MtoM #99 - Doc Pays Off Student Loans 8 Months Into Attendinghood

This is the White Coat Investor Podcast, Milestones to Millionaire, celebrating stories of success along the journey to financial freedom. Hello, and welcome to another episode of the Milestones to Millionaire podcast. I'm your host, Dr. Disha Spath. And today we have a very special guest, Dr. Leo Reap, who's going to tell us about his journey to pay off $287,000 of his student loans in a hurry.

If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school, or residency. Even though your family and perhaps even your business rely on you to be the chief financial officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance, and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this. And the White Coat Investor can help.

All right, Dr. Reeap, how are you today?

I'm wonderful. Thank you so much for having me on.

Thank you for being here. Please tell us a little bit about yourself.

Yeah, so I'm a hematologist. Oncologist. I, uh, graduated medical school in about 2015 and completed my training just a little over a year ago.

Wonderful. And what part of the country do you live in?

Um, we live in Michigan and live in the metro Detroit area.

And how much did you pay off?

Uh, I ended up paying about $287,000 about eight months after I finished training.

Oh, my God. Eight months. That's amazing. How long did it take you total? Were you making payments during your training as well?

Yeah, so I certainly didn't make that. Pay that off all within the eight months within becoming an attending. Long story short, in about 2014, I discovered the WCI and started to dig into the philosophy a little bit. And then in 2015, when I got that infamous packet delivery with the sum of my money that I owed, I ended up stirred a little bit of a fire in me to kind of figure out what the best possible situation was for me to handle these over the course of time. My parents ended up helping me initially with undergrad, but because they were helping my brother at the time for him to go through undergrad, I was on my own for medical school. And so when I saw that total loan amount, which, honestly, I'd put in the back of my mind, it really Kind of made me think that we need to assess of what we need to do in order to get these taken care of. Before I started training, I ended up kind of doing an analysis with my parents and looking at the various options of what to do we could do between public service loan forgiveness and then running the numbers of. If we started with standard payments at the time of when training started, and we ended up after we ran the math and looked at it, depending on the rate of aggressiveness we wanted to pursue, I could either be debt free after about seven years or be debt free after about 10 years with the public service loan forgiveness program. So we ended up deciding to pursue that. My family had a small windfall at the time where my dad's great aunt, I think it was, died and had half the house left in his name. And so my parents used that to deleverage their life and then offered to help subsidize my payments initially while I was in training, until I was able to moonlight and make adequate money, understanding that I would then trade my time and autonomy to help continue those aggressive payments.

Wow. What a great way to put it to trade your time and autonomy to actually make those payments and get rid of it so that you can earn your time and autonomy back. I love that.

I really think that the value in money is embodied, is predicated on the belief that it is embodied by time and autonomy. And so you either can trade your time and autonomy for money or use money to buy back your time or autonomy in that way.

So you said your parents helped you. Can you kind of roughly estimate for us how much they might have contributed to your loans?

Yeah, so we split the payments roughly in half during it. So we started at about. I think they were about four grand a month payments. So half and a half, which was a lot for as a. As a resident. But once I started making ends meet with extra moonlighting income, and admittedly ended up having three separate moonlighting jobs, one as a hospitalist, one working in urgent care, and then another doing infusion center moonlighting for patients receiving chemotherapy and other infusions. The aggregate income of that ended up 20 totaling over the course of about four years was closer to $200,000. So pretty much all of that got applied to my student loans during that time.

Wow. Okay. So you basically started moonlighting probably in the last year of your internal medicine residency and then kept it up through fellowship. Okay, and then. And that was $200,000 on top of what you were making in fellowship.

Wow.

Amazing. How about your spouse? Are you married? What? Was she bringing in any income?

Yeah, my wife and I got married in 2016. She was still in training to become a PhD psychologist at that point in time. So I initially didn't have any additional income. Thankfully, she doesn't have any student loan burden, courtesy of her program and the way that it's structured. But until she became the equivalent of an attending perpetual psychologist, she didn't make any money at that point in time. So she finished about a year before I finished, which was me. Similar salaries as a, as an intern and trainee.

Okay, got it. So like roughly 60, $50,000 or something like that.

Yeah. So aggregate, we were closer to 100K during, during training between the two of us.

