MtoM #96 - Periodontist Pays Off $780,000 of Debt

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 96. Periodontist pays off $780,000 in student loans.

Love what you hear on the podcast. Looking for more great white Coat investor content? Head over to our YouTube channel where you can watch video recordings of our podcast, short snippets of financial tips explained succinctly by me and others, and deep dives into topics for more in depth learning. You can even learn all about real estate with webinars from our real estate partners. Check out all this and more@YouTube.com TheWhiteCoatinVestor. You can do this and the White.

Coat Investor can help. Now, we have a pretty special guest on this podcast today who's accomplished something absolutely remarkable. Now she's going to stay anonymous. Even if you go to the YouTube channel and watch this, it's not video, it's just audio today. But I think a lot of you, particularly those of you in a lot of trouble with student loans, are going to find this pretty inspirational. It's really about the power of personal finance, working together with a partner and just really focusing and awakening to financial literacy and then applying that with financial discipline. Let's get her on the line. I think you're going to enjoy this podcast.

Our guest today on the Milestone to Millionaire podcast has done something very paying off a very high student loan burden. I want to welcome you to the Milestones to Millionaire podcast.

Thank you so much for having me.

It's wonderful to have you on here. Let's start with you just telling people about what you do for a living.

I'm a full time periodontist and I'm a little shy of six years out of my training.

Okay. And tell us about your student loans.

I'm not sure if I'm the highest, but when I graduated my Residency, I was $780,000 in debt.

Wow, $780,000. It is not my record. My record is 1.1 to 1.2 million. I think that was an orthodontist who kind of let the loans ride for a while afterward. I've certainly seen two doc couples that have been over a million dollars before, but. But clearly 780 is pretty far out there. You know, I don't know how many standard deviations that is away from the mean, even for a dental specialist, which typically have the highest student loan burdens anyway. But it's a big debt.

Yeah.

How'd you feel when you Came out of training and, you know, added that up and looked at it.

I think I remember most the day when you graduate and you have to sign a bunch of paperwork and they sit you in a room and give you an envelope with all your loan information. And I felt completely overwhelmed. I was pretty naive, I think, in regards to finances. Naive in the sense that I thought the stock market was just something rich people put their money in. So I really had no education on the finance front. I really was just hyper focused on my goal and my training. And because I took out the max amount of loans for my education and living, the interest rates really compounded, especially during my three years of my residency program.

Yeah, clearly no dental school costs $780,000, but with time, debt grows.

Yes.

What about your residency? Did you get paid during residency? Did you have to pay tuition during residency? Was it neutral? How did your residency work financially?

Yeah, my residency was neutral, so I did not have to pay any tuition, which was a big win. I did have to take out for living, but I was in a relatively low cost of living area. So I believe for my three years, I took about $25,000 or a little shy of that a year to live off of.

Awesome.

All right, so you paid off $780,000 five years. I mean, do you have any idea how inspirational this is going to be to someone who's in the situation you were in five or six or seven or eight years ago? I mean, this is an incredible accomplishment you've done. Clearly. Part of the story, though, I assume is going to be a story about income. Can you talk to us about how much you've made over the last five years, what your range of income has been since you came out of your residency?

