MtoM #97 - Doc Pays Off $360,000 of Student Loans and Hits Millionaire Status

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 97. Did you know that the White Coat Investor not only has a podcast and a blog, but several books that will help you on your way to financial independence. These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances early in your professional journey. Find the book that is right for you at the wci store@shop.whitecoatinvestor.com or or on Amazon. You can do this and the White Coat Investor can help. Welcome back to the podcast. I hope this makes your Monday mornings on your way into work a little bit easier to tolerate. Although I know lots of you like me, work weekends and evenings and nights and holidays as well. If you'd like to come on this podcast and share your financial milestones, we'd love to have you. You can apply@whitecoatinvestor.com Milestones and I don't care what the milestone is. I don't care if it's that you bought a snowblower for. We'll celebrate your accomplishment with you and use it to inspire others to do the same. So whether your milestone is getting back to broke or becoming a DECA millionaire, you are welcome on this podcast. And there's someone else just like you out there that would benefit from hearing your story. We've got a great doc on today. It's one half of a two doc couple and they have actually accomplished two milestones that are worth celebrating today. Let's get Carrie on the line. Our guest today on the Milestones to Millionaire podcast is Kerry. Welcome to the podcast.

Thanks for having me.

You've accomplished not one, but two awesome milestones. Congratulations.

Thank you.

You have paid off $360,000 in student loans in five years. That's pretty awesome. And I understand you've also become a millionaire.

Yeah, yeah. I just calculated my net worth this week and realized we hit the million dollar mark.

Well, that's pretty awesome. In a year when a lot of assets, housing, stocks, bonds are down to have hit a net worth milestone. That's Pretty awesome.

Thank you.

All right, well, let's talk a little bit about you. Tell us about your specialty, how far you are out of training, and what part of the country you live in.

So I'm a physiatrist, which is physical medicine and rehab, and I'm about five years out of training.

Okay. And in the West Coast. East coast, Midwest.

I'm in North Carolina.

North Carolina. Okay. And tell us a little bit about your. Well, let's start. Let's start with the student loans. How much did you owe when you came out of medical school? Do you remember?

I think it was about the $360,000. I think my payments and residency just kind of took care of the interest.

And then. So you owed about 360 when you came out of residency as well?

Exactly.

And how'd that feel to know you owed, you know, not quite half a million dollars, but it rounds there. Right. How'd that feel?

It was really overwhelming. Yeah. That's a lot. I know. When I was done with undergrad, I only had $9,000 in loans after going to private undergrad school. So that was quite a difference for me.

So was this stressful? Is this something you were laying awake at night worrying about, or did you feel like you had a good plan for it?

I was pretty stressed out about it until I found out about the white coat investor my last year of residency. So I knew either I had to do pslf, which my husband is doing, or to do refinance and pay it off. So once I had a plan, I felt a little bit better about it.

Okay, so tell us about the plan. What was the plan you put in place originally and did it change as you went through?

Yeah, so at my graduation, I decided to be an independent contractor. So I knew that I wouldn't qualify for pslf, so I actually made the minimum payments for, like, a year until I decided, okay, now I really need to do this. So I refinanced, and I got a lower rate for my interest rate, and then I refinanced again a couple years later when the pandemic hit, and I got a really low interest rate, and I would just put all of my income towards my 401 and Roth IRA and taxes and loans. So that was my plan.

And it's pretty much what you did, it sounds like.

Yeah, I stuck to it. My income varies a lot as an independent contractor. So, you know, the year of COVID I quit my job, so I wasn't paying very much toward it. But then this last year, I'M doing full time locum, so I just knocked it out.

Very cool. How much of it did you think you paid off in the last year?

I probably paid off about half of it.

Half of it in the last year? You really accelerated at the end.

Yeah, I did, yeah. Because, you know, a couple years there, I didn't make a whole lot. It was really important for me to max out my 401k at the time, so I could have put more money towards it then. But, you know, you only get so many years to max out those tax advantage accounts.

Yeah. So was it more just a function of the income, or do you think you started seeing progress? It was like the horse smell in the barn and started going crazy paying off the loans?

Yeah, I think once I saw progress, I knew the end was near. I just had to finish it out. There was no going back.

Very cool. So, I mean, you had refinanced a couple of times before the pandemic hit, but how did you feel when all the people that still had federal loans, their loans went to 0% in March of 2020?

Well, I felt pretty jealous. I mean, I wish I would have zero percent on my loans, but, you know, I had refinanced for a variable rate. I started at about 2% and it went down to 0.34%.

So it's pretty close to the same thing.

It was almost zero percent, but also my husband's a physician as well, and he's going for PSLF, so he's getting the 0% right now, which is great.

So your family's kind of got the best of both worlds, it sounds like.

Yeah, yeah, yeah.

Very cool. Okay, so let's turn now a little bit toward the other milestone. What's your net worth now that you just calculated?

It's right at a million, right?

About a million. What does that consist of? How much is home equity versus retirement accounts versus other investments, et cetera?

Yeah, so all of my assets, it's about 1 million, 65 million. That includes our 401ks, Roth IRAs, home equity and cash, and some syndications as well. And then our liabilities, we have about $425,000 for our mortgage. And then my husband owes about $200,000 for his student loans.

That's it. That's all the debt. No car loans, no credit card loans, nothing else?

No, no car loans. Yeah, we don't need to do that now.

