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MtoM #241: Plastic Surgeon Receives PSLF and Becomes a Millionaire and Finance 101: PSLF
00:25:08
Today we are talking with an academic plastic surgeon who is celebrating getting both PSLF and becoming a millionaire. He is just starting his 5th year of practice. He and his wife are both committed to financial literacy. They have a 30% savings rate...
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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.
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B
This is Milestones to millionaire podcast number 241. Plastic surgeon receives PSLF and becomes a millionaire. This podcast is sponsored by Bob Baiani at Protuity. He's an independent provider of disability insurance planning solutions to the medical community in every state and a longtime White Coat Investor sponsor. He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage or to get this critical insurance in place, contact bob@whitecoatinvestor.com Protuity or you can email infoprotuity.com or you can just call 973-771-9100. Okay, I may be seeing Bob soon. Actually, we often have a get together with or sponsoring insurance agents at WCICON. We've got WCICON coming up again. Okay, you are in the middle of the early bird period. In fact, you're about at the end of the early bird period. In fact, I don't even know if you can still register for register for WC Icon as I record this because I'm recording this before registration goes live and maybe we sold out the first day, I don't know. But at any rate, if we didn't sell out the first day, this early bird registration ends tomorrow, the 23rd. So don't wait. You get 300 bucks off if you register during the early bird pricing. Go to wcievents.com okay, so the regular pricing, you know, with that discount is 16.99. The premium is 21.99. It's going to be awesome. We're going to Vegas. Going back to Vegas. It's been six years since we were there and if you love Vegas because of stuff on the Strip, that's great. We're only 10 miles away from the Strip, but we're not on the Strip. If you love Vegas for the reasons I do, which is that it's got some pretty awesome outdoor deserty stuff to do, we're a little bit closer to that. We're about five miles from, from Red Rock, you know, National Recreation Area. So we're kind of in between the Strip and the outdoorsy stuff in Vegas. It's an awesome resort hotel. We've got an incredible lineup of speakers, maybe the best lineup of speakers we've ever had. We've got three new workshops we've never done before at the conference that are going to be awes, great people leading those workshops and of course, we have the usual fun stuff when we knock off at three or four in the afternoon to go spend some time on the golf course, spend some time playing pickleball. I think I'm leading some hikes this year. It's going to be awesome at WCICON, but you can save yourself 300 bucks if you register today instead of waiting until whatever, December to register for it. So go to wcievents.com take advantage of that early bird pricing and. And we'll see you at the Physician Wellness and Financial Literacy Conference. Okay. We got a great interview today. As you heard in the title, this is a plastic surgeon. Plastic surgeon has met not one goal, but two goals and gets pretty vulnerable with us. You know, talks a little bit about his past, and I think you're going to enjoy that. Stick around afterward. I want to talk a little bit about pslf. There's a lot of fear out there about PSLF that I'm going to try to eradicate in this podcast. Our guest today on the Milestone to Millionaire podcast is Rob. Rob, welcome to the podcast.
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A
Hey, thanks for having me, Jim. I've been a longtime listener.
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B
Well, it's always fun to have longtime listeners on here, but let's introduce you to all the other longtime listeners. Tell us what you do for a living, how far you are out of training, what part of the country you're in.
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A
So, I am an academic plastic surgeon. I specialize in reconstructive microsurgery as well as upper extremity surgery. So I have a bit of a unique practice. I do about 50% breast reconstruction and 50% elective hand surgery with really a minimal call requirement. But I do take facial and hand trauma call as I'm in an academic center. I just finished my fourth year, so I'm starting my fifth year and I'm in Texas.
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B
Okay, so you four plus years out of training and tell us what milestones you've recently accomplished.
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So, a while back, I've been meaning to submit my application to the podcast for a while, but I got public service loan forgiveness during my second year of practice, and then my wife and I achieved millionaire status shortly thereafter. We were hoping to get it by age 40, but we ended up being like 40 and a half before it happened.
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B
Very cool. Now, this does not surprise me, knowing your specialty, that you got this a couple of years out of training. A lot of people that don't really dive into the details on public service loan forgiveness may not realize that all those years of training count and the payments may be Very low. Especially if there's a three and a half year student loan holiday in the middle of it.
