[Editor's Note: I hope you enjoy today's guest post submitted by Dipak Patel, a family physician currently working part-time at the Community Health Center in Meriden, CT. He is passionate about lifestyle medicine and hopes to start a low volume lifestyle medicine centered primary care office. I often hear from docs who have paid off tons of debt and tweet about them like one this week who paid off $733K. Those tweets are often met with objections like “that doc makes more than me” or “that doc lives in a lower cost of living than me.” They remind me of the old phrase “People who say it cannot be done should not interrupt those who are doing it.” Today, we are featuring a post by a family doc, so I hope to see a lot fewer objections than usual. We have no financial relationship.]
Racking Up Big Debt
My financial outlook was somewhat frightening in 2009. My educational debt was $300,000. Credit card debt was $60,000 and I borrowed an additional $100,000 from my parents. I got married 2 months post-residency graduation and my wife had $50,000 in student debt. At that time, starting salaries for family medicine was around $130,000 in Connecticut. I knew the bleak nationwide forecast for family medicine in 2002 when I started my medical education.
About $150,000 of that debt total was spent towards a nonprofit group that I helped to start and felt very passionate about before medical school and supported all throughout training. From a financial point of view, borrowing $150,000 in 2005 to start up a nonprofit and hoping to pay that money back as a family doctor 7 years later with the projected low-income potential in family medicine is insanity (mistake #1?).
Living Like a Frugal Physician…For the Most Part
I was living frugally, perhaps even more so than Mr. Money Mustache from 1999 to 2009, living a happy life on $12,000 a year or less, and living in an expensive part of the country — Nassau County New York, a suburb area outside of New York City. I have always had a second job, too, even through medical school and residency.
My level of simplicity gradually — but expectedly — ended after getting married. Afterward, I even went to the opposite of the spending spectrum for a few years. In 2009, my wife had an income of $50,000 working as an epidemiologist in the state department of public health. Thankfully, she also had around $40,000 in taxable investment accounts and an IRA. Our combined debt was $510,000 in August of 2009.
In spite of those challenges, and having 3 kids over 6 years while my wife was not working or part-time (7-month maternity leave with each kid), and giving around 10% of our gross income to charity, I am happy to report that my old debt, including my wife’s educational debt, is now zero. In spite of our fairly high spending lifestyle, we should be able to achieve financial independence 8 years from now when I turn 52. My path was convoluted and filled with financial blunders. I still have not fully grasped how this was possible given our spending habits!
$150K of Help From the NHSC Loan Repayment Program
The National Health Service Corp was clearly helpful in paying off our student loan debt. I knew I would likely end up working at a community health center. I was in their loan repayment program for 10 years and this amounted to $150,000 of tax-free money or 30% of my total debt of $510,000. $25,000 yearly for the first 2 years, followed by $20,000 annually the next 2 years and finally $10,000 per year the final 6 years.
However, their initial promise was for $30,000 per year until my student loan debt was paid off. I was hoping to have my initial debt paid off in 6 years post-residency. The Great Recession along with federal budget cuts greatly affected my plans as the National Health Service Corp budget was affected. I went from expecting $300,000 in loan repayment over 10 years to the reality of $150,000 after 10 years for working in an underserved community health center. I am appreciated either way, but I had to adjust to those budget cuts.
Knocking Out Debt By Increasing Income
I increased my income in two significant ways that helped me to rapidly pay off our loans:
#1 Hospitalist Side Gig
For the first 2 years, I worked nearly every weekend as a hospitalist, though I always had Fridays off. My main job’s salary at the local community health center was $130,000 the first year. There was no way to survive without the full-time weekend hospitalist side gig.
#2 Increasing Salaries
I had a minimal commute, so saved a lot of time there. Luckily for me, every couple of years, the markets pushed family medicine and hospitalists’ salaries up quite a bit to a point where a seasoned family doctor at a corporate practice could expect to earn $250,000 a year or more working 28 clinical hours a week.
After 18 months post-residency, we had paid off my prior $60,000 credit card debt, and saved around $130,000 and put that as the 20% down payment on a 4,000 sq. foot, 4-year-old house (I know, I know — mistake #2?). I did not have any kids at that time. We did take advantage of the housing market in 2011 to get what we felt was a good deal on the house, and interest rates were low. Finally, we were committed to living in the area for the long term. Still, such a purchase clearly delays financial independence, but we have enjoyed this house over the past 8 years and have many fond memories related to the house.
