Ten Financial Tips to Young MDs
February 16, 2020
If you know me in real life, you know that if I had not been a pediatrician than I really should have been a Trust and Estates Attorney or a Personal Financial Advisor. I find personal finances fascinating, because the same way folks make irrational decisions in their personal lives or in their health decisions, they do the same in their finances. Personal finance is at it’s core pscyhology. It was taken me to my 40s to realize you cannot fix people’s financial problems. Even if you draw out a personal financial plan for them and hand them essentially every detail they need to make themselves financially free, they still won’t.
But since I have become drplasticpicker, I am very hopeful! Just like my mission to save the planet, I have to do it by not telling people what to do – but rather showing them different possibilities. Most won’t listen, but some will begin their journey and hopefully end up in a better financial place.
I am hoping that I give you small glimpses into our personal finance journey, especially to our Young MDs. So here are Ten Financial Tips to Young MDs.
- Keep Your Student Debt Low: Medical school is insanely expensive. I realize this. The older pediatrician in our office who paid for his own medical schooling when it was less than $5000 a year 40 years ago does not fully understand how difficult your journey will be. His financial journey due to timing was easier than yours. I know our family’s financial path has been easier than yours. I know that medical school costs beyond $90,000 a year now and our daughter says she wants to be a doctor! But as much as you can, try to keep your overall student debt low. Mr. Plastic Picker and I did this by living frugally during medical school. We were given a “budget” for living expenses with our school loans. And for some reason, we were able to return at least $8,000-10,000 back each year individually to the school. At the same time we had classmates that were going on cruises together as medical students. I remember hearing about this during school and thinking they were insane! When you are a student, you are poor – live that way. We were happy.
- Start Paying Off School Loans Right Away During Residency: There are benefits to start paying off your student loans right away. Don’t kick the can down the road. Residency salary is much more than it used to be when we were residents. This will force you to live more simply. You have an MD during residency, but trust me – you are still poor and lack any real skills to actually make money. Continue to live a frugal but fun-filled lifestyle. We had our two children during residency and fellowship, but we were still able to every year chip away at our loans. You gain interest rate deductions when you pay on time and start paying early. We had our son, and I remember getting his baby clothes mostly at the sales rack at Toys R Us and at garage sales. I bought his baby bathtub for $1 at a garage sale and sold it back 4 years later to someone else for $1! It makes me a little bit sad to think about it, as no one ever offered to throw me a baby shower. I think no one really wanted to celebrate a fellow resident having a baby back then. I remember Dr. Young-Ho Yoon gave us the most beautiful baby clothes! He and his wife were so thoughtful. They remain good friends https://drplasticpicker.com/dr-young-ho-yoon-pediatrian-and-environmentalist-1/
- Moonlight If you Can During Residency/Fellowship: Younger MDs in my department might be surprised about this, but drplasticpicker used to moonlight a lot. I don’t moonlight or pick up extra shifts now because it does not make as much sense for me. I am now taxed at almost the 40% bracket and I am financially free now. But during residency and fellowship, both Mr. Plastic Picker (who is a doctor too) and I used to moonlight. Remember this was at the same time residency work-hour restrictions were looser also and honestly, we worked more total hours than the current generation. But somehow we found the time to moonlight. Especially as a chief resident and during fellowship, we had weekend morning urgent care shifts that paid $90 an hour. And overnight shifts at this small community hospital that had a pretty quiet inpatient pediatric floor, and that was $1000 an overnight. Mr. Plastic Picker used to love to get shifts at the outside hospital CT scanner to monitor for contrast reactions. He was only paid $50 an hour, but all you had to do was call 911 if someone was having a reaction. He used to sit there and just study or surf the internet. LOL. I remember that was the moonlighting shift he was working right before our second daughter was born. I remember telling him, “You better get here! She is going to come soon.” I think he was worried about providing for his growing family, so he both finished his shift and got there in time for both of us.
- Extra Moonlighting Money, Pay Off your Loans: After any extra moonlighting work, we threw that at our loans right away. I remember after the plum pediatric overnights at the small community hospital, we would go to a “fancy” dinner at either Cheesecake Factory or California Pizza Kitchen with our son and buy him a small toy like a HotWheel or a Thomas the Tank Train Engine, and then apply those extra funds to our loans.
- Max Out Your Roth IRA: This is one of the best pieces of advice I got. In fact, I was given this advice by Dr. Young-Ho Yoon https://drplasticpicker.com/dr-young-ho-yoon-pediatrian-and-environmentalist-1/. We did this even before paying off extra loans. Those accounts are worth quite a bit now through the power of compounding. You only qualify for this during your training. Read up on the tax benefits of Roth IRAs.
