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MtoM #240: Pulmonologist Pays Off Student Loans in Less Than 5 Years and Finance 101: Paying for School
00:28:54
Today we talk to a Pulmonologist who paid off nearly $300,000 of loans in less than 5 years. He shares that he initially operated under the ignorance is bliss mindset and opted to avoid worrying about his loans at all. Once he had a bit of a financial...
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- [00:00]
A
This is the White Coat Investor Podcast Milestones to Millionaire Celebrating stories of success along the journey to financial freedom. This is Milestones to Millionaire podcast number 240 pulmonologist pays off student loans in less than five years Southern impression Homes takes owning rental property to the next level with their innovative 2.0 approach, focusing solely on turnkey new construction investment properties, single family homes, duplexes and quads in high growth areas of Florida. They handle every aspect of the process with expertise and efficiency, including financing, insurance and property management. To learn more about Build to rent, visit whitecoatinvestor.com southernimpressionhomes or call 904-831-8058. All right, we got a few events coming up. This podcast drops on the 15th. The event is on the 22nd. It's next Monday, 6pm Mountain sign up whitecoatinvestor.com Few Alyssa Chang's coming on. She's a doc, a life coach. She's been a WC icon speaker. She is at growyourwealthymindset.com but she's going to be talking about wealth and women, deconstructing social narratives for financial empowerment. She's going to talk about discovering where your money beliefs really come from, how they shape your decisions. Today she's going to uncover the hidden history of women's financial rights, what it means for you. Now talk about the gender pay gap, especially among docs, break down the money messages that society pushes on men versus Women and help you learn some practical ways to reframe your money thoughts and step into financial empowerment again. You can sign up for that@whitecoatinvestor.com Few in case it's not obvious, this one's for the women out there, all right. It's run by the women at White Coat Investor. I'm not even involved in this at all, other than telling you about it at the podcast. But these events have been spectacular, very well received, and will be a great use of your time again. September 22nd 6:00pm Mountain okay, we've got a great interview today. Our doc is a pulmonologist who didn't do everything exactly right and yet is still having a great deal of financial success. And I think there's a lot of lessons to learn there. We'll talk more after the break. We're also going to talk a little bit about paying for school. Our guest today on the Milestones to Millionaire podcast is Todd. Todd, welcome to the podcast.
- [02:34]
B
Thank you for having me. Dr. Dali, excited to be here.
- [02:37]
A
Let's have you introduce Yourself a little bit to the audience. Tell us what you do for a living, how far you are out of training, what part of the country you' Sounds great.
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B
My name's Todd Gandy. I'm a pulmonary and critical care physician in the southeast region, which is my home. So after training, came back home to be close to family, but also for purposes to some extent of geographic arbitrage. I graduated medical school in 2013. I did three years in internal medicine. I did stay on for one year of chief residency year and then did three years in fellowship, pulmonary and critical care fellowship. I've been in practice now for five years. Came into practice right in the heart of COVID 19. Pandemic in 2020.
- [03:19]
A
Welcome to the ICU, right?
- [03:21]
B
That's right. It was a good time to be kind of thrown to the wolves in a sense. I think looking back, I was very fortunate to experience that because it really got me off the ground running at the start of my career.
- [03:34]
A
Yeah. Well, tell us what you've accomplished in the last five years, what we're celebrating today.
- [03:39]
B
So celebrating today, paying off My student loans, $297,000 in student loan debt. Coming into residency and fellowship. I originally didn't have really a great plan for that. It was more income based repayment plan that I didn't know a whole lot about. I knew I worked for a nonprofit system and so started off with those payments initially about halfway through residency and through the start of fellowship, I got married, we had a child. You know, life comes at you fast. And I actually went into what I considered financial hardships, wasn't making any payments on those for some time, and I think fell into the trap of they'll take care of themselves with time. Once I got into my attending role about five years ago, because I didn't have a great plan for those loans, I refinanced at a low interest rate with a private company and committed to paying them off in full. The first three years were just kind of standard payments. And when I didn't see that premium shrink too much over the first three years, I finally said, I got to do something about this. And I made a goal to pay them off by my 40th birthday. And here I am actually having just turned 39, achieved that goal a year early and very excited to have done that.
- [04:52]
A
Very cool. Well, my notes say it was $297,316.11. Is that the most it ever was? Was that at some point during training that it peaked at that level, or was that the amount you owed when you came out of school?
