WCI #137: Inspiration to Crush Your Student Loans

This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dali. This is White Coat Investor podcast number 137. Some inspiration to crush your student loans at some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment. These loans allow doctors to secure a mortgage with fewer restrictions and a lower down payment than a conventional mortgage. But if you're further advanced in your career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter timeframe could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage. You can do this and the White Coat Investor can help. All right, our quote of the day today comes from 21 pilots who said out of student loans and treehouse homes, we all would take the latter. And isn't that true? And that's what we're going to talk about today. We're going to be talking about all about student loan refinancing. And one of the worst parts of being a doctor, a dentist or an attorney is this massive student loan burden that you have to build your life around in a lot of ways, certainly your early financial life. This is the big piece of it. It's interesting when I go talk to groups of residents or medical students, almost all the questions are about student loans and student loan management. This is something people are thinking about and people are worrying about. And so today we're going to be dealing a lot with it. If you are one of those people that needs to refinance your student loan still be sure to check out our recommended student loan refinan financing companies. This can be found on the recommended tab@thewhitecoatinvestor.com it's the first thing on that tab and we have there the best deals you can find on the Internet. You get cash back in your pocket, it costs you nothing and you get a lower interest rate. So you may save thousands each year in interest that can go to principal instead of interest, and you get cash back and you get better customer service. So unless you're going for forgiveness, you really ought to seriously consider refinancing your student loans early and often. Today's podcast, however, is going to be a little bit more inspiration, mostly from people who have refinanced their student loans, but all of them have just absolutely crushed their student loans. They have gone out, dragged the student loan by the collar over into the corner and dropped an anvil on it. And I want you to hear these stories of people that absolutely have done with what I tell you to do, to live like a resident for two to five years out of residency, get the lowest interest rate you can sometimes with a variable 5 year loan, and just absolutely smack these things around, putting 10,000, $15,000 a month toward your student loans and really just getting them out of your life. And so we have six guests today. We've recorded a 10 minute segment with each of them. And they're gonna be talking about what they did to get out of debt so quickly. And sometimes it's faster even than you might believe that they got out of Deb a little bit slower. You know, they did on all kinds of different incomes with all kinds of different amounts of student loan burdens. But I hope there's somebody in the podcast that you can relate to and say, I want to do what that person did or what that doc did and get my student loans out of my life. I want the better cash flow. I don't want them hanging over my head. I want a little more freedom with my career. I want a little more, you know, freedom in my financial life. I just want to spend money on something else and have this done. Whatever your motivation might be to get rid of your student loans, I hope today provides a little bit more of that motivation and inspiration to do it. All right, let's get our first guest on the line here. Our first guest today is David, who is an emergency physician and has agreed to come on and talk a little bit about how he crushed his student loans pretty quickly. So, David, how much did you pay off in total?

So I started out with about 405. Full disclosure, I do still owe about $35,000 on a 1.8% fixed federal direct loan that I'm just paying the minimums on, but I paid off all the rest.

But you wiped out over $375,000 in student loans.

Yeah.

How long did that take you?

Well, I started in June of 2015 and just paid that off in April of this year. So a little less than four years.

A little less than four years. Almost $400,000. Very impressive. Congratulations.

Oh, thank you.

And what was your average household income over that time period?

So when I started my first job, I was making, I think it was around $340,000 and managed to get that up to about $400,000.

But you were dedicating, it sounds like 25%, maybe even a third or more of your income a year towards student loans there for almost four years. Does that sound about right?

Close to it. There were a few large chunks that I put towards it that came from other sources. I did inherit about 15,000 from my grandmother.

You just signed that straight over to the student loan servicer?

Yeah, that's what I kept doing. Anytime I would get a large chunk of money, I would put it straight at it. I got several signing bonuses during these four years from switching contracts a couple times, and each time I got a signing bonus, I just put it straight at it.

That's an interesting strategy. Change jobs frequently and take advantage of the signing bonuses. But it seems to have worked out well for you.

Yeah, well, the weird thing is I actually didn't change jobs. The job sort of changed around me. Different companies taken over. I pretty much stayed at the same hospital most of these four years.

Interesting. So how did you do it? What was your secret to success?

Well, honestly, I kept hearing your voice ringing in my ear. Live like a resident. Tried not to get crazy with the spending, and just every time our income went up, just kept adding debt to our loan payments and try to keep our spending in check.

So do you feel like you did like you did live like a resident or that you just kind of used that principle to keep the rate of lifestyle increase in check enough to accomplish this goal?

Yeah, I wouldn't say I lived completely like a resident. I did buy a Mazda outright, which I never would have done as a resident, but I didn't go and buy a BMW or a Mercedes, so tried to be modest.

Did you find out that this was easier or harder than you thought it was going to be when you were looking at this four years ago? Did it turn out to be easier or harder?

Honestly, I felt like it was a little bit easier than I expected. We weren't living on ramen, you know, the whole time, so we managed to have two little kids. And, yeah, we were comfortable, just not extravagant.

So you had a couple of kids, you lived a comfortable life, you bought a car outright. You know, it doesn't sound like you were in any sort of financial hardship while wiping out almost $400,000 in student loans over a period of four years?

No, I wouldn't say that. I did, as I said, take high paying jobs. With this in mind, I looked for jobs with signing bonus and then when it came time to leave or stay at the hospital with the new company, just negotiated knowing what my worth was and got that other signing bonus and just kept putting those towards the loans.

So how does it feel now? I mean, you've only got a relatively small amount of student loans still hanging out there, and it sounds like you've kind of made the decision to carry these for a little bit due to their very low interest interest rate. But how does it feel to have the rest of that wiped out?

