529s and Spending for College

INTRODUCTION

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.

Dr. Jim Dahle:
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All right, welcome back to the podcast. We got a cool thing coming up. This thing drops on August 14th. I'm recording it in late July, but on August 19th, five days after this drops, we have something that's pretty special. We're calling it Financial Crash Course.

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Okay, let's get into your questions. This podcast is driven by you, so we want to spend our time helping you and dealing with what you're dealing with. So let's get started into some of this stuff. Why don't we start today with a question off the Speak Pipe, and I think maybe we do a little bit of a deep dive about this one. This one comes from Steve.

SPENDING FOR COLLEGE

Steve:
Hi Jim, this is Steve from Texas. We appreciate all the information about saving for college over the last several years on the podcast. However, I wonder if you might do a podcast episode on spending for college. For example, what's the process of spending down to 529? Do you just pay the bills and withdraw the money and keep the receipts, or is there something more complicated than that?

Also, what would you recommend for those of us that have a diversified savings plan for college, in that we plan on using 529, personal savings earmarked from our brokerage account, and cash flow? Is there any benefit to doing one before the other, or is it best just to liquidate the 529s first because they're at least flexible? Thanks for all that you do.

Dr. Jim Dahle:
Okay, let's talk about 529s. I guess I haven't spent a lot of time talking about spending them down. I'm actually spending down a lot of 529s. I think I'm spending down eight 529s right now.

As you may or may not be aware, Katie and I have established 529s for all of our nieces and nephews, as well as our children. We now have two kids in college and a number of their cousins in college, as well. We've got only two so far out of college. One spent their whole 529, one did not. We've got a fair amount of experience in spending from 529s.

Here's the way our process works. The kid has an expense that's 529 eligible, and I have to educate each of them about what 529 eligible expenses are. A lot of them try to send me transportation expenses, for example. Nope, not eligible. The most recent one was a deposit on an apartment. The deposit is not a 529 eligible expense. The rent is, but the deposit is not. I said, that one's not coming from your 529, sorry.

Assuming it's an eligible expense, they text me and say, “Hey, Uncle Jim or Dad, I need $529.30.” And I Venmo them $529.30. Then I log in to my529.com, which is the Utah 529, where we have all of these established, go to their account and withdraw $529.30 and transfer it to my bank account. Then they send me a receipt. They usually email the receipt because it's easier for me to save it on my computer. I save it into a file on my computer for my 2025 tax files. I label it “529 Expenses.” I label it with the date and their name. I've got it in there if I ever get audited.

But you have to have receipts to cover all your 529 withdrawals or they're not eligible withdrawals, and you'll end up having to pay tax and penalty on them. You do need to keep track of those receipts in case of an audit. You need to make sure it's only being spent for eligible expenses.

You have the whole year to take the money out. If you wanted to let it ride until December and then add it all up and pull the money out in December, you could do that, but you can't wait till the next year. This is not an HSA where you can save the receipts for decades and then pull the money out all at once. That's not the way it works. It's got to come out in the year it's spent. I find it easiest to just take out when they spend it.

I encourage the nieces and nephews to spend my money first before they go to their parents' money, if any, before they use their own money. If it's an eligible expense, let's drain this 529. If you drain it your first year or your first two years, fine, no big deal. If you get to the end of college and you still have money in here and you're not going to grad school, I'm going to make you the owner. Then you have to deal with the withdrawal issues. Obviously, you can transfer up to $35,000 to a Roth IRA over a number of years. Maybe that's what the one that's overfunded right now will end up doing.

As far as my children's ones go, they're probably all going to be overfunded. We'll end up just changing the beneficiary to the grandkids for those. That's our process for spending down a 529.

Now, if you have other assets you're planning to use to pay for college, you may need a little bit more complicated plan for paying. Certainly, I would prioritize use of the 529, but it really comes down to what are the other assets.

If they have scholarship money, obviously, you're going to use that first. If they're working, you may want to use their earnings for stuff that's not 529 eligible, like those apartment deposits or transportation expenses or traveling they want to do, those sorts of things. That's what my kids tend to use their earnings for is fun stuff. Then for anything that qualifies for actual 529 money, they use the 529.

If you're also using your savings, the question is, “Well, how do you balance these two?” Well, you probably want to use the 529 in a way that it's empty by the time they're done with their education, because it can't be used for other things. You can change the beneficiary, obviously, but it can't be used for other things.

There's also the fact that 529 money grows tax-free as long as it's used for education. You might want a balanced approach where you take a certain amount out each year if you're also using your taxable account or your own cash flow, but I'd probably tend to lean more toward front-loading the 529 withdrawals and then making it up toward the end.

But that's up to you. It certainly would be reasonable to spread the 529 withdrawals out over the entire educational period to try to maximize the benefit of that tax-protected growth.

If you're using the loans as well, you may want to use the 529 money to make it so you're only using the loans with the best possible terms. Let's say, for instance, you're using it to pay for medical school. Maybe you take out the maximum amount of federal loans, which now with the new One Big Beautiful Bill Act is $50,000 a year, at least once it's fully implemented, and then when you need money above and beyond that, you take it from the 529. Maybe that's your approach. That would be reasonable to do as well.

As far as it goes for saving for college, there's basically four pillars to paying for college. There's your college choice, which is surprisingly important. College education is a lot like a marriage. It basically costs what you're willing to pay. If you want to pay $100,000 a year for your college education, there is a school in this country that will take your money.

On the other hand, you can go to the local community college and it probably costs you $2,000 a year and you live at home. A college education would be very inexpensive. State schools, especially for the kids of doctors that tend to do well in school due to good genetics and their tiger parents, tend to qualify for scholarships at state colleges and oftentimes can go for a relatively low price.

School selection is very important. Then, of course, there's savings, what you saved in advance for college. That's usually in a 529. Maybe it's in an education savings account, aka a Coverdell, but most of the time these days it's in a 529.

Then there's the kid's contribution. That might be the scholarships they earn, the money they earn during the summers, their work during the school years, or money they saved up during high school or something. That's their contribution. I think it's a good idea to have them have some skin in the game, as well.

Finally, there's your cash flow. There's no requirement, especially for a high-income professional who's still going to be working while the kid's in college, to save it all up in advance. You don't have to do that. You're making $20,000, $30,000, $40,000 a month. Some of that can go toward paying for college. You can cash flow a lot of this.

Those are the four pillars of paying for college. I hope that most White Coat Investors are not using borrowed money to pay for undergraduate educations. Now, I get it if your kid goes to dental school or your kid goes to med school, some of that might need to be borrowed. I think they ought to be borrowing it, not you. But as far as undergrad goes, I think between your cash flow and your savings and good school selection and their contribution, you ought to be able to get through debt-free for the most part.