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I actually didn't make any payments as an attending, which is just crazy to think about.
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B
So how much did you have forgiven via pslf?
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A
I did so as a practice run. I did my wife's PSLF first because she's also an employee at a state institution, and then I did mine about six months later. So total, between the two of us, it was about 340.
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B
340. Okay. And what does she do for a living?
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A
She is not a physician, but works at the medical school here. She started when I was an intern, actually. And she's worked her way up from basically program coordinator for the family medicine medical students, and now she's director of academic programs and gotten like 15 promotions since we started. So I'm very proud of her too. She's definitely done more than pull her weight.
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B
Yeah, that's way more promotions than most doctors ever get, huh?
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A
Yeah, it's just crazy.
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B
Okay, so how much on your student loans, how much do you think you paid total toward them?
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A
Interestingly, I can't access my account anymore, which is how I actually found out that I got PSLF as I tried to log in and it said I no longer had an account. I thought there was some mistake in that. I had to reset my password. So I called and they told me I just like, no longer had student loans. And that's actually how I found out about it.
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B
They're really organized. It's really a top quality bureaucracy.
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A
Yeah. But as I recall, the first few years, the monthly payments were around 250.
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B
Okay.
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But then by the end of my training, because I was a PGY10 by the time I was done, the payments before we went on the pause for Covid were around 1200amonth. Yeah.
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B
Okay, so you, you paid a significant amount on these. It wasn't nothing for sure.
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A
Yeah. I actually don't like the word forgiveness because, you know, it. I did pay for. For seven years out of the 10, you know. You know, Covid pause notwithstanding. But you know, I think there are a lot of people out there that make a lot of payments and end up paying a significant amount of money. It's just sort of like how much, you know, how much money should it cost to be a doctor? I don't know.
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B
But.
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But there are people that get PSLF that still have paid, you know, a six figure amount.
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B
Yeah. Were all your loans federal?
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Yes.
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B
Okay. And what surprised you the most as you went through this process over a decade of qualifying for public service loan forgiveness.
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Initially, it was really clunky. And one of my biggest regrets is that I didn't monetize my knowledge of PSLF like your website has done, because at some point I was like, walking other residents through it, you know, and I did it for my wife and. But I remember it being really, really clunky in the beginning. And so I just. I got a little tired of it and I just put myself in ivr. And even when all those other, you know, more beneficial programs came out, I just stayed in IVR. I let it ride for the full 10 years, and I was expecting it to be really clunky on the exit ramp also, but it was really, really smooth. I just submitted my stuff, and three months later, they were gone.
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B
Very cool. Very cool. Well, congratulations on that. And about the time you happen to have, you know, six figures of student loans wip, you also happen to become a millionaire. So tell us how the two of you did that. It sounds like you've probably been working pretty closely together to do that. You're not that far out of your training and you're an academic doc to boot. So it's not all an income story. It doesn't sound like, but tell us how you managed to get there.
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A
Well, I think one of the reasons I wanted to come on the podcast, because I think that there's this idea that academic plastic surgeons are somehow like, you know, not well compensated. And that may be. That may be the case in some places. I don't know. I haven't worked everywhere. I've only worked at my current institution. But I've not been unhappy with my income since I. Since I graduated. Started out the year out of fellowship. I started it, you know, for those three months because I started in September. Obviously wasn't very much. It was like 110. But every year since then has been in the low 400s for me, which is not obviously there. I'm sure they're a private practice plastic surgeons that make a lot more money than that. But low four hundreds with a working spouse has been more than enough. And so we coupled that, you know, two incomes with the savings rate of about 30%, and it's done. Done well for us.
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B
Very cool. So the student loans went away. What other debts have you dealt with?
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A
So we got rid of all our consumer debt. No more credit card debt. Although, you know, every now and then something comes up and we have to carry over a balance. And I'm really annoyed about it. But then we Just pay it off the next month or two. But other than that, we had one car payment that we paid off and actually my wife has a new car, so we still have one car loan. But it's very manageable for us.
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B
Very cool. And tell us about your investments. How do you guys invest? You said you're saving 30%? Ish.