It feels amazing. The day that I sent that last payment on the higher interest one, it was a huge weight off my shoulders and that feeling hasn't really worn off. It's been about nine months and it still feels fantastic not seeing that large sum go out of my account every month.

So no regrets whatsoever?

Oh, none.

None at all.

So what advice do you have for someone that's like you sitting back there in June 2015 staring at this huge student loan burden? What do you say to that person?

I would say try to delay gratification because it's totally worth it once you get these loans out of your life. And just try to remember you don't have to take the perfect dream job right away. Try to find something that pays maybe a little bit more and just go after it.

Awesome. So what's next for you and your financial goals?

We're looking to get more into real estate. I've been reading a lot on Passive Income MD and on your site about real estate investing and we did just close on our first investment property last week and we're looking to keep the ball rolling with that.

Do you feel like you can take a little bit more risk in your investing life and in your career life now that you don't have the student loans?

Absolutely. Yeah.

Yeah. That's a nice benefit of having that cash flow fixed up in your life. I've certainly noticed that since paid off our mortgage a couple of years ago. It's amazing how much more risk tolerant I am with everything in my life just because I really don't have to have that monthly nut to cover the expenses. It's really helpful. All right, well, David, congratulations on your success. I'm super impressed. I know people will be inspired by your story, so thank you so much for coming onto the White Coat Investor.

Oh, thanks for having me. And thanks for everything you do.

You're very welcome. Our next guest today comes to us with a kind of a different situation than our first one. We're going to let her stay anonymous in this, so I'm not going to say her name, but welcome to the White Coat Investor podcast.

Thanks for having me.

So how much debt did you pay off?

We paid off just under $180,000.

$180,000? And what are your specialties?

So I'm a general pediatrician and my husband is a radiologist.

Okay, and what time period did you pay that off over?

So we paid off about $140,000 before my husband graduated his fellowship.

So you did that basically on resident and fellow incomes?

We did most of it on just our resident income. I mean, pediatrics training is shorter than fellowship training, so I was in a attending the final two years of his training. But yes, mostly we did it on trainee salary.

And then the remainder you paid off over what time period?

So basically we had set ourselves the goal that we would pay off all of our student debt before our 10 year medical school reunion. And so in January, before our 10 year reunion, I just kind of paid it all off in one lump sum.

And that was how long out of. Out of his training?

He would have been almost four years out of training at that point.

And what was your average household income over that time period? I mean, obviously it changed when you came out of training.

So when we were in training, we started out making about 50,000 each and went up a little bit every year. Our real physician income when we were both attendings was, was about 580 combined.

Okay, so how'd you do it?

So like I said, most of what we paid off we actually paid off on a trainee salary, which I think makes us a little bit unique. I would say that our secret was we did a lot of moonlighting. So we had set ourselves a financial goal. We made a plan of how we were going to achieve that goal over the 10 year time period. And, you know, moonlighting is a really great opportunity that I don't know that a lot of trainees take advantage of. But, you know, when you're making 65 or $75 an hour to, you know, do a little extra work, it can go a really long way. You're at a much lower tax bracket. So, I mean, I looked back at some of our tax records, but some years we were making 40, $50,000 over our base salary as Trainees. And that was all for moonlighting.

And what kind of moonlighting were you doing as a pediatrician?

So I did just extra shifts, either in the emergency room or on the inpatient floors. So clinical work. But my husband, as a radiology resident, they actually monitored the MRI machines at the satellite offices. So in case there are any contrast reactions, their job was to assist and treat the contrast reactions and get the patient appropriate care. There's not a lot of contrast reactions that happen.

Yeah. Sounds like he sat around and studied and read White Coat Investor. Is that kind of how it worked out?

Yes, that actually is exactly what he did. He studied. He spent a lot of time just studying and getting ready for his boards. But when you're making $75 an hour to do very little work, that's great. And that money goes a long way when your trainees and your expenses are much lower than when you finish and aren't attending.

Yeah, certainly less work than I had to put in. I think I made $80 an hour when I was moonlighting. I didn't do very much of it. I probably did 10 shifts in the last six months of my residency, all while double covered in an emergency department. But I think they paid me $80 an hour, and I was working for it. I know that there was no doubt about it. They got a good deal out of me. All right, so was this easier or harder than you thought it was going to be when you started?

I think actually it was a lot easier. Especially now, of course, looking back, that it's over. Like I said, you don't have as many competing interests when you're in training. And because you spend so much of your time at work, there's just not a lot of opportunity to spend extra income on extraneous stuff. So it was a lot easier to just kind of stick to our goals than it is now. I think you don't see as much progress one month to the next as you would hope because it's such a big number. But when you look at it overall at the end of the year, it really is amazing to see how much progress you can make. And it's a huge weight to know that your student loan debt is just gone and you don't have to worry about it anymore. And, you know, even as attendings, we didn't have to worry about it too much and we could focus on other things.

So do you feel like you made a good investment borrowing that money to go to med school at this point?

Yeah, definitely.

What would you say to someone who Says you should carry your student loans and invest in something with a higher return than your interest.

So, like I mentioned, we paid off most of our debt while we were in training, and the debt we did not pay off, we didn't pay off because it was at a very low interest rate. My husband was fortunate enough to have some debt that was still at, like, that very low percent, you know, the 2% that the government gave out, you know, about a decade and a half ago. And we purposely did not pay off that debt because it was at such a low interest rate that we decided we were going to invest and save and have a side fund and, you know, work on a down payment for a home and then paying off our mortgage. And what I have to say to that is, even though mathematically it probably was the right thing to do, psychologically, having that, like, debt floating out there was just so annoying. I really just. It meant a lot to be able to just cross it off my list and never have to worry about it again. So even though it was at a low interest rate, I wish we had just paid it all off like one fell swoop right away.