We tend to invest our 529s aggressively, much more aggressively than we invest even our retirement money, despite the fact that we need the money sooner. The reason why is that you have to consider not only the likelihood of a market downturn causing you to have less money, but the consequences.

If there's a big, nasty bear market and our 529s get whacked, that's okay because we could cash flow their college educations. We wouldn't have to touch that 529. We could use some cash and pay for this year and give the market some time to rebound and maybe pull a bunch of that money out their senior year.

But the benefit of investing aggressively is you tend to get the higher returns over the long term. Dialing that aggressiveness back in the last year or two before they get to college when that accounts as big as it's going to get hurts you the most. I prefer to leave it invested aggressively.

The cool thing about that is those accounts all benefited from being invested aggressively in 2023 and 2024 when the market went crazy. We've always invested our 529s aggressively, 100% stock. In fact, we tilt them pretty significantly to both international and small value stocks. Now, that wasn't so awesome when US large cap stocks were doing awesome, but that international tilt is sure paying off in 2025.

The point is you don't have to invest in these things. It doesn't have to be 100% cash the day they start college when they turn 18. That money is still not going to be spent, some of it, until they're a senior probably. That's three years away. It doesn't have to all be in cash by then. You can be relatively aggressive. You need to consider not only the possibility of a market downturn, but also the consequences of it. The more dire the consequences, the more conservative you ought to be with that money. Maybe it's worth discussing with the kid as well.

QUOTE OF THE DAY

Dr. Jim Dahle:
Our quote of the day today comes from Warren Buffett, who said, “Be fearful when others are greedy, and greedy only when others are fearful.”

The truth of the matter is if you use a static asset allocation and always invest when you get the money so that you're not trying to time the market, you're not trying to dollar cost average some lump sum you got, this works out pretty well. Because even when markets are down, you're still investing because it's your habit. You invest every month. When markets are up, you invest every month, so you don't have to worry so much about the big, bad behavioral problems in investing, which is fear of loss and fear of missing out.

When you set your asset allocation, you probably ought to balance those two things. You want that asset allocation or mix of investments that perfectly balances your fear of loss, especially during a market downturn, and your fear of missing out, especially during a market upturn. You're looking for something you can stick with long-term. It really doesn't matter that much what your asset allocation is. Whether you can stick with it or not long-term is far more important.

CHANGING 529 BENEFICIARY

Dr. Jim Dahle:
All right, let's answer some questions from the email. “In an episode, you discussed that changing the beneficiary of 529 from the current beneficiary to a new beneficiary of a younger generation is treated as a gift, and depending on the amount, potentially triggers a gift tax using up a portion of the unified gift – estate tax exemption. However, you did not specify whether this is treated as a gift from the current owner of the 529 or from the current beneficiary of the 529. I'd appreciate hearing your thoughts on this, as it seems like you could make a case for either.” The best article I could find on this comes from Michael Kitsies. And we'll include the link in the show notes.

“Michael concludes that the correct treatment is that this is a gift from the current beneficiary to the new beneficiary, which is absolutely true. That is how it's treated. While I see his logic to a point, this still bothers me. How can someone involuntarily and non-discretionarily trigger a tax reporting requirement for someone else?

Taking this logic to the extreme, imagine a bitter divorce. Under one spouse, the owner of a 529 could repeatedly switch the beneficiary of the 529 back and forth between their ex-spouse and a common child, triggering an arbitrarily large gift tax liability. I'd love to hear your thoughts on who has the gift tax filing obligation when the beneficiary of the 529 changes is the owner of multiple 529 plans for children.

Loving marriage, though. Bitter ex-spouse scenario above was purely hypothetical. On phase to be somewhere between moderately and clearly overfunded. I'm interested in making sure transfers to future generations are handled properly.”

Okay, well, the way it's written is the current beneficiary, that's who the gift tax applies to. Now, you can probably, if you're not that overfunded, deal with the gift tax limits. This year, I think it's $19,000, could be $20,000, it goes up every year. Lately, it's been going up about $1,000 a year, but you could move $19,000 a year from the kid to the grandkid. And within a few years, you ought to have the 529 empty.

So you can work around this if your 529 isn't like $400,000 overfunded. Even if it is, you're probably splitting it between multiple grandkids. Maybe you can still work it out where you can make the transfer over a few years and not have to deal with the gift tax issues.

Keep in mind, gift tax, for most people, is just a tax return. It's not an actual tax. You don't actually pay anything. You're just saying, “I'm going to use up some of my estate tax exemption.” Well, with the One Big Beautiful Bill Act, that's now $15 million in 2025. If you're married, it's $30 million, okay? So unless you're going to die with more than $30 million indexed to inflation, $30 million in today's dollars, you're not going to have an estate tax. So you don't have to pay any gift tax. You're just using up some of that exemption.

It's really not that big a deal. Even if you had to use $400,000 of it, you're probably not getting to your estate tax limits anyway. No big deal. Make sure your state doesn't have some weird estate tax thing going on as well. There's about a dozen states or so that do have an estate or inheritance tax, and you ought to be aware of those laws as well as you're changing beneficiaries.

But yeah, it's a little weird. I don't think when Congress put 529s in place that they really thought through everything with regard to 529 laws, including hypothetical situations like this bitter divorce scenario proposed in the email. I would think if you're really switching back and forth a whole bunch and trying to use up their $15 million exemption that you could go to court and argue against that, that that was obviously crazy. And I think you can get out of that sort of a thing.

But it seems a little bit bizarre because who are you trying to hurt? If you're in a bitter divorce, do you really want to hurt your kid? You're not hurting your ex-spouse, you're hurting your kid. I don't know why you'd be interested in doing that anyway. Most people don't hate their kids just because they got divorced. But that is the way it works. It is a gift from the current beneficiary to the next generation and uses up their gift tax exemption if you're given more than $19,000.

These are true first world problems we're talking about here. This is not something the average American deals with. And so, I don't think Congress cares all that much that this is the way the law is written, but that's the way it is. So, be aware of that.

All right, everybody. If no one's told you thanks for what you do today, let me be the first. I know a lot of us, a lot of you listening to this podcast had a rough day at work today for whatever reason. I don't know. Somebody died, you made a mistake, somebody was mean to you. I don't know what happened. Maybe a patient vomited on you or threw something at you. I have no idea.

