[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.]

Larry Keller

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.

The frugal physician

“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!