Okay, got it. And what has been your range of income during this time?

Now she makes a full attending PhD salary, which is closer to 100,000, and then make a pretty standard salary for an attending oncologist closer to 325.

Okay, great. And so you put about 150, $200,000 towards your student loans during your training, and then the rest was as you turn in attending. You just shoveled money over towards the loans?

Yes, yes. I decided more than anything with the anticipated birth. With our first child, I really wanted to be debt free before his birth or close to the time of his birth. So I was able to pay him off about a couple months after he was born.

Oh my gosh, that's such a great thing to get off your back right before you start, you know, all payer payments or daycare payments.

Yeah, those expenses are not little. It's basically like another small mortgage on the side. So I was great that we were able to get that taken care.

Oh, that's wonderful. So how did you, how did you do it? I know you've worked really, really hard in residency and, you know, your fellowship. How did you maintain that? How did you maintain your sanity and how many hours were you working exactly?

So I never violated duty hour restrictions by any means. I probably did. And with my hospital job, I did somewhere in the range of three to five extra shifts a month. And then on top of that, we did occasional urgent care shifts at nighttime and things of that nature. The pandemic did help, actually inadvertently, slightly, because we were actually pulled off of our fellowship for about two months, where I ended up doing just hospitals coverage essentially for two, two months straight. They needed additional help because of all the employees that were furloughed. And so they ended up calling the fellows to help at that point in time. And so I ended up doing, I think, about 17 or 18 shifts a month for the first two months of the pandemic. At nighttime, taking care of all those.

Patients with COVID Nice. And then the payment pause, I'm sure helped as well.

Yeah, actually, we refinanced, actually twice, so unfortunately, it didn't.

Oh, yeah.

But that's okay. We ended up refinancing twice throughout it as interest rates were falling. In 2018, in 2019, and so that helped accelerate some of the payment process as well.

Okay. Yeah. There was a time, a point in time where the interest rates were really low. I mean, almost down to zero. Right. What was your interest rate?

My interest rate, I think that we got down to was about 4 and change. I ended up looking at refinancing when rates even felt lower when compared against the time horizon of how much it would have changed anything with how aggressively we were paying them off. Really, it's almost a meaningless change that didn't amount to substantial savings. And most of the savings that comes with those really, is inversely proportional to the amount of time you pay them off with.

Absolutely. Was it easier or harder than you thought?

It was probably easier than I initially thought, but hard in the sense that it was a lot of work upfront. I'm very grateful I did, and I'm very gracious for the initial assistance my parents were able to help me with, to help me at least start that process and accelerate it. My kind of philosophy ever since has been that money should always be evaluated against time and autonomy. Whenever you're making those kinds of decisions, whether it's a job, a big purchase, and looking at the total sum of the costs, either time, autonomy and. Or money with those kinds of student loans, I think, are a perfect example of that.

How does it feel to have the student loans gone now?

It feels great. I mean, I love that the only payment we have now is a mortgage, and that essentially, if our jobs were in a position where they were threatened, we're not under that obligation to work. And I think physicians that aren't under that sense of obligation to work tend to make better physicians. Because we are coming to work because we want to, we're better able to pivot and provide for our patients.

Really changes your mentality when you don't have to go to work anymore and you want to show up with that attitude. Absolutely. So what do you say to someone? You know, people are always going to say, oh, but you just. Just paid off so much money, you know, and, you know, we could even just get loan forgiveness from the government or, you know, pslf, and they've made it so much easier. What do you, what do you say? Or you know, people that say that, hey, that's a, you know, it's less than 5% interest rate on your student loans, you should just carry it and instead invest on the side instead. What do you say to those people?

Yeah, so I don't think that's actually a wrong philosophy by any means. And if you looked at it from a purely mathematical and pragmatic sense, I think that it makes sense to carry them on and to invest, especially assuming you get an average return of say, 8% a year in the market or otherwise. However, that ignores the psychological aspect, I think, of loans and debt as a whole. And there is a fundamental obligation that's carried with any substantial amount of debt where you're obligated to continue to trade your time and autonomy for, for that debt burden. And so without that debt burden, I'm not obligated in that sense, and I find that very freeing.

The debtor is slave to the lender. That's the saying, right? Yeah, I agree. I mean that, that sense of freedom and the extra freedom, actual attainable freedom that you get from not carrying the debt is something is really huge.