What you're doing is important. Not everybody tells you thank you. And I know it matters what you're doing. So, keep your head up. The work is important. That's why they pay you a lot to do it. Let's manage your money well so you don't have to do it forever and you can do it on your terms soon. But in the meantime, thanks for all the hard work you're putting in.

Okay, we have to talk more about student loans. We're going to be talking a lot about student loans and maybe I need to spend some more time with Andrew at studentloanadvice.com so I have all the answers down to all these questions you guys are asking me.

A lot of stuff has changed with student loans since the One Big Beautiful Bill Act came out. I'm still catching up personally, and trying to get all the answers right. Because for the last three and a half years, the answer was, “well, just stay on student loan holiday and we'll figure it out when it ends.” Well, it's all ended now, or it's ending soon, or it's going to end over the next three years or so. And so, it's time to get stuff sorted out.

I highly recommend a consult with Andrew. If you have any sort of a complicated student loan situation, you can book that at studentloanadvice.com. And it's well worth your time. It's one flat fee, it gets you an hour with Andrew, he goes over your stuff in advance. And then you get like a year of sending him follow-up email questions all for one flat fee. I think it's a pretty good deal for those of you with complicated student loan situations. But let's listen to Samantha's question.

NEW STUDENT LOAN CHANGES

Samantha:
Hi, Dr. Dahle. I really appreciate everything you do for the White Coat Investor community. I've benefited immensely from your podcast and all the information you've provided. I'd like to ask you a question regarding student loans. I've been honestly having trouble keeping up with what to do with my student loans. I was hoping you could spend a little time going over what the options are currently based on the new changes and also regarding PSLF.

For a little background, my situation is that I have worked for a 501(c)(3) institution for the past eight years and am on track for PSLF, I think. I'm currently in the save forbearance and I'm really not sure what my best option is. I haven't recertified my income since I was in training. I now have an attendee level income and I'm not sure I fully understand what my options are and what the implications are. I would appreciate any guidance you could provide. Thank you.

Dr. Jim Dahle:
Okay, the first guidance I would give you is go book a consult with Andrew. This is well worth your time. You're probably looking at hundreds of thousands of dollars being forgiven. Spending $600 or whatever it is, I think it's $600 now, at studentloanadvice.com is well worth your money. That is a good investment for you to manage your student loans exactly right. One little tip could be worth tens of thousands or even hundreds of thousands of dollars.

So, don't be afraid, don't be penny wise and pound foolish. If you need a consult from someone who really knows this stuff in and out, get Andrew on a call and get it sorted out. He was on just three episodes ago, episode 429. We went over all the new changes. Obviously, we didn't walk through every possible scenario for every possible borrower.

But I think as an overview, PSLF didn't change. PSLF is still there. Your plan is PSLF, you should still go for PSLF. You've been at this employer for eight years or whatever, maybe including residency and you only got two years left, you should still go for PSLF.

Now, it's just a question of getting those last whatever number of payments you've got and maybe it's just 24 more, maybe it's 36 or whatever, however long the save forbearance has been going on.

Now, there's a big dilemma right now in this space with the SAVE thing. Because there's all these people that have been on SAVE and the Biden administration tried to put SAVE in and as soon as the Trump administration came in, they're like, “What is this? This is way too generous, we're getting rid of this.” And it's been tied up in court and it's a mess.

It looks like SAVE is not going to be around. It's certainly not going to be around long-term. The only question is, are you going to be able to buy back those months of payments that you didn't make under save or somehow get credit under them? And nobody's really sure. And so, the dilemma is, “Do you switch now, probably to IBR?”, although I think a few people are switching to PAY, even though PAY is going to go away in a few years. Do you switch to IBR now and make sure the payments you're making now are counting? Or do you stay in SAVE for a few more months and hope that that buyback is going to happen and potentially be behind by a few months in payments and have to wait longer to get your public service loan forgiveness?

But if it all works out and you can get the buyback, then maybe you pay a little bit less over time from staying in SAVE until it's really completely done. And nobody really knows the answer. I think Andrew is mostly recommending that people go to IBR now and bird in the hand rather than two in the bush kind of philosophy. But those are the main things.

Now, there's basically four categories of people out there. People that qualify for old IBR, people that qualify for new IBR. These are most current borrowers. People who are in school now, and people that haven't started medical school yet. And depending on which of those categories you're in, your options are going to be different for your income-driven repayment programs.

For people who haven't even started medical school, probably half their loans are going to be private. Well, maybe not. It depends on how expensive the medical school is. They're not going to be as eligible for PSLF as current borrowers are, and those currently in medical school are. Their only option when they come out of school is going to be this RAP program, which is probably higher payments for most people, and so less money left to forgive overall. Basically, it's less generous than the program for all of you current borrowers has been for the last 10 or 15 years.

That part's actually relatively easy to sort out, the people who haven't even started medical school yet. It's the other groups that are much more complicated and the ones who are much more likely to benefit from a consultation with a pro about it.

But I think that's the dilemma you're facing. I think there's a lot of people in this bucket with you, Samantha. You can certainly commiserate with people, especially on the White Coat Investors subreddit. This is being talked about in multiple threads every day.

If you can't figure it out on your own, what the best thing to do is, I'd just book a consult with Andrew. I think it's well worth your money. Even if you're on a resident income, I think it's worth your money to have that consultation. Too many of us become so fee-averse that it ends up costing us more money in the long run than the fees would have been, and that peace of mind is worth something too.

Okay, let's take a question from Travis here.

SPREADING FINANCIAL LITERACY

Travis:
Hi, Dr. Dahle and the rest of the White Coat Investor team. My name is Travis Nixon. I'm a dentist, practice owner, and educator at the University of North Carolina School of Dentistry. I've been following both the blog and more recently the podcast since 2013 and can't imagine where I'd be in my financial literacy without the amazing content from your group.

While I'm passionate about financial literacy, I'm also equally as passionate about practice management and clinical excellence and teach an optional seminar class study club at the dental school to third and fourth year dental students.

Our group is now in its third year and has grown from 27 to over 70 students, or roughly 40 percent of the students from the two classes. I frequently share your principles with these students, but would love to step it up a little bit this coming year.

Are there any ways in which we could partner together to make even more of an impact on these young practitioners, such as a live seminar, a quick phone call to the group, or any other materials? I realize that providing your book may not be possible since they are not first-year students. Thank you so much and keep up the great work.

Dr. Jim Dahle:
Travis, thanks for leaving a Speak Pipe. You can always email me. You don't have to leave Speak Pipes to communicate with me. Those are mostly for messages we're going to use on the podcast. So we're going to your message without your contact information, just to talk a little bit about financial literacy.

