In honor of everyone graduating and moving on to the next step, let’s talk about money. And by money — I mean debt because new doctors don’t have any money! All we have are bills to pay!
I am the one who does the finances in our household. It really happened by accident. My husband was deployed shortly after we got married, so all daily responsibilities were de facto handed off to me. By the time he got back a year later, I had realized I like the bookkeeping. It’s like folding towels — a nice, sequential task where the corners line up neatly with the bonus of a visibly completed task when I’m finished.
That calm, simple task (money, not towels) kind of exploded once I graduated residency and everything changed. My husband graduated law school and started working full time. I switched from my modest salaried resident job to a higher paid but extremely variable hourly job. We bought a house. We sold a car and bought another one. And oh, yeah — all of our student loans came due.
I knew vaguely during training that we had a lot of debt. I would glance at it out of the corner of my eye from time to time, but everything was in forbearance or deferment, so nothing was due. Out of sight, out of mind, amirite? And it’s not like there was a way around it. If we wanted to complete the training we had begun, then massive debt was part of the package. Here, I will also admit that I had a naïve belief that if my school didn’t think we students would be able to pay the money back as physicians, surely they wouldn’t be helping to get us all in such debt, right? So I ignored it and kept working and surviving, and all the while the law of compounding interest ticked quietly away in the background. I knew our debt was mumble-mumble-hundred-thousand-mumble-and-change, but I only checked it every few years when I was forced to.
When I took a deep breath and did the arithmetic, we were about $750,000 in debt.
Quite a number, isn’t it?
Of course, I didn’t add all of that up until about a year ago. It was only then that my husband and I finally sat down and hashed out the basics of our repayment plan and started educating ourselves about money. A colleague told me a horror story about blindly paying the minimums on her student loans for 10 years only to find out she still owed her predatory lender $150k, so we learned about the benefits of refinancing. We had cosigned a loan for a friend forever ago who was having trouble (please do not ever cosign anything for a friend EVER), so we found a way to get some control of that loan to keep it from threatening our credit. I started listening to Dave Ramsey and reading The White Coat Investor. We found out how behind we are on retirement stuff. And we finally got in the habit of throwing buckets of money at our debts. We have paid a few small things off, which feels like a triumph. The rest won’t go away without years of consistent effort.
Here’s roughly what our budget looks like now, in terms of percentage of our monthly income:
Tithe – 10%
Student loan payments – 40-50%
Retirement savings – 6%
Mortgage/ house stuff – 10%
Car payments – 6%
Other – 20-30%
It’s not quite a painful way to live since we are in a cheap area of the country and we have never had a lot of money to spend anyway. But I still worry sometimes, and clearly the two of us cannot afford to do less than work full time at the jobs we currently have for the next 5-7 years. We’ve settled into the plan, and things are stable and workable. I feel immensely thankful for that, considering how much worse it could be. But I have to say, it’s not really fun to have half your income going to student loan debt. I wish I’d seen this coming.
I was talking to a premed student a while ago and she was telling me she got into multiple medical schools but wasn’t sure which one to choose. One was the local state school. The other was a private school in California. We talked for a while about the similarities and differences, and then I offhandedly asked if there was much of a price difference between the two. She turned sheepish. Turns out the fancy California school was $30k more per year and she wanted to do family medicine. I kinda lost it on her. $30k per year becomes $120k on graduation becomes $150k after residency becomes a $2000 difference in monthly payments for 5-10 years, and that’s likely an underestimate. She had never looked at it that way, and the last I heard she was headed to the state school.
So why bring all of this up? Because no one ever talks to med students, residents and doctors about money and it can really hurt us. We should learn about budgeting and investing and taxes. And we should talk about it with each other, so hopefully, we can stop making dumb mistakes (example: I literally realized today that I have to be careful about how much money goes into my retirement account now because apparently there’s a fee if I go over some arbitrary limit the IRS set. This is called a contribution limit, and it’s really basic. I had no idea). If it were just about money, it wouldn’t matter. But as I explained to that premed student, money equals freedom. Freedom to have a long parental leave when you have kids. Freedom to take low-paying work. Freedom to leave medicine if you want. Freedom to take a freaking vacation. The list goes on.
So, med students, residents, fellow new docs, educate yourself as early as you can. Treat debt like the enemy it is. And talk to each other. If we don’t help each other with the nuts and bolts of this profession, who will?
Zoe Smothermon is a family physician who blogs at Apparently a D.O.ctor.
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