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White Coat Investor Podcast
MtoM #244: A One-Doctor Couple Pays Off Student Loans in 6 Months and Finance 101: Understanding Health Insurance
00:22:45
Today we are chatting with a one doctor couple who paid off $205,000 in only six months! They took advantage of the payment pause during covid. During this time she got her practice started and once the pause lifted and her practice took off they went...
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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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This is Milestones to Millionaire, A one doctor couple pays off their student loans in six months. 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 today. You can also email infoprotuity.com or call 973-771-9100. All right, you need some extra money? Want to be paid for your opinion? Here's where you go to do it. Whitecoatinvestor.com surveys okay, companies are willing to pay for your opinion. Yes. It also lets them tell you about their product. But hey, if they want to pay you to advertise you, that's fine too, right? But if you go there, you can sign up and take these surveys and they send you a check. One of our columnists made as much as $30,000 in a year from taking surveys. Now, some specialties can make more money than others. No doubt about it. If you prescribe expensive medications, your opinion is more valuable than my opinion. You know, I'm talking about neurology, I'm talking about rheumatology, I'm talking about oncology. You know, when you sit in the ER and you mostly prescribe Keplex and Percocet, apparently that's not as valuable. You know, the only reps that ever come see me are like the Xarelto rep. So, you know, but for those of you who are prescribing expensive stuff, this can be a pretty lucrative side hustle. And for most docs, it can be a side hustle. And maybe it helps you open up a solo 401k or something. You need to open up. But even if you just want a little bit extra cash while you're zoning out watching TV at night, these surveys don't take a lot of brain power to fill out most of the time. So check them out. Whitecoatinvestor.com surveys all right, we got a great interview today with a couple who's accomplished something pretty remarkable. So let's get them on the line and talk about it. Stick around afterward. We're going to be talking a little bit about health insurance. Our Guests today on the Milestones to Millionaire podcast are Kayleigh and Josh. Welcome to the podcast, guys.
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C
Thank you. Great to be here.
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B
Okay, let's introduce you a little bit. Tell our listeners what you do for a living. And as I talked to you before we started recording, I know one of you is a doc. Tell us how far you are out of training.
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C
We.
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B
What part of the country you live in.
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A
So I am in internal medicine and pediatrics, so dual trained. We are in New Braunfels, Texas, so kind of between Austin and San Antonio. I'm about. Let's see, four years out of training. Yeah. Started a private practice here in New Braunfels in about April of 2023.
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B
Okay, and, Josh, tell us what you do.
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C
So I'm. I'm a home builder here in the New Braunfels San Marcos area. Just building houses, man. That's it.
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B
Okay, now, what have you guys accomplished?
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So we paid off my student loans, which was about 205,000 in six months.
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B
Six months?
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A
Yep.
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B
Now, you said you're four years out of training. Did you pay it off six months out of training? Or is there some point in the last four years that you're like, oh, we got to do something about these student loans?
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A
Yeah. So we kind of had the benefit of the whole Covid pause thing. And then we actually. We were pregnant with our son. And so I was kind of doing some just online stuff before I started my practice. We weren't really putting anything to the loans. And then once I started my practice, it really, you know, ramped up pretty quickly. And so as soon as that income started, you know, coming in, we were able to just knock it out. So it was like January of 2024. We really decided to start. That was the first payment, and then we paid it off by July of 2024.
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B
Okay, so was it the same payment every month, or did you send in a big lump sum at some point?
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A
So our first payment was $3,000, and then our largest one was close to 40,000. So, you know, a wide range. We started off small, just doing what we could, and then as business started ramping up, we were able to put those larger chunks.
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B
Okay, so how'd you do it? Tell us how you did it.
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A
I think we kept some of that, like, live like a resident mentality. You know, we did buy a house during that time as well, but, you know, we're very modest with it. It's a very, you know, it's kind of a small house. You know, we weren't going on trips or Anything. Josh is very debt adverse. So he was kind of the one pushing us to get those paid off. And so, yeah, we really just kind of, you know, went hard at the debt and we even, we actually total. We paid off 330, which included his student loans in 15 months.
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B
Awesome. Josh, what was your degree in?
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C
I was construction science.
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B
So this was an undergraduate degree or this was a master's or what was this?
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C
Yeah, this was just bachelor's. Yeah. As soon as I graduated, just started working in construction. And then we got married. She was in residency and then, yeah, after that, after we moved back here to Texas, we looked at how much debt we had. You know, 205,000 for her, you know, 65 and some change for me. Cars and all kinds of, all kinds of stuff. And we were like, man, this is not going to end well if we don't do something about it right now. So.
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B
Whose idea was it at first, man?
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C
I want to say me, but it was really her. It took a while to get her on board and realize that, yeah, this is not good. But once it clicked for her, she was, I mean, full steam ahead. She kind of took it over from there. She was like, let's, let's get it done. Let's knock it out.
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B
Kayleigh, why do you think it was it took you slightly longer to get on board?
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A
I just kind of thought, you know, student loans, it was part of it. You know, I would pay them off at, at some point and I guess the whole interest being paused, it doesn't really. The full impact of it hadn't hit me. And so once I was unpaused, it kind of, you know, opened my eyes to, wow, this can add up very quickly. And I don't want to be, you know, 60 and still paying on my student loans, so.
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B
Very cool. Well, you certainly didn't make it to 60. You only made it six months. Once you got serious about it, how did it feel to send in $40,000 at once?
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A
It hurts a little bit, you know, especially when you're working really hard, you know, for that income. It, it definitely hurts. But, you know, at the end of it, they actually sent me a check for like $37. I guess I had overpaid. And so it felt good seeing that check from the irs, you know, like, oh, you overpaid. So that was, that was nice.
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B
Very cool. So have you guys celebrated this yet? Have you done anything to celebrate whacking your student loans like this?
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C
We keep talking about taking a big trip somewhere. We haven't done it yet we are in the process of building our own house. We just bought a lot, nice piece of property here in town. So we are in the process of building the house. But as far as something immediate. No, we keep talking about it, but we should probably do that.
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B
Yeah, I think you should, for sure, because this is quite an accomplishment. You should be super proud of yourself. I like this combination, right? A home builder and a doc. You got somebody that makes pretty good cash, and you got somebody that can keep the most expensive, expensive thing you ever buy in your life, relatively low cost. So this is a good combination.
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A
We like to think so, yeah.
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B
So tell us about your upbringing and kind of how it affected your views on money.
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A
Yeah, I mean, definitely. You know, growing up, I saw my parents struggle, you know, but they always worked super hard. So, you know, I. I didn't necessarily want to share in those struggles, but I feel like my parents also kind of helped me to realize, you know, the importance of working hard to, you know, not have debt. So I think that really helped. What about you?
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