[Editor’s Note: Todays’s guest post is from a regular reader dentist who blogs anonymously at Debt Free DDS. Debt Free DDS is passionate about personal finance, destroying student loans, and becoming financially independent. I’m behind that 100% and appreciate the shout out given to the White Coat Investor blog, book, and Fire Your Financial Advisor course. We have no financial relationship.]

Once upon a time, in a land far away from where I live now, I had been out of dental training for almost two years. I was still over $400,000 in student loan debt (mostly at 7.9%) and the balance hadn’t decreased at all. I was stuck. I was scared. And I didn’t know what to do. I wasn’t making any headway with my student loans let alone my net worth. I knew I had to make a change, and quickly.

What I had done right to this point

  • You could say buying my own practice was the right thing to do. I did make about $150k each of those first two years, which actually is the average income for a general dentist in the US. And higher than the average income for a new grad associate which is around $120k.
  • Purchased a somewhat modest home. The home was about $270k. So it’s not like we purchased a big fancy doctor home.
  • Drove paid off cars that weren’t overly expensive
  • No credit card debt
  • Had good term life insurance and good disability insurance

What I had done wrong to this point

  • Practiced where I wanted to live instead of lived where I wanted to practice. It is much harder for a dentist to make good money where I lived.
  • Only paid the interest on my student loans (almost $2k/month)
  • Didn’t have a student loan plan
  • I only put 3% down on my home using an FHA loan and had to pay PMI
  • Didn’t have a written financial plan
  • Hadn’t refinanced my student loans
  • Didn’t save anything for retirement
  • Hadn’t discovered the White Coat Investor

There were so many things going through my mind at this point. How was I going to pay off my student loans, let alone save for my kids’ college? Was saving for retirement ever going to be possible for me? Was it possible to become debt-free?

At this point between my practice, house, and student loans, I was over $1,000,000 dollars in debt. That is a lot of zeros. And I’d argue none of those were bad purchases. But I was making $150,000/year. That Debt to income ratio was way too big. I was scared. And despite what most people tell you, fear can be a good motivator.

Fast forward 3 years after that point and my student loans were paid off, half of my practice was paid off, I had a 3-month emergency fund, and I had bought my “doctor home” with 20% down. How did I get there as a dentist? Let’s find out.

How I Paid Off My Student Loan Debt and Began My Journey to Financial Independence

Geographic Arbitrage

At that point two years after training and still in extreme debt with no concrete plan, I didn’t know exactly what I needed to do. However, I did know that where I lived was not a good place to make a lot of money as a dentist. The cost of living was high, and there were so many dentists that making a lot of money was hard. But it was near family and it was where we wanted to live. We couldn’t move, right? Wrong. We had to move.

I did some research on where dentists could make more money and on profitable dental practices I could purchase. We ended up finding a great opportunity in a state neither my wife nor I had ever stepped foot in. We didn’t know anyone there. It was a little frightening, but it was not as scary as staying in the same situation. So we did it. I moved my wife and children to a totally new place. I sold my practice and bought a new one in this state where we had no family and had no ties to at all.

You know what? We love it here. It’s still America. We have an airport, movie theaters, grocery stores. It’s not that different from anywhere else. And I am making a lot more money. We can afford to travel back home or to other places. My wife has good friends, the kids have good schools and friends. We wouldn’t take it back for anything. I believe moving outside of your comfort zone is good for any person or family to grow.

dentist student loan debt

Finding The White Coat Investor

I was now in a new place and had a new practice. I was making more money and things were looking up. Now what? We rented a home at first to make sure we were going to like the new area. But other than that, I still didn’t have a financial plan.

I got a phone call from a certain company stating they could help me with my finances. I needed help, so I  thought, “what the heck”. I signed up for a new term life insurance policy and a new disability policy with this company. I was also pitched that I needed to convert this new term policy to Whole Life asap. I was also being pressured to buy Whole Life policies for all of my children. He seemed like he knew what he was talking about, but something didn’t feel right. I was making more money now, but I had so much student loan debt still and had so many other places my cash needed to go. Whole life for myself and for my kids didn’t seem right.

At about this same time, I had a physician friend tell me I should check out the White Coat Investor blog. I took a look and was intrigued immediately and noticed he had a book as well. I purchased the book and it turned out to be one of the best purchases I have ever made.

The book was full of so much great information that it was almost overwhelming to me. Pretty much all of it was new to me. I had no idea what a mutual fund was. Because I was so overwhelmed I’ll be honest, the only thing that really stuck with me after the first time I read it was that I needed to destroy my student loan debt, I needed to start putting something away for retirement now, and I didn’t need whole life insurance now or probably ever. Additionally, I learned that the person who was wanting to “help me” with my finances was a commissioned salesman, not a financial advisor.