After my first kid was born in 2012, I reduced my weekend hospitalist work to every other weekend. After the second kid was born in 2014, I reduced my weekend hospitalist work to every third weekend. For the past 4 years, It has been every 5th weekend or so. As the base salaries and rates increased, I decreased my hospitalist work.
My income continued to rise, and work volume decreased. I have earned around $300,000 a year as a family doctor for the past 5 years on a fairly light clinical schedule. I currently work only Monday, Tuesday and Wednesday most weeks except for 10 weekends a year where I do day shift hospitalist work. With a part-time like schedule and a 4 day weekend most weeks, I don’t feel too much burnout. My wife finally returned to work full time after my third, and hopefully, last kid was 1 year old, and got a significant increase in pay at her state government job as an MPH.
But…I Had to Buy a Tesla
My wife and I had no car payments from 2009 through 2015. This was obviously helpful in paying down the debt. In October 2015, I went into the financial dark side and bought a new Tesla (I know, I know – mistake #3), after having a 19-year-old Honda Accord the prior 10 years, which was working just fine. I just could not get the Tesla out of my head for the 1 year prior, and was feeling some burnout and need to enjoy the money I had earned.
Without any focus on financial independence at that time and total debt was coming down dramatically, I took the plunge. 4 years later, I still do enjoy driving and having this car. Two years after I bought the Tesla and my third kid was born, my wife bought a new Chrysler Pacifica E Hybrid minivan, a partially electric vehicle – mistake #4. Clearly, I had lost my ways from my prior financial simplicity.
To further my spending habit, I also bought $40,000 worth of solar panels in 2015 to cover my home electricity as well as the electricity to cover 20,000 miles of driving for 2 cars. I was aiming for a ‘’net-zero’’ house, where the energy used for the home and transportation is made by the home too.
Maxing Out Retirement Accounts
Along the way, we were able to max out 2 work retirement accounts for the past 8 years, with our jobs matching some of our contributions. Any additional savings went to pay off the debt beyond what the NHSC could give me. My Tesla car loan is paid off, and my wife’s car loan is nearly paid off. We did add some money to my wife's initial taxable account. We have 3 college savings accounts via the state CHET program and fund them to cover perhaps 3 or 4 years of college.
Other than the 2 new cars and bigger than necessary house, we are fairly careful with our spending. We rarely eat out. Clothing tends to last for a while. Not much spent on jewelry after the $10,000, via a credit card loan, I spent on my wife’s engagement ring in 2009. Kids in public school. Grandparents helped the first 2 years with child care.
My prior simple lifestyle is gradually returning and I have made substantial cuts to our spending without affecting my family’s happiness. We still spend a lot of money well beyond what has been posted by doctors aiming for early financial independence. Our vacation expenses are not so simple, but also not so often — once a year. Other vacation time is visiting family and friends.
Next Up, Financial Independence
I have a strong desire to pay off our house mortgage, even though the interest rate is relatively low at 3.6%. Over the next 4 years, we hope to pay off the remaining $345,000 mortgage using the additional savings from having no more student loan payments, no more Tesla loan payments, another kid leaving daycare for public school, and other savings from cutting expenses over the last 2 years. After the house and remaining car loan (wife’s minivan) is paid off, we should be able to live comfortably on around $80,000 a year.
With my current free time on Thursdays and Fridays, I may pursue a low volume cash practice to engage with patients who are more motivated to improve their health via lifestyle medicine, a relatively new field that I have board certification in. If I did achieve financial independence sooner by not making the 4 large mistakes listed above, I likely would transition full time to a lower volume type practice as it is simply more enjoyable, many patients want more time to interact with their doctors to solve their medical problems, and patients get healthier quickly. As a family doctor, I have not found anything more rewarding than seeing patients basically cure themselves of their diabetes, high blood pressure, and other serious problems after guided instruction and coaching from their doctor to radically change their lifestyle habits.
I do not have any regrets on my financial journey so far. I have lived and learned from prior mistakes, overcome a $510,000 debt, enjoyed some of the more expensive things in life, continued to invest significantly in nonprofit charities, and still have a significant amount of money saved and invested while working as an employed family doctor. As long as we do not buy a new car in the next 8 years, hopefully, no new cars ever again, we should be well on our way to financial independence in 8 years, 18 years post-residency, though I don’t feel any need to not work as I already have a 4 day weekend and at least somewhat enjoy the work.
How did you knock out student loan debt? What financial mistakes have you made? Comment below!