White Coat Investor Podcast
Episode: MtoM #202: Radiologist Gets PSLF and Finance 101: Charitable Giving
Release Date: December 23, 2024

Introduction

In Episode MtoM #202 of the White Coat Investor Podcast, host Dr. Jim Dahle interviews Katie, an academic radiologist who has successfully navigated the complexities of student loan debt to achieve financial freedom through Public Service Loan Forgiveness (PSLF). The episode not only delves into Katie's journey to becoming debt-free but also explores essential financial strategies, including charitable giving. This comprehensive summary captures the key discussions, insights, and conclusions drawn during the episode.

Guest Background

Katie, a practicing academic radiologist from the Pacific Northwest, shares her professional and personal journey with Dr. Dahle. With five years completed since her medical training, Katie has established herself in the field while managing significant student debt.

• Career Path:
  Katie: “I am an academic radiologist and I just passed five years out of training.” [02:29]

• Personal Life:
  Katie resides in the Pacific Northwest with her husband, an outdoor adventure entrepreneur specializing in stand-up paddleboarding and kayaking. Together, they enjoy hiking and spending time in the mountains.

Achievements: Public Service Loan Forgiveness and Debt Freedom

Katie's primary milestone is achieving Public Service Loan Forgiveness (PSLF), which has rendered her and her husband entirely debt-free.

• PSLF Success:
  Katie: “By earning that public service loan forgiveness, my husband and I are completely debt free.” [02:48]

• Financial Milestone:
  "Debt free. Five years out." [02:37]

Debt Management Journey

Katie provides an in-depth look at her student loan debt journey, highlighting the challenges and strategies she employed to manage and ultimately eliminate her debt.

• Initial Debt Load:
  Upon graduating from medical school, Katie accumulated approximately $220,000 in student loans.
  Katie: “When I graduated from med school, I had about $220,000 in debt.” [06:00]

• Debt Growth During Training:
  By the end of her training, her debt had grown to around $340,000 due to interest accumulation as she opted not to make principal payments.
  Katie: “At the end of training, it was probably right around $340,000 because I never paid a cent of principal.” [06:43]

• Financial Discipline:
  Katie and her husband have always been debt-averse, avoiding car loans and mortgages by purchasing vehicles with cash and choosing to rent instead of buying a home.

Public Service Loan Forgiveness (PSLF) Strategy

Katie's strategic approach to handling her student loans through PSLF is a cornerstone of her financial success.

• Early Planning:
  Katie became aware of PSLF during her medical school years (2009-2010) and incorporated it into her financial plan from the outset.
  Katie: “I knew about public service loan forgiveness. It was on my plan from that moment on.” [10:03]

• Implementation:
  By working in a public service role as an academic radiologist, Katie qualified for PSLF, allowing her to have her loans forgiven after making qualifying payments.
  Jim: “You never paid an attending level payment.” [10:55]

• Impact of COVID-19:
  The pandemic inadvertently benefited Katie's financial situation by pausing loan payments, which, combined with her PSLF plan, significantly reduced her total repayment to approximately $30,000.
  Katie: “I never paid an attending level payment.” [10:55]
  Jim: “Wow, you paid 30,000 and had 300ish.” [12:03]

Future Financial Plans

With her student loans fully forgiven, Katie and her husband are charting a new course for their financial future.

• Home Purchase:
  They are considering buying a house outright with cash, leveraging their saved PSLF side fund.
  Katie: “We might very well use it as a cash house fund.” [12:37]

• Supporting Family:
  A significant financial goal for Katie is to ensure the well-being of her severely disabled older brother, alleviating future financial and emotional stress for her parents.
  Katie: “We'll be able to cover that for him.” [14:16]

Financial Advice for Medical Professionals

Katie offers valuable advice to medical students and professionals grappling with student debt, emphasizing the importance of planning and financial literacy.

• Pursue Your Calling:
  Katie: “Medicine isn't just a job. It is a profession, and it is a calling. And if you feel called to do this work, then don't let the money stand in your way.” [14:54]

• Develop a Plan:
  She stresses the necessity of having a clear financial plan, such as PSLF, and adhering to it diligently.
  Katie: “Have a plan and stick to it.” [15:52]

• Living Below Means:
  Katie highlights the importance of living below one's means to achieve financial success, independent of high income.
  Katie: “We live well below our means... money isn't where we derive our happiness.” [15:59]

• Alternative Debt Clearance:
  Without PSLF, Katie believes she could have paid off her debt in three years by utilizing her savings and disciplined financial habits.
  Katie: “I could have paid off my debt in three years.” [16:37]

Charitable Giving: Finance 101

Towards the end of the episode, Dr. Dahle shifts the conversation to the topic of charitable giving, especially relevant with the holiday season approaching.

• Importance of Intentional Giving:
  Dr. Dahle emphasizes that giving should be done thoughtfully to maximize its impact and minimize negative consequences.
  Jim: “You want to give with intentionality and think about how much you're giving and how you're giving it and when you're giving it.” [24:12]

• Qualified Charitable Distributions (QCD):
  For individuals aged 72 and above, QCDs allow for tax-efficient charitable donations directly from an IRA, eliminating taxes for amounts up to $100,000.
  Jim: “If you are of RMD, age 72, 75 plus,… it's called a qualified charitable distribution qcd.” [24:30]

• Donor-Advised Funds (DAF):
  DAFTs offer a way to give anonymously, preventing donors from receiving unsolicited solicitations from charities. This method also simplifies tax deductions and ensures funds are eventually directed to chosen charities.
  Jim: “One cool thing I've found to avoid this charity porn problem is to give anonymously. And the best way to do that is to use a donor advised fund, a DAF.” [24:55]

• Tax Benefits of Donating Appreciated Assets:
  Donating appreciated mutual funds or stock can provide significant tax benefits by allowing donors to deduct the full market value without incurring capital gains taxes.
  Jim: “One of my favorite ways to give to charity is to give appreciated shares of mutual funds that you've owned for at least a year and have substantial gains.” [25:10]

• Avoiding Over-Solicitation:
  To prevent becoming overwhelmed with charity solicitations, anonymous giving through DAFs is recommended, ensuring donations support causes without personal information being shared widely.
  Jim: “If you run a DAF and you'd like to sponsor the white coat investor, contact us.” [25:02]

Conclusion

Episode MtoM #202 serves as an inspiring narrative of overcoming student debt through strategic financial planning and highlights the profound impact of financial literacy in both personal and professional realms. Katie's story not only provides a roadmap for medical professionals facing similar challenges but also underscores the broader principles of earning, saving, investing, spending, and giving—key components of financial wellness. Additionally, the episode offers practical advice on charitable giving, ensuring that generosity is both effective and sustainable.

Notable Quotes:

• Katie: “By earning that public service loan forgiveness, my husband and I are completely debt free.” [02:48]
• Jim: “Wow, you paid 30,000 and had 300ish.” [12:03]
• Katie: “Medicine isn't just a job. It is a profession, and it is a calling. And if you feel called to do this work, then don't let the money stand in your way.” [14:54]
• Jim: “You want to give with intentionality and think about how much you're giving and how you're giving it and when you're giving it.” [24:12]

Speaker Attribution:

• Jim Dahle: Host of the White Coat Investor Podcast
• Katie: Guest, Academic Radiologist

This episode offers valuable lessons on managing student debt, the benefits of PSLF, and effective strategies for charitable giving, making it a must-listen for medical professionals and high-income earners seeking financial independence.