What advice do you have for someone that just like you were when you started, you know, they're coming out of medical school, they're married, they've got $180,000 in debt. What would you tell them? What do you wish somebody had told you when you were at that stage?

So what I wish somebody had told me was, you know, get yourself organized. Know what you owe, know where it is, know what the interest rates are, and make a plan and stick to your plan. I think we figured that out on our own, and it took us about six to eight months to figure it out. But it would have been good to have that set and in place while we were still medical students so we could direct our energy. What I would say to trainees now is don't overlook opportunities that are available to you, like moonlighting. I mean, a lot of my trainees don't do a lot of moonlighting. A lot of our residency applicants don't ask about moonlighting. And it really is, like, a powerful tool that you can use during your training to get yourself ahead financially.

So what's next for you guys and your financial goals?

So we do have a financial plan in terms of, you know, wealth accumulation and debt management. We have a plan to pay off our mortgage and to, you know, achieve financial independence before a certain age. But, yeah, that's what we're working towards now.

Well, congratulations. I'm Very impressed with what you've done and pleased with the progress you're making in your financial lives. And thank you so much, much for your service and dedicating your lives to medicine. I mean, it's true if you had put this sort of time and effort and money into other pursuits, you may be doing even better than you're doing now in medicine, despite your high incomes now. So congratulations on that and thank you for what you're doing.

Thanks. And if I could just say thank you to you as well, because the one thing that's really helped us all of this time and to stick to our financial plan was reading your blog and listening to your podcast. It was just really nice to have somebody that we viewed as like, an adult and an expert reinforcing everything we were doing and telling us we were doing the right things. So it gives us a lot of confidence when we make decisions knowing that, like, we are following your advice and that, you know, you agree with what we're doing. So thanks a lot for what you do.

Well, after a while, you don't need my reassurance because you see the results happening in your own lives. So.

Yeah.

But I do appreciate the vote of confidence.

It was a big help. And I can't say it enough that just having someone tell us what you're doing is good. And being able to see that in black and white and see the results, like you said, it means a lot to us. So thank you for what you do.

You're very welcome. Thanks for coming on the show.

Yep, no problem.

Our next guest today is not a physician, but a cybersecurity professional. And it's interesting, we talked just before we started recording, and he said, you know, the pathway here is often very similar to doctors. You end up with doctor, like, incomes of eventually, if you really know what you're doing in this field. So welcome to the White Coat Investor Podcast.

My pleasure. Thanks, Jim.

Now, you had some debt. How much did you pay off?

So my wife and I got married quite early, out of undergrad, and between the two of us, $150,000.

$150,000. And what was her degree in?

She studied nursing, so she's a bsn, RN and Critical care certified. She works at one of the the larger ers here in the metropolitan area.

And what was your degree?

I studied business and economics, so I have a background in management consulting, and now I'm a cybersecurity professional at one of the large industry companies here.

Okay, so bachelor's level, master's level.

That's right. Two undergrad degrees and you guys paid.

Off $150,000 over what time period?

It was just under five years and so happy to give you my background if you want really quick. Sure, yeah. So we were dating through undergrad and I remember applying to a number of schools. And I've appreciated the parts of your podcast where you touch on some of that and the options for paying for school. And my parents, I grew up in a middle class income household and we had moved to a large city and we ended up buying a home in an area that was around a lot of other wealthy families, but we weren't necessarily wealthy. So I learned how to live below my means. But my parents never really taught me about investing and they hadn't saved up any money for me in terms of my college education, nor for my siblings. So I had a couple options. State school, private school. Applied to a few of them. I got a decent scholarship at the private school I went to. It's a really good school, but at the end of the day, $30,000 per year in tuition and then there's living expenses on that. When I pulled the trigger to go to university, I had a plan, a little bit of what I wanted to do, study business, but I didn't, until the end of my freshman year, really understand the scope of what it means to live off of student loans. I never dreamed that I'd be in a place where I could be making in one year what I'm doing. Had racked up in debt. And that's, you know, we can talk more about that. But I remember being in my dorm room and my roommate, he was complaining that he had to go down to the finance office. And I said, oh, well, what do you have to do down there? Oh, well, I have to fill out this paperwork because, you know, I have to give him this check. I said, oh, what's the check? And he showed it to me. I looked down at it and it was his entire quarter of tuition right there on a check. And it was his grandma's name. And I was going, oh, wow, okay, so your grandma pays for your school. Yeah. And I remember he left the room and I was sitting there in my dorm room and it hit me. That was one of the big milestones for me, my financial history.

Wow.

Some people's families are paying for their school. They're not living off these student loans. And I went back and looked at for my records so that I could tell you Today, around average 8% was the rate for my loan. So not too Pretty, yeah.

So what was your average household income over those five years you were paying off this debt?

When I graduated out of undergrad, it was just after 2009, so early 2010, really tough time to graduate. I hadn't been able to land an internship. I went to a great school, but the large consultancies were delaying start dates. I was in the interview pipeline with two of those. I was totally disappointed. Know where to go. So I ended up getting a small contract gig, but then I. But then two large Accenture consultants were starting a new firm, and they liked my background. I had a friend in the firm already, so I was their 10th employee. And over the course of around six years, it grew to about 300 people. And so I got to learn the business. I understand all the companies in this area because we serve them, but, yeah, so graduated, had. My offer was a $45,000 base. There's some bonus in there. My wife was starting out the big er, so she was working night shifts and had some charge nurse differentials. So I think she was making around 60 or $70,000 working nights for the first three years of our marriage. So.

So you think maybe 110, $120,000 a year or so over those five years?

That's right.

And took you five years to pay off $150,000?

That's right.

Okay. So how'd you do it? I mean, you're dedicating a pretty significant chunk of your income to paying off these loans, right?

