MtoM #77 - Radiology 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 77. Radiology resident gets back to broke. No more wading through dozens of books at the library, scrolling through hundreds of blog posts on dozens of blogs, or checking in daily with online forums, trying to gain a financial education the way the hobbyists do for a fraction of the price of hiring a professional financial planner. The Fire your financial advisor online course will take you from feeling anxious and having no plan to having a written financial plan. You can follow the rest of your investing career as a professional and a retiree. This course is the material that should have been taught to you in college, medical school, or residency, but never was. Fire your financial advisor also has a version eligible for CME credit. Get your financial life in order today. Go to whitecoatinvestor.com courses to sign up. You can do this and the White Coat Investor can help. All right, let's get our guest on the line here. Our guest today on the Milestones to Millionaire podcast is Ryan. Welcome to the podcast.

Thank you, Dr. Dali. Glad to be here.

Tell us, what's your specialty and where are you at in your training?

I am a PGY5, fourth year radiology residency. So I graduated medical school in 2017, about to graduate residency here in the next month.

Okay, and where are you at? You in the Northwest? The Southeast? Where are you?

I'm in California.

California, okay.

Yeah.

And what is your approximate net worth?

My approximate net worth at this time is a positive. $25,000.

$25,000. You're back to broke.

Back to broke. Very happy about it.

Congratulations. So let's divide it up. Tell people what you've got. How much you have in assets, how much you have in debts and liabilities. Where are.

Sure. So I have about $115,000 in retirement accounts. Most of that is in Roth IRAs, myself and a spousal Roth IRA, a small amount in a 457B plan here at work, and about $35,000 in cash or cash equivalents. About $125,000 left in federal student loans.

And you mentioned a spousal ira, so I assume there's a spouse to go with that.

Yes.

Is your spouse working or.

My spouse works. She's currently on maternity leave, but she'll be returning to work here in a little bit. She works in sports marketing for an advertisement and marketing firm.

So what was your net worth when you came out of med school?

When we came out of med school, we didn't have much to our name other than about $175,000 of student debt.

So minus 175 is where you were at. And now you're back to broke. So over the course you're PGY4. So over the course of four years, essentially your net worth is increased by about 50 grand a year.

Right.

Which is amazingly similar to what residents actually get paid.

Yes.

So how did you do it?

So when we first started, when I first had an intern paycheck, my wife was working. She makes. Her salary has really pretty much mirrored mine. So we always tried to live on one salary and save the other salary as best as we could. And that's worked out so far. And then I was fortunate enough in residency to have a lot of moonlighting opportunities as a radiology resident. So I did a lot of moonlighting all four years spent, especially my third year, and that really beefed up our cash inflow.

So what was the moonlighting? You went out to some hospital and read films or what did you do?

Most radiology residents do this contrast coverage is what we call it. So imaging centers around the area will hire residents to come and supervise contrast injections and deal with any adverse reactions with the iodine or gadolinium contrast. So in most places it's a state law that a physician has to observe and supervise contrast injections. And obviously radiologists at the imaging centers in most places are going home at 5 or 6pm so then residents or other trainees will take over for the rest of the evening to supervise those injections.

So you're sleeping for dollars?

Yes.

I mean, presumably you're not in there pushing the contrast. You're just in the building to meet legal requirements.

Just in the building to meet legal requirements. It's a great opportunity around the country for a lot of residents and fellows. We get a lot of studying done and other type of work done during that time.

Okay, so what about anything else? Did your parents give you any money? Did you get an inheritance? This is all money you earned, no inheritance?

Yep. This is all money from us. Both my wife and I come from similar economic backgrounds, middle class families. My dad was a general contractor throughout my life. Still works full time. He's in his young 70s now, still working full time for a general contractor. My mother for most of my life was a stay at home mom. So they raised me and my three siblings on a pretty modest incident income. My dad's income was around 70 to $75,000 throughout his career. That really hasn't changed much in several decades, according to my parents. So, yeah, I mean, this was all us. I took out loans for school. I was fortunate to go through undergrad without any student loans. I did that by working through undergrad. I worked both during the school year as well as over the summers. Then grants and scholarships also paid for the rest of undergrad. In med school, I also had some grants and scholarships that paid for nearly half of my tuition each year. Some of that was financial need based scholarship from my medical school, and some of that was grants that I applied for and received.

So a whole combination of stuff going in there, working together to help keep your debt relatively low. I mean, I say relatively low. $175,000. Still a ton of money.

Right?

But it's less than lots of people are coming out with these days. Somebody gave me a statistic that the average dentist coming out of a private dental school here in Salt Lake has $525,000 in student loans. So it certainly can be a lot worse.

Yes.

All right, so this is impressive, right, what you've done. You've managed to increase your net worth by 50 grand a year while in residency. What would you say were your secrets, other than you just, you know, saved half your income? I mean, how do you do that? How do you resist spending it? I mean, most people have no trouble at all spending $100,000 a year. That's not hard to do. How did you manage not to do that so that you could use this to build wealth?

Yeah, that really is the secret is resisting spending. My wife and I really got on the same page about that. For me, it's. I need constant reinforcement to not spend my money. I do that through financial education. I'm always listening to podcasts, reading a few books here and there, occasionally going to the Internet, looking at the blogs. But the minute that I stop kind of flooding my wife, my life with that financial education, then it goes back to, oh, yeah, maybe we could afford a new car or maybe we could upgrade our living situation. But when you're listening to that stuff on a daily basis and you're listening to other people that are going through the same things as you and other people that are down the road from you and have achieved some sort of financial success, it's really a lot easier to have your goals in mind on a daily basis because, you know, the decisions to spend money are daily. So that's kind of what we've done. Podcast is definitely my go to. I listen to your podcast religiously twice a Week and then several other financial podcasts out there on the market that I've liked, both geared towards physicians and also non physicians.