- [05:06]
B
That's the amount I owed when I came out of school. Truthfully, I don't really know what they peaked at. That was part of the ignorance is bliss kind of approach. That might have been the peak. They might have creeped over 300. For a while I didn't look at them. And even, even once I got into my attending role and had refinanced, I was making the payments, but out of sight, out of mind, wasn't looking at them until really I dove headfirst into a lot of your podcasts and what the white coat investor teaches. I started really prioritizing personal finance and started looking at them regularly. And again, when that premium wasn't shrinking, I wasn't happy and I decided to reset my goals.
- [05:43]
A
Yeah, that balance doesn't move that much, especially if you're, if you've set up a plan that's 10 years or 20 years or something like that. It's mostly interest those first few years, isn't it?
- [05:53]
B
Absolutely. It was a 20 year plan. And as a family grew and, you know, lifestyle creep grew, all of those things, I just, I didn't like the path I was on and knew I had to do something different.
- [06:05]
A
Yeah, so what, what, what was the change? Do you remember? Was it gradual or was there one day where you're like, I gotta learn how this stuff works?
- [06:15]
B
I think I did kind of have aha moment at some point. I can't say exactly when that was. I know a lot of us who listen and read your material, listen to your podcast, go on the website, you know, feel similar. It was simply just starting to read about this and educating myself and really mastering the concept of financial independence. For the longest time, I thought, you know, life was, you get a job at 25, you work for 40 years, you retire at 65, and you spend a lot in between. And the whole concept of financial independence, sadly, was relatively foreign to me. And once I started listening to your podcast, to and from work, you know, 10 minutes a day, I started to realize, hey, this might be for me, I can really take the reins on what the future looks like for me and my family. I just need to educate myself and do the basics. Pay down bad debt, start saving and living intentionally. Yeah, very cool.
- [07:15]
A
Well, 10 minutes a day of podcast is a pretty nice commute. I think that's another benefit of geographic arbitrage that maybe doesn't get sung as often as maybe it should. Right. It's better than sitting in traffic in LA for two hours. Each way going to work for sure.
- [07:32]
B
Yeah, absolutely. I think I'm very fortunate to have a short drive into work. And when we take on new colleagues, I'm an advocate for living where I live. I mean, I think a short commute is very important. You hear on the radio every day, you know, the average American spends $5,000 a year in gas. I can't imagine I come anywhere close to that. I have a six or seven year old car and I've got 60,000 miles on it. So, you know, 10,000 miles a year. I'm not, not doing a whole lot of driving.
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A
Yeah. Now it sounds like you got married at some point during your training. It sounds like that was before kind of this financial awakening for you. So. So the two of you at some point had to have a discussion about what you were going to do with your money. Tell me about that first discussion.
- [08:17]
B
Yeah, I don't think it was as formal as maybe it should be or could have been. It's still a work in progress. I got married after my intern year, so after one year of residency, got married maybe four years later, we had a child. But it was just kind of gradual learning and teaching along the way. You know, I talk with my wife about what I've learned through your podcast and other financial resources and you know, she takes some of it in, she'd ask some, some good questions. But, you know, we still really haven't had a formal sit down discussion about all of our financial goals and, you know, financial philosophy as much as we could or should. But yeah, it's still very much a work in progress. But fortunately, I think we come from a very similar upbringing background, have very similar principles and we're just lucky to be in a good working relationship.
- [09:14]
A
Yeah, for sure. So give us a sense what intensivists in the Southeast make these days when they're working full time.
- [09:20]
B
So I think, you know, going back to geographic arbitrage in general, physician pay in the Southeast is pretty good. The cost of living, some of the best in the country. I spent my whole life in the Carolinas. Coming out of fellowship, I'd say our total household income was around 450. That's grown. I looked up on my tax returns from last year. We were 638. So anywhere from 450 to close to 650 has been our income range. The majority of that, my income. But I would say over the last couple of years the majority of the growth has actually been my wife's income. So over the last five years, she's kind of grown into a high, high income worker as well, which has been beneficial for the family and the household. And you know, are we going to grow much beyond 650? I'm not sure. We might be approaching our ceiling, but yeah, I'd say that's the range we've had since coming out of fellowship.
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A
Yeah. Not a bad ceiling to have though, right?
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B
That's right.
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A
So with both of you working, what have you decided to do as far as childcare and balancing, you know, all these house responsibilities? What have you outsourced and how are you taking care of those kids when you're both at work?
