Does more money equal more problems?

According to a recent release from Association of American Medical Colleges (AAMC), the percentage of graduating medical students with debt is dropping. This statement hit me like a 300-pound bag of pennies, “Wait!?! Some people actually graduate medical school WITHOUT debt?” If that is you, congratulations, that is quite the feat in today’s expensive world of medical education. Personally, I graduated medical school with quite a bit of debt, despite the Post 9/11 GI Bill and having a career prior to pursing a medical education. According to the AAMC study, the average cost of medical school is $243, 902 and private medical schools were even more pricey at $322,767 for the four-year total. Although my GI bill and prior career may not be super common, my graduating with more than a little debt is a common finding. Per the AAMC study, 76% medical students graduate with debt. I was comforted, I was not alone in my sea of debt. The average debt was $192,000 in 2017, but at private medical schools around 20% of students have debt of greater than $300,000. To combat the debt/cost issue, medical schools are now offering, and some even requiring, financial literacy training for their students.  This is great for our future physicians, but for many of us in practice or just starting or graduating residency, the proverbial “kitty-cash” is out of the money bag.

Thankfully EM physicians have steady salaries, according to an article in ACEP Now from September 2018, the average EM physician salary is $370,000. Divide that number by twelve and you’ll see a gross income of $30,800 per month. For many of us graduating residency or fellowship, that is about half of our annual gross income. As you salivate thinking of nightly bottles of expensive wine, boutique clothes and luxury bags, pause for a moment and consider the financial responsibility that comes with earning $30,000 per month.  Remind your day-dreaming self of the student loan debt lurking behind that beautiful $1,500 bag or weekly manicures and facials at your favorite upscale salon.  Are you back to reality yet?  Let’s look at Dr. James Dahle for some tips for financial health and wellness as we enter world of the earning EM physician.  The following summary is from his book, The White Coat Investor, a podcast with ACEP Frontline and ALiEM Wellness Think Tank. 

Live like a resident

A common theme in his writing and interviews is to “live like a resident” for a couple years after residency. He is not referring to fried cafeteria food, constant caffeine intake, or 24 hour shifts in the ICU, but living with little overhead, living below your means. As a resident you have been surviving the past three or four years with enough luxury to get by and maybe even sustain some happiness. Try to avoid growing into your income, which Dr. Dahle says is an easy task many physicians accomplish without much effort. If you can, avoid the fancy new car, the expensive house, the high-end clothing and instead, save and plan with your money. Try to work down some student loans, save up a down payment for your dream home, and build your wealth. That leads us to our next bullet point.

Build your retirement

Start saving now, even as residents we can usually afford to put away a small percentage of our monthly income for retirement. Take advantage of a Roth 401(k) or 403(b) offered from your employer. If you are not at a facility that offers such, start your own Roth Individual Retirement Account (IRA). As first year and beyond attendings, The White Coat Investor recommends putting aside 20% of your income toward retirement. Participation in your employer’s retirement plan and setting up your own Roth IRA are some of the options.

Protect your earning asset

Buy a high-quality disability insurance policy to protect yourself from a possible inability to earn. Dr. Dahle recommends that even residents spend money to protect their future earning potential, it is one of your most valuable assets. Disability insurance may be discounted as residents, so shop around for the right policy. Be sure to advocate for yourself when buying your policy and remember to grow your protection with your income.

Protect your family

Purchase term life insurance. This is important even for residents if you are the sole earner. Grow your insurance policy as your income grows to protect your loved ones in the event of your death. Consider enough insurance to cover remaining mortgage, larger debts and living expenses to keep your family comfortable. 

Learn and lean out your loans

As stated earlier, a lot of us graduate medical school with student loan debt. There are several options to begin repayment. It is wise to educate yourself on them all and choose which is best for you. Early in your career, even in residency, consider Income Based Repayment or Pay As You Earn to start paying down your debt and building history for potential Public Service Loan Forgiveness. Depending on your choice after residency, if you work for a nonprofit, which includes academic institutions, and complete 120 payments (including those based on your income as a resident) the remainder of your loans may be forgiven. If you are not working for a nonprofit, consider refinancing for the lowest interest rate as soon as possible, then prioritize debt repayment and aggressively work down towards zero. 

Create a written financial plan

This is über important for residents and fellows about to graduate and get that first attending paycheck. But it is advice that could help all of us at any point in our career. Essentially, create a plan for your money. Prioritize working towards zero debt, building wealth, dream home, children’s college savings, etc. A written and solid plan for your new earnings will facilitate meeting your financial goals, provide you and your family direction, and allow a comfortable and secure future.

As I researched this topic, I pulled these key points from the different platforms listed below. This article is not a complete financial guide, but a starting point for those of us learning and preparing for life outside our training and even some of us early in our careers. I hope this summary provides a little guidance and sparks some inspiration in those with minimal interest in money and debt management. I learned a lot in preparation for this article. I am now finically optimistic and even a little educated. The information is out there, it is free, and it is understandable. Please see the resources below for your own knowledge and empowerment.

Resources

• Budd, K. (2018, October, 9). 7 Ways to Reduce Medical School Debt. Retrieved from AAMC.
• Dahle, J. (2014). The white coat investor: a doctor’s guide to personal finance and investing. San Bernadino, CA: The White Coat Investor, LLC.
• Katz, B. 2018-2019 compensation report for Emergency Physicians shows steady salaries. ACEP Now. 2018 (SEP). Learn More
• Youngclaus, J. An exploration of the recent decline in the percentage of US medical school graduated with education debt. Analysis in Brief: Association of American Medical Colleges. 2018;18(4): Download PDF
• Stanton, R (Host). (2018, September). ACEP Frontline; James Dahle, MD, FACEP-White Coat Investor. [Audio Podcast]. Retrieved from Soundcloud.com.
• Battaglioli, N (Host). (2017, January, 16). The Wellness Think Tank Talks with Jim Dahle from the White Coat Investor. [Audio Podcast]. Watch Video.

Alecia Gende, DO
AAWEP Senior Resident Representative/Newsletter Editor
Primary Care Sports Medicine Fellow
University of Iowa Sports Medicine
Iowa City, IA