Here's the deal with financial literacy. I would love to come out to every medical and dental student in the country. Every school, give them all a great lecture and teach them all an eight-week course. It would be awesome.

I can't do that for a few reasons. One, I don't have the time. Two, there's no way I'm spending that much time on a plane, in hotels, and in Ubers. I hate it. So I'm not going to do it. And the truth is, most schools will not pay me enough that I'm willing to actually get on a plane and come speak to you.

So here's what we do instead from White Coat Investor. First of all, we encourage people like you to do what you're doing. And you're doing fantastic work and I thank you for it. And we try to recognize people like you doing this through our Financial Educator Award that we give out every year. To all of Travis's students, you should nominate him for that award. We should give him some recognition and encourage this sort of behavior. If there were one person like Travis at every medical school and dental school and residency in the country, White Coat Investor wouldn't have to exist. It really wouldn't. And that would be pretty awesome. That's kind of the main thing here.

And so, we try to support people like you, Travis, in doing what you're doing. We have slides. If you go to that Financial Educator Award post we do every year and it's under WCI Plus on the main whitecoatinvestor.com page, you can get a set of slides you can use to give a financial talk. There's a version for students, a version for residents, a version for attendees. We provide those slides to you. I try to update them every year. You can modify them as needed. If you don't even want to give me credit for them, I can live with that. That's fine.

Another thing we do is we do a student webinar. I'm told I'm not supposed to call them student webinars because apparently calling something a webinar makes fewer people come to it. I don't know why, but it's basically the talk I would give at your dental school or your medical school if you flew me out there to come speak to you.

And I usually wrangle in Andrew from studentloanadvice.com to help me with the student loan section. And then we stick around afterward, just like I would stick around if I was standing in that classroom giving a talk at your dental school until everyone's had their questions answered. We stick around for an hour or more afterward and just answer your individual questions. We do that once a year. And that's kind of the substitute I have for going around to 400 different schools and giving a talk at all of them.

It's really funny, sometimes I get these invitations from schools or residencies and they're like, “We'll put you up in a hotel room.” No payment for my time whatsoever, won't even pay my airfare, but they'll put me up in a hotel room if I'll come out and talk to them.

I don't know, maybe they think I need a new entry on my CV more than I do or something. But I'm not coming out there just for a hotel room, sorry. My time's worth more than that. And frankly, I don't like traveling that much. So I'm not going to come out and give all those talks. If you want to pay me to come out, we'll come out and we'll give you a talk. But that's how we limit how many of these I do a year is we just charge for them. So I end up doing about a dozen of them a year.

Okay, what else do we do? We have the Champions Program. We try to give a copy of the White Coat Investor book, the student book, Guide for Students, to every first year medical and dental student for free. We're giving these away. It costs us six figures every year to give these away. It's a lot of value of books that we're giving away. And all you have to do is be a first year volunteer to pass them out for your class. And we'll send you enough for everybody in your class.

So, if you're at an institution like Travis's, find a first year and encourage them to volunteer. And we'll get those out. And if you do that, well, by the time they get to Travis's class in their third or fourth year, they've all got a copy of the book. They might not have read it, but it's probably on their shelf at home. Most people probably aren't throwing it away. And then they can use that as whatever, the textbook for the course or a resource that they can use.

If you're relatively well-to-do and you have 10 students or 25 students or whatever, you have 77 students or whatever I think Travis has this year, you can buy them a copy of the books. We'll give you bulk pricing on them. If you're buying 25 plus copies of them, we'll give you a bulk pricing on copies of the student book or any of the other books. Just contact us at [email protected] and we'll give you discount copies of them.

But we cannot run a course at every medical and dental school in the country. If you want me to speak, you have to pay me to come speak. Otherwise there's the webinar once a year, the free books and all the resources that we can give and encouragement we can give to people like Travis for what they're doing. Thanks so much. All of you out there, I know there's a whole bunch of you out there and I appreciate the lectures you're giving, the little side talks you give to a handful of residents or students at a time. It really does make a difference when people hear this financial literacy stuff from people they respect who are teaching them other stuff, anyway. So, please continue to incorporate that into your practice as you go.

POLITICS

Dr. Jim Dahle:
Okay. Let's talk a little bit about politics. Everybody loves politics. I did an AMA recently on Reddit. AMA is Ask Me Anything. It's this thing that Reddit does where you just say, “Hey, I'm here for a day or two and you can ask me anything. I'll answer your questions.” And the interesting thing when we announced this is all anybody wanted to talk about was Donald Trump. And I'm like I'm kind of a financial resource guy. This is the White Coat Investor subreddit. But if this is really what you guys want to talk about is the president, I guess we can do that.

But for the most part, we try not to get into politics too much here at the White Coat Investor. The main reason why is actually a business reason. We figure whatever political position we take in politics, of course, is where reasonable people can disagree. In politics, any position we take, approximately half of our audience is going to disagree with us. We try not to take positions as we don't want to tweak you off and make you not become financially literate because you don't like whatever our political position is. We try not to talk about politics as much as we can.

Obviously, it does have some influence on your finances, particularly when things like the One Big Beautiful Bill Act gets passed. That's going to change things in your finances, how you manage your taxes, maybe how you manage your investments.

I got this email that says the elephant in the room, so to speak, or maybe this was a comment on a blog post. “Everything in this post is true. And hopefully we're all following written financial plans. But when is it time to revise a written financial plan in response to drastic, likely persistent economic policy changes to say nothing of the immense current and likely long-term professional and economic disruption to anyone in a university research setting, which applies to many WCI readers.”

And a similar comment. “Thank you so much for taking the time to reply. I suspect that many of us who would never sell a dip are nonetheless thinking of diversification in new ways right now. Nothing else till I tilt my forthcoming after-tax investments a bit more into international stocks or bonds, canned goods, legal fees for dual citizenship.

During your admirably brief response time, a friend of mine found out that a $500,000 federal grant on which she is the primary investigator, which had already been issued to her university, is being canceled. No one even knows what that means when the money has already been partially spent.

For the academic medical research sector, it's a real life, real-time confiscation scenario. If nothing else, obliteration of research funding will lead to circumstances that meet the when to revise a plan criteria you offer, and with which I agree. For many readers, the question may be less, do I sell the dip? No, obviously you don't. But given that I have to revise my plan, do I just cut luxuries as much as possible and tilt a bit more toward bond funds for now or what?”