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B
Yeah, you know, we, we talk a lot on, on here about living like a resident. We, we try to do that to some extent and limit our expenses. But in regards to child care and, and now school, my oldest child's in first grade. I have a six year old, four year old and two year old. So first grader and two in daycare or preschool as we like to call it. And my first grader is in private school. So our total educational costs I would say are probably, you know, close to $50,000 a year for those three kids. So we just, you know, factor that into our budget and working to plan for the future. We do have 529 accounts we've opened for each that have gone to about 20,000 for each kid. I'm hoping to get those to 50 or 60 before kind of tapping those out so that child care, I mean, being close to family is helpful. We don't have to pay a whole lot for babysitters or when we go out of town on, on vacation for the weekend. We're fortunate to have grandparents nearby who can help us out.
- [11:34]
A
Very cool. Now I often tell people you don't want to have, you know, student loans still when you're more than five years out of training. Do you agree with that? Are you glad to be rid of them within five years?
- [11:45]
B
Yeah, I'd absolutely agree with it. You know, I encourage a lot of my, my friends to kind of rethink their approach. It's funny, I talk to people in medicine who are earning a lot more than I am and they'll say, oh yeah, my financial guy just says, you know, not worry about those, keep making, you know, minimum payments and they'll take care of themselves or, you know, others who are just sticking to the 15 to 20 year plan. Some who have had success in PSLF approach. But I think for me, absolutely it worked. I think, you know, getting debt off my shoulders as Much as possible is good. You know, looking back, one of the mistakes certainly was just accepting the status quo and taking bad advice. I can think back to what we had in medical school. A financial advisor who was hired by the medical school who very much feels like looking back, his only job was to help us figure out how to get much loan money as we could and how to do that fast. And so I was fortunate to come out of undergrad without any student loan debt. All my debt was taken on in medical school. But I could have been a little more frugal in hindsight. You know, I probably could have stuck to a PSLF plan if I had been a little bit better educated. All of my employers throughout my time in residency and fellowship and now as an attending have been nonprofit organization. But despite that, I still, I don't regret anything I did in terms of resetting these goals, setting a timeline to get them off my back within five years, and actually achieving that goal a year early.
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A
Yeah, what's the, what's the biggest check you ever wrote to your lender? Do you remember?
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B
It was the last check I wrote. So over the first three years of repaying student loans, I think the premium came down by about $57,000. So balance when I paid it off was 230, $240,000 that I had saved up over the course of two and a half years wanting to check. It was just a few clicks online, so not quite, as, you know, didn't feel quite the same, but it was nice to see that number disappear. And I got to give credit to a friend of mine. You know, I can recall a conversation I had at dinner one night. He's a single guy, also a physician, but not married, no children, pretty financially savvy. And we started talking to him about finances. He said, what are you doing with, you know, in terms of taxable brokerage account? I said, I don't have one. I didn't know how to open one. I was a little thought it was going to be too time consuming to make it happen. But he was like, well, at the very least, you know, you need to take what you got in savings and put it in a money market account. The next day, I opened up a taxable brokerage account with Charles Schwab, opened up a money market account and just put $50,000 in there. And a couple months later, I saw a number grow. And that was nice. Instead of just seeing a number shrink, I was very accustomed to putting my paycheck and savings every month and then spending it down and repeating the process and really never seen a number grow. So that was very helpful. And then I started investing that money. And that's actually, that Schwab account is what I used to pay off my student loans. It was about 50% in the end, 50% of the cash I used to pay off those loans were in a money market account and the other 50% were in index funds and even, even some stocks that I had picked.
- [15:09]
A
Now somewhere out there there's an MS.4 or a PGY one listening to this, going, I don't know much about my student loans. I don't know if I'm ever going to be rid of these things. What advice do you have for that person?
- [15:22]
B
Yeah, I would say first and foremost, don't just ignore them. You know, I got bad advice in medical school and through residency from older doctors who said, well, you know, you're going to have high loans, it's okay, you're going to be a high earner. You'll just pay on them into perpetuity, but your income will take care of it. And I think that is not a way to live with intention. So educate yourself on your options. And at the end of the day, whether you use some sort of PSLF program or refinance and are determined to pay off the premium in full, I think you should always be setting aside money intentionally to pay off those loans.
- [16:02]
A
Well, congratulations, Todd. You've accomplished no small feat. Nearly $300,000 in student loans you've paid off in about four years, it sounds like. So it's pretty awesome. Well done. You should be proud of yourself. And what's next for you? What's your next financial goal you're working on?
- [16:22]
B
Well, I get, you know, we technically could celebrate another one. Our net worth is over a million dollars. I calculated it this morning. It's actually close to 1.4 when I include very cool, about $500,000 in home equity. So I guess reaching that second million dollar mark is a goal. Maybe 5 million by 50 and financial independence by the mid-50s.