Now everybody with debt has to struggle with a question which is, do I pay on the debt or do I invest? Where did you end up with that? How did you wrestle with that and why did you come to the decision you did?

So we're still looking at that question and reevaluating as time goes on. We our financial plan was very simple to start with. As an intern, we wanted to max out our Roth IRAs, hers and mine, $6,000 a year or whatever that comes to be depending on the year. And we invested those very simply. We just put them in target date retirement funds, and that's the most simple thing we could do. And so far that's worked out great for the past five years. And then regarding the debt, you know, I've been paying down my student loan with anything extra beyond what I've maxed out my Roth IRA with. So we paid off our car loans, so we own both of our cars. And then now what we were paying towards our car loans, $500 a month, we've just been putting towards the student loan.

Now you mentioned a 457 or something earlier as well, didn't you? How'd that come along?

So that's through my employment. It's a governmental 457 plan that they offer for the residents. There's a small match there. I think it's like 3%. So that's over four years. That comes out to be about 20 grand if you just put in enough to get the match, which is what I've been doing.

You basically didn't want to leave your salary on the table there.

Yeah, exactly.

Okay, so how about your upbringing? You mentioned your parents, did they teach, teach you about money? How'd you learn about money?

My parents were exceptional with money in the sense of budgeting and frugality. I never felt like I wanted for anything. My friends were all in similar economic backgrounds as me. We obviously weren't driving new and fancy cars on the salary which my parents had. But we went on family vacations. A lot of those were camping, backpacking, national parks. So they taught me a lot about saving, budgeting. My mom is kind of the person in the household that does a lot of the books. And I remember when I was nine, I think for my ninth birthday, she took me to the bank and we bought paper savings bonds. And I still remember vividly her giving me the bond and saying, if you hold on to this. At some point, this is going to be worth twice the amount that you paid for it. And as a nine year old, I was like, oh my gosh, that's incredible. When I'm 16, I'm going to cash this in and buy a new car when I'm old enough to drive. I actually still have those paper savings bonds. I haven't cashed them in yet. My mom has them in a drawer somewhere. So they taught me a lot about saving, not so much about investing. I didn't know anything about retirement accounts, stocks, bonds, nothing like that until really I was like an intern. And I started, you know, I started with your book was the very first thing. I had a financial advisor at my medical school. As I was graduating, he handed me a copy of your book. And that's how I got started, really, with that type of financial education.

Awesome. Well, there's someone out there that's just like you were four years ago. They're coming out of med school. Their net worth is minus 100, minus 200, minus 300,000. What advice do you have for them.

Besides what we've talked about already? For those with spouses or other partners? For us, it was really good to start with the end in mind. Sometimes it is hard to get on the same page about your spending priorities. And there's this idea of, we're young and healthy now. We should be spending our money now while we have the chance to enjoy it. But also, you know, we have goals in the future. So what we did is we kind of sat down and several times we sit down and we kind of look at where do we want to be in 30 years from now? Where do we want to be in 15 years, 10 years, 5 years? And then we come up with a road plan to reach those goals. And it's much easier to say, you know, by the time we're 50, I don't want to be, you know, tied to work. I want to have the option of and flexibility of working when and how I want. So in order to get to, you know, financial freedom by age 50 or whatever it is we decide on, there's a certain amount we have to save and a certain amount we have to invest and a certain plan that we have to follow in order to reach that goal. So that's kind of what we did. And I would definitely recommend that for others that have spouses or partners and you're trying to get on the same page with where your money's going.

Awesome. Run the numbers, have a plan that's good advice. Well, thank you so much, Ryan, for coming on the Milestones to Millionaire podcast. I know there's somebody out there that'll be inspired by your story and hopefully get back to broke without even finishing training.

So.

So congratulations to you and thank you so much.

I appreciate it. Dr. Dali, big fan. Thank you for having me.

All right. Always good to have a resident on here back to broke. It's, you know, kind of the first milestone. You haven't yet paid off your debt, but you've acquired enough assets to at least offset it. And I think for most people, you're probably in attending by the time you make it. So if you can get back to broke as a resident, I'd say you're ahead of the game. But a few lessons to learn there. 1. Maximize your income. 2. Save a bunch of your income, right? Even as a resident. Granted there's two incomes here. You can save a lot of your income. That's the average American household income is what a resident makes. So you can certainly save something during residency. I don't expect anybody to get rich during residency, but you ought to get in the habit of saving something. And of course take care of the other important financial things that need to be done during residency, such as having a plan for your attending income when you hit that, having a student loan plan, getting your disability, and if anybody else depends on you life insurance in place, you got to do those major things. But if you can save something and start investing as well, you'll be that much further ahead. Especially if part of your salary depends on putting money into a retirement plan. Always make sure you get any match available to you. No more wading through dozens of books at the library, scrolling through hundreds of blog posts on dozens of blogs, or checking in daily with online forums trying to gain a financial education the way the hobbyists do, for a fraction of the price of hiring a professional financial planner. The Fire your financial Advisor online course will take you from feeling anxious and having no plan to having a written financial plan. You can follow the rest of your investing career as a professional and a retiree. This course is the material that should have been taught to you in college, medical school, or residency, but never was. Fire your Financial Advisor also has a version eligible for CME credit. Get your financial life in order today. Go to whitecoatinvestor.com courses to sign up. You can do this and the White Coat Investor can help. If you'd like to be on the Milestones to Millionaire podcast, you can sign up@whitecoatinvestor.com Milestones until our next episode. Keep your head up, shoulders back. You've got this and we can help. 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.