[Editor's Note: This post was submitted by a primary care physician who blogs as “Dr. D” at TheFrugalPhysician.com about deflating her lifestyle and paying off over $100k in student loan debt in 6 months! It's the beginning of a new year and time to decide yourself to stop being broke and make the necessary sacrifices to eliminate debt. Make a plan. Run the numbers. Get mad at debt! When you've got those loans paid off and are “back to broke”, post a picture of yourself on social media with a sign showing your net worth of $0 using #backtobroke and we'll celebrate with you! We have no financial relationship with The Frugal Physician.]
You know that feeling you get in the pit of your stomach when you realize you’ve made a huge financial mistake? It's that feeling of knowing you took the wrong fork in the road, after being miles past that fork already. There was a smarter choice, but you didn’t make it. That is the feeling I got when I listened to the White Coat Investor book on Audible. I was spending my entire maternity leave holed up in a room alone, sewing a cover to a couch because I was too stressed out about money. I didn’t want to spend the cash on a new couch for the basement. This beautiful room was supposed to be a fabulous place for my boys to play and grow. But, it was just taking me away from the precious little time I had with my baby boy.
I was a new attending and my husband was a stay at home dad. We lived in a beautiful gated community on an island. We owned a rental property that brought in consistent rent. We had a couple of decent cars. But, this fabulous lifestyle was only possible when I was working. Having to take time off for the baby with no income and with big bills like student loans coming in was stressful, to say the least.
“Live like a resident,” said Dr. Dahle. And there was that pit-in-stomach thing. That’s where I had gone wrong. I had inflated the lifestyle of my family too fast after becoming a new attending. Now, I was stuck with large bills, a large life, and no flexibility. I wanted more time with my baby, but I couldn’t have it. I would throw it all out the plantation shuttered, sun-drenched window if I could, for just a little more time for baby cuddles. The large wrap around, salt breezy porch was nothing but a shackle around my ankle. I thought I owned the place. Turns out, it owned me.
I went upstairs and found my husband. “Something has to change,” I declared.
And so began our debt free journey.
Step One: To pay off debt, devise a plan.
Slowly, painfully, we looked at our budget. We were already paying $4k a month to student loans. We had an extra $500 per month. We made a goal and started a debt snowball, attacking the smallest debt first and then rolling those payments into the second smallest loan when the first was paid off. We also refinanced the student loans for a lower interest rate down the line.
“Dr. D” The Frugal Physician
Step Two: Optimize housing: How much house do you really need? Do you really need to buy?
The seed had been sown. My contract came to an end and it came time to move across the country. “Live like a resident.” What if we did the unthinkable? What if as an attending, I went back to living like a resident? What would our family think? What would our friends think? My mother had already told me my cousin had a nicer, bigger house than mine. What would she think now? Probably that I had gone wrong somewhere, as she expected. But, the numbers didn’t lie. If we sold the house we were in, we would likely come out even. Then, we could rent in the new town. If we cut down on the housing expense, that would be that much more going towards the student loans.
So, reluctantly, I did a search for rentals in the new town. Ouch. Not the lifestyle I was used to. But we grit our teeth and made ourselves look. We found a few potentials and asked our family in that town to walk through them. Oh boy, they were not expecting all those smells. By the time it came time to move, we still hadn’t found a place in the new town. So, we stayed with my in-laws and house-hunted. Something good had to come up. And it did. We found a rental that fit our needs, close to the hospital and with plenty of space for the kids and the dogs.
Our housing expense went from around $2400/month for mortgage/tax/insurance/HOA to $2100 for rent. Renting meant no unexpected maintenance costs either. So we found another $300 here in saved expected monthly expenses and a lot more savings in the unexpected expenses we didn’t have to pay for. Also, because we were downsizing, I didn’t feel as big of an urge to make my dwelling look like Pinterest…more savings there.
Step Three: Cars are transportation and a depreciating asset. Buy used.
Finally, one car was paid off. Then, the second one got totaled. When we got the insurance money, we bought used and paid cash. Two cars paid off! That was another good $900 going towards the snowball.
Step Four: Smaller house, less stuff.
We moved in and got settled. A lot of things went into the attic for storage. When you have less square footage, you need less things. When you have less things, there is less to clean. And with less stuff, there was more time for the family to hang out and just be.
Initially, we stopped here. Without making too much more effort, we started having more extra money (around $2k) at the end of the month to put towards debt.
But, life happened, and I found myself in a job that wasn’t a good fit. But, I was unable to walk away from it because of my large student loan bill.
Step Five: Get Frugal: squeeze out every penny.
So, we asked ourselves: What if we optimized our spending more? We looked at our budget and started to cut the excess–the spending that didn’t make any difference to our happiness. We cut things like:
- Buying food at work and going to Starbucks every day (average saved= $200/month).
- I started shopping at Walmart instead of Whole Foods (average saved =$400/month).
- We cut the cord with cable and switched to streaming services (average saved= $50/month).
- We stopped financing out our phones and switched to an alternative carrier (average saved= $60/month).
- We started buying used kids clothes instead of new (average saved= $100/month)
- I cut my own and the kid's hair (average saved= $75/month)
- I stopped buying clothes for myself (average saved= $100/month…Not sure how long this is going to last)
Those 5 steps add up to an extra $3k in loan payments, on top of the $4k we were already paying.