Boy, the anxiety out there anytime anything happens in Washington is pretty impressive. And I think it gets better over time for each individual investor because it always feels like this time is different. It felt like it was different in 2008 when money market funds were highly likely to break the buck and the global currency markets were melting down.

You think it feels different now? You should have seen 2008. It felt like that in 2000, I'm sure, when the tech meltdown happened. It felt like that in 2020, when we all felt like we were going to not only die, but bring home a virus that was going to kill our family. It felt like that in 2022, when interest rates went up 4% in just a few months. But yet, the right answer has always been to tell yourself, “This too shall pass.” And it's not always true.

In the late Bronze Age in the Eastern Mediterranean, it didn't pass. Or czarist Russia. But even the Great Depression worked out okay eventually for a buying holder, especially if you owned bonds.

When your personal situation changes, your personal situation, not general economic and political changes, but your personal situation changes, it's appropriate to change your plans. You get married. Somebody dies. You or your spouse die. You get divorced. You or your spouse gets disabled. There's a serious change in your earnings. There's an earlier retirement date. Your kid turns out to have a lifelong disability or something. And it seems more reasonable to cut luxuries than to change an asset allocation in the middle of a market meltdown for sure.

But that's basically it. Your asset allocation, as originally designed, should incorporate the possibility of risks showing up, the risk of a change in presidential administration, a risk of a bear market, a risk of US stocks underperforming international stocks. These risks have always existed. They just happened to show up this year.

And so, that's not a reason to change your plan. If you change your plan every time there's new economic and political news, at a minimum, you're going to be changing your investing plan, your asset allocation every four years. And you're probably going to regret it, because most changes end up being performance chasing. You end up selling low and buying high. It's just not a good recipe. What works is sticking with a plan long term for decades.

When I look at the changes we've made in our investing plan over the last 21 years, they are minimal changes, number one. They're tiny percentages of the plan. And none of them really changed the amount of risk we were taking. At one point, we added a little bit of peer-to-peer loans. We had those for a few years. Then we phased them out of the portfolio.

At another point, we slightly increased our real estate allocation and ended up with some private real estate investments when they became available to us due to our level of wealth. And we did a few simplifying changes. I used to have some dedicated mid-cap holdings, and we ended up just having more in small cap for that small value tilt that we have in our portfolio. They're minor changes.

It's been 21 years. We're basically using the same plan I wrote as a PGY2 resident. Same plan. We're still following it. You don't have to change it every four years. In fact, the more you change it, the less likely you are to be successful.

So, pick a reasonable plan you can stick with long term. Use a static, unchanging asset allocation. Rebalance to it periodically. Every year or so is plenty. And stay the course in market downturns, whether they're due to a pandemic or a tech meltdown or the emergence of AI or interest rate changes or a global financial crisis. Whatever it is, threats of war in Ukraine or the Middle East, there's always going to be this sort of stuff happening. And if you let it bother you, if you sit there and wonder, “Should I change my asset allocation?” every time you read CNN or Fox News, it's going to drive you nuts.

This finance stuff is not that hard. Write down a reasonable plan, follow it, fund it adequately, and guess what? In 15, 20, 25 years, you're a multimillionaire, and you don't have to work for money. This stuff's not that hard. You can do it. Thousands and thousands of White Coat Investors before you have done it. We highlight them on the Milestones to Millionaire podcast all the time. You can do it, too. It's not that hard.

Live like a resident for a few years. Knock out your student loans if nobody else is going to pay them off for you. Put 20% of your income toward retirement. Use tax protected accounts as they're available to you. Have a reasonable amount of risk in your plan. Use index funds.

If you're going to invest in something like real estate, make sure you're doing it the right way for you. Limit how much you're putting into Japanese yen or Bitcoin or gold or platinum or whatever cool little diversifying thing you want to have. And you know what? It's going to work. It's going to work. It's not that complicated. You can do it.

SPONSOR

Dr. Jim Dahle:
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All right. Don't forget the financial crash course. It's August 19th at 06:00 P.M. You sign up for that at whitecoatinvestor.com/crashcourse. Who's it designed for? Well, attending level professionals or anybody who will eventually be an attending level professional. So I hope to see lots and lots of you there.

Thanks for those of you leaving five-star reviews for the podcast. It really does help us to get new listeners and help more people. A recent one came in from J.H. Tellers who said, “Good for all high earners. As a son of a white coat, I've used the material from this podcast to help my father better his understanding of his financial assets while growing my own personal knowledge. Keep up the good work.” Five stars.

I appreciate that. Also appreciate those of you telling people about the podcast, the blog, the website, the books, whatever. Word of mouth is an important way that we can reach more White Coat Investors and help them be successful. Because I truly believe that financially successful, financially comfortable, whatever you want to call it, doctors are better doctors. They're better physicians. They're better parents. They're better partners.

Keep your head up and your shoulders back. You've got this. We're here to help. Send us any questions you have at whitecoatinvestor.com/speakpipe. We'll get them answered on the podcast. See you next time.

DISCLAIMER

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your 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.

INTRODUCTION

This is the White Coat Investor podcast Milestones to Millionaire – Celebrating stories of success along the journey to financial freedom.

Dr. Jim Dahle:
This is Milestones to Millionaire podcast number 235 – Resident gets $100,000 in assets during residency.

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We do something here at the White Coat Investor we've been doing for many years to directly reduce the indebtedness of medical students, medical and other professional students. You can actually apply no matter what professional school you're in, as long as it's a brick and mortar school.

But we give a scholarship. We've got 10 of these scholarships every year, thousands of dollars. And students can apply for this through the end of August. Rules and details of applying can be found at whitecoatinvestor.com/scholarship. We're just going to have one big category this year. We're hoping people will put a financial spin on their essays that they submit to apply for this scholarship. But we had over a thousand applicants last year. We expect more than a thousand applicants this year.

We can use some help judging. If you'd like to be a judge for the White Coat Investor Scholarship, email [email protected]. Just put “Volunteer Judge” in the title. And you'll have to read a few essays, like 10 essays, come September and help us decide which ones are going to be the winning ones. So thank you if you're willing to do that, please volunteer.

Okay, we have a great interview today. This one's going to be a lot of fun. You guys are always telling me, don't get the multi-billionaires on here. We want people that are like us, don't have that much. Lower milestones. This is one of those, you're going to like it. Stick around afterward. We're going to talk for just a few minutes about why medical school still makes sense as an investment.

INTERVIEW

Dr. Jim Dahle:
Our guest today on the Milestones to Millionaire podcast is Suresh. Thanks for being here.

Suresh:
It's a pleasure, Dr. Dahle. I've been looking forward to this moment for a long, long time now.

