MtoM #89 - Pediatric Hospitalist Pays Off $270,000 in 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 89. Pediatric hospitalist pays off $270,000 in student loans. This is the Milestones to Millionaire podcast where we feature you and we feature your accomplishments. We want to celebrate with you if you've reached any sort of a financial milestone. Whether it's paying off a certain amount of debt, whether it's building a certain amount of net worth, whether it's becoming financially independent, whether it's buying a car with cash, whatever it might be. We want to celebrate with you and use your experience to inspire others to do the same. But we need your help to do it. If you don't apply@whitecoatinvestor.com Milestone we're not going to have any guests on this show, so make sure you do that. We'd love to have you on and share your experience. If you're finding our podcast informative and helpful, we would encourage you to sign up for our monthly newsletter. It is totally free and includes useful, actionable information not available on the regular blog posts or this podcast. It's almost like being in a secret club. The kind of club that can boost your knowledge and enhance your wealth at the same time, with no strings attached. Sign up today@whitecoatinvestor.com Newsletter. You can do this and the White Coat Investor can help. By the way, we're trying to give away hundreds of thousands of dollars worth of books. This is a program we call the White Coat Investor Champions program where we try to give a copy of the White Coat Investors Guide to Students to every first year medical and dental student in the country. This is our third or fourth year doing this and so far we have never been 100% successful. We have never gotten this book into the hands of every single one of those students. And the reason why is because we haven't had a volunte champion from their class willing to pass out the books. This is super easy, right? This is no big deal. All you gotta do is hand the books out, we send you a box of books, you pass them out to your classmates. That's it. No more commitment than that. And if you do that, you know, we'll send you a T shirt and some swag in addition to, obviously a copy of the book for you. So if you are a first year medical or dental student, or if you know a first year medical or dental student, please encourage them to apply@whitecoatinvestor.com champion to be one of our champions for this program. This is a great way to boost financial literacy among professional students right at the beginning of their careers. And it's probably, I think, the most important outreach program that we have here at the White Coat Investor. More important than our Financial Teacher Award that we do once a year. More important than the WCI scholarship. And we really want to make the most of it. So you gotta apply during the winter. There's gonna be a cutoff come next spring because we wanna be able to get the books to you before your Ms. One year ends. But you can apply anytime now@whitecoatinvestor.com champion. All right, we've got a great guest on here. Let's bring him on the show. Our guest today on the Milestones to millionaire podcast is Dr. Shane Raney. Welcome to the podcast.

I'm ecstatic to be here with you. As a bucket list item for me to meet the White Coat investor himself.

Awesome. Well, it's a pleasure to have you here. I'm not going to lie. I did not have you on my bucket list, but maybe I should have put you on there.

Okay. Another goal to work toward, I guess.

That's right. That's right. Well, you have paid off a whole big chunk of debt. $270,000 in student loans, correct?

Yes, sir. $270,062.83, to be precise.

Yeah, let's get it all in there because you definitely accomplished something here. Tell us what you do and how far you are out of training.

Yeah, sure. So I'm a pediatric hospitalist by training. I work down in the sunny desert of Arizona. 300 days of sunshine a year and 365 days of student loans, which are now gone. And so I work a week on and a week off, which allows for a lot of extra work. And so I finished residency in 2018, worked for an attending, as an attending for a year at my home program in Illinois, and then we moved down here in 2019. So this is my fourth year out of residency now.

So you paid them off in what, three, three and a half years? Something like that.

So when I actually got serious about it and refinanced, it was about 28 months from the refinance date to the payoff. But four years out of residency, I kind of played around for a little bit for a year.

Okay. And on what kind of income did you pay all this off?

Yeah, so I feel like we're very well compensated as pediatric hospitalists. After RVU bonuses and incentives, we make about $280,000 a year. So about the student loans in salary and then we get the RV bonuses twice a year. So that was very helpful to have that come in twice a year to be able to make extra loan payments, if you will, throughout the year.

Did you get any other help? Do you have a spouse or partner working? Did you get money from your parents? Did you win a lottery? Did you have an inheritance? Anything else? Or is this just all from your.

Earnings off me earnings? I stopped playing the lottery about 25 years ago or whatever it was. And so my wife is actually a doctor. It's a funny story. She's an OB gyn, but she felt called to stay home with the kids and now she's a full time stay at home mom. So I get to be the sole breadwinner for the family. And we just decided to go after the loans and here we are.

And she's been doing that since you were in, became an attending or how long she'd been staying home?

She's been staying home two years now.

Two years?

About two years now. She finished residency 2019, the year after I did.

So you did almost all of this on your income, it sounds like.

Yes, sir. Yeah. Very blessed and fortunate to be compensated so well.

You know, one of the criticisms I sometimes hear about this podcast is that we only bring people on here that are making $900,000 a year and just, you know, you can't do it as a family doc, you can't do it as a pediatrician. Last week we had a family doc. This week we have you on here. What's your response to these people that say you can't pay off your student loans in two or three years? It can't be done?