Rents are pretty high in this area. We were renting an apartment right out of school. All the things that I know now I wish I could tell myself, and we can talk more about that if you'd like. But essentially we said, hey, we want to spend a certain amount on travel. We didn't have kids yet. We love traveling. We love hiking, we love backpacking. So, you know, each year we're going to go to Europe. We budgeted for that. And we want to try to live below, be able to save around 40% of our income. And that saving includes throwing money at debt or maxing out Roth IRAs. So I did have someone in my life who had recommended, hey, open up Roth IRAs for both you and your wife. Max those out before paying off your debt. Which was scary because my debt was enough of a rate that I thought, not sure the market's going to do that. I only wish I had put more in. Right. So.

Yeah, well, you had a pretty good. Pretty good markup from 2010 to 2015.

Right?

I'm not sure. That was necessarily a bad decision just because the outcome wasn't ideal.

So living below our means, I think you on your show, what I appreciate. Live like a resident. That's what you preach. And, you know, we probably had a little bit more than a resident income and maybe a little bit less debt than a resident or if a married couple who are both doctors had. But we decided to have two old Toyota cars. We weren't going to worry about what people thought about that. We ate in a lot. You know, once or twice a month we'd go to Happy hour, spend 40 bucks at, you know, at a bar. It's not that bad. So we were able to keep things low in terms of our expenses, but we did. I found also in our box, our little family box, a couple of flashcards that we had made that was essentially like our North Star plan in terms of what our goals were. And it was live on less than 50% of our income. If possible, save up enough for a 20% down on a house. So we ended up being able to do that. But that was one of my regrets because if we had put Nothing down at 2010 in the area we live, we'd have a million dollars of equity in a house somewhere.

Yeah. Again, one of those things in retrospect doesn't necessarily mean the decision was right. You never know when it's 2010 and when it's 2006.

Right, exactly.

So do you think the overall process was easier or harder than you expected it to be before you started?

I think there were a few things in my life that set me off as being a frugal person. And my wife. Thankfully, we both have the same financial philosophy. My dad was laid off when I was 14, and he always kind of scrounged to get back to where he should be. He probably should have been at a director level when I was at that time. And so I always just remember feeling the weight of, wow, there's no money coming in. But we still have these expenses. We also have a lot of goals around being generous. We give over 10% to our church, my siblings have adopted children, and we've gone through agencies that aren't state, sponsored. So we end up giving them 10, $20,000 for that. So I think that's a really big part of our life that maybe slowed our process towards our goals, but those things are still worth doing, especially if you're making over $100,000 together.

How's it feel to have those student loans gone?

It feels great.

No regrets. You don't Want to go take them back and wish you'd invested the difference?

Well, I mean, it still feels great. Isn't that weird? And it's going to be the same thing with a mortgage. Our goal is to become financially independent by between age 40 and 45. It's going to depend on the market and what we want to do. But before then, we're probably going to pay off the mortgage. Will we have regrets about not putting that in the S&P 500? I don't know, but it just feels good.

What advice do you have for someone that's just like you before you started?

Well, the first advice I give is if you don't know what you want to do, don't go to school and take a year off. Learn a trade. Try to learn from other professionals around you. I think another big thing is if you are going to go to school, if possible, have it be something that pays. Business, STEM degree, a practice within medicine that's going to pay well. Unless you're specifically passionate about social work or whatever else, make your degree worthwhile. And I would say too, live below your means. Don't be afraid to not become part of the consumer culture. There's so much that you can spend your money on. There's so many people going to try to sell you products. Keep it simple, put it in the index funds. Tell your family to live below their means as well. Be generous with those in your family who maybe aren't as competent or not as educated. Make sure that you're not alone in your island trying to build this for yourself. The reason why we want to become financially independent is to bless our kids, to bless our community.

Well, thank you so much for being willing to come on the White Coat Investor podcast for this segment and I hope your story inspires others like you to do the same.

Well, thank you so much, Jim.

My next guest on the podcast. Ishahed. Welcome to the White Coat Investor podcast.

Great, thanks for having me.

Now tell me a little bit about what you have done. How much debt have you paid off?

So I paid off about $330,000 of student loans.

And how long did it take you to do that?

It took me about five years post residency.

Okay, and what was your specialty and what was your average income over that time period?

So I'm born in family medicine, currently working in urgent care and I started in residency making about 50, 55k and upon graduating, basically averaging about 280 a year.

So you made $280,000 a year and you knocked out 330 you said.

Correct.

$330,000 in five years. How did you do that?

Using the same advice that you often give. You know, living like a resident. Pretty much past my residency years. So, you know, that was definitely key to getting this knocked out.

So what do you think? I mean, was it easier or harder than you expected it to be?

It was definitely hard. So I will say that I took on two jobs. So I was doing my urgent care job and then I picked up a side gig working as a hospitalist too. And so for the first couple years I was just kind of really going at it hard. And time is very valuable. I sort of wish that I would have maybe paced myself a little better, but the feeling of paying off alone, there's nothing like it. So no regrets.

So did you kind of front loaded or backloaded more? When did you pay off more of the debt in that five year period?

It was probably the first two years out of residency. I mean, that's when I was really very ambitious and I felt like I had a lot more energy doing back to back 12 hour shifts and now I do one shift and I'm a little tired, so definitely had a lot more drive then.

It's interesting if that's the way it is after a couple of years. Imagine these poor docs who have student loans after 20 years. Right. Imagine how tired they are.

Yeah. I speak to some of my colleagues and they're maybe 20, 30 years ahead of me and they're still paying off loans, but everyone has a different plan, so whatever works for them.

