OH HEY LET'S TALK ABOUT MONEY

In honor of everyone graduating and moving on to the next step, let's talk about money!  And by money I mean debt, because new doctors don't have any money!  All we have is bills to pay!

So I am the one who does the money things in our household.  It really happened by accident.  Matt was deployed shortly after we got married, before we had fully decided our financial plan as a couple, so all daily responsibilities were de facto handed off to me.  By the time he got back a year later, all the accounts and whatnot had my passwords on them and all the bills auto-debited out of my checking account so I could keep track of them (insofar as a medical student can keep track of anything besides the filtration system of a nephron).  Over the years of our marriage it has taken on a comfortable, natural sort of balance where we check in regularly with each other and the bills are somewhat more evenly distributed, but I still do the weekly bookkeeping and the nuts and bolts of our budget.  I like it.  It's like folding towels, which I also like - a nice, sequential task where the corners line up neatly with the bonus of a visibly completed task when I'm finished. 

That calm, simple task (money, not towels) kind of exploded once I graduated residency and everything changed.  Matt graduated law school and started working full time.  I switched from a modest salaried job to a higher-paid-but-extremely-variable hourly job.  We bought a house.  We sold a car and bought another one.  And oh, yeah - all of our student loans came due. 

I knew in a vague way during training that we had a lot of debt.  I would glance at it out of the corner of my eye from time to time, but everything was in forbearance or deferment, so nothing was due.  Out of sight, out of mind, amirite?  It felt insubstantial to me, like a theoretical concept.  And it's not like there was a way around it.  If we wanted to complete the training we had begun, then massive debt was part of the package.  Here I will also admit that I had a naïve, trusting sense that if my school didn't think we students would be able to pay the money back as physicians, surely they wouldn't be helping to get us all in such debt, right?  So I ignored it and kept working and surviving, and all the while the law of compounding interest ticked quietly away in the background.  I knew our debt was mumble-mumble-hundred-thousand-mumble-and-change, but I literally only checked it every few years when I was forced to.  And I had never even looked at Matt's student loans.  Law school was slightly less per year than medical school and it was a year shorter.  That was the full extent of my knowledge.

There is a reason that if you listen to Dave Ramsey and a caller states they have six figure student loan debt, he asks who the doctor or lawyer is.  It's because we accumulate student loan debt on a scale that most people never conceive of, and that's on top of "normal" things like credit cards and cars and family debt and having a mortgage.

When I took a deep breath and did the arithmetic, we were about $750,000 in debt.

Quite a number, isn't it.

Of course, I didn't add all of that up until about a year ago.  I promptly panicked.  It was only then that Matt and I finally sat down over lunch with a napkin and a pen and hashed out the basics of our repayment plan.  Could we have done it sooner?  Eh, maybe, but we didn't have all the numbers we needed to do the proper math, like my expected monthly income.  I certainly don't think we could have waited any longer than we did without ending up in some trouble, though.

Over the past year, I've learned a few things about money, which was necessary as I abruptly found out I knew nothing whatsoever about money other than basic budgeting.  Change was time consuming and mostly driven by need as we ran into financial thing after financial thing.  My colleague told me a horror story about blindly paying the minimums on her student loans for 10 years only to find out she still owed $150k, so we learned about refinancing and put all our loans on a seven year term with a better lender than the government.  We had cosigned a loan for a friend forever ago who was having trouble (please do not ever ever ever cosign anything for a friend EVER), so we learned about how to finally get some control of that loan to keep it from vomiting all over our credit.  I started listening to Dave Ramsey and reading The White Coat Investor.  We found out how behind we are on retirement stuff, yay.  And we finally got in the habit of throwing buckets and buckets and buckets of money at our debts.  We have paid a few small things off, which felt like a triumph.  The rest won't go away without years of consistent effort.

Here's roughly what our budget looks like now, in terms of percentage of our monthly income:

Tithe - 10%
Student loan payments ~ 40-50%
Retirement savings - 6%
Mortgage/ house stuff ~ 10%
Car payments ~ 6%
Other ~ 20-30%

I put things in the order we generally pay them.  It's not quite a painful way to live since we live in a cheap area of the country and we have never had a lot of money to spend anyway.  But I still worry sometimes, and clearly the two of us cannot afford to do less than work full time at the jobs we currently have for the next 5-7 years.  I especially always feel like that big retirement chunk hurts to lose, even though the reasons for it are sound.  We've settled into the plan and things are stable and workable.  I feel immensely thankful for that, considering how much worse it could be.  But I have to say... it's not really fun to have half your income going to student loan debt and to know that can't change for almost as long as it took to accumulate that debt.

I was talking to a premed student a while ago and she was telling me she got into multiple medical schools, but wasn't sure which one to choose.  One was the local state school.  The other was a private school in California.  We talked for a while about the similarities and differences, and then I offhandedly asked if there was much of a price difference between the two.  She turned sheepish.  Turns out the fancy California school was $30k more per year and she wanted to do family medicine.  I kinda lost it on her.  $30k per year becomes $120k on graduation becomes $150k after residency becomes a $2000 difference in monthly payments for 5-10 years.  Not very socially appropriate of me to lay it out like that, but she had never looked at it that way.  Last I heard she was headed to the state school.

So why bring all of this up?  Because no one ever talks to med students, residents, and doctors about money and it can really hurt us.  We shouldn't go to extremely expensive medical schools really ever, but especially not if we want to go into primary care.  We shouldn't take the max student loans out when it will cost us literally thousands extra a few years down the road.  We should learn about budgeting and investing and taxes and talk about it with each other so hopefully we can stop making dumb mistakes (example: I literally realized today that I have to be careful about how much money goes into my retirement account now because apparently there's a fee if I go over some arbitrary limit the IRS set.  This is called a contribution limit and it's really basic and I had no idea).  If it were just about money it wouldn't matter.  But as I explained to that premed student, money = freedom.  Freedom to have a long parental leave when you have kids.  Freedom to take low-paying work and get to missionary work sooner.  Freedom to support missionaries and sponsor lots of kids through Compassion International.  Freedom to leave medicine if you want.  Freedom to take a freaking vacation.  The list goes on.

So, med students, residents, fellow new docs, educate yourself as early as you can.  Treat debt like the enemy it is.  And talk to each other.