I immediately fired the commissioned salesman. Luckily this had all happened so quickly that I hadn’t canceled my old disability and term life policies, so I still had them intact. I then came up with my plan. It wasn’t a full financial plan. I still didn’t really know what that was. But here was my plan at that point:

  • Make as much money as I could ethically and honestly
  • NOT get Whole Life insurance (and not deal with a commissioned salesman at all)
  • Start maxing out IRAs for my wife and I (I didn’t have an employer 401k or anything like that, and wasn’t eligible for an individual 401k)
  • Pay off my student loans
  • Have a 3-6 month liquid emergency fund
  • Save up for a 20% down payment on a “forever” home.

How I Implemented My Debt Payoff and Savings Plan

#1 Bought a Second Dental Practice

Even though I was making more money at my new practice than I had before, I had the opportunity to buy into a second practice. This would mean more working hours and more headaches, but it also meant more income. I sold out of the second practice after 1.5 years and made some money on the sale as well. So this second practice increased my income substantially for a time. I couldn’t do it longer than that because of symptoms of burnout, but I am glad I did it for as long as I did. It was a huge boost financially.

#2 Refinanced Student Loans

There are many private companies that refinance student loans. I happened to use Laurel Road. I got a much better interest rate than I had with my federal loans. This is a no brainer to do so that more of your money is going towards principal rather than interest.

#3 Lived Like a Resident

This is another concept that stuck with me after reading the White Coat Investor book the first time. I knew that medical residents and the average American family can live on about $63,000, and so we could too. We paid ourselves a little more than that, but for the most part, we lived like residents and the rest went mostly towards paying off the student loans, our IRAs, an emergency fund, and a house down payment.

Our vacations were mostly driving to grandparents’ houses. We didn’t eat out very often. I took (and still take) my lunch to work everyday. We got a lot of hand-me-down clothes from friends and family. We wanted our kids to be dressed with clothes that were clean and without holes but we weren’t going to go to Nordstrom to do it. We upgraded one of our cars, but we did it with cash and it was not a luxury car. Our kids go to public schools. Our schools are pretty good but honestly, that’s not what is most important. The most important thing is that we are involved with our kids’ education. We make sure they read a lot of books, and they don’t get a lot of screen time. I believe the education of our kids has more to do with what happens in the home than with what happens at school. I always went to public schools and I turned out just fine.

And Then it Happened…

Three years after moving and sticking to my “mini” financial plan, I paid off my student loans. I bought my “doctor” home with a 20% down payment, and I had maxed out mine and my spouse’s IRAs for three years straight so at least we had something saved for retirement. Half of my practice was paid off, and I had 3 months of liquid cash in an emergency fund. The day I paid off my student loans was one of the best days of my life. I would rank the best days of my life like this:

  1. Wedding day
  2. The days each of my kids were born.
  3. The day I graduated Dental School
  4. The day I paid off my student loans

After I had paid them off I reflected on where I had been just three years before. At that time I had honestly hoped that I would magically get a windfall that would pay off my student loans. I was desperate and didn’t know what to do. But now I felt in control of my life and finances. I felt like being debt-free and financially successful was possible. And to be honest, I felt like a better dentist. Not having such a huge loan burden helps me focus on being a better practitioner.

dentist student loan debt

More Financial Work To Do

My student loans have now been paid off for about a year. The giddiness of paying them soon wore off (just a little). I knew there was much more to being financially successful. So I decided to read The White Coat Investor again. This time because I was less overwhelmed, more things from the book stuck with me. I knew I needed a full comprehensive financial plan but I didn’t know enough to do it myself. And I had been soured on financial “advisors” from my past experience. I knew I needed a financial education.

My Financial Education

I started off by taking White Coat Investor’s Fire Your Financial Advisor course. And I will tell you, it’s worth 100 times what he charges. I was taught so many things. I did the course a second time to make sure I hadn’t missed anything.

I also learned that continuing financial education is important. I started listening to all of the WCI podcasts, read his book “Financial Bootcamp”, and also read at least 15 other financial books in this past year.  By that time I had a complete financial plan, and I also had the knowledge and ability to manage our finances myself. [Others are finding the new and improved WCI Forum, White Coat Investors Facebook Group, WCI Reddit, and other social media to also be valuable in improving their financial literacy and goal support. — Ed]

I have learned so much. This past year I have increased my emergency fund to 6 months liquid cash and I have been saving 30% of my gross income towards retirement and am sticking to a very detailed and full-fledged financial plan that will hopefully have me financially independent in the next 10-15 years.

Because I understand what it feels like to be in financial and student loan despair, and also what it’s like to get a financial education, pay off massive student loans, and be on the path towards financial independence, I have now started my own blog.  This is not to compete with anyone else, but just to help those who find themselves where I found myself just 4 years ago. Please check it out and contact me there if you have any other questions about my journey.

Becoming Debt Free and financially literate and eventually financially independent is possible for every dentist and every high income professional. It takes hard work, discipline, and a good financial education. Anyone reading this has already discovered the White Coat Investor and so you are in the right place to get started on this path if you already haven’t. Living a full and rich life, free from student loan debt, is possible and it doesn’t need to take a lifetime. I’m living proof.

Are you a dentist that as paid off significant amounts of debt? How did it feel? What steps are you now taking toward financial independence? Are you likely to ever go back into debt? Comment below!