The goal of this series is to share their story so that you, my reader, may learn and be inspired from their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially! I’d like to thank the women who took the time to answer these questions and if you’re interested in doing this, send me an email.
So let’s meet this debt-free female physician rockstar – Allison.
Tell us about yourself
I am an attending in my second year out of fellowship. My husband is a new attending and is 6 months into his job. We have been married for 3 years with baby #1 currently incubating. I am a surgeon with a specialty that allows a flexible schedule. I love traveling, volunteering, and working out. I live in a larger city in Wisconsin, but still low cost of living. I REALLY wanted to live in California or Chicago, but even as a two-physician family, my husband was adamant that we could not afford it and would not meet our financial goals. We settled on Milwaukee as it’s close to Chicago, on the lake, low COL, and still large enough for both of us to find work and some diversity.
I chose a specialty I thought I liked. I always expected to be in academic surgery, only to realize that I do not like it and it does not meet my life goals. If I had to do it again, I probably would not have gone to medical school. I feel like I spent so much time training to do something that is not my passion. I will work hard and do a good job as a surgeon, but it is not the job that I was put on this Earth to do. The problem is that I’ve spent so much time developing these skills I can’t remember what my passions are!
The only thing that kept me going through training was the fear of student loans – I could never quit because I had to have a high income to pay them off! It was also VERY important to me that I be able to support my family without issue if I had to be the breadwinner. I now realize that there are non-clinical jobs that would allow me to pay my loans off – and one semester of tuition was still cheaper than the years of sacrifice and the 3.5 years more of medical school fees!
Did you graduate with student loans?
I went to a private college that was mostly cash flowed by parents so did not have any significant debt. I went to a public medical school and received a tuition-free scholarship for 3 of the 4 years. I still managed to graduate with $110,000 of debt, which capitalized to $180,000 by the time I finished residency and started making income-based repayments. My interest rate was 6.75% with a 0.25% reduction for automatic withdrawal.
The moment in fellowship that I accepted that I could not do this job full-time or forever and be happy was the moment I ditched PSLF. I am SO glad I did for many reasons. As a person with $180K in debt, yes, I was thrilled to find a program where the government would pay off my loans! All I had to do in return was my 7 years of training and IBR at less than $500/month and 3 years of IBR on an attending salary. What a steal! As a taxpayer, I do not think it’s right that taxes go toward paying for the nice apartment I had in medical school, the international travel I did on student loans, or the interest that accumulated and I ignored to buy myself a condo and new car instead of paying what I owed. Therefore, I decided I would delay gratification and pay off those student loans so I could be debt free! I paid them off in 14 months after fellowship.
But, the first 3 months after fellowship I spent traveling and volunteering abroad. I used my first paycheck to celebrate and took 2 vacations: I took my mom on a 2-week tour of Europe (she never goes on vacation and would not be able to afford it) and then I took my husband on an African safari.
It was SO painful, but I don’t have a debt in the world and it’s priceless! I have decreased my work to part-time because I only have rent and insurance to pay and am no longer concerned with PSLF. I did not refinance because I knew my goal was to pay it off immediately and wanted every incentive to do so.
During my debt-free journey I spent~ 2.5 months to volunteer with my husband in Africa as well as splurge on a vacation to the Maldives. I also volunteered abroad with refugees for about another month. Those breaks rejuvenated me to work harder and finish off the debt quickly. They also reminded me why I do like medicine and am happy I have a needed skill to provide. Sometimes, time-sensitive opportunities come up and taking a detour is worth it – as long as you still have a plan and date for freedom.
In hindsight, I should have started IBR in residency instead of having a house and car payments at that time. My debt would have been much less and IBR would have seemed less painful. Again, given the current political climate, I’m still glad things worked out where I just focused and paid them off. This means I sacrificed greatly – we moved to a low COL area despite my love for big cities, I sold my house and we are still renting, we waited to have kids, I am still driving my beater car from residency, and I moonlighted in the middle of nowhere for a week or 2 at a time away from my husband. We did still take vacations for our sanity ☺.
