We got to really use that income, which was like a lot of fun. And now we have the backyard of our dreams, which is great. And now, you know, with this bear market, we're gonna just kind of try to, try to add to some, to some stock savings and maybe regain that millionaire status and then go from stay the course.

I love it. What a wonderful lesson to learn. Live like a resident, learn the money management skills that you need and then you can enjoy life too. It's just a little bit more, just delay just a little bit, delay gratification a little bit and it really pays off. So thank you so much, Peter for being here.

For sure. Thank you.

What a wonderful story. I love stories like that. With Peter and his wife working together. A few takeaways I had from that, from their experience. I really loved how they ran the numbers when he made the decision to not go for PSLF and paid off really quickly. You know, instead of kind of gestalting it, they were really numbers focused and you know, a lot of us can relate to that. The math in the end counts and matters a lot. They were also running the math on their monthly budget and doing the monthly budget meetings and working together. They had a visual representation of their debt and they really used that to motivate them to work together, make some difficult choices initially. And they lived below their means, but it's not like they were depriving themselves. They still had a nice wedding, they traveled, they had children or a child and they were still living their life, but they were just living slightly below their means and they made such great progress. They paid off all their student loans and now they are millionaires together. And that's the beautiful part of it. The whole family benefits and they continue to work together, continue to run their budget and make value based decisions about their spending. Such a powerful thing. Sounds easy. It's difficult to implement, but it's incredible life superpower when it comes to making the decisions that that benefit our families in the long term. And also they did actually inflate their lifestyle a bit. They moved closer to family, they bought a bigger house, they redid their backyard and are also enjoying their life now and you know, inflating their budget just by a little bit in order to continue to meet their life goals and their value goals. So kudos to them and I'm so glad to have them here.

Still not sure what to do with your student loans? Overwhelmed with how to tackle that giant debt in an ever changing political climate, the experts@studentloanadvice.com are here to help guide you through the best options to manage your loans. Our experienced staff have consulted on over $250 million in student loan debt and the averagestudentloanadvice.com client has saved over $190,000. You will receive a customized student loan plan using the principles of the White Coat Investor. Get answers to all of your student loan questions, gain clarity about your financial future, and start down the right path toward financial freedom. Book a consult today@studentloanadvice.com you can do this and the White Coat Investor can help.

We know what you do is really hard. Guys, thank you so much for the important work that you're doing. Thank you for listening to this podcast. Keep your head up, shoulders back. You've got this. We can help. Have a great day. 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.