- [16:42]
A
Yeah, very awesome. Well, you'll find that second, you'll find that second million goes a lot faster than the first one.
- [16:47]
B
I believe that I'm seeing it kind of play out right now in person, you know, short term goals. I recently purchased fire your financial advisor through your company. I'm about halfway through that course. I'm going to have my wife sit down and take the course as well to formalize a written financial plan. Sadly, we don't have one of those quite yet. But we're working on it. And then beyond that, my wife very likely will be transitioning out of her work role in the next year or two and I'm hoping to get into real estate and she's interested in becoming a real estate professional status. And so we might be looking into your real estate course once we get all the way through. Hire your financial advisor.
- [17:26]
A
Very cool. Well, congratulations to both of you on your success. Well done and looking forward to following along with your success as the years come by. So thank you for being willing to come on the podcast and sharing your story with others. Hopefully inspire them to the same.
- [17:41]
B
Thanks very much, Dr. Daly. It's kind of surreal getting to talk to you after hearing you so much on these podcasts. So absolutely a pleasure to come on and talk with you and thanks for all you do for our community. You're always making sure to thank us for the work we do in the hospital. I want to make sure we thank you for what you're doing here. In terms of financial education, a lot of it's pretty basic stuff, but as you know, a lot of us out there don't know our basics quite yet. So champions are masters of the basics. And you've really helped me master the basics.
- [18:14]
A
Okay. I hope you enjoyed that interview. I like doing interviews like that where people reveal that they're not perfect. The truth is, the high income you earn as a doc allows you to make all kinds of mistakes and still be okay. So do not beat yourself up that you've made some financial mistakes in your past. All of us have made some financial mistakes in the past. I've talked about some of the ones I made. Thankfully, I made most of mine very early on with very small amounts of money. But I own some crummy whole life insurance as a medical student. Right. I went to a fee based, not a fee only advisor and got some lousy advice. Quite honestly, I wasn't paying very much for it, but it wasn't even worth what I was paying for it. So I've made mistakes just like Todd's made mistakes. Right. I talked with him after we stopped recording. I'm like, man, how much regret do you have about not going for public service loan forgiveness? And he has a little bit, but not a lot because he likes taking control of the situation. He had some doubts about whether it was going to work out for him. But the truth is, once you put a plan together, whether that plan's going for public service loan forgiveness, whether that plan is paying off your student loans, all you got to do is work the plan. And the plan worked fine. He was making plenty of money. Paying off that amount of student loans was very doable on his income. And he did that. And now his student loans are gone, just as though they had been forgiven via public service loan forgiveness. And the truth is, now that he's figured out this financial literacy thing, he's going to become a gazillionaire, right? Go down the road, project this out 5, 10, 20 years. Right? He's going to have millions and millions of dollars. Is the $300,000 that he paid off in student loans rather than getting a freebie from the taxpayer via PSLF really going to matter? No, it's not. What matters is that he got that high income by finishing his training and working hard and that he's now managing it well. He's managing it intentionally. Is he becoming more financially literate every month? Absolutely, he is.
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B
He.
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A
And that pays great dividends when you make 4 and 5 and $600,000 a year. So I think that's the lesson to take away from this. Not to go, oh, I would have done it a little bit differently if I was doing it well, maybe you would have and maybe you would have optimized it slightly better. But the truth is we only got to get the big stuff right. We don't have to get everything right. We've already got a high income. Most Americans have an income problem. You don't have an income problem if you're like most docs. Your problem is just learning to manage that income, to take that high income and, and turned into a high net worth high earner, not rich yet. Or Henry, that's what a lot of you are. I don't want you to be that for long. I want you to be a high earner that is rich. Because when you are wealthy, when you are financially comfortable, when you don't have financial worries, you don't have to spend as much time trying to make payroll and trying to make payments. You can instead put that focus on making a real difference in the world. Whether that's in your practice, whether that's in your community involvement, whether that's in your family, whether that's in treating your own burnout, whatever it takes. I just think you're going to be better off that way. All right. I promised you at the beginning that we're going to talk a little bit about paying for school. And I'm not talking about your school. We spend lots of time talking about that on this podcast. Whether that's borrowing some money and going for Public Service Loan forgiveness, or whether that's signing a contract for an MD PhD or an HBCUs PSP, or with the National Health Service Corps or Indian Health Services, whether that's your parents being wealthy and helping you pay for it, that's water under the bridge. I'm talking about your kids. Now, there's really four pillars to paying for school when we're talking about college for the most part here. The first one is school selection. This is probably the most important one. School's a little bit