Financial aspects of kids
Baby #1 on the way as an attending. No way I could afford them time or moneywise prior to now – and I was not ready myself for this responsibility.
Are you planning to fund their college expenses?
We are planning to frontload a 529 at the beginning of next year. We are planning to fully fund our child’s college expenses if able to.
Child Care expenses?
Since I am now working part-time, we will try daycare at first and see if a nanny is needed.
Financial aspects of marriage
Are you married?
Yes, this is the first marriage for both of us.
Did you get a pre-nuptial or post-nuptial agreement?
No pre-nup. I don’t wish I had one. We are working on building our wealth together.
Do you and your partner agree on finances?
We did not see eye to eye on finances until I went through the pain of paying off my debt. I finally understood the value of money, living within my budget, and honoring my commitments to pay debt I accumulated (student loans). We now have joint investment accounts and track our savings on a spreadsheet per paycheck. We have sacrificed to have low expenses – all of our friends have bought million-dollar homes and multiple Mercedes’. We are renting, debt free, save 70% of our income, and can breathe with ease.
Is your spouse stay at home?
No. I am still not sure I want to be the childcare provider for the days I’m not working – so we will have to figure this out as we go.
Are you the breadwinner?
I have always made more because I am a couple years ahead in training than my husband. But, I am also the only one who had debt and minimal savings. We are finally on even ground debt-wise, and now he is earning more than me because I dropped to part-time. We will see how it works out in the long run.
Have you experienced a financial catastrophe?
I consider student loans a financial catastrophe. I encourage everyone to stop paying a second mortgage and clean up the debt – it takes sacrifice, possibly moving, and definitely downsizing but it IS possible to not HAVE to work and feel like you’re living paycheck to paycheck.
What’s your FI (financial independence) number?
$10 million dollars – we plan to be there in 25-30 years. FI means I quit medicine altogether. We are financially stable for me to work part-time now which is great. FI means we can afford all of our needs, have a paid-off house, drop all insurances, and pay for the needs and education of our children, as well as support our mothers if needed.
Who handles the finances in your relationship? Are you DIY or do you have a financial advisor?
My husband handles most of it – we discuss what investments we’d like to make and he will set up the account for that. We are DIY and are glad we never got pulled into having an advisor.
What is your net worth?
+ $250K – it does NOT include home equity (we don’t own a home). It is cash, retirement accounts, and investment accounts.
How are you saving for FI/retirement?
We are doing: Roth 401(k)s x 2, 457(b) x 1, backdoor Roth IRAs x 2, taxable investment accounts, and an HSA. Most retirement accounts are in a target index fund; taxable account is 90/10 stocks and bonds.
Biggest financial failure/regret:
I should have done at the very least a Roth IRA during residency. I wish I started paying my student loans in residency – you’re not that poor – more than half of America lives on your resident salary and supports a family!
One thing you wish you knew:
All of my attendings told me to defer my loans – you’ll pay them as an attending. Guess what, you have many more expenses as an attending, the interest is no longer deductible, and you are taxed so much more!
What insurances do you have?
Long-term disability and life; currently looking into umbrella.
Do you give to charity?
12.5% to church and various organizations like UNICEF. We also donate appreciated stocks so we do not have to pay the capital gains on them and it counts as charity.
Any parting words of wisdom?
I encourage medical students to live frugally, and get out of medicine if you realize that this field is not for you. I also encourage residents to start paying at least the minimum amount due (do NOT defer) and try to put away money in a Roth IRA or other plan at your hospital has (many times they have 401(k)s and 403(b)s for residents, too!).
And … that’s a wrap! If you’re interested in doing this please send me an email – I’d love to hear from you!
Wow, paying off $180K of student loan debt in 14 months! #likeaboss