Yeah, but you did well. I mean, you had, well, more than the average amount of student loans. You had a higher than average family practice salary for sure because you were doing urgent care and you still managed to do it in less than five years. Which is what I tell people is try to have your student loans paid off within two to five years of getting out of residency. So certainly you've demonstrated that it can be done. Despite higher than average loans and a relatively low paying specialty. Did you invest as you went along as well, or did all your spare income go toward paying off these loans?

Yeah, I did not know anything about investment. I think I came across your website and your book in residency and I actually started doing some income based repayment. All my loans in residency. I didn't even know what a 401k was for that matter. That was the first thing that I sort of got myself into was 401k. That was matched by my employer or the hospital I worked at. And so that was kind of the early stages and I'm still nowhere near a connoisseur as you are. I still, when I read your post and listen to some of the podcasts, there's still a lot of confusion, but hopefully with time I get there.

Well, hopefully with time I'll be able to make it less confusing as I get better at explaining it, maybe. Yeah. But did you continue to invest in a 401k, et cetera, while you were paying off the debt those five years?

I did, yeah.

And about how much a year were you investing the max?

About 18,000 or 19,000.

Okay. And did you do anything else in a backdoor Roth IRA or a taxable account or anything? So you maxed out the 401. Everything else went toward the student loans.

Right, right.

Okay. You know, a lot of people say, man, my student loans, the interest rate's so low, I'm just going to carry this debt for a while and invest on the side. Were you tempted to do that? Did you think about doing that? Did you decide against doing that? What do you think about that approach?

Right. Well, I think if I, you know, if I had the financial acumen of a Dr. Jim Dahl, like, yes, I would have certainly thought about that. But like I said, I just the fact that I even did the 401k was a big step. So I would say I, I would hope for anyone to know what they're doing before that they get into any kind of investment. So I just didn't feel like I was there.

Yeah. The nice thing about paying off debt is it's a guaranteed investment. You know exactly what you're going to make on it.

Right.

You know, your net worth is going to go up by investing in it. You know, there's basically no risk. So it is beneficial. If you don't know much about investing, it's a no brainer. That's true investment for you.

That's true.

So how's it feel? You have your student loans gone?

Yeah, it's a great feeling, but I can't just help reflect on the numbers sometimes. I guess what I could have done with that money.

Of course now you have a certain amount of money each month that's not going towards student loans that you can do whatever you want with. Have you spent anything extra since that happened? Splurged a little bit now that you've got the student loans gone?

Well, I just bought a home September 1st. I did put initial deposit, but I did borrow a little bit from family to kind of help with the Initial, but it was just a good choice for me, I think, because of the location. I live in San Diego. Rent's really expensive, and so the monthly mortgage payments are practically very close to what I was paying monthly or for rent, which is about 24, $2,500 a month for a one bedroom apartment.

Yeah, it's expensive to live there for sure.

Definitely.

So what advice do you have for someone that's just like you were five years ago? What would you say to that person today from the other end of the tunnel? You've now reached the light at the end of the tunnel. What encouragement or advice would you give to someone that's just starting into this dark tunnel of paying off their student loans?

Right.

That's a great way to put it. Yeah. Just like what I was saying before, the advice that you often give is to live like a resident. I mean, I think I definitely followed true to that. But I still had enough to, for example, go on a vacation every year and say take my mom on a trip overseas. But I would also just let people know not to get too caught up on the spending. And I think you mention that too in your post because a lot of things that we get, you know, caught up buying is just, it's just temporary happiness. You know, it doesn't really. It's not long lasting anyway.

So we.

But that's kind of the society we're living in, kind of a consumerism type society, so.

Well, that's good advice. So what's next for you and your financial goals? You bought a house, you paid off your student loans. What's next?

Just to keep educating myself about retirement and investing all the things that we never learned in medical school or residency. So I'm definitely trying to learn and go from there.

Awesome. Well, congratulations on your success. I'm proud of you. You've done some wonderful work. It is no small feat to pay off $330,000 in student loans in less than five years. So you should be proud of that. The fact that you can do that in a lot of ways, that's training wheels for becoming financially independent. When you can wipe out your debt that fast, you can become financially independent in a short period of time as well. So congratulations to you, well done. And thanks for going into medicine and thanks for being on the White Coat Investor podcast today.

I appreciate it. It was a pleasure to speak with you. Yeah, I wish you the best. I think you're really helping a lot of people in so many ways, including myself. So I really appreciate all the work you're doing.

It's very kind of you, thank you. Our next guest on the White Coat Investor podcast is Alex. And Alex, how much debt did you pay off?

So I ended up paying off close to $195,000 in student loan. And I did it in about 18 months or a year and a half or so.

18 months, not bad at all. So you think it's totally realistic when I tell people to pay off their student loans in two to five years?

Oh, definitely.

What's your specialty, Alex?

I did family medicine.

So a family medicine doc. You're not exactly the highest paid physician in the house of medicine, I imagine.

Not at all.

What was your average household income over that 18 month period?

So I started with the salary of 220 with the like signing bonus of I think 25,000. And I think I, at least during the time I went to two, maybe 60.

Okay, and was there any other significant income in your family?

No, that's it.

You had a working spouse or anything? It's just you?

I have a girlfriend. But I mean, we're not. The finances are separate.

None of her income went into paying off your student loans then?

No, I mean, you know, we get shared cost of living.

Right.

Together for a year during that.

Okay, so $195,000 on an income of 220 to 260. That's pretty impressive. You dedicated a big chunk of your income to paying off student loans. I mean, how'd you do that?

So I ended up just kind of right before I graduated, I went on a binge of reading about finance. And the thing that triggered that was I had a Sallie Mae loan that was 12k. I was making payments throughout residency and it ballooned up to like 15 or 16k during the time, even making small payments. So I read a bunch of finance books. I read your book. I read like the Dave Ramsey books. I went in depth into like finance and understanding like what I was getting into as far as the money situation, because I didn't want to, you know, I didn't want to just pay you, trust other people. So I kind of kicked in the butt and started. Just decided when I started working I would stay at the same lifestyle as a resident, if not lower. And then anything that came in above what I was getting as a resident would go to loans. It hurt.