Notice how we didn’t restrict the weekend activities at all. We still do everything we want on our time off. We have just optimized our routine fixed expenses. We have toddlers so traveling often to far off places in a closed tube of cranky adults is …unappealing. But, we have taken three very comfortable vacations this year, partly using credit card rewards. We still go out and donate to our favorite charities. That’s how we keep everyone happy.
Soon, we turned around and found we had paid $100,000 towards student loans in 6 months. And, that pit-in-the-stomach feeling was nowhere to be found. It had been replaced by a relentless sense of can-do. We had turned the numbers around and were finally making the money work for us. And the relatives? Well, turns out the smaller house was just fine to visit as well. No one really cared all that much.
So, that’s how we did the unthinkable. My lifestyle went from resident to attending and back to resident again. And turns out, life got a lot better. The weight of the neverending student loan was lifted. Now, the light at the end of the tunnel is glimmering with promises of freedom and quality family time. It is there for you too, should you decide to look up from your endless charting. Freedom from debt and prosperity are within reach. You just have to decide if you are ready to be free. Are you ready to stop throwing your money away and give yourself a raise? Come get frugal with me at www.thefrugalphysician.com.
Have you downsized your “doctor lifestyle” to reach financial goals? How have family and friends reacted? What was the most difficult part? What have you done to get frugal? Comment below!
Becoming debt free is no jokey but when you do achieve it, you’re less likely to spend much money.
Yes, it is definitely a great exercise to build our financial muscles and learn how to manage money.
Going back to living like a resident after your lifestyle had been inflated was likely really difficult. I don’t know many who are strong enough to do that, even when it is obviously the right thing to do!
The second huge takeaway from your story is that the success you had at paying down your debt is what encouraged you to keep going. The first steps in the right direction may be the hardest, but it got easier once you saw progress.
Your story and example are truly incredible. Job well done crushing your debt!
TPP
Thanks TPP! Yes, it was definitely tough initially. But, the gains were so substantial, I’d do it again in a heartbeat! It’s amazing how quickly you get used to things. As physicians, we tend to move towns a fair bit between stages of training and between jobs. This transition is totally doable is something is starting over in a new town.
Such an inspiring story!
TPP is absolutely correct that on how much more difficult it is to go from an inflated lifestyle back down to a spartan one. It is much easier to continue to live like a resident without having a taste of the “good life” which you have shown really is not good if you are consumed with financial worry.
Beinf from the Indian community myself, I know familial pressure (besides getting stuck in an awful arranged marriage that ended up in awful divorce there is family pressure to have the superfluous things to show that you are a successful doctor). So I understand the pressure you got from your parents especially when you mentioned that they are comparing your home to others already before the downsize.
What you have done is nothing short of incredible. The general public has no idea how much student loan monthly payments can be. $4k/mo in student loan payment is the equivalent of a mortgage for a very nice home. I can’t wait for you to experience the weight of that being lifted when you finally get it paid off. It was one of the most freeing feelings I have had financially or otherwise (paying off the mortgage and becoming completely debt free was the only thing that topped it for me).
I wish you continued success on your financial journey. You have already done the hard part, stick with it and the good stuff will soon follow.
Here’s to a great 2019!
Thank you xrayvsn for your kindness. lol right on with the Indian community. I figure no matter what I have, there will be something bigger and greater. Not worth it to try to please them. I’d rather have my freedom. I can’t wait to be rid of this loan monkey either!
Thanks for sharing. I love this community of like minded physicians. I get asked all the time how come as an attending we still live in a small apartment instead of the big house in the suburbs ??♂️. Our only remaining debt is mortgage debt (about $30k) and expect to pay it before the fall, when our oldest goes to college—which we already saved for. It is a great liberating feeling. Most of my colleagues think I was crazy paying off my student loans early when they were locked in at ridiculous low interest rates, but they were in the same ballpark of my current mortgage (2.75% APR) and I still want that debt gone ASAP. Can’t wait to have the apt paid off!
PS: I saw your website btw. Congrats on coming out. It is def a tough decision but I’m sure it will make you more relatable. Many of us share similar backgrounds. Best of luck on your journey.
NYCdoc, way to go! Your situation is enviable! I think being part of this community is the best part of my debt free journey so far. Thank you for reading my post about coming out of anonymity! https://www.thefrugalphysician.com/im-coming-out/
I am debt free but somehow credit card bills are never less than 10k. Pulled 12 months bills and must expenses were sorta necessary. 🙁
We do live an inflated life, family of 5
Spiderman, just try recording and breaking down the categories of your spending. You’ll probably find things to optimize.
https://www.thefrugalphysician.com/how-to-get-started-budgeting/
Great article! I just became financially literate about a year ago thanks to The White Coat Investor book. I am 5 years out of training and, while we didn’t have what I would call an inflated lifestyle, we also didn’t make an exerted effort to pay down debt and build wealth. Now that I am trying to do that, I have had a very hard time trying to get my spouse to be on the same page. I have been doing backdoor Roth IRAs, starting and funding an HSA account, starting an individual 401k, and want to put chunks of money every month towards paying off student loans. I am a “delayed gratification, prepare for the future” type of person so this makes complete sense and feels great to me; however, my spouse is a “let’s build memories” person. We have kids who are getting older (oldest is 13) and she feels I am being extreme and too focused on money and will in the future regret missing out on opportunities to build memories while our kids are still at home.