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A
Yeah, we really take advantage of the state employee thing. We have six tax advantaged retirement accounts between the two of us and we use basically my income to max out all her accounts too. So I've got my three, then she's got three that we max out.
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B
These are 403Bs and 401As and 457s or what are they correct?
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Yeah.
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Pretty typical combination for academic docs.
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Yeah.
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B
Are you doing backdoor Roths too?
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A
Embarrassingly, I've only done two out of four years because it took me a while to understand how taxes work.
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B
I love that in our community. That's like embarrassing, right? Whereas most people don't even know what a backdoor Roth is. So two out of four is way ahead of most Americans.
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A
Well, I've tried to manage our own, our own finances, just more for my education because I think at some point it's going to maybe be a little bit too much for me to do on my own. But getting my head around taxes also took a little bit longer than, than I, than I had anticipated. And so I, I've avoided doing the conversions early in the year because I've always had, you know, like a, a little bit of a tax bill in April. But I think I've, I've started to wrap my head around it and so, so I think this year we'll definitely do it.
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B
Yeah, you know, there's a couple of nice things about doing it yourself. One is, you know, it's the best paying hobby out there. Right. I mean financial advice is expensive stuff. And then two, assuming you do it right, you do it and you do it well, you learn way more when you're doing it yourself.
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A
Yeah, I agree.
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B
And I think you become, you become pretty competent not only, you know, managing your finances, but also, you know, filing your own taxes. For many years I did my own taxes. Wasn't until actually my staff forced me to quit doing the corporate return for White Coat Investor. And we sent it over to an accountant and they looked over the last couple of them and I had made very few mistakes on a corporate return, so I was feeling pretty good about that. But don't do my own taxes anymore. But did for many Years and really learned a lot about the tax code. It was never really more than, you know, learning one more form a year, it seems like. Rob, tell me about your upbringing, what it taught you about money, and maybe some lessons you learned there, for better or for worse, that led you to how you manage money today.
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A
So I'm originally from the border of Texas, Mexico. My dad was in the military, which, as you know, when you're in the military, you're not rich, you're not broke. You just kind of. It can be a perfectly fine life. And my mom was a teacher. She was an ESL teacher down on a border town, and everything was great. You know, when my dad left the army, I think he had a bit of a difficult time transitioning to civilian life. He tried his hand at real estate, and it didn't go very well. So I have a very vivid memory of always being. You know, I was always aware of money and the stress it caused, and I have a very vivid memory of the first time I heard the word bankruptcy. I was, like, 10 years old. And ironically, my parents told me about this when we were on our way out of town for a weekend trip. So the irony of that, you know, now being an adult, you know, I can. I can see it. But it was an unusual upbringing because even though we had no money, my parents always projected sort of like, you know, we were successful, everything was fine. And in hindsight, I can appreciate that maybe that was a protective thing that they were doing, trying to shield me from it. But I definitely picked up some bad habits when I was younger that I had to break out of. And I think it all happened when I was graduating from medical school and we had the exit interview, and then somebody, like, showed me my debt. And I just. I remember it was just like a. Like a switch went off in my brain, and I. I saw it as, like, a problem that I was going to solve. And then that's when I got a plan for public service loan forgiveness. And that's when this whole thing started, and I got very serious about personal finance. I actually. I found your podcast or your blog, actually, back then in 2013, I think.
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B
Yeah, there was no podcast in 2013.
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A
Yeah, and I remember your website was all. It was like the silhouette of the white coat, but the background, the banner was like ones and zeros, I think.
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B
I don't know. But it was very brown before the redesign in 2016.
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Yeah. So then I, you know, I took that. I took that experience and. And really just kind of. It allowed me to Focus. But in hindsight it was just, you know, such a, such an unusual way to learn about money through seeing a bad example, you know, because a lot of people have come on here and talked about good examples, but I had to kind of reconcile that. And, and it was, you know, my, my father passed away a couple years ago and when I was going through his finances, you know, he unfortunately passed with a negative net worth of about $200,000, which was, that was hard to swallow because, you know, I love my parents and I want, I wanted them to do well. Just made me really sad that that's, that's where he ended up. And also very grateful for, for these opportunities that I have to have a job where I, you know, I feel fulfilled. You know, I think Cam Ward recently is a quarterback in the NFL, said something to the effect that, you know, he had to watch his dad go to work at 4:30 in the morning every day doing stuff that he didn't like. So if he can't get his act together for football, he doesn't deserve it. I feel the same way about being a plastic surgeon. You know, I had to, you know, watch my dad and mom and dad do things that maybe they didn't really want to do. And now I get to, you know, be a millionaire and a plastic surgeon. It's a pretty, pretty phenomenal life.