You literally did it by living like a resident. Truly living like a resident.

Yeah. And by the way, living a resident was pretty good for me because living like a student was not that. Not that fun.

So it was an upgrade in some ways, at least from what you're doing in medical school.

Yeah, so I still was able to, you know, like, budget out of vacation that year. Like a year and a half. I still went on vacation. I still did everything. It just. I didn't, you know, I didn't upgrade, actually. I didn't grip my life at all.

What'd you drive during that time period?

I had a 2012 Altima.

Okay. Hey, you know, that's 15 years newer than Whitney's Altima, so. So was it easier or harder than you thought it would be?

It wasn't. It wasn't that much harder than getting into med school. I just developed, like I said. I laid out all my. My debt into a spreadsheet. I put out the percentages, and then I went highest percentage down. And it was. Like I said before, it was. I worked a little more than a attending does, less than a resident does. So also made up a difference in getting more income that way. But it wasn't that much more difficult. It was less work than residency, and it was a little more work than my peers, and I just kept my lifestyle. You know, I'm also very simple, so, you know, no fancy things for me. I do well with the hike and, you know, maybe a cup of coffee in the morning at home, and that's kind of it.

Now, you did this pretty quickly, and you must have sensed the momentum. I mean, you got scared a little bit when you saw those loans go up in balance during residency, but they must have been dropping pretty quickly. That balance must have been dropping, dropping pretty quickly as you were paying this off after a few months and you sensed that momentum. How did that feel?

Oh, that was probably the greatest feeling because it went, you know, from close to 200 to 100 in a couple months. I was like, oh, my God, this is fantastic. So the last big chunk I made, I saved up, I think, two or three paychecks, and it was like a 15k, like, done deal payment. I was like, ah.

So how did it feel to have him totally gone?

Oh, it was the best. It's probably one of the greatest. I think I framed the letter that they sent you for paying off your loans. I don't know where my medical school frame is, but that one's framed in the office.

Didn't necessarily put your diploma in a frame, but you did put in your loans paid off letter. Huh? That's awesome.

I think my parents have my diploma somewhere, because I really don't know where it is, but that one's I could see it right now.

Did you invest at all during this time period or did everything go toward debt?

No. So the one if you read everybody else's or probably Dave Raps is don't invest. I still put away 19k, I think or 18 it was at the time. And then I got matching from my employer.

So you still maxed out your 401k?

Yeah, max the 401k. And that's kind of the base, the basics of it. I didn't do anything else afterwards. I did start kind of an independent like investment account, but nothing other than the 19K.

Do you remember what your student loan interest rate was?

There was a six point range for 2, 6.7, 7.2. And the big one was the private Sally Mae loan, which was at 12.9, almost 13, basically.

Did you refinance those?

No, because that was the smallest one. And I did the math as far as refinancing. I was like on a mission to pay it off. I assume that interest only matters if time is a factor. So my goal was to pay it off in two years or less. And that's where I ended up doing the math and like, okay, this is how much I got to pay every month. And refinancing would have cost a certain amount. The cost saving wasn't there. I just didn't want to go through the hassle refinance. So I didn't refinance. I just aggressively paid off highest interest to lowest as fast as I could.

Now, if you had had lower interest rates, would you have considered carrying that debt longer in order to invest?

I might have taken a little longer to pay them off, but no, because.

You wanted to be done, be done.

And the other thing was, even if it's low, that payment's still there in like my philosophy. So the job I started with is starting to kind of wear on me. So I wanted to be able to say, okay, any job that I go on to next, I don't want to have to need the job. And with the student loans, like you always need to be able to make that payment no matter what.

So what advice do you have for someone that's a couple years behind you, just like you were before you started paying on these student loans, maybe just like you before they were graduated from residency. What do you say to them?

I said it's definitely doable in under three to five years. I mean, if that's your goal, you could do it faster. Sometimes that can be kind of, you know, it wears on you a little bit, but it's doable. You just have to come up with, like, a plan, just like anything else. Sort out where the debt is. Because I talk to, you know, residents and some students now, and they don't know where who has their loans, what kind of loans, what are the percentages? Like, all of us, like, you just kind of go through med school because that's rigorous enough in residency. And I think maybe the first thing is sort them out and then try to figure out what's comfortable for you to pay. What do you feel comfortable paying? But definitely three to five is easily doable.

Was it hard for you to map it all out on a spreadsheet?

No. I mean, I had to track down. I had like four loan servicers and it wasn't that many. Plus, like I said, Sallie Mae at the time and then became Navient. But it wasn't that difficult.

I imagine there's some people listening to this podcast who are saying, well, sure, that's easy. He's single, but I'm married or I have a kid or whatever. What would you say to that person?

I mean, you have to understand what you're spending and what, you know, where the money's going, you know, before you do anything. Because if you're buying a bunch of stuff that you don't need, then, yeah, it's gonna be very difficult. But I, like, laid down a very tight budget, how much I was gonna work, and if you're going from residency to being an attending, it's probably gonna be easy. For me, it was easier just because the time demands were lower so I could work less than I did as a resident, more than normal attending does, and still have plenty of time to, like, visit with friends, go on vacation, and make these giant payments. So I think it's doable. Yeah, I don't know if I'm lucky, but hey, I don't have. I don't have a family to take care of. So I think it's different situation. Maybe you could extend it out to like five years. You don't have to do it in a year and a half or, you know, less under two years.

Less work, more money. Sounds pretty good, huh?

Yeah.

So what's next for you and your financial goals?