We have tried to compromise by me allowing our kids be in moderately expensive extracurricular activities, going on a family vacation every other year instead of every year, etc. She also wants to give to others, which I love about her, and I like to do as well, only I want to get ourselves on solid financial footing first since we still have a negative net worth. However, she sees this as being a mistake by bypassing opportunities to help others in need NOW in order to selfishly focus on our own financial security before helping others, because, as she sees it, we are already much better off than most other people since we have a stable, high income career. I have tried in the past to get her to read some of the books I have been reading so that she can understand where I was coming from, but she has resisted. Finally, after another financial discussion the other day that did not go super well, she asked if she were to read one financial book, which one would I have it be?
So, my question to the forum is, which book would you have her read to get her to a basic financial literacy level and hopefully get us closer to being on the same page? Any input is appreciated.
Not sure I have a book to offer, but there are a number of wci posts about how on a physician salary you can have anything you want, but not every thing you want. There are also several on budgeting, which is really what it sounds like is at issue here. I’m just a humble Army doc 5 years post residency/3 post fellowship, but we manage to give to charity, max retirement accounts, and do a little vacationing all with four kids and a live in grandma. You just have to prioritize – in our case the vacations are generally to inexpensive places to see family a few days once or twice a year, not two week tours of Europe or Hawaii. Memories happen.
Newbe, you do not need to spend money to make great memories with your children. A great example is camping at the beach. Every day you and the kids play on the beach will be a great memory. Going on some great hikes together to explore is another great example. Spending time together is what makes the memories, not spending money together. You shouldn’t be waiting for family vacations to make those memories, you should be doing that every week. You still have a negative net worth. You have a high income, but no wealth. Concentrate on net worth, not net income. Don’t spend like a millionaire until you are a millionaire. Two books I would recommend are my book The Doctors Guide to Eliminating debt and also The Millionaire Next Door. Best of luck to you and your family.
Dr. Cory S. Fawcett
Prescription for Financial Success
I agree with KFM and Dr. Fawcett. You can make great memories on a budget. You don’t need international trips or a big budget to enjoy life. There are probably amazing things you can do without going more than a few hundred miles from home. Same with charity. I would recommend a planned approach. Discuss how much you can budget for others every year and consider how it will increase over time. Over time you can probably help others more if you plan now.
Please don’t cross post comments on different blog posts. I gave you my answer elsewhere. If you want to get advice from the forum on your situation, post it on the forum rather than the comments section of multiple blog posts. That’s spammy.
https://www.whitecoatinvestor.com/forums/
You can make great memories without spending a fortune! I have 2 small children, 5 and 2. Since we had kids, we’ve taken 1 vacation per year in the summer. We rent a house near a public lake. We drive a few hours to get there. The houses for rent in these rural areas are always cheap. Every day we would go to the public lake and playground, kids would play in the sand, swim and play in the playground. Then we’d go for ice cream, then we back to the house. Kids go to bed, my wife and I relax with some beer or wine and repeat the next day. Some days we take a hike. The total vacation costs less than $1200. we make tons of memories.
I’m usually not this territorial, but I often post as “Newbie” for the last few years. This is not me. We got out of debt a few years ago, my wife is totally on board, and we are slowly but surely accumulating wealth. Thanks to WCI, his affiliates, and a bunch of awesome comment posters 🙂
Great story. You did it the hard way. It is so much tougher to back down a lifestyle that has been inflated to an attending income, than it is to keep a lower spending rate right out of residency and use the attending income to become debt free. I commend you for making those tough decisions and following through on your plan to become debt free. So many are not willing to give up the house and cars, but you did it. Keep up the good work.
Dr. Cory S. Fawcett
Prescription for Financial Success
Thank you, Dr. Fawcett. Totally agree that it’s easier just to stick with the resident lifestyle for a bit longer! Would advise all smart, upcoming docs to do that.
Perfect example of ” Live like no one else, (so that) later you can live like no one else”
Ahh Dave….good stuff. Thanks Bonnie!
@TFP Congratulations! Great job! Nothing to add but encouragement. You are crushing it!
@Newbie Tons of great books out there for your wife but my advice is that you Give yourself an assignment as well. Ask your wife about the memories she wants for your children and then just listen. Find out what is important to her. Then listen some more to make sure you are hearing her. Then talk together for a family plan that can get you both where you want to be
It’s much easier as a team rather than you as the captain of a ship she doesn’t want to be on.
Thanks ArmyDoc! Totally agree with your advice for Newbie. @Newbie- start by dreaming together. Find out what motivates her. Then, align your dreams together with a budget and make it a date every month. More here: https://www.thefrugalphysician.com/how-to-get-started-budgeting/
Remember to be kind because nothing is going to mess up your finances like divorce lawyers! https://www.thefrugalphysician.com/working-with-your-spouse/
Inspiring story- thank you for sharing.
We are trying to do something similar- after re-reading your story I wonder if there is more to your story you haven’t shared. When I added up all your savings it was a little over $10k a month… amazing! But much less than $16,600 you need to hit the 100k in 6 months. Was the rest from a boost in income?
Yeah, I was coming here to post similar but using the stated 7k/mo. Excellent budgeting but far short of 100k in 6 mo.
Thanks for sharing nevertheless.
Just read her original blog post. 14K tax refund, $15K in loan repayment at new job and put part of their emergency fund toward loans pushed it over $100k.