Dr. Jim Dahle:
Yeah, it's pretty awesome to get people on that listen all the time and celebrate with them. Let's introduce you a little bit to the audience. Tell them where you're at in your training because you're not done with training yet. And what part of the country you're in and what you're doing for a living.

Suresh:
Sure, yeah. I am a PGY3 internal medicine resident. I just started my third year. I've just finished my first week of PGY3. I live in a major city in the Northeast and I'm looking to go into primary care starting next year. One of those rare outpatient internists that we don't really see much these days.

Dr. Jim Dahle:
Awesome. We definitely need more of them. Thank you for what you do. That's pretty awesome. Okay, Northeast, big major city. That's a code word for high cost of living.

Suresh:
Let me say this. I know when we think of major Northeast city, we start thinking of New York, Boston, D.C. It's considered Northeast, but it's one of the friendlier cost of living cities.

Dr. Jim Dahle:
Fair enough, fair enough. Okay, now you have somebody else in your life. Tell us a little bit about who else you're working with on these financial goals.

Suresh:
Yes, absolutely. My wife Hina is just as big of a role in this as I am. She works full-time as well as a prompt engineer for Meta. Basically everything that you put into Meta's version of ChatGPT. There's a person on the other end of that that's helping train the AI. So I get to see a lot of the crazy questions sometimes that people like to ask the AI.

But yeah, she has a really cool job and she gets to work from home. She's been on this whole journey with me from med school to residency and I'll becoming an attending next year. So she's a very, very big part of all the goals that we've achieved.

Dr. Jim Dahle:
Okay. I understand you got married and combined finances about the time you started residency.

Suresh:
Correct, that was May of 2023 is when we were like, let's get a chewing bank account, checking account, everything is combined, combined credit cards. So that way we both know the ins and outs, what's coming in, what's going out. We both have full equal access to it.

Dr. Jim Dahle:
All right. Well, when you applied to come on the podcast, which is weeks, maybe months ago, the milestone you wanted to celebrate was $100,000. $100,000 in assets while still in residency, which is pretty awesome. But give us a sense of what that means. Where were you guys at when you got married a couple of years ago? What kind of net worth are we talking about? Did she bring a bunch of assets into the marriage or were you both just dirt poor broke when you came into the marriage? Tell us where you started.

Suresh:
Definitely option B, dirt poor broke. I went to an osteopathic med school. I was grateful enough that my family helped pay for my undergrad. But then med school was all on me. I went to a DO school, which we know are very expensive. And my wife didn't have any assets when we came into the marriage. Coming out of training, May of 2023, my wife and I's combined net worth was negative $318,000.

Dr. Jim Dahle:
Wow.

Suresh:
Yes.

Dr. Jim Dahle:
Where are you at now? Have you added it up recently?

Suresh:
Yeah. Now we are at negative $213,000, negative $212,000.

Dr. Jim Dahle:
Very nice. Very nice.

Suresh:
And the only debt we have is those student loans. I've kept those untouched and I'll get into why. I had a very lucky situation, let's say with student loans. And then the rest, the assets, we've split between a taxable brokerage, two Roth IRAs, my residencies 403(b), 401(a). And the majority of it is actually in cash in a high yield savings account.

Dr. Jim Dahle:
Now you have swung your net worth by $100,000 in the last couple of years and hit $100,000 in assets, which is the milestone we're celebrating today. So, congratulations on that.

Suresh:
Thank you.

Dr. Jim Dahle:
Tell us what income looked like over the last couple of years. I think we understand about what you've made as a medicine PGY-1 and PGY-2. That's typically in the $60,000, $65,000, $70,000 range. You mentioned you'd done a little bit of moonlighting. Of course, she's working. So, what's your household income look like over the last couple of years?

Suresh:
Yeah. 2023 was obviously a weird year because I started intern year halfway through the year. I was a fourth year med student the first half. And then actually when we first started interning, my wife was actually unemployed for about three months and she started working in September of 2023.

2023, it wasn't very impactful. If I had to take a guess, I think on our tax returns, it was like $60,000, $65,000. Now 2024 was the big year. That's when I started moonlighting. My wife worked the full year. I worked the full year as a resident. And in 2024, I remember on our taxes hour, it was $129,000 in 2024. And I expect that to be a little bit higher this year as well, because in 2024, I didn't do a full year of moonlighting and I'll probably be doing full-time moonlighting this year as well, which that's pretty cool thing that I can talk about later too. It's a bit of a unique moonlighting experience. But that's kind of what our income has looked like.

Dr. Jim Dahle:
Yeah, let's hear a little bit about the moonlighting experience. It's pretty unusual to be able to get out there at the end of your PGY-1 year and not only safe, but effective enough that someone's willing to pay you something. So, tell us a little bit about the moonlighting.

Suresh:
Yeah, yeah, it's a very unique experience and I love talking about it. I knew very early on in my intern year that I wanted to go into outpatient primary care. I just, I was like one of the, because in my program, 40% of people go on to fellowship, cardiology, pulmonology, another 50% go on to be hospitalists and then maybe down the road subspecialized. And then there's that small 5% to 10% of us that are crazy enough to do outpatient internal medicine. And I was one of them.

Dr. Jim Dahle:
Is it that few? It's 10%?

Suresh:
I kid you not, Dr. Dahle. There's 63 residents in my program across PGY-1, 2, and 3. And out of all of us, there's three. There's me and then there was two in the PGY-3 class that just graduated. Currently right now in the program, and obviously we don't know what the new interns want to do yet. They just got here, but I am the only one going into outpatient internal medicine. So, it's very rare. Everybody wants to be a hospitalist these days. And I get it, seven on, seven off. It seems like a nice lifestyle, but to me, it felt like I was working every other weekend instead of seven on, seven off. And that's the time I want to spend with my wife.

Anyways, I knew very early on that outpatient internal medicine is what I wanted to go through. And at the time, my wife and I, I'm from the East Coast. My wife is from the East Coast. We thought maybe we just wanted a complete change of scenery and maybe go to the Pacific Northwest.

I think around February, March of intern year, I just put my resume out there on Dog Cafe. Believe it or not, like three, four weeks later, I ran across this private practice based out in the Pacific Northwest. And it was a good interview. We said we'd stay in touch. And the lady that owned the private practice, she was like, “Look, if after you finish your intern year, if you want to do a little bit of moonlighting, see some patients on telehealth, I'd be happy to do that.”