I think at this point would be trying to pay off the house that we purchased, that I purchased after doing so. And, you know, that's actually a little less than the loans. So it's at 180. So I should be able to pay it off quickly, but I probably won't because the interest rate is a little lower. And since doing the aggressive pay down, I switched jobs to a lower paying job, but probably a longer lasting lifetime of the job.

Awesome. It's amazing how much you focused, right? You got a job that's maybe not your forever job, but it paid well. You focused your lifestyle, you focused your loan payments and what you did with your money to build wealth. And you knocked it out in eight days, 18 months. Congratulations. I'm proud of you.

Thank you. And that was part of it too. Looking for at the time, you know, maybe it wasn't my the best job. It was literally the highest paying job I could get.

Awesome. Well, $195,000 in debt in 18 months on an income of 220 to $260,000. Very well done. And I appreciate you coming on the White Coat Investor show.

Awesome. Thank you for. I love the show. You're doing a great job. I have a bunch of friends at work Catalyst and read your book. Thank you for your service. Thank you for helping us out and giving us, you know, the much needed information we need. Thank you.

Thank you. Bye. Bye. All right, our next guest on the White Coat Investor podcast is Min. Welcome to the podcast.

Hi.

So first question for you. How much debt did you pay off?

About 230k between college and med school.

And that was all student loans?

Yes.

And how long did that take you from the time you came out of training?

I just finished this last January, so that would be about a little bit more than two and a half years.

You paid it off over a little more than two and a half years. Awesome. That's pretty awesome. And what was your average household income over that time period?

I actually asked my work what they would be okay with me seeing, but it ranged between 200 and 300k over that time. It kind of depends a lot like, my RVUs and other incentives I'm meeting during that time, but around that range.

Okay, so basically you were putting half your income toward your student loans. Yeah, I mean, it's pretty simple formula, right? You know, you make 200 something thousand and you pay off 200 something thousand in just over a couple of years. So basically it's half your income. So how did you do that? You know, this seems just unfathomable to so many of my listeners and readers to be able to. To pay off that much debt that quickly. How did you do it?

So, you know, the funny thing is, I mean, I did have a plan to pay it off quickly, but it didn't feel Like I was overextending myself. I basically just saved a lot of money. But I think because I've been doing that my whole life and living not on a lot, it wasn't that bad. I mean, I was kind of in a good situation for it. I was single, I have no children, I was renting an apartment growing up, I never spent very much money. I'm a very big Marie Kondo sort of person where I don't believe in having a lot of stuff and not needing that much stuff. So I just looked at my past expenses and made a budget based on how much I normally spent and that was based on, I guess on my resident spending and saved everything else.

So you're just a frugal person.

Yeah, I think I'm just very cheap to begin with. You know, look at my budget. Even now, even after my loans are paid off, I only spend about like 20 to 25% of my after tax earnings on living expenses. I haven't even changed my spending too much since I paid off my loan. So I just didn't spend very much money. One of the things I did do was I call it like a zero sum budget where I at the end of each month I look at all the money that I have left and what I don't have, focus towards some goal. I just take the all the extra and throw in my loans. So every dollar had like either a purpose or I went to loan money.

So you budget, you live frugally, you manage your money well. I mean, it doesn't seem that complicated and yet it's really hard for a lot of people. Did you, I mean, you clearly had a plan going into this when you're coming out of training to get rid of these things fast. And I'm sure at that point you were kind of imagining how you're going to do it and thinking through it, did it end up being easier or harder than you thought?

I was always kind of a little poor growing up. So once I started making money, just it was a lot more than I was used to having. So I just sort of, I just kept living the same lifestyle. And my life is pretty simple. My hobbies are very low cost. Where I backpack, I run, I garden. Nothing I do takes that much money really. And even as a resident, I even felt like my resident salary at the time was good enough for me to have a good lifestyle where I took up extra hobbies like skiing, rock climbing, even on my resident salary. So once I started making attending money, it just seemed like I had so much money to accomplish my goals. But I think a lot of it just has to come with the fact that I live like kind of this simple lifestyle where I find a lot of pleasure in things that don't cost that much. So it was pretty easy to be honest for me to reach my goals. But like I said, I'm also single with no kids, or at the time I was single anyway, so it wasn't that hard for me to have extra money to pay my loans.

You know, among climbers, we call this the dirtbag lifestyle. You know, you sacrifice everything for the climbing, you know, and you live out of the back of your car or your van and go find the free foods you can. I mean, some of us have this mentality a little bit, I think in medical school as well, we're like, where's the nearest free lunch? But that sort of mentality, even if you just have a little bit of it, certainly goes a long way when all of a sudden you have this avalanche of income come in and you're finishing training and then you can just designate it toward building wealth, whether it's paying off loans or investing, which I presume you're doing a lot more of now the loans are gone.

Yeah, well, I was always investing the whole time, so I never ignored like my retirement goals and my saving for a home goals. So I always met those. And then after I met all those is what I threw at my loans basically. But I haven't changed it to awesome.

So you've been saving the whole time?

Yeah.

So how does it feel to have the student loans gone?

It was pretty anticlimactic, to be honest. I thought I would have this like momentous feeling of relief after I like paid it off. But I remember I pushed a button and it was just kind of done.

Not that exciting.

Yeah, like I was something I was looking forward to, but it kind of happened quickly and yeah, just it felt good. And I remember I told people I actually posted it on your website, but it wasn't awesome. Amazing feeling.

Yeah. You know, I kind of felt the same way when I paid off the mortgage. I was like, yeah, it's nice to never have to worry about this whole pay off debt versus invest question again. But you know, it wasn't some life changing experience. And I think partly because we were in a good financial place either way, you know, with or without it. But a lot of people say you should carry your student loans and invest in something with a higher return than your interest rate. Did you ever think about doing that or. Because you paid your loans off pretty rapidly.