More details on the original post.
https://www.thefrugalphysician.com/how-i-paid-100000-on-student-loans-in-6-months/
Thanks Toby and ORDOC. I was hoping someone would catch that. I didn’t want to divert and go into it in the original post here because it got too wordy. Yes, I went with the Dave Ramsey Method initially and threw everything we had (except an Emergency fund of $10k which is a bit more generous than Dave’s recommended 1k) at the debt. That, along with tax refund/bonus front-loaded the year. In the second half, we just had savings. With that, we are on track to pay off $150k principal in 12 months.
Don’t want this to come off as scoffing or condescending , so
1. Good post. Good layout of how to cut back for those who are in a rut.
2. That being said, I never cut back or particularly budgeted. I am not a starbuck addict, but I never though about “hey lets wait I can’t afford it” for little things (eat out when I wanted, shop reasonably wherever I wanted etc). Instead my focus has always been how can I make more money. I agree you can’t just make more and spend it all, but TBH this is overblown here. Usually people who have the ability to generate significant income tend to know how to manage finances. Doctors make good money but its a rare doc that goes beyond a million a year. When you are making 200-400k docs think they are making a ton and start spending like they are generating in millions. Thats when they go in the hole. Be realistic.
3. The above also leads to friction and living too much like a resident with your life partner. People should live. YOLO folks. I am sorry but you can’t enjoy somethings with same fervor when older. Spend a little. “Living like a resident” turns to a hard and fast rule. Relax. The biggest pet peeve is hyper aggressive debt pay off: why exactly? Its 3-4%. Live life, don’t penny pinch to make extra payments and lose those young years. So you payed a little extra interest, big whoop. You didn’t skip that awesome lunch, or that trip to build memories.
Anways, I gotta go back to work.
“Usually people who have the ability to generate significant income tend to know how to manage finances. ”
Sorry but this is contrary to my experience at least in medicine. It also seems like this and other related sites would be so popular if that were the case.
Meant to say these sites would not be so popular if people with large income knew how to manage finances.
Read: “In medicine”
If its a doctor deriving significant income – I’ll arbitrarily say 1 million/yr (ortho, neurosurgeon etc) – from employment then I’ve seen plenty mismanaging that.
If its an entrepreneur dentist owning 4-5 locations hiring other dentists to work as employees and counting benjamins at the end of the day, well then it took some financial know how to get there and he/she is unlikely to squander that money. I know a couple of folks like this in my neck of woods as well.
My experience in the business world outside of medicine has been what I mentioned.
This actually drives a very important point: doctors hang out in their “lobby” (see even the forum section on this very site). Usually they trust their colleagues. These sites are “popular” because docs can care less about finances (for whatever unfortunate reason). Taking advice from another doc about finances is easier for docs. Make no mistake, the “site” is a summary of things one should do to ensure high level of success. Its not rocket science. Also its not the only way (easiest to follow though). Its boglehead, nothing revolutionary. However, delivery, being a doc, marketing etc makes this site what it is. Index investing takes may be 0.00002394 neuron.
I’m not against any of this, except providing an alternative route I took and I know a few other entrepreneur physicians took that involves not budgeting or paying off loans in 6 months.
Disagree that “usually people who have the ability to generate significant income tend to know how to manage finances.” Why do you think this website is so successful? Most docs don’t need encouragement to carry their debt and live a little. That’s pretty easy and automatic. And most docs NEVER hear the opposite- that they can be free of their debt less than 5 years out of training.
I’m a big fan of boosting income, but focusing 100% on offense doesn’t win football games.
We can agree to disagree. You are thinking of physicians who derive their income from employment (or made partner in a group which they didn’t create). I am thinking of business owner physicians who tend to understand the nuances of business, taxes and how to manage debt etc.
Your website is popular because majority of physicians are employed, in heavy debt (refi is an easy sell) and a simple path to FI which is boglehead.
Being a fan of high income is like…every one…but to do it takes mental focus. This post is exactly all “defense” and no offense. Physicians forget the offense all togehter and rely on just defense. All I am saying is to “go spread” (see what I did there, football followers) your wings and you don’t have to penny pinch. You DONT have to pay off debt in 6 months. But thats the message that docs get from your website. Its not bad, but you could manage debt while using money to either invest better, upgrade your brain to then make more money, or leverage.
Anyways, you have more cache and what you are saying isn’t wrong. I was merely pointing out a more efficient, yet less traveled way of doing things.
I’m not sure I see a disagreement where you do.
As you know, one post does not make a website. You can’t say everything in every post.