Well, I think it can be done, and I think I'm proof that it can be done. And like I said, I'm very, very blessed. But it's really about your mindset and about how hard you work. And I think the, the website was so good for me for that. And you wrote an article called the X Factor, and it really resonated with me about you just have to want it. There's a quote and I think one of the best movies ever made, Dodgeball, if you've seen it, where the coach tells him, you got to get angry, you got to get mean. It's the only way you can play. And so I reflected on that as far as student debt went. And I feel like I was sold a bill of goods in college and med school, and it was more expensive and I borrowed more than I should have and nobody stopped me. And that kind of lit a fire under me. Pay it off. And I didn't really feel like I was done with medical school until the debt was gone. And now I feel like I'm officially done with medical school and can move on toward the next chapter.

Awesome. That's not my favorite quote from dodgeball, though. This is. This is a cult classic. Right. It's eminently quotable. But my favorite is if you can dodge a wrench, you can dodge a ball.

Also a classic.

All right, so explain to people how you did this. I mean, obviously you got the X factor right, obviously you got your mindset right. But practically speaking, how did you pay off that much debt on essentially the same salary as the level of debt that you had?

Sure. I think that working as a hospitalist was really the best case scenario because the schedule is a week on and a week off. And so I had a week off every other week essentially to pick up extra work as I could. And a lot of that was within my own hospital system. And so I worked every job I could get my hands on for the past two years. And essentially through every bit of extra, after maxing the 401k and maxing both mine and my wife's Roth IRAs, threw it towards the loans. And I think my kids thought I was going to throw them toward the student loans. Just everything extra was, was going towards it. And so it was pretty motivating after a while to see that loan balance drop by five figures every month with all the extra money being thrown. And that was. That was definitely motivating. And, and towards the end there it was dropping about as fast as my 401k. And so I was trying to race to the finish to see which one would be a. So it would be. Would be done faster. And so, yeah, it was very motivating to see that balance drop so quickly. And so it was definitely a very heavy handed student loan approach. And we just got our hands on every extra bit of income we could and put it towards the loans. After maxing out all our retirement accounts and paying the bill, did you ever.

Feel like you were making a big sacrifice to do it, or did you feel like you could do what you wanted to do and spend what you wanted to spend, or. Or what? How did it feel to you as you went through this process?

Yeah, that's a really good question. It's something I reflect on often and I think that it was a big sacrifice in the sense that you're still living like a resident and it's definitely not glamorous, but it sure is effective. I don't feel like I deprived myself or my family of things we wanted to do. We've been on a couple of vacations this year. We went to Denver and we went to Texas and also went to New Mexico. And so we were able to do those things driving, of course, and. But I think the biggest sacrifice was in that I was gone a lot. And so my family really had buy in for this and they knew how important it was to us and so they, they bought in and I was gone a lot. And I felt like my kids were small enough that it was a good trade off at the age they were before they got a little bit older. And where's daddy going? He's always working and so wanted to get that done to begin with. And so now that they're getting a little bit older, it won't be quite as much the extra work and travel big on.

Yeah, you lived like a resident in, in more ways than one. Not only with what you spent, but in how hard you worked.

The 80 hour work weeks never end apparently. So.

Yeah, I think with the 80 hour work week in place, a lot of people have, have discovered their hours went up when they became an attending, so.

Right.

All right, so how's it feel? I mean, they're gone. How do you feel?

They're. God, it's still pretty surreal. I started getting the feeling in the last month before I made the last payment. I said, man, this is happening. It's going to happen. I feel like I'm a big basketball fan. I played my whole life. And so I feel like you do when you go in and you put in the legwork and you watch the tape and you build a game plan and you go out there and you execute and you win and it worked. And now they're gone and I'm fighting the urge to pop a bottle of champagne and spray it all over the house. That's probably going to cost a little bit more money in the long run, but. But it feels amazing. And so I think there's a lot to be said. Like you wrote about a lot on your site about the psychological aspect and so the monkey's off your back and that improves your cash flow, it improves your psyche, your demeanor. And so now you have an opportunity to do some of those other things. So it feels incredible. Still pretty surreal. I can't believe it's. Mine are gone at least.

Yeah. So what are the other things you're planning to do now, you've just freed up a huge chunk of your income to invest or give or spend or what? What are you going to do with it?

That's a good question. I'm going to take a little bit of time off, but I don't know about you, I'm ready to do it all over again for my wife's loans. So we're going to start that process here probably in a couple months. But I do plan on maxing all the investment accounts that are available and then maybe take a vacation, a real vacation, and then restart on my wife's because the interest payments are still paused. Actually, quick anecdote on that. You talk a lot about market timing and trying not to time the market, but I think I have the best poor market timing in American history or one of the best. Refinance my student loans three days before they put the interest rate at zero percent. And so perfect time.