Yeah, so I had a pretty big range of income. My husband is not in the medical specialty. He's actually an engineer. So we needed to be in more of a metropolitan city for him to work and be close to an airport. So that kind of led us to work in kind of a northeast city. And I really struggled to find kind of a full time associateship position. So what I ended up doing was kind of work in certain practices, certain days a week, and traveled around quite a lot to fill the schedule. My first year of work, I struggled to make 150, 160,000. And the biggest struggle that first year was, you know, when your loans start to kick in. You know, I couldn't even pay back, you know, a 10 year, the 10 year payment if I wanted to pay it back in 10 years, I couldn't afford that. So it kind of hit me. I had to go to income based repayment, which, for the amount of debt that I have, really didn't even cover principal. So that was pretty stressful. I looked into refinancing, but initially I was not approved to refinance because my debt to income ratio, they said was not favorable, which I understood, but. So that was kind of. I struggled. I definitely. It was a little depressing. I was working as hard as I could trying to see patients. But, you know, those first couple of years, you're kind of low man on the totem pole again, especially as a dental specialist. You have to get out there and win referrals, and you also have to treat patients well and build a reputation. And those things just take time. And you also have to get used to working in a private practice. Certain practices are run better than others. So I definitely. I think the first two years I learned a lot about what I liked and what I didn't like, and then realized in order for us to probably pay this debt off and for me to have a little less stress in my life, to consider moving to an area that had a little bit less competition and more need for my specialty. So that's what I ended up doing. We interviewed or I interviewed for about six months, and we moved to the Southeast. It was a big life change for my husband and I. We moved right before kind of the COVID A year before COVID really kind of hit. And it was the, hands down, the best decision I could have ever made for me professionally. So that first year when I moved to be an associate down here, I made about 300, so about double what I made up north. And then after Covid and things settled down a bit, I actually bought into the practice. And that obviously really helped to kind of increase my monthly take home. I know some people might give me negative feedback and say, you know, you went into more debt to pay off debt. But the way that our partnership was structured, it just made the most financial sense for me.

Yeah, I think so. Now makes a lot of sense for a lot of dentists. You know, it's crazy if you're sitting there with a $500,000 student loan and $500,000 mortgage, and then you take on, you know, a $500,000, you know, practice loan to buy into a practice or whatever, you know, it does feel crazy. But when it doubles your income, it makes sense.

Yeah. And so then after that, after I became partner, my first year of partner, I made just shy of 500, and I'm probably on track to do about 600 or 650. Just depends on how many Fridays I want to work.

Yeah, but it's not like you're making a million and a half. Here's more to this story than just an income story. Especially it involves your partner having some professional changes. Did he start working remotely or just get an entirely new job or what happened there?

Yeah, so luckily he was able to maintain his role with his company. But, yeah, it was a lot of conversations, a lot of sitting down. But Covid kind of, I guess, was positive in his profession because it moved, made everyone remote. So he's now a remote worker and still works for the company. And so that was really a big blessing that we had. So he maintains his job and his take home. You know, combined, we probably make about, you know, 850 per year. But really what we tried to do is live off of one income and more or less, once I was able to refinance, I did that immediately and just lumped together my high interest loans. Like anything that was approaching 8.5 or even 8.6% just kind of went dumped into a big bucket. And so for the, you know, three years that we paid it down pretty heavily, I was basically paying about 12,000amonth in student loans. So anytime I had leftover income, anytime I got any type of disbursement from, like, after paying taxes of our quarterlies, I just threw that money into the debt.

Yeah, I mean, at the beginning, $800,000 of debt at, you know, 8% or 7%, this is $60,000 a year in interest.

I know.

Just to cover the interest.

Right, I know.

I mean, that's five months of $12,000 a month payments just to cover the interest.

It's. It's insane. And, you know, luckily, I think, you know, you talk about it a lot, the geographic arbitrage, but it definitely can really help. I think you do need to like the area you want to live in. And luckily we're getting used to it. It's different, but we're on the coast and the weather's pretty nice, so I can't complain. But it was a huge life change, especially for my. My husband, who's not, you know, I think had to have more of the change than I did.

Yeah.

So, I mean, how much were you living on?

So we really, I would say, didn't we live like residents? I probably still, like, live like a resident. I still have the same beater car that I had in residency. Same with My husband. So we lived off of. We rented. I'm trying to do the math in my head really quickly. We stayed renting for a while, so monthly, just living. We were probably shy of 5,500amonth, and that included rent and all our utilities and kind of, you know, expenses. Grocery shopping, et cetera.

Yeah, you lived like a resident.

Yep.

And you paid off $780,000 in five years. How's it feel to have that monkey off your back?