- Do Extra Training only if it Gives You a Real Skill and They Pay You: Mr. Plastic Picker is a sub-sub specialist. I remember when he was applying for his sub-sub specialist position, and there was a program in Southern California that gave him a position. It was with a very famous sub-sub specialist, but the caveat is that there was no funding. I remember thinking, that was crazy??!!! So those fellows would do fellowship for “free” and moonlight to make money. Mr. Plastic Picker said no thanks, and we stayed in Boston for his training at our more prestigious institution where he was actually paid and also moonlighted. We came back home to Southern California later in a better financial position. I was also offered to continue fellowship in a prestigious lab but would work for “free” clinically. I also said, no thank you! That degree was not going to feed my two children. So I made the difficult decision to uproot the entire family to complete a research fellowship at NIH, but that ended up being one of the most wonderful years of my life and led me to my current position. Here are some of my thoughts on unnecessary training programs https://drplasticpicker.com/fise-senior-mds-lets-stop-prolonging-the-medical-training-process/.
- Start Your Real Job As Soon As You Can: This advice I received from a NICU nurse. Our youngest daughter was born at 28 weeks, but she is a miracle baby and did well. She was intubated for only 1-2 days, had a scare with a possible meninigits diagnosis but ended up having a line infection instead. So she was in the level 2 nursery for a long time. This is where the premature babies are breathing on their own, and are in different incubators and just getting regular vitals, being monitored and feed through an NG tube. As a mother in the level 2 nursery, you have lots of time to hold your baby and chat with the nurses. One NICU nurse I got to know well. I had worked with her as a young resident, but as a mom on the other side now – we grew close. She told me a lot of stories about working as a traveller nurse and had an amazing skill set. But she told me, she regretted it. She did not have seniority or much of a retirement now that she was in her 50s. Her advice to me was to find my real job and stay there. I listened to her and I have reached my 10th anniversary at our HMO and I am so grateful https://drplasticpicker.com/dr-plastic-picker-agitates-for-the-ocean-at-a-regional-meeting/.
- Don’t Fall Into the Fancy Car Trap: Drive a safe, reliable, and fuel-efficient car. Mr. Plastic Picker loves a nice car, but he is practical. He drives a 2012 Red Prius. It is still going strong and getting 50 MPG and the maintenance is so affordable because it is a Toyota. It is hard to justify getting another car. If you are a Young MD reading this, Mr. Plastic Picker 100% makes more than you. Yet Mr. Plastic Picker drives a 2012 Red Prius. Actually most of his colleageus in a subspecialty department characterized by high-income earners who are sub-sub specialized mostly drive either Priuses or sensible electric cars like the Chevy BOLT or Nissan Leaf. None of the them have new TESLAS and especially not the Roadster. Think about it. If you are a young MD and you have a TESLA, drplasticpicker is shaking my head and rethinking how much common sense you have. I wonder if you actually know how to budget? How can you be entrusted to the department budget, if you have a TESLA this early one? One of our colleagues LEASED a TESLA. Then he got a flat tire within a few months. Dear Dear Friend said I was being so mean, when I started laughing uproariously in the lunch room when I heard from someone else that news. That was before I became the zen and kind and emotionally open and emphatic drplasticpicker. Although I still think it’s funny.
- Become Financially Literate: Personal finances is not rocket science and certainly not aeronautical engineering. Our family’s road to financial independence was simple. We minimized our debt as much as we could, We worked extra when we were younger and threw that at our debt. We started working our real jobs as soon as we could. We both work full time. We live with and near our families and have family supports. And our savings rate has on average been at least 50%, and even in our lean years when we we had to buy new cars was at lesast 30%. We were at 68% one year, but that was kind of crazy. We continue to live relatively simple lives compared to others in our income bracket. We invested all the extra money into either stocks, real estate, and we maxed out on our retirement funds. That is it. I recommend reading Millionaire Next Door by Thomas Stanley, an old tried and trusted book to explain it all. Read financial blogs of those who actually are frugal. I like Retireby40, LenPenzo.com, and Mr. Money Mustache are good blogs. www.drmcfrugal.com is a new blogger that I am following that seems to have good advice. But of coures, I am reserving judgement. LOL. I wonder if he read that! Take their advice as no more than the advice of anyone else, and figure it out yourself. Do become familiar with bankrate.com. That is basic information everyone should know about interest rates, mortgages and the like.
- Have Free or Inexpensive Hobbies: If you love skiing, you will be poor. Or you will have to work a lot to fund that hobby. Same thing with golf, sailing, and traveling. Think about drplasticpicker’s hobbies. I blog, which cost $25 a year for the hosting. I pick up trash, that is free and actually helps the earth. I make trash art, that is also free. I read, which is mostly free if I get the books from the library. I am a Girl Scout Troop Leader, which does cost me some but not that much. But it also saves me money, because an equivalent activity for my daughter would cost in the thousands. I also feel it is a good professional development exercise for myself. I invest in real estate and love reading about personal finance, which actually makes me money. I also like to meticulously track our financies and spending, which again makes me money because I spend less and I know where every penny is.
This post serves as a great outlet. I always wanted to write a personal finance blog, but really I didn’t need to. Everything I ever wanted to tell all the Young MDs out there is right here in these Ten Financial Tips to Young MDs. Good luck. It is 641AM on Sunday morning and I am going to head to the beach now to pick up another bag.