By Alaina Trivax, WCI Columnist
If you’ve read any of my columns on the WCI website, you know that I am not a physician myself. Rather, I am a middle school teacher and married to a Physical Medicine and Rehabilitation attending. If you’re in a partnership in which you’re paying down debt originally acquired by one person, like what my family is currently doing, this post is for you.
Paying Off OUR Student Loans (Even Though Only One of Us Got the Medical Degree)
My husband, Brandon, and I met in the months between his medical school graduation and the start of his residency. After getting married in the spring of his PGY-3 year, we met with a local financial advisor recommended by one of his colleagues. We provided information on our current cash accounts, retirement plans, and debts. For context, he graduated medical school with about $300,000 in student loans, more than 10 times the debt that I accumulated while earning bachelor’s and master’s degrees. We’re on a solid path now, but we certainly made a few mistakes along the way.
Mistake #1: No Payoff Plan
When we first got married, we were balancing four student loan payments each month: one for Brandon’s federal loans, one for my federal loans, one for Brandon's private loans, and one for my private loans. We were only paying the minimum due on each of these accounts, and thus, we were making very little progress toward actually paying them off. We just assumed that we’d continue on the repayment plans for the next 10-20 years. Perhaps we’d target them a little more aggressively after he became an attending, but even if we didn’t, we figured the debts would be paid off eventually.
As the financial advisor pointed out, though, we had enough cash on hand to pay off two, if not three, of those student loan accounts. When we looked closer, we realized that our monthly payments weren’t making much of a dent in the total balance. This financial advisor recommended that we identify the minimum amount we’d be comfortable having in a cash emergency fund and that we allocate the surplus funds toward paying off our student loans. We were fresh out of graduate and medical school and had very little financial knowledge. Looking back, I’m embarrassed to say that this had never occurred to us.
With one of the first checks written from our new joint account, we paid off both of our private loan accounts. These were the largest payments either of us had ever made, but it just made so much sense. Eliminating these loans prevented us from paying any additional interest and increased our monthly cash flow. This, in theory, would allow us to target our other loans more intentionally—though it took some time for us to figure that out.
Mistake #2: Too Slow, Then Too Fast
For another year, we continued making only the minimum payments for our two federal student loans. Since Brandon was still in training, we reasoned that our goal was simply to keep the balances from compounding too much—especially on his medical school loans.
At the time, we owed a little more than $20,000 on my federal loan account. We were watching our finances closely in preparation for an out-of-state fellowship that he would soon be completing and realized that we were going to struggle to manage the increased expenses of maintaining two households. If we could pay off this account, the funds that had been allocated to making that monthly payment could help us make ends meet each month. We reevaluated our emergency fund and decided we would be comfortable with a lower balance in exchange for the increased cash flow.
Paying off this account hurt a little more, as writing those checks brought our cash reserves down to an amount that would only cover our expenses for two to three months. This was the lowest balance we’d seen since combining our finances, and it made us nervous as we headed into a period of uncertain expenses. If we could go back, I think we’d alter the timing of that account payoff just a bit. We got lucky and made it through his fellowship without too much of a financial hit, but the first few months were pretty stressful. We’d both have slept much better if we still had that larger emergency fund available as a buffer.
Mistake #3: Sending the “Extra” to Student Loans
When Brandon began making an attending salary, we focused our efforts on paying off his student loans—which now totaled more than $335,000. For the first six months, in addition to making the monthly minimum payment, we sent any “extra” money to that account. Sometimes, this meant an additional payment of a few thousand dollars; in other months—when the car insurance bill was due, for example—we made only the minimum payment.
This inconsistency wasn’t working. We were failing to allocate funds for our planned expenses, like that car insurance bill, and this left us both unnecessarily stressed about typical household expenses. We also found ourselves justifying various one-time expenses, with the assertion that we’d just send more to student loans next month.
We realized that we needed to extend the “pay ourselves first” mindset to include our student loan payoff goals. Our investment goals are funded with direct transfers from our paychecks; we also pay for health insurance and fund a dependent-care FSA and an HSA with pre-tax payroll contributions.
To apply this approach to our debt goals, we first ran some calculations—evaluating our regular household expenses, expected income, and the desired timeline for paying off these student loans. This allowed us to identify a specific amount that we would pay toward student loans every single month. We would still review any extra funds and, after accounting for large planned expenses, send those dollars to student loans, too.
After implementing this approach eight months ago, we’ve sent approximately $48,500 to student loans; after interest, this has reduced our student loan balance by nearly $40,000 or by 12.5%. We continue to “pay ourselves first” and now allocate at least 25% of our income to student loans each month.
Mindset Matters: Getting Your Spouse on Board
Now, three years into marriage and almost a year out of training, we’re making significant progress on Brandon’s medical school loans. We try not to refer to them as “his loans”—rather, this is our debt. Sure, they are in his name and we hadn’t even met when he took this debt on, but that’s how combined family finances work. These loans are what paid for his medical degree, which enables him to bring home the salary that supports our family. Sharing our income, assets, financial goals, and, of course, debt is a key step on the path to collective financial growth and independence.
If you’re in a similar financial situation and are trying to aggressively pay off your student loans, you’ll be most successful if you and your spouse are on the same page. Approaching your debt payoff goals as a team has several benefits, both to your marriage and your financial growth. Working together toward this goal will minimize the potential resentment that can come when one partner is policing the household budget for overspending. Once you’ve defined a set amount to send to student loans each month, you are free to spend the rest as needed and desired. This provides both partners with flexibility that can help the household run smoothly and happily.
A Quick Note: Refinancing and Interest Rates
As part of our debt-payoff approach, it’s worth noting that we have refinanced these loans three times. In doing so, we’ve reduced our interest rate from 6.8% to 2.05%. Refinancing is a fairly simple process that has saved us a great deal of money.
A Second Note: Dual-Physician Families
I can’t personally speak to the debt payoff experiences of dual-physician families, but I can imagine a few potential advantages and complications. Such families likely have two high earners, but perhaps have double the debt, too. Challenges could certainly arise if partners disagree on how aggressively to pay off these student loans. If you are navigating this particular path, please consider sharing your experience.
Learn from Our Mistakes: Make a Payoff Plan
The mistakes we made in approaching these student loans can be attributed to our failure to create a reasonable payoff plan. As you and your partner work to pay down your debts, following a specific and measurable payoff plan will serve you well. This can be as simple as “We will send $5,000 to student loans each month, along with 100% of any extra income from coverage, etc., and 70% of any annual bonuses.” Whatever your plan is, make sure it’s reasonable and is aligned to your target payoff timeline.
What's been your experience navigating the world of student loans with a partner? Are you on the same page? Have you made a payoff plan? If you and your partner have developed a payoff plan that’s working for you, comment below!