I like it as well because of the fact that I don't have to answer the debt versus invest question. Once you pay off the debt, the only answer after that point is simply invest.

Yeah, absolutely. It makes it easy just to fork it over into your investment account. I love that. What advice would you have for someone that's just like you, you were before you started. What would you tell them?

I think I would tell them I'd have to have an honest discussion with them about how much they owe, what their life goals are, what their, what their dreams are. And I think everyone's decision with this is very personal. And personal finance is personal for that exact reason. I think the part that's often missed, kind of as we just alluded to, is that when you look at it from a purely monetary and numeric sense, it's easy to get lulled into that. We'll just keep it along or keep it in the back burner and invest the rest. And there's times where that's true, but I think ultimately when you look at the fundamental obligation that comes along with these loans and that how free you are when they're finally gone, there's a lot of liberty in that that really, I think, helps make you a better clinician and allows you to pivot in ways or invest in ways that you otherwise wouldn't have the capacity to. So I would challenge or I recommend that whenever a young person is looking at their future and trying to figure out how do I approach my loan burden, what do I want to do? I would ask them, think of what your 40 or 45 year old self would want. And I realize that's a really hard question when you're 20, 25 years old. But that was kind of the driving force for me was that I realized that at 40 or 45, when my kids are in their approaching their teenage years and having sports games and things like that, you know, the premium on your time and autonomy at that point in time is exceptionally high. And to be debt free at that point in time allows you to say no to things and allow you to have that time freedom that you otherwise wouldn't if you were still substantially in debt.

I love that. Yeah, that's a really good point. That you have at that point, the ability to make it to your son's game, you know, make it to what they want you to be at, and they're going to be really counting on you to be there. That's when you really need that time as a father. And I think that's just lovely. So what's next in your financial goals?

Well, the goal eventually is to pay off our house in full. We're taking actually kind of the numeric approach with that in the way that we kind of view debt and looking at mortgage debt, so approaching that from kind of a standard payment process. But I need a new car. I still drive a 2011 Honda Civic, so it's a great car, but it's time to get a new one. So I'm saving up and we'll purchase an electric vehicle once I've saved up enough.

Nice. I have a 2012 Honda Civic and it's manual and it's amazing.

They're great cars. They never break down.

Yeah, no, they just keep running. I just. Yeah, it's so fun. But yeah, I can see why you might need a new car at this point. I'm hoping mine has another year or two to go.

I just keep driving it, hoping that it's not going to break down one day. So far, so good.

All right, well, good luck to you. I have no doubt you're going to meet all of your next financial goals. And thank you so much for being here and sharing your wisdom.

Thank you so much for having me. I appreciate it.

My pleasure. All right, so what a wonderful interview that was. I'M so inspired by Dr. Leah Reap's journey and his and his family's motivation to really get everything paid off, to get $287,000 of student loans just, just off their backs as soon as they started their attending lives. What I really found incredible about their journey was that first he sat down and actually went over his student loan burdens with his parents. And you know, it sounds like they all had a similar mentality about how to handle money and, and how transparent they were and generous they were with each other. And then, you know, he ran the numbers. He decided he could be debt free in seven years instead of 10 years with PSLF. So he just started, you know, went for the seven year process, which makes sense, and just went at. And it sounds like he worked a ton. And of course the pandemic and the circumstances there helped a little bit, but the mindset that he had and the goal that he set helped him achieve a humongous victory. Even though there was the pandemic, even though there was so much uncertainty. It's in those times when you have the plan that it really helps you take advantage of any kind of positive silver lining that might come out of a disaster and go forward and achieve your goals. So inspired by that and his next financial goals of being there for his kids when they are old enough to play games and he wants to be there and show up and he has the power to say no at that point if he is debt free. The motivation behind being debt free, it's just all so well thought out, so clear in his mind, and that's what makes it so achievable, because he has seen the end result already and just of course, has the shovel to take care of the debt as well. I am very, very grateful for Dr. Leo Reap to come onto our podcast here today. And I hope you had something that you learned, something that you can take away from this as well. I hope you have a great day and thank you for all that you do.

If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the Chief Financial Officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. 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 at the White Coat Investor. 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.