Complete_Newbie, I like your idea, too, and I agree with living life a little more than like a resident, I suffered through and finished residency gladly for a reason, and do not want to ever go back to being that broke, and financially restrained. I have experienced every range of financial dependence and independence as I work for a company and I am self-employed. I agree with getting creative with things, and not having to go so tight as in residency. I have no regrets on anything I’ve ever purchased (mostly the coolest vacations I could ever imagine, the best ones were on CMEs dime, or write off CMEs since I maintain a 1099 contract status). I’ve lived in the most awesome homes (I just bought them from banks in foreclosure, but they were huge golf course homes, so didn’t live in less, just paid less), and driven the most awesome cars(luxury, but used), and had some of the grandest shopping sprees(outlet malls, but still designer), and it all added to my life, it did not take away from it. I’ve experienced debt and debt free (no mortgage even), but even when I was in debt in those times and living bigger, I wouldn’t trade it. I’m older (not retirement old, whatever that is nowadays, lol), and have had all the great experiences, so don’t want a lot of it now, but I’d hate to tell a person not to have them, and live a perpetual life of less in their youth when they are best able to enjoy it all. I guess everyone’s happiness is based on different things, and debt free may not be everyone’s end all, living comfortably, with a little splurge here and there may be just right, too. Balance is key. My debt free is not driven by stress of wanting to be out of debt, but based on my philanthropic endeavors, I need more money to help other people like I want to! By the way, I did “expand my mind” and took a job that paid off my student loans;) Just saying that I agree there are a few different ways to skin a cat:)
Complete_Newbie, I like your idea, too, and I agree with living life a little more than like a resident, I suffered through and finished residency gladly for a reason, and do not want to ever go back to being that broke, and financially restrained. I have experienced every range of financial dependence and independence as I work for a company and I am self-employed. I agree with getting creative with things, and not having to go so tight as in residency. I have no regrets on anything I’ve ever purchased (mostly the coolest vacations I could ever imagine, the best ones were on CMEs dime, or write off CMEs since I maintain a 1099 contract status). I’ve lived in the most awesome homes (I just bought them from banks in foreclosure, but they were huge golf course homes, so didn’t live in less, just paid less), and driven the most awesome cars(luxury, but used), and had some of the grandest shopping sprees(outlet malls, but still designer), and it all added to my life, it did not take away from it. I’ve experienced debt and debt free (no mortgage even), but even when I was in debt in those times and living bigger, I wouldn’t trade it. I, also, increased my income during those times that I lived bigger. I’m older (not retirement old, whatever that is nowadays, lol), and have had all the great experiences, so don’t want a lot of it now, but I’d hate to tell a person not to have them, and live a perpetual life of less in their youth when they are best able to enjoy it all. I guess everyone’s happiness is based on different things, and debt free may not be everyone’s end all, living comfortably, with few debts, with a little splurge here and there may be just right, too. Balance is key. My debt free was not driven by stress of wanting to be out of debt, but based on my philanthropic endeavors, I need more money to help other people like I want to! By the way, I did “expand my mind” and took a job that paid off my student loans;) Just saying that I agree there are a few different ways to skin a cat:)
Dr. Living Your Best Life,
I agree with WCI in that I don’t see a disagreement where you do. The point of this post is that it is never too late to downsize and pay student loans off in a hurry IF that’s what’s important to you. A lot of younger docs are being trapped in poor employment positions by their student debt. This post is to show them the way out. The point is not to make anyone feel guilty for the money they are spending on what is important to them.
Dr. D
Yes, I agree, not a disagreement at all, just mentioning ways new docs coming out of residency can save money (finding employee loan payoff jobs, buying foreclosures, buying used luxury, outlet shopping, etc), and still enjoy some of the finer things in life, they worked hard for it.
I disagree that one cannot enjoy SOME of the finer things in life on a resident income. I mean, that’s the median US household income. Then, after a couple of years, you’re in a position to consume in a ridiculous manner. I’ve never really felt poor (at least since med school graduation) because I was always spending more each year than the previous.
I agree with both of you! Be smart and mindful about spending and you really can have it all. $50k a year isn’t exactly poverty. I had a great time in residency and I’m having a great time now. The key is expectation management and being intentional with money.
Complete_Newbie, You express a very commonly held view so I’m glad you brought it up. I wonder if you have ever tracked your spending and know exactly where all your money is going. Does your spending align with what you want out of life? Yes, we docs are very good at generating income. But, most docs are also very good at throwing it out of the window. Yes, you could always make more. I pondered this question in this post: https://www.thefrugalphysician.com/pick-up-shifts-or-cut-back/ The answer is usually somewhere in the middle and dependent on the person. I’m primary care, have little kids, and work a 5 day a week job. I don’t want to pick up more work. I’d rather cut back so I can spend time with my boys. But remember, at the end of the day, wealth is not what you make, it is what you keep. There’s nothing wrong with keeping a little bit more by being mindful about your spending.
Excellent story about the power of paying off debt. It supercharges you to even surpass your original debt pay off goals, making you get to the finish line ahead of your set time line. I have no doubt you will do the same TFP. Good luck and all the best on your journey. You are inspiring some along the way.
Thank you, Immigrant Finances. I agree. I have learned so much from this journey… the benefits are invaluable.
Congratulations on being debt free! I am a big believer in saving on the daily small stuff as you have seen and shown, makes a huge difference. This does not mean “penny pinching” (as mentioned by a poster above) which is not helpful nor is “being penny wise and pound foolish” . Yolo is an important concept and no one understand the fragility of life more than physicians. Finances are a balance and once you understand that you can spend more or less based on needs and wants without having to suffer. People can and should spend on things that make them happy but do so knowingly :”I will buy this thing if it will make me happy”. I also believe that anyone who cant describe (beyond the brand name) why a luxury vehicle is a luxury vehicle shouldn’t ever buy one as obviously they know nothing. A gently used non-luxury brand suffices most people needs (besides ego). If you are living a life to just show-off , then God help you
Couldn’t agree with your more, Raggaman. Wish I was debt free! Not yet… about 50k more to go. Soon though!
Frugal MD’s story is impressive! I could never be that frugal but I try my best to moderate. I think what Raggaman says is so true. I’ve found the key is to spend money deliberately and if you’re going to splurge make it something that has value to you. I could never drop $10,000 on a watch to see r-o-l-e-x on the face since other than seeing those letters it wouldn’t give me any more joy than seeing c-i-t-i-z-e-n on the face. Same goes for a $1000+ dollar suit. However, there are other purchases experiences that give me joy. Splurge on that, but save on the other stuff that’s not as important to you.