like a wedding. College is like a wedding in that it costs what you're willing to pay. You can go to a very inexpensive school. The least expensive one around here is a community college. You live at home, you pay almost nothing in tuition, and you can come out with very little money having been spent to get that education. Even some of the state schools around here and one of the private schools around here is very inexpensive four figure tuition bill every year. And basically they're cheap enough that you could work your way through college. You know, if you work hard while you're in school, you work hard in the summers, you could work your way through and be totally debt free. Okay? On the other hand, there are undergraduate institutions in this country that are $100,000 a year. You could borrow $400,000 just to get an undergraduate degree in, you know, art history, underwater, basket weaving, whatever, right? Something that's not going to pay you anywhere near that amount of money. So school selection matters. And then after that you have the parental savings, what you're saving up before Junior starts school. Typically that's done in the 529 plan these days, right? 529 plan. You don't get a tax break when the money goes in. You might get a state tax break, but usually you don't get a federal tax break. And sometimes you don't even get a state tax break. Then it grows in a tax protected way. And when you pull it out, as long as you spend it on legitimate educational expenses, which doesn't include transportation, by the way, it comes out tax free. Right. So it's kind of like a Roth IRA for education. Great way to save for college. Okay, that's pillar number two. First one's school selection, second one's parental savings. The third pillar is parental cash flow. You don't actually have to save the whole cost of the education up before they start. I don't know where this idea comes and people end up with these $600,000 529s. I don't know where they think their kid's going to school. But you don't have to save it all up in advance. You can cash flow some. Okay, Junior's no longer in the house eating all your food. Well, that just freed up $250 a month that you can go toward helping junior pay for college. Right. And typical doctors, you're making pretty good money.
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B
Right.
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A
You're making 200 or not 220 or 30 or $40,000 a month. $50,000 a month. Yeah. Some of that can go toward paying for college with your cash flow. And then the fourth pillar is your child's contribution. That might be scholarships, it might be some of their savings, and it might be them working during school or during the summers, them making a contribution to their own education. Those are the four pillars of paying for school. You notice there's not one that's called student loans. I don't think the children of doctors ought to be borrowing money, at least for their undergraduate education. It's just too easy to get that for too low of a price. That if you're saddling your kid with $150,000 in student loans for an undergraduate education, I think you're doing them a disservice. I don't think that's the right way for the top 1 or 2 or 3% in our country be treating their kids. So try to get them through undergrad without any student loans at all. Now, if they go to dental school, maybe that's not gonna happen. They go to medical school, maybe that's not gonna happen. Maybe there's gonna be some borrowed money at that point.
- [25:18]
B
Right.
- [25:19]
A
And you can talk with them about how you're gonna manage that. Keep it to an amount that's very reasonable given their expected future income and loan forgiveness for somebody. Or they can just refinance it, pay it back. Same thing we talk about on this podcast all the time for those high earners. But use those four pillars to pay for school in order to get them through undergraduate without debt. For a lot of us, that wasn't possible for us. So this is a chance to change our family tree and get them a little bit of a head start into their life. So hopefully they can pass that forward to your grandkids and great grandkids and great, great grandkids and really change the way your family does education going forward. You know, my daughter is being dropped off on the day we're recording this. We're recording this in late August. She's being dropped off at College number two is going to college. Half her kids are now out of the house. And it was very interesting, right? She's got a good 529 that we saved up far more money than she's going to need for an undergraduate education at her chosen institution. She's there on a full tuition scholarship anyway. But the funny part about it is my wife took her out last week to get a computer for her and she's going into mechanical engineering. So she needs a relatively high powered computer. It's basically like a gaming laptop. And she's like, oh, I thought this was going to be a gift from you guys. She didn't think she was going to have to use her 529money to pay for this. I'm like, do you have any idea how much money is in your 529? That was the gift. But it's fun to see. My kids in some ways are just as cheap as I am. And what you teach your kids about finances maybe matters more than how much money you give them. Don't leave it to the world to teach them how finances work. Teach your own kids financial literacy, the stuff you're learning, pass it along to them. You'd be amazed what a difference it makes when you leave home already. Understanding how investing works, how insurance works, how college works, how careers work. Talk with your kids about this stuff. There's no reason that we have to have financially illiterate people who are 20 and 30 and 40 years old in our country. It's a huge blessing to be financially literate from the very beginning of your life. So pass that legacy on to your kids.
- [27:36]
B
All right.
- [27:37]
A
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