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B
Okay, so what was the biggest disagreement you and your spouse had about money during the last 10 years as you became millionaires?
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A
When I was a resident, we had some issues with buying too many berries at the grocery store. But that's not as serious as it got. You know, I got really fortunate with my spouse. We're from the same town, sort of from the same background. And so we really, you know, we don't, we don't get in too many disagreements about our finances, which has been, you know, really awesome because 10 years of residency was tough for me, but it was also not, not a whole lot of fun for my wife.
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B
Yeah, I'm sure. And well, if Barry discussions is as bad as it gets, I think you won there. So nice work, nice work. What's next for you guys with your financial goals?
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So I would like to have a million dollars in investable assets working in our retirement accounts. And then sort of a long term goal is once we hit a net worth of 5 million, I'm going to buy myself a 911 Porsche Turbo S. Very cool. And then I'm going to drive it into the ground. I'm not just going to leave it in the garage.
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B
Very cool. So there's somebody out there like you, right? Maybe they're just starting a long training period and they're like, I'm going to be in training for six, seven, maybe 10 years. What advice do you have for them that they can be financially successful despite the fact that they're going to be a PGY8 or whatever?
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A
I think, you know, obviously there's a little bit of consternation surrounding public service loan forgiveness right now, but I think, I think just from my experience, have a well thought out plan for the way you want to manage your student loans and your finances and then stick to it. Because there, along the way, there were tons of people that told me, oh, PSLF is never going to work. You need to refinance now because of X, Y or Z. But I knew that I had thought about it and I was going to do 10 years of training whether I liked it or not. And so this was, this is what I was going to do. And so I stuck to it. Didn't listen to other people and also didn't take sort of in that same vein, I didn't take advice from just anybody because there's a lot of bad advice out there, too. So if you have a bunch of conversations with people that don't really understand what you're going through, it can be problematic, particularly for younger generations when they're talking to surgeons that trained 10, 20, 30 years ago. I mean, I've even found that I work at a medical school and I mentor a lot of medical students and I'm only in my early 40s and I already feel disconnected from that age group by quite a bit. So they have to deal with things that. That I didn't even really think about. And so you have to be careful on who you get your advice from, too.
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B
Some advice is classic and some advice changes every few years, doesn't it?
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A
Right. Yeah.
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B
Very cool. Congratulations to you and your spouse. You guys have done wonderfully. You should be very proud of yourselves. Thank you so much for dedicating 10 years of your life to your craft. When people need a hand surgeon, and I needed a hand surgeon a year ago, we really need a hand surgeon. So thanks so much for learning how to do all that and thanks for coming on the podcast and sharing your story with everybody else to inspire them to do the same.
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A
Yeah, thank you for having me.