Yeah, I only thought about it for maybe a little bit because I know mathematically that what makes sense, I think it was the emotional component of having to have loans that I wanted to get rid of them. And really, because my loan payments I had refinanced, but my loan payments were like over 2k a month, which is kind of a big chunk to have, I guess, committed to something that you don't want to spend your money to. So I just wanted to get rid of it so that each month I have a lot more flexibility with whatever I want to do with it. So that was my driving goal, was like having an extra 2k to do whatever I wanted with each month.

Do you feel like you have more freedom in your career, that you can maybe negotiate harder with your employer or, you know, that it's easier for you to change jobs, or do you feel any additional power there?

Maybe a little bit. The place I work for in the Bay Area, it's kind of a big company or I guess a really big hospital system. So it's not like anyone there negotiates that much, to be honest. Like, it's very transparent. We all kind of make about the same thing. I guess if I did want to leave, that could help, but I'm not really looking for that.

Not really something you're looking for there? You know, it's a little bit like the military that way. You know, we all knew exactly what everybody else was making, and the military sure as heck wasn't going to negotiate with us.

Yeah, yeah. So it means it's just very transparent. I'm actually an academic position. And so it's the only thing like I was debating was like, the public service loan forgiveness program, because if I did want to do that, I would have had to stay there for like seven years. And that's one of the reasons why I refinanced, because I didn't know for sure early on that's something I wanted to commit to.

And you could see that you could wipe it out in just two and a half years pretty easily, huh?

Yeah.

So what advice do you have for someone that's just like you were before you started? Somebody coming out of residency, they're going to be making 200 something. Maybe they live in the Bay area, they've got 200 something in loans. What do you tell them?

Basically, it's very doable, but they shouldn't also stress too much. I think the main thing is you have to. You do have to think about it. It's Something I started teaching our students about and our residents about, just to make sure they start thinking about it, even if they don't want to think about it at the moment, but they've had some exposure to it, I guess, basically, also is to create a budget and to stick to it. The main thing about creating a budget was that I made sure I budgeted fun things. So I had, like, a big travel component in my budget. I made sure my hobbies were incorporated to it and that I could do, like, a fancy meal every month if I wanted to. So make sure it's, like, manageable and fun that way.

But as long as I say you never felt deprived.

Yeah, I never.

It's easier to stick with it when you're not deprived.

Yeah. I never felt like I was depriving myself or acting poor or anything like that on my budget. I felt perfectly happy on it. So create something that's, like, makes you happy and then don't have any guilt as long as you stick to the budget. At least that's how I did. So I would. I would splurge all the time. But as long as I budgeted for it, I didn't feel bad about it. And then. Yeah, once you think about it, just, you know, make a plan and stick to it. I think the good thing about being attended. Oh, I guess the other thing was. So I think the hardest part about not spending money is like, having people around you that make a lot of money and spend a lot of money. So trying to, like, focus on your life, what makes you happy, how much that really costs, and sticking to it, because we're attending, we have the luxury of deciding what makes us happy. So I guess the way I was trying to think about this was there's a lot of, like, pressure to sort of model what makes other people happy, but just do what makes you happy, whether that's expensive or not, you can sort of plan that out and then stick to it.

That's great advice, Min. Congratulations on your success. You paid off $230,000 on an income of $200,000 to $300,000, all while living in the Bay Area. It's very impressive. Congratulations on your success.

Thank you.

Okay, so that was a pretty neat experience, I thought, hearing from all these people. It's wonderful to hear that it actually works. You know, this is something that's always been tough for me with the white coat investor is I didn't really have any significant student loans. I owed time instead of money. I owed the military four years. But the nice thing about that is there's an ending date on it. Four years out of residency, I was out of debt and so a lot of people can't really relate to my student loan story because I didn't have this crushing burden of $300,000 in student loans that I paid off quickly. So I've tried to substitute in some other people's stories and I hope that worked. I hope that it was something you could relate to a little bit more and that you will be inspired to budget like Min did and to take these debts and take your income and put them against each other and wipe them out so that you can start building wealth. You can start investing, you can get into your dream house, you can do the things you want to do. You can be in the career, the job that you want to be in the rest of your life because you paid for med school. It's now over and you can now move on with your life. At some point in our financial lives, it will be time to buy a home. A physician mortgage can be a good vehicle for a young doctor who's just out of school and has a more effective place to use their money than on a big down payment. These loans allow doctors to secure a mortgage with fewer restrictions and a lower down payment than a conventional mortgage. But if you're further advanced in your career or deeper into your journey to financial freedom, buying a home with a conventional mortgage and then later on potentially refinancing that loan to a better rate with a shorter time frame could be a great move. Wherever you are in your financial journey, make sure you use the mortgage that will be most financially beneficial for you. Hop over to our recommended tab to learn more about all of your mortgage and refinancing options@whitecoatinvestor.com mortgage you can do this and the white coat investor can help. If you want to crush your student loans like the people in today's episode have, the first step is often refinancing them. Simply go to that recommended tab under whitecoatinvestor.com and we'll put that link in the show notes as well. Refinance your student loans. If you're going to do it quickly, even consider a variable 5 year loan and really just get the lowest interest rate. You can get some cash back, get a little bit better customer service and knock these loans out of the park. Thanks. For those of you who have left us a five star review and those who are telling your friends about the podcast that really does help spread the word and really help other doctors to be just as successful as you have been. Next week, we're also going to be talking a little bit about student loans as well. For those who might be considering other methods of taking care of the student loans, such as the forgiveness programs, we'll be bringing on special guests, Travis Hornsby, so look forward to that next week. But in the meantime, keep your head up and your shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast.

My dad your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.