Then after my intern year, as DOs, we have to take comlex level three. After I passed that, I reached out to her. Because in my residency program, as great of a program as it is, once out of every five weeks is when I'm actually in the clinic. And my inpatient training will help me a lot. But this moonlighting opportunity gave me extra exposure to outpatient care. And so, when I got my step three results back, I reached out to that doctor. She sent me over all the stuff I needed to do to get my license going. I ran everything by my program director. And by now, this is the fall of PGY-2 year.

I showed my program director the contract and she's like flipping through. And she was like “I've never seen anything like this before.” But she was like, yeah, I don't see why not, why I would have any issues with you doing telehealth in your free time. And it works out really well. Because when it's 06:00 P.M. over here, it's actually 03:00 P.M. over there.

So, it's been really nice. I'll like go about my day. I'll come home and maybe two to three days out of the week, I'll see six to eight patients. And it's nice. It's on my own time. I can do it whenever I want from my laptop. I don't have to worry about going into the hospital to pick up an overnight shift or a shift with the trauma team at 07:00 A.M. on a Saturday. I've been very blessed in the amount of experience that it's given me and something that I'm going into. I've been very, very blessed.

Dr. Jim Dahle:
Very cool. Okay, let's get back to the finances now. You guys have not made that much money in the last two years to have built up $100,000 in assets. What was your savings rate the last couple of years? Have you calculated it? It's got to be what? 40% or something?

Suresh:
It was in the high 40s. I think a big part of what played into that is that like I said before, we live in a nice two bedroom, two bathroom loft style apartment. Our rent is not that much at all. We live in a pretty affordable big city in America. We don't have a car payment. We have a dog. We don't have any kids. And we have two sources of income. Well, almost three with my moonlighting as well.

I'm on track to probably make about an extra $40,000 from just moonlighting this year. And all of that money, the moonlighting money is extra money. We just put that aside towards our savings.

I calculated how much we're living off of per month. And the average was probably around like $5,000 a month is what we're living off of. So, we've kept our fixed costs low. And my wife and I were talking about it because when we calculated it, we're like, what? It didn't feel like the Dave Ramsey eat off rice and beans type of lifestyle. It felt like I was living even below a resident, but life felt fine. We go out and enjoy dates. We travel. A more of a limiting factor for us is my availability to go on dates and do things versus money.

I think the biggest thing that I can suggest and what I think helped was keeping our fixed costs low. Our rent is low. We don't have a car payment because we're still driving a paid off car that was part of our families that they gave to us. And because of that, we feel like we have a lot more disposable income to enjoy our lives and everything else we just put towards our savings.

Dr. Jim Dahle:
Yeah. What kind of car is it? How nice of a gift was this is what I want to know.

Suresh:
It was a good gift. Honestly, it was a 2015 Acura RDX SUV. So I can't even complain. It's a great car.

Dr. Jim Dahle:
It's certainly within the range of reliable, reasonable transportation, but it is 10 years old.

Suresh:
Absolutely. And knock on wood, we've kept up with all the oil changes and everything it's been running. Well, I tell myself it's a fancy Honda. We're planning on driving that thing into the ground.

Dr. Jim Dahle:
Very cool. Okay. You alluded to a student loan plan earlier. What's your plan to deal with your student loans?

Suresh:
Yeah. Yeah. I'm glad you brought that up because I think that's a very interesting topic these days. There's a lot of chaos going on in the student loan world. We can go back to 2019 was my first year of med school. We all know that what happened that winter or January of 2020, it was my first year of med school was when the COVID-19 pandemic broke out. And during that time, if we all remember, our loans went into a freeze. Pretty much all four years of med school, I was able to get away with no interest accruing on my loans.

And then my fourth year of med school, and that's kind of when I had my like financial awakening because I was like I'm about to get married. I'm going to start a job. I have to learn what to do with a paycheck and not wait until I'm in attending when there's big numbers coming my way. I need to know how to manage this money now. It really all started. And I have both the books. They're right back here with the White Coat Investor book. This is where it all started. That's why this is such a cool moment. With the podcast and one of the things I learned was I need to file my taxes as a fourth year med student.

Now this is spring of 2023. I'm a fourth year med student. All of my loans are just principal. It's only the principal because from my first year of med school, maybe not the first few months, but everything was on hold. I remember there were talks about the SAVE plan going on. And in my head, I got to know, and I was like, “Well, I need to lock in a $0 payment because then the government's just going to get rid of the rest of the interest. So now I'll pretty much lock in another year so my loan's not growing.”

I filed my taxes as a fourth year med student, locked in that $0 payment, my intern year of residency. And so, I got away with a whole year of $0 payments. My balance isn't growing because I got on SAVE. And then July of now I'm a PGY-2 is when the whole SAVE lawsuit happened. And from there, my loans, because I was already on SAVE, went into the save forbearance.

Now, I remember as a first year med student, we had a guy come in to our lecture hall and talk to us about PSLF. And at that moment, something inside me, and I don't know what it was, but it was a voice just told me that, “Don't rely on this program.” Something just told me, I was uncomfortable with the fact of keeping something hanging around for 10 years to rely on the government to forgive something for me, not even knowing what the political climate would be like. In that case, 14 years from then.

At that time, I told myself that I'm going to make a plan for my student loans that hinges on the fact that I'm going to pay off every single last in 10 years. Really everything that happened after the SAVE thing, I don't pay attention to the news because I'm like, “Well, I don't care about making payments right now because all the payments that I could have been making, I'm just stuffing them into a high yield savings account.”

And that's why the majority of our liquid net worth is tied up in that high yield savings account because I'm just waiting for that day to hear the announcement that payments are starting back up again, SAVE for reverence is done and drop a massive anvil on that loan balance.

For me, I made a plan that centered around my abilities and my hard work and not relying on a plan. And I think PSLF is wonderful, but just I am looking back, I'm so glad that I made a plan like this because all of this uproar that's going on in the news right now, I've just shut it out because I'm not worried about what happens with PSLF. I'm not worried about what happens with the income driven repayment plan. I'm going to refinance the moment I hear that things are starting back up and just get rid of it within two to three years.

Dr. Jim Dahle:
Very cool. Well, congratulations on thinking that all through. And certainly that plan will work. No doubt about that. I'm going to talk a little bit later in this podcast after we stop the interview, I'm going to be talking a little bit about why medical school is actually still a pretty good deal. And it is.

Suresh:
It is.

Dr. Jim Dahle:
It is still a good deal.

Suresh:
Absolutely.

Dr. Jim Dahle:
And so, it's pretty cool that you've just demonstrated that in your student loan plan. All right. Well, there's somebody else out there like you that wants to be financially successful. Maybe they're just coming out of medical school now. Maybe by the time they're hearing this, they've just started their internship. They want to be like you. What advice do you have for them?