You asked for a book reference…..The obvious choice would be the same book you read The White Coat Investor, A Doctors Guide to Personal Finance and Investing. It is 5 years old but his philosophy hasn’t changed. You can get her a personal copy for $12.00 on Amazon. It is written in plain language about the physician financial environment. If it helped you, it will help her……Gordon ( I don’t work for Jim Dahle but
I would accept a token donation to my Bucket List Fund)
And it’s an easy listen on Audible!
Congrats on making such significant progress in the span of a year! I’m a new, fairly frugal attending who is also aggressively tackling student loans, and it feels great to see that number moving on down. I’m on board with most of the post, but searching for clarity regarding the housing portion of things. Are you just renting until your debt is paid down before buying? We bought with the mindset that, once we are ready to move/sell, we will take the money we put toward our mortgage with us and put it toward the purchase of a new home. I know we lose what we put toward HOA fees and insurance and realtor fees and the like, but I still feel comfortable being a little slower paying off student loan debt and handling a mortgage that is not that much more than rent would be. Am I being short sighted??
The mortgage is MORE than comparable rent? That’s unusual. It should be less. Are you sure you’re comparing apples to apples?
There is a little more space in the house we bought than our previous place because we needed more space for our expanding family, so not quite apples to apples. Just confused about highlighting renting over buying and trying to figure out if I missed something.
Also, the mortgage itself is not more. It’s the total of mortgage + insurance + HOA + taxes that is slightly more.
Imagine you were a real estate investor. You want to buy a house and rent it out. Your income from that investment is the rent. Your expenses are the mortgage, insurance, HOA, property taxes, maintenance etc. Once you’ve paid all that, you want to have some profit left over, right? I mean, it’s an investment. So it stands to reason that ideally the rent you can charge to rent it out significantly exceeds all of those expenses, right? So OF COURSE rent should be less than your mortgage.
Midwest Mommy Doc,
Right out of residency, I bought a nice house but something that had “potential”- smallest house in the nicest neighborhood. I thought I’d make money on it when I left, after we left. We ended up leaving in 2 years. During that time, we put in mortgage, taxes, hoa, insurance, and more than 20k in improvements (we put in labor ourselves). We walked away from the house sale with $8k. I didn’t think that was worth it. That $8k wasn’t worth the cost of buying and selling and the hassle of living in a house that was showing. I used this rent versus buy calculator when we downsized: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?abt=0002&abg=1
Right now we are only renting until we pay down debt and then we will likely buy a long term place. The taxes in new york state, especially with the limitations of the SALT deductions, make buying less attractive for the short term.
Check out these other people talking about this: http://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/ and https://www.choosefi.com/047-cult-of-home-ownership-millennial-revolution/
I like finding ways to save as much as anyone
Stopped Starbucks for 1 year and treat was to buy a top notch espresso machine that makes better coffee!
But have spent less and less time seeking ways to save because…..
….you can only shrink the bottom line so much.
Too many people forget about the top line which has no cap!
Change the way you think
Focus on top line – start by looking at growing a side hustle over a decade or more those can add up quickly
Also don’t avoid trying to improve the largest expenses in life:
– taxes – gov takes 35+% of most of our pay – state + fed
– learn the rules, play by the rules, but don’t hate the player—hate the game!
– debt – as in the rate you borrow for your home and student loans
– fight for every little bit of savings. So many people fail to shop rates. Do so often!
JustSayin
Spending also has no cap. 🙂 And the progressive tax code takes more and more of every dollar earned, but a dollar saved is always after-tax!
I hear ya…
My point – thinking $4 coffee is alot of money is a problem
At my worst day financially $4 was never ‘too much’
Its a contraction – scarcity mindset
There is so much money in this world – just look at your blog etc – look at the growth there!
So much more to be gained by avoiding the scarcity bent
BTW when is the State of the Blog coming out?
JustSayin
You’re right that the small rocks don’t matter much. But the big rocks certainly do. Had a pulmonologist email yesterday about the $2M house he just bought to consume. That doesn’t work very well with a doctor income. The truth is that doctors make plenty of money to pay off their loans and become financially independent over the course of a typical career with a simple savings and know-nothing investing plan. If they want to try to do it faster or become even wealthier through entrepreneurship, that’s fine, but don’t kid yourself that most will or even can. Look at the physician financial blogosphere. 80+ blogs. Only one blew up and only two others make enough to be worth the time from a financial perspective. Not exactly a high percentage.
I also don’t get the sense that you’ve figured out how much is “enough” for you yet. If there is no amount that is enough for you, at some point you will be exchanging your time and effort and perhaps even more important things for money you don’t want or need. Investing isn’t about maximizing the pot of money. It’s about reaching your goals while taking as little risk as possible. Risk control is much more important than return.
State of the Blog comes out next week, finished it up this am. You’re not going to like it though. Most of the stuff you’re interested in isn’t going to be in there.
Maybe my side hustle is marriage to a guy who put in his military time so we got that pension? 50% drop though if I’m widowed or divorced. But our money is for doing what we want, and if we don’t have enough, working as a doc is my best paying hustle. At the moment it happens to be my well paying what I want to do, and my money I already have makes it optional (good and bad- every crappy day at work has the risk of being my last, but that? as the Master Card ads say- WORTH IT). I am too brain dead or lazy and not so brilliant- if I compare how could I have had a WCI type side hustle it is both- bad timing and possible lack of being the best (lack of brilliance) since as he points out he is one of scores of doc blogs, most make much more at their doc job; and laziness- while I’m happy to share the little bits I knew before I ever heard of WCI I can’t be bothered to actually comprehend all the many options for our money once I get to the ‘possibly a disguised way to fleece me’ or ‘takes a lot of effort to understand well enough not to get fleeced or lose your money anyway’ part.