Oh, my goodness. How painful was that to have President Trump make that announcement three days after you refinance?

It was a little bit of a punch in the face, but ultimately I said the behavioral aspect, I want it gone. And I was probably going to do it anyway. And so it ended up working out. The very fortunately chose a variable interest rate, and so it was low the whole, the whole time that I was paying it off. But it was, it worked out. It worked out. It was a little bit of a, oh, man, I made a big mistake. But it ended up working out just fine. In hindsight, do you feel bad that.

You didn't get the $10,000 that people are getting now off their student loans?

I mean, you never want to turn down free money. Right? But, but I also think that I took out the loan and I feel like I should pay it back because it's the right thing to do. It's, it's my agreement that I took out. And so I feel like it's my responsibility to pay back the money. And so I don't feel, I don't regret that I did that in hindsight.

But you're going to take the $10,000 for your wife's loan. I assume it's possible.

I think we make too much money, to be honest with you, to get the cutoff, but that's definitely something to look into.

Yeah, I think, I think, I don't think there's a cutoff on that part of it. You get twice as much if you had a Pell Grant, but pretty much as long as you have federal loans, you're pretty much getting that these days.

So I guess I can't turn down free money.

Yeah, free money is a good thing. I'd have to refresh my mind on the details. I haven't looked at it for a little while. So if that's wrong, don't everybody write me hate mail. I may be wrong. Go back and look at the post. We've actually written and double checked and fact checked on the subject, but. All right. Well, you know, a lot of people are saying, especially with inflation being high, you should carry your student loans. You should invest in something with a higher return than your interest rate. You don't believe that you paid it off. You were concerned about behavioral aspects you mentioned. Tell us about your thought process and why you decided to do that.

Yeah, that's a really good question. And I was asked it frequently and I know myself, I know that I would have gotten used to the higher salary and used to spending the money. And I just know that behaviorally that was never an option for me. I definitely still wrestle with that question. Did I do something wrong? Should I have invested in the interim? But my philosophy is why not do both? Why not max out the accounts available to you, your 401k, why not max out your Roth IRAs, both yourselves and your spouses, and then pay down the debt? Or you can do both at the same time. And I did. And there wasn't a year in the last two or three years that we didn't max out those accounts, both for myself and my wife. And so it's not as much as you could invest on top of that and some other account of taxable account. But the behavior thing was huge for me. And I know myself, I know that I would have gotten used to the attending salary and I did not want to buy a car, I did not want to buy a, a boat. I wanted student loan gone before any of those things started becoming temptations.

Now there's somebody out there like you, maybe they're a pre med student wondering if it's really a good idea to borrow all this money to go to medical school. Maybe they're an MS.1 or MS.2 that just realized how big of a hole they're going to be in. What advice do you have for that person about student loans and careers?

Yeah, sure. I don't really feel like I'm in the position to give advice, but I think that it was helpful for me. And this is what I recommend everybody to remember your why. Remember why you're doing it the way you're doing it. And for me, it was for my family, it was to free up all this income and to free up financial security later so we could do the things we wanted to do as a family. And so I wrote that down and I reflected on it frequently, almost every time I made a payment. And just remember why you're doing it. And the second thing would be to stop digging, don't take out any more debt and just start paying it off. I mean, the pediatric hospitalist can do it. You can do it too. We're in the bottom of the house in the basement of medicine. But you write a lot about inter specialty difference in income. And so it's about trying to maximize where you're at and no excuses. Play like a champion or pay like a champion.

Well, Congratulations to you, Dr. Rainey, and thank you so much for coming on the podcast and using your experience to inspire others to do the same.

Jim, thanks for having me. It was great to be with you.

All right, a lot of lessons to learn in that particular interview. I hope you enjoyed that as much as I did. You know, if nothing else, there's a little bit of background information there that makes you think and go, well, what would I do in that situation? If I've got two high earners and we want to raise a family and one of us wants to stay home, do we go both part time, one of us go part time, one of us not work at all? And obviously there are financial consequences to whatever option you choose. And so it's interesting to see that these guys, the decisions these guys have made, as well as the success they've been able to have in accordance with the decisions that they've made. So what you need to do, obviously personal finance is 80% personal and only 20% finance. So apply what you can to your life and use that information that you're now empowered with to reach what you define as success. To reach your goals, that's the most important thing, right? Investing is a single player game. It's you against your goals. It's not you against anybody else. You don't need to be the wealthiest person in the graveyard. You just need to be able to reach your own financial goals. If you're finding our podcasts informative and helpful, we would encourage you to sign up for our monthly newsletter. It is totally free and includes useful, actionable information not available on the regular blog posts or this podcast. It's almost like being in a secret club, the kind of club that can boost your knowledge and enhance your wealth at the same time, with no strings attached. Sign up today@whitecoatinvestor.com Newsletter. 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. We'll see you next time on the Milestones to Millionaire podcast. 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.