Suresh:
I think the biggest and most life changing financial year of your life is that fourth year of med school. Your fourth year of med school is that one time where your med school responsibilities are dwindling down. Because trust me, intern year of residency is a beast in and of itself. You're not going to have time.

I would say that fourth year of med school after your match, use March until June and maybe spend a little bit of time each day learning about personal finance, reading the White Coat Investor books, both of them, the first one and the Bootcamp one. Read them, absorb them, read the blog, learn about basic financial finances, index funds, learn about the different sort of retirement accounts and apply what you learned in that fourth year of med school right off of intern year.

Because I meet so many of my co-residents that like to do the, “Oh, I'll do this when I get, become an attending.” And to me, that's kind of crazy, because when you become an attending, everything is happening on such a large scale. The paychecks you're getting are at such a large scale. And if you haven't built those habits and applied what you learned in your fourth year of med school to residency, the amount of my co-residents that don't even contribute to their 403(b) and don't get the match, drives me crazy.

I actually spoke with the interns this year during orientation week and showed them how to do that. Because I was like, “This is a part of your side.” And just little things like that, if you can learn to and build the habit of that during residency, have a plan for your student loans, file your taxes your fourth year. If you don't have a plan during residency, I'm going to promise you that you're not going to have a plan when you're an attending.

My biggest thing is take advantage of that time during your fourth year of med school to learn about personal finance and apply that. You can read all the books you want, podcasts you want, but if you don't apply what you learned during residency, you're not going to be financially successful as an attending. But if you do apply that during residency, maybe you can build your network up a little bit, without even really trying we did. And so, I have White Coat Investor to thank for that. I'm really happy that we were able to meet.

Dr. Jim Dahle:
Awesome. Preach it, Suresh. Hey, I want you all out there in podcast land to know I did not pay him to say all that.

Suresh:
No, no.

Dr. Jim Dahle:
That was quite a testimonial, I think of exactly what we're trying to accomplish here at the White Coat Investor. Well, thank you very much for being willing to come on the podcast and sharing your experience so we can use it to inspire others.

Suresh:
Of course. Pleasure. Thanks for having me.

Dr. Jim Dahle:
All right, that was fun. I'll let him go for a while. He was a little bit chatty, which is awesome because, hey sometimes people that are chatty say things that are pretty awesome. That was a great testimonial he gave. And I hope you all take that advice. You medical students, you residents, take that advice. Learn this stuff early. It's way easier to learn this stuff when you're working with four figure portfolios instead of seven figure portfolios. It just induces a bunch of stress when you have more money. Unless you've already been doing it for years, and then it's easy. It's really not that hard at all.

FINANCE 101: IS MEDICAL SCHOOL WORTH THE COST

Dr. Jim Dahle:
Okay. I promised we were going to talk a little bit about medical school. I get emails all the time. I see it on forums all the time. Does medical school still make sense? Now after COVID and with AI and all the debt I'm going to have to borrow, does this still make sense? Well, the truth is that it does.

Financially, medical school still makes sense. It's still a good investment. Now, if you can't get in and you spend 10 years applying to medical school, that's a different story. That's not what we're talking about. Or if you struggle so much in medical school that you're having trouble matching into a residency, maybe it's not such a great investment. But for the vast majority of medical students, medical school is a great investment.

Let's look at the averages. If you look at the averages, the average physician right now is making $375,000. That's the average. Some doctors are making more. Some doctors are making less, obviously. The average student loan debt coming out last time I looked, which is not that long ago, was about $200,000, $205,000 for an MD school. It's higher for a DO school pushing $250,000. Dentists are pushing $300,000, but that's the average.

With the average income for a physician and the average debt for a physician, basically you only have to live like a resident for two years to pay off med school. If you live on $75,000, you pay your $75,000 in taxes that basically leaves you something like $200,000, $225,000, something like that, that you could throw the entire thing at your student loans. That would wipe out the average student loan in a year. Even if you have double the average of student loans, you can wipe that out in two years.

Now, I know not every doctor makes the average physician income. Some of you come out and you get a job that's making $200,000 or $225,000 or $250,000 or something like that. And it might take a little bit longer.

But this is not a bad investment. This is a good investment. It can be even better too, because a lot of you these days are not actually paying for medical school. The taxpayer is paying for it on your behalf because of your willingness to work at a taxpayer approved job. Whether that is in academic medicine, whether that's at the VA, whether that's with the military as some sort of government employee, whatever it is, the taxpayer said “If you do this, we're actually willing to pay for your medical school.”

And so, you spend your four years in school and rack up $200,000 or $300,000 or $400,000 in student loans. You go to residency or fellowship for three to seven years. And those payments all count toward your 10 years of payments. And another year or two, because of the way they certify your income, you're still making low payments. And then you make a year or two or three of big payments and the rest gets forgiven, tax-free, because you're doing what the taxpayer via their elected representatives has asked you to do.

A lot of you are only paying a tiny percentage of what medical school costs. Both of those are great options to deal with the cost of medical school. There are other contracts available. You can sign up for HPSP with the military like I did. That will also pay for medical school. You'll owe time instead of money, of course. It might take you longer to pay off the time than it does to pay off the financial debt.

But medical school still makes sense. I'm not sure that's necessarily the case for every profession out there. A lot of veterinarians are racking up almost as much debt as the physicians are. And often getting jobs that are nowhere near as fruitful as what human physicians are being paid. It's not as good of a ratio for lots of dentists, particularly if you end up in some employee level job. Attorneys tend to be bimodal. You're in big law making the big bucks or you're in some sort of job that's not making that much money.

But for physicians going to medical school, this makes sense. Don't let somebody talk you out of it that it's a bad financial deal. Yes, AI is going to have effects on medicine. It's going to have effects on every profession and a lot of other jobs too. It's not a reason not to go into it. We're still going to need doctors, even with AI. Nobody's going to go out and do everything doctors are doing now just using AI. I wouldn't let that scare you out of medical school.

If this is your dream, if this is what you want to do with your life, it has been a wonderful career for me. I'm still doing it now, even though I don't have to, which is the greatest endorsement for a career that you can have. If it's something that a practitioner would do for free, that tells you an awful lot about it.

Don't bail out of medical school. Don't be afraid of medical school because it's expensive, because the debt will be high. Hopefully there are ways to keep that debt down and get it paid off quickly when you're done with your training. If you learn to manage money, you can handle it, I promise.

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DISCLAIMER

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your 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.