At first didn't feel real because, you know, sometimes it felt like Monopoly money. I know that sounds probably really strange to people, but sometimes you just. You don't. You can't even fathom kind of what you did to yourself. It's only the stress that starts to build when you really realize, oh, you know, I really need to make sure I get a plan together now. It just feels quite liberating. I would say that I enjoy practicing a lot more. I'm not as obsessed about the schedule or trying to work extra hours or work Saturdays. I'll still do that if I need to help a patient. But I feel like I can really focus and just enjoy my skill set. And I think it just gives me a little bit more longevity for burnout, because I think burnout is also something that you. You learn when you're initially practicing and getting on a residency, and that's like a whole nother podcast. But, yeah, I'm learning kind of where my cutoff point is, you know, what makes me happy to work, what money I enjoy. But there comes a point where you work so hard that you don't even get to enjoy the fruits of your labor. So I'm just trying to figure out what works best for us.

Yeah.

For a long time in this process, it doesn't sound like it was entirely clear that this was going to work, that you were actually going to win. At what point in this did you realize, this is going to happen? We're going to get it paid off. When did that happen?

I think it was my first year of the partnership, because obviously, you can structure a partnership a lot of different ways, but we paid ourselves kind of a managerial fee every month, and then we would basically rely on the distribution after I paid taxes, which, you know, that's a shocker for anyone for small business owners, but I paid my taxes, and then, you know, I had a good lump of money. You know, sometimes, you know, an extra 30,000, and I just started throwing it at the debt. And then obviously, that built and built and built. My husband, too, was able to vest a little bit of stock so that also he contributed some towards the end, about 100k of stock that, you know, he has built that we have together. So it kind of made sense for us to use that before the market started to change. But yeah, the light at the end of the tunnel was really when you just start to see the numbers go down. And my next goal is to kind of work on, I would say savings because definitely I tried to save as much as I could, but I was really just focused on any of my income. Went to debt.

Yeah.

Do you feel like you just got lucky or do you think that anybody could have done what you've done to.

Get rid of this debt?

Yeah, I mean, I think a bit of luck comes into it just in the sense that we moved to an area we didn't know. You know, we went into a practice. I didn't really know, you know, the person that well, and I just trusted my gut and kind of went where I thought I'd be happy. And I think that if I had stayed where we were and tried to make it work and tried to work harder, I don't think I would have. I think I would still have the majority of that debt. It's just so much harder to practice in a city. So I think that sometimes you just got to pull the rip cord and make a big life change. And I think what I learned is just that if you're ever not happy, you know, it's okay to change. You know, your first job coming out of a residency doesn't need to be your last and only job. I think a lot of us think you got to find your forever practice right away. But you know, I think it's normal if you look at other disciplines, you know, you work in a couple different jobs with a couple different companies before you find your way. So I definitely think I am too, I would say a hard worker. So for me, you know, I'm completely fine working six days a week and just kind of hammering away and I can live pretty simply, you know, I'm pretty an easy person in regards to what makes me happy. Usually being outside makes me the happiest.

Yeah.

Okay, so imagine there's, you know, a pre dent student coming to you that says I'm gonna have to borrow, you know, 90 grand a year to go to dental school. Or maybe it's a fourth year dental student that, you know, already owes three or four hundred thousand dol and, and wants to become a periodontist. What do you tell them?

I think I would definitely try to be honest with them and just, you know, kind of. It would be great if someone had run the numbers for me a little bit more. I was so naive and like I said, just hyper focused. So I think I would just share with them. You know, this is what you can expect. It's also really helpful to start to understand, you know, what your monthly expenses are going to be or what, you know, you're going to live off monthly. I didn't know how to budget at all. So I've learned that along the way and your podcast has really helped me do that. But definitely making sure they're at least a little bit aware of what they're doing. At the end of the day, you got to do what makes you happy. So I'm a big believer. I'm really happy. I don't regret my education at all. And I would do it all over again because I think it put me in a position where I can help people and my craft is always going to be needed. So I would just tell people to kind of follow that dream and maybe be do a little start listening to the white coat investor before they start their trading.

Oh, man, you have done something pretty awesome and I congratulate you on that. This is fantastic work the two of you have done. Really putting all your resources into it, being willing to move, you know, cashing out what, you know, money that he had and obviously a lot of his income went to it. You guys didn't even live on just one income. You lived like residents for five years and knocked this out. And I'm really proud of you. You've awesome. And I know your story is going to be so inspiring to other people that are, that are sitting in that position. There is somebody that has just come out of a dental residency listening to this podcast and they owe 600,000 or 700,000 or $800,000. What advice and hope can you give that person?