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B
Okay. Hope you enjoyed that interview. You know, I'm super thankful for anybody who operates on hands these days. I may need another hand surgeon. I had a non union of my Scaphoid bone. And we're trying to decide what to do about it, whether just keep doing PT or whether to go do a distal pole resection. So if you got an opinion, send me an email about that. But I promised you at the top of the podcast that we're gonna talk a little bit about Public Service Loan Forgiveness, or pslf. There was a lot of fear out there that with the one big beautiful Bill Act, PSLF was gonna go away or be dramatically changed or that nobody was gonna be grandfathered into it or whatever, right? There's all this kind of fear. Some of it was irrational, some of it was totally reasonable. Well, the truth of the matter is PSLF really didn't change at all as a result of the one big beautiful Bill Act. It's still there. Okay? If you work full time, that's defined as 30 plus hours a week for a nonprofit or government employer and you make payments in a qualifying program for 10 years, whatever you still owe in federal student loans goes away tax free, okay? It's forgiven. That's Public Service Loan forgiveness. None of that has changed. There are some changes to the income driven repayment programs, right? And some of those were really, really generous. Right. The SAVE plan, which was the last one that the Biden administration came out with, it was kind of put in place by executive fiat, right? It didn't go through an act of Congress, so no surprise, you know, it got tied up in a bunch of court cases. And when a new administration swept in, that was pretty much the death knell on it. It was really generous to doctors. It was awesome. I mean, basically your debt never went up during residency and you only had to make 10% of discretionary income payments. And it was a pretty nice program. Well, that one went away. So the only programs you got a couple more years if you're in one of these other programs. But three years from now, the only programs that are going to be out there are ibr, which also went through an act of Congress. And so it requires an act of Congress to go away. And this new income driven repayment program, the RAP program, okay, and that one's a little bit different, right? It calculates your payments based on your adjusted gross income, not this discretionary income calculation. And so for a lot of people, it means higher payments. Other things change. Like there is IDR forgiveness, right? Under the pay program, you could get IDR forgiveness after 20 years of payments that was taxable, but you didn't have to work for a non profit. You didn't have to Work for a government employer, you could just make payments. You don't have to work at all. You're just making these little tiny payments for 20 years. The rest was forgiven. That forgiveness was taxable under IBR. It was 25 years under this new RAP program is 30 years. So that is not nearly as attractive as it was under the PAY program. So with pay going away, some people who are counting on that program to get taxable forgiveness at 20 years, they have not been grandfathered into that. But anybody going for public service loan forgiveness, things really haven't changed much for you. Now. New borrowers, people that are coming into medical school now, a year from now, five years from now, things are going to look a little bit different for them because a much bigger chunk of their loans for the last 15 or 20 years, none of your loans have been anything but federal loans unless you refinanced them to private loans. You had federal loans, and so they were all basically eligible for pslf. Well, in coming years, that's not going to be the case because you're only allowed to borrow about $50,000 a year. I say about exactly $50,000 a year for medical school. And so that's from a federal. And so that's all that's going to be eligible for forgiveness. You're not going to be eligible to get 4 and 5 and $800,000 forgiven. You know, it might be something more like 2 or $300,000 forgiven. So that's down the road. If you're already listening to this podcast, you're probably not in that boat. You're probably already in a boat where all your loans are federal. Maybe you're already making payments on it. Maybe you're four years or six years or eight years into this process. This is going to work out for you just like you planned. If PSLF made sense for you this spring, PSLF makes sense for you this fall. So take a deep breath, stop panicking about pslf. It hasn't gone away. We've got some stability in the student loan situation, at least for the next three and a half years. So I would plan on that. If it makes sense for you, work toward public service loan forgiveness and say thank you very much to the taxpayer. You know, it is the taxpayers decided, if you're willing to work for a nonprofit employer, that they're willing to provide this benefit for you, and I suggest you take advantage of it. Hope that answers some questions. And a lot of the concerns out there I'm hearing about pslf. I think those who've been following this really closely, have been reassured, but I know a lot of people, they just don't follow that closely. You're busy, right? Especially if you're in residency or fellowship or something. It's hard to keep track of everything all at once, but hopefully this provides you some reassurance. This podcast was sponsored by Bob Bayani at Protuity. One listener sent us this review about Bob Bob's been absolutely terrific to work with. He's always quickly and clearly communicated with me by both email and or telephone, with responses to my inquiries usually coming the same day. I have somewhat of a unique situation. Bob has been able to help explain the implications and underwriting process in a clear and professional manner. Contact bob@whitecoatinvestor.com Protuity today you can email infootuity.com, you can call 973-771-9100. But however you do it, if you don't have disability insurance or if you just need your disability insurance reviewed, get it done today before you develop some sort of a medical problem and certainly before you become disabled. Besides, the sooner you get it, the cheaper it is and the longer it may pay you benefits for. So there's no reason to wait on disability insurance. If you're making money, go get some disability insurance. Whitecoatinvestor.compro28 all right, keep your head up, shoulders back. You've got this. We're here to help. The whole White Coat Investor community is standing behind you. We'll see you next time on the Milestones to Millionaire podcast.
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A
The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.