It sounds like your income's varied quite a bit over the last five years. Did he come out of residency the same Time as you.

He's a year ahead because his residency is three years long and mine's four.

Okay. And you know, what's the range of combined household income you've had over the last five or six years, do you think?

It's been about 600,000 is the average. Hugh's pretty consistent, making about 350,000 a year. And then mine has varied between like 140,000 a year to 500,000 a year.

Okay. That's pretty darn good income as a PM&R doc. Sounds like you're working hard at all those locum gigs.

Yeah, it's feast or famine for sure.

Yeah. Very cool. So, I mean, you guys have done pretty awesome. I mean, million dollars already five years out. You started quite a bit in the hole. How much do you think he owed when he came out of training?

He owed about 250,000.

Yeah. So you guys started, I mean, $600,000 in the hole. So you've had a net worth swing of 1.6 million over the last five years. How'd you guys do that? How'd you do it?

Well, you know, as you say, live like a resident. You know, I found out about the white coat investor my last year of residency. So we knew that we couldn't grow into our income right away. But, you know, we're just kind of gradually growing into our income, making sure to invest a lot of our income, you know, raising the tax advantaged accounts like 401k and doing the backdoor Roth, and we just. Yeah, we don't spend more than we need to.

How much do you guys think you spend in a given year?

I think it varies. We probably spend about maybe 120,000, about $10,000 a month.

Yeah, there's a big difference between your income and $120,000, even after paying the taxes on it.

Right. So we've been saving a lot and putting a lot towards my loans.

All right, so this process of paying off this debt, was it easier or harder than you thought it was?

I think it was easier than I thought it would be because I had a plan. Right. At the end of residency, I found out about living like a resident from an attending who didn't do that. He found out about the white coat investor a little bit too late, and he had to scale back on his living expenses, and I think that would have been a lot harder. Of course, we had the income of my husband too. So that made it a lot easier too.

Yeah, for sure. The higher your income, the easier a lot of this Stuff is. But unfortunately, that also often comes with another set of student loans, as you've discovered. So what advice do you have for somebody that's like you? They're coming out of training, maybe they're a senior resident, maybe they're a brand new attending. They're drowning in their debt. They're trying to figure out, do I pay off debt, do I invest? How do I do this? What advice do you have for that person?

I would say to have a plan your last year of residency and stick to it. If you're going to do pslf, stick with that. If there's no way you're going to do that, then just refinance. Refinance often and early so that you're not paying all that extra interest. And do the variable rate too. I think that just having a plan is the best thing to do.

Which one feels better, having your student loans gone or being a millionaire?

Oh, the loans for sure. Yeah. I'm so glad that's gone.

Very cool. What about a pre med student is looking at medical school going, I'm going to have $400,000 by the time I get out. I don't know if I can afford to do this. What advice would you give that person?

Well, you know, it's overwhelming to take out all those loans, but if it's something that you really want to do, you just have to have a plan to pay it off. You know, your income will be much higher as a physician, so you're able to pay it off if you have a plan.

Very cool. Well, thank you so much, Carrie. You've done fantastic work. I congratulate you and your husband on your accomplishments. They are not trivial. It's impressive to have paid off hundreds of thousand dollars of student loans in just five years. It's impressive to be a millionaire in just five years. As you know, if you've read the White Coat Investor, it took us longer than that. We did not make it in five years. We've got a guest coming up. I just recorded before this one, but it's actually podcast number 100 who made it in three years. And so I'm feeling very inadequate today with you having done it in five and him having done it in three. But the truth is, it's an individual game, right? It's us against our goals. We're not competing with each other. So congratulations to you. Thanks for coming on the podcast to inspire others to do the same.

Yeah, thanks so much for having me.

All right, great episode. It's fun to have two milestones to talk about in a single episode, but lots of lessons learned there. The main one of course is get a plan, work the plan. You know, it helps of course to be married to another high earner, but it was interesting. After we finished recording the podcast, I chatted with her spouse for a while who's a hospitalist, and it's interesting that they have gone back and forth during their career where one kind of worked full time for a while and then the other one worked full time for a while and they've realized now they have their financial ducks in a row that they don't need two full time physician incomes. And so what have they chosen to do? They've chosen to be able to, you know, one or the other of them to work less and be able to spend more time with the kids. And that's one of the great things about having a plan is you get to prioritize what you value. You spend intentionally, both with your money and with your time. But living like a resident or something similar to it for the first few years out of training opens up all these possibilities that you will want at mid career. I promise you, you will want that flexibility and that freedom. Take care of business early on and you will be able to do things like they have done. You know, paying off student loans in five years, becoming millionaires, being able to cut back and spend time with kids and just having that career flexibility that allows you to do this awesome career that we have. But to be able to do it on your terms in a way that promotes career longevity, avoids burnout, avoids divorce. It's just good. It's the good life and you can have it just by managing your finances intentionally. Did you know that the White Coat Investor not only has a podcast and a blog, but several books that will help you on your way to financial independence? These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances earnings early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help. Till next time, keep your Head up, shoulders back. You've got this. We can help you here at the White Code Investor, and we'd love to have you on the Milestones to Millionaire podcast. See you next time. The hosts of the White Coat Investor podcast are not licensed accountants, attorneys, or financial advisors.

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It should not be considered professional or personalized financial advice. You should consult the appropriate professional for.

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