And that is true for ANY side hustle I would enjoy developing into a way to- what? Fly first class? I could already choose that if I wanted. Build a fancier house? Don’t want it. Share my wisdom in writing with folks, some who will learn or be grateful some who will mock? I get to do that for free here, sermo, elsewhere. Don’t want or expect pay for my level of prose and intel. Move somewhere I’d like better? All possible for me to do, even several of those, just not all of the many (and many foolish to me) ways to spend money. I have already developed adequate expertise and already put in the effort for my greatest ‘hustle’- getting over $80/hour to help people. All I gotta do is not take too long a break from it (and turned out 5 years was not too long).
My greatest luxury is absolute toddler like freedom to do whatever I want whenever I want. Medicine is done taking that from me (now I assume it voluntarily, temporarily; perhaps to free me from volunteer jobs I needed an ironclad excuse to walk away from- and a 40-60 hour work week plus a nice donation does that very well) and it is medicine that has already given me that.
[ad hominem attacks not permitted.]
Frugal Physician,
Thank you for sharing your message! I absolutely believe the first step to getting “unstuck” is figuring out where you can cut. Defense (within reason) is the first step on the path to independence. This step is a 1st lesson on how to behave with money.
We started this path several years ago when we discovered WCI’s website and message. Before then: we bought a mega whole life insurance product out of training, drove luxury cars with credit, and purchased a home before the ink was dry on my first attending contract.
Fast forward 7 years: we are maxing out our tax advantaged accounts (including 529’s and our childrens’ roth ira through my wife’s side hustle), drive used cars paid in full, and are paying down student loan debt while refinancing. I’m starting to get asked questions about personal finance from my peers at work!
All the points about being happy with less is so true…and it is evidence based. After a certain amount of dollars, there’s no significant increase in happiness for every extra dollar you earn. Isn’t this what financial literacy/wellness is meant to do for us?
It’s meant to lead us to the life we want; to obtain happiness.
To the abundance minded posters in this chain: it’s much easier to increase your spending when you’re free from consumer debt, student loan debt, and are investing a significant chunk of your income.
Respectfully,
Psy-FI MD
Psy-FI MD,
First, I love that name! Second, congratulations on making huge changes and seeing progress! This stuff can really make a huge difference in people’s lives. And as far as mindset- I see myself as having an abundance mindset as far as finding value for the dollar. Not everything of value in life is expensive… most of it is free, as the saying goes.
Thanks for commenting!
Totally understand about non-doctors not understanding the loan burden. A little while back I was chatting with a friend-of-a-friend who we had just met and it came up in conversation that I had driven a 12yo corolla until very recently. He couldn’t believe it- “you’re a doctor and you were driving a 12yo corolla?!?” I told him it was because I had student loans. Emphasis on had, ie past tense. I will admit it would have been much tougher to go back to the resident lifestyle after inflating too early, but it was super easy to keep driving my beater for a few more years.
Thank you so much for this post! I have some reason only discovered (or really focused on reading) WCI a few days ago and I have been ravenously reading and digesting all the great info on here. I remember vaguely reading about the student loan refi info back in residency but feeling “too overwhelmed” and naively thinking “the money will sort itself out” I didn’t really get into serious financial focus until now.
Reading your blog TheFrugalPhysician over the past 24 hours has been such an eye-opener because OMG I AM YOU! I am in the middle of my 3rd year as an attending and I lived the inflated life for the past couple years with my fiance who is an attorney. While I don’t have kids and we live in Honolulu, HI (which is its own bag of worms with COL), I felt the exact pit-in-the-stomach sensation you are talking about last month. My first private group practice PCP job out of residency wasn’t working out (I thought I would be there for life) and as my contract was up, I finally admitted I wasn’t happy and found another job with a different hospital clinic. Problem is, I didn’t account for the waiting period for hospital credentialing (b/c it’s a hospital system clinic) to take SO LONG and thus I don’t have a start date set until my paperwork is all approved. I find myself jobless during this time since December, ANXIOUSLY waiting for the news of when I can actually start working. While the break has been good relief for mind & soul (I suffered severe burnout with the first job), the harsh reality of my sh*tty financial organization being income-less for 2+ months makes me realize I never want to be in this situation again.
I found Dave Ramsey (which I knew about for years from the “planner community”) but never really took his teachings to heart because I was SO stupidly comfortable in the mindset about the “attending salary” and not looking at the total picture with my student loans, etc. After making my first budget 1 week ago DR style,I felt so awkward and not relating to the majority of DR blogs who are non-medical community based, felt like my level of student loans seemed impossible (despite being average for my med school classmates). Finally reading a female MD blog like yours, I felt relieved of my shame of my financial mistakes and I am SO INSPIRED.
Sorry for the long comment but I just wanted to say as a fellow female PCP young attending, I am so impressed by you and your family’s efforts and you are EXACTLY who I needed to “meet/find” to give me hope for my new financial journey! THANK YOU
Wow!