Yeah, so just take it day by day. I think it's really easy to get overwhelmed. I'm probably an anxious person. So you know, that type of anxiety, the best way to, I think, fight it is just to make sure you kind of look, you're objective. You just come up with a logical plan. Lifestyle, inflation, just don't do it. You know, it's really, I think you got to look and pick three things that make you happy. And if those three things really increase your happiness, then spend money on them. Absolutely. But a lot of stuff I think docs get into trouble is, you know, kind of buying the house and buying the cars and buying all these other things and, you know, take it, take it easy. It's okay that you don't have everything right away. And sometimes keeping your life simple is a little easier than, you know, kind of adding all the other expenses and taking care of things that come with, you know, buying nicer things. So I would just say day by day and just trust yourself that, you know, even if it takes you 20 years or 10 years or whatever your plan is going to be, as long as you get a plan together and stick to it. You know, the math, easy to follow. And this is coming from a person like, I'm terrible at math. I'm terrible at spreadsheets. But it can be done. You know, you can make it approachable.

Yeah.

Now, initially you were turned down for refinancing, but at some point along the way, a company decided they were going.

To, you know, take.

Take the risk of refinancing your debt. At what point was that?

So that was my first coming into like, we were negotiating the contract for the buy in. So that was right after about like 2019. But I had all the documents to prove my income. I should also probably say too, you know, me and my husband, we got married, you know, also at 2019. So it kind of freed up some of the discussion before, you know, he would have had to been a co signer and just certain discussions that didn't sit well with us. We wanted to wait till we were married to kind of make sure that we committed for that debt. So that helped too. But yep, it was right going into that partnership year that I got approved.

I almost kind of wish I had him on the podcast so I could ask him this question. But I'll bet you guys have had enough conversations that you can answer for him.

Sure.

How intimidating was it to marry into this debt? What do you think he would say?

So he was somebody who's really into fire financial. Yeah. Independence, retire early. I had no idea what that was. And if Dylan didn't marry me, I would say he's probably would be living in an rv, retired, traveling around the country. That's kind of mountain biking. That's. That's probably what he would love to do. But, you know, I think initially he was really intimidated. It's scary, right? You know, you have something that's looming over you, and he was financially already pretty much on track to be set, and I've definitely delayed that from a retirement standpoint. So, you know, I think that that just shifted a bit. I think that he will say, though, the best thing we ever did was move, was move. So just realizing that it wasn't going to happen up north and being open to kind of moving, you know, I'll always be super thankful to him because I don't know where we would stand if we still had stayed kind of in that saturated city.

Yeah, well, his sacrifice, your sacrifice, is now being rewarded. You guys have an awesome income. You've knocked out this debt. You have at least $12,000 a month that have opened up that you can do whatever you want with. I think it's probably much more than that now at this point. Then that's a pretty awesome place to be. So congratulations to both of you on your success and thanks so much for coming on the Milestones to Millionaire podcast.

Thank you so much for having me.

All right. Wow. That was gotta be one of my favorite podcast episodes ever. I hope you found that as inspirational as I did. And I think this one people are gonna look back on going, you know, I've only got $350,000. I heard someone that took care of 780 and just make it feel a whole lot more possible to do it. Yeah, it took some geographic arbitrage. Yeah, it took a partner helping out. But you know what? Five years living like a resident. Five years, it's gone. Even an astronomical amount of student loan debt, it can be done. You can raise your income. You can refinance. Eventually you can dedicate a huge chunk of your income toward eliminating those student loans.

You can do this. Other people have done it.

You can do it too.

Love what you hear on the podcast. Looking for more great White Coat Investor content? Head over to our YouTube channel where you can watch video recordings of our podcast, short snippets of financial tips explained succinctly by me and others, and deep dives into topics for more in depth learning. You can even learn all about real estate with webinars from our real estate partners. Check out all this and more@YouTube.com thewhitecoatinvestor you can do this and the White.

Coat Investor can help. All right, thanks for being a podcast listener, for being a subscriber telling others about it. We really do appreciate it and we'll see you next time on the Milestones to Millionaire podcast.

The hosts of the White Coat 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.