I am learning SO MUCH from your website and the Facebook group. I was always one of those people scared or embarrassed to talk about finances and I grew up without much so once I “had money” with the first attending paycheck, it was like some switch went off on my brain! Thank you for creating a safe space (judgement-free or at least milder than most!) for us to learn when we spent too much time only focusing on school and feeling “i don’t have time/energy to learn that adult stuff”.
^_^
-Dr CK
newly “frugal” MD
Newly Frugal MD,
Thank you! This blogging stuff is a lot of work, but it is comments like yours that make it all worth it. I am so glad my story can provide you with value and inspiration. You are definitely not alone and have plenty of time to turn it around. Like Dave Ramsey says, we have a pretty large shovel to dig ourselves out of debt. So, when we make up our mind and set our intention, it’s totally doable. Thanks to Dr. Dahle, there is a great resource here to learn about investing once we’re out of debt. You can do it! Please keep in touch and keep me updated on your journey!
Much love,
Dr. D
Hi Frugal Doc,
It’s nice to know one isn’t alone, and those of us who graduated after the millenium with huge school loans have a hard time explaining the burden. A burden we took on to become physicians and help folks. But a lot of folks say things like, “I know what you mean, I have $30k in loans” When I tell them I’m close to ten times that the looks are impressive. I’m pursuing the PSLF program, so far all my time in has counted, and so I’m nearing 2 years left, crossed fingers. Otherwise I’d have to reengineer my whole plan.
I do take a small issue with some of your numbers – you list a bout a $1,000 worth of savings in Step5, then say that added up to $3,000 more a month. okay… how? Then the $3,000 + $4,000 ($7,000 by my arithmetic) monthly payments somehow adds up to having paid $100,000 off your loans in 6 months? Last I checked 7×6 was 42, so at most by what you wrote you could have made $42,000 in loan payments, and some of that is interest. So, can you clear this up a bit?
Thanks!
DrGeek
Hey Dr. Geek,
Congrats to you for almost being done with your PSLF commitment! Yes, it’s very hard for nonphysicians to understand how much of a burden 6 figure student debt is. So the math above, we had an extra 2k after steps 1-4 and 1k from step 5. So that’s 3k added to the 4k we were already paying (we were already paying more than what was due every month). Yes, 7k x6mo= 42k. The 100k statement is actually linked to a more in-depth breakdown of how we got there. Read it here: https://www.thefrugalphysician.com/how-i-paid-100000-on-student-loans-in-6-months/
Good luck to you and thanks for reading!
Dr. D
I like many of the comments listed above. Glad to see many more people becoming financially literate and learning how to manage their money vs. their money (or lack of it) managing them.
1) Several of the Dave Ramsey concepts apply very well here. Mostly, making a list of the expenses and discovering your “must haves” and somewhat “wants.” Initially this is very difficult as everything you’ve been doing feels like a “must have”, but just writing it down makes you really begin to take stock of what you really value. He is a big advocate of paying down your highest interest loan or smallest loan first. I could see going either way… Highest interest loan makes sense b/c this is what is accumulating the largest amount of interest every month…smallest loan first as this gets you excited and motivated to pay off more loans because when you get that $0 statement, that gives you a bit of an excited kick in the behind.
2) Unless absolutely necessary, pay off your credit cards in full every month. I learned from my middle class parents that you don’t put any charge on a credit card that you don’t have the funds to pay off in 30 days; that simple. Yes there are emergencies, but at a APR of 12-25%, this gets very dangerous very quickly. Credit cards are a convenience not to have to carry much cash, but if you don’t have the $ in hand (or your bank account) to pay the bill tomorrow, do your very best not to buy it on a CC. Plus, with the bonuses associated with credit cards, these are simply a nice bonus for spending $ you were already planning on spending.
3) Start a 401K or Roth (if able) If you employer offers a 401K or 403b match, do it!!! If not, you are leaving a 2-5% match on the table and on a 200K salary/year, this is 4-10K. After 5 years, even invested in a mutual fund that follows the S&P 500 or DOW Jones, this really adds up, and it is pre-tax $. Most of us are already 5-10 years behind our like aged colleagues at saving, as we were in school or training, so we really have to get going out of the blocks! My brother–in the business world–reiterates this to me all the time. I “lost” 10 years in earning potential and the power of compounding my saved assets, so we must get going.
4) Buy things for yourself, not to keep up with your neighbors, your parents, or friends that think you should be living some certain type of lifestyle as a physician. This is about YOU, not keeping up with the Jones’. Being debt free, or much lower in debt feels tons better than driving a new BMW or Mercedes etc.
Keep up the good work guys! Kudos for being interested and motivated enough to read blogs like this and trying to improve your financial futures. It feels great not to be imprisoned by debt.
J P Jones
a doctor cutting their kids hair. wow, really great story on how to live humbly.
Really great article that addresses so many of the important steps towards debt elimination and financial freedom. Honestly, step one is the kicker for me. My wife and I (dual physician marriage) still come back to updating our financial plan with regularity. There is a great WCI article on writing/devising a financial plan and this is (in my opinion) by far and away the most important step. In medicine things are so algorithm driven. I think a well written financial plan that you can return to is vital to maintaining that momentum, and really useful for the physician mentality. I would agree too that deciding if you will refinance your student debt or pursue PSLF is key as well, and should be discussed early and often as it directly impacts so much of the subsequent steps. I have refinanced my debt and incorporated so much of what was written above and it has made all the difference. Thanks for this timeless article!
Stay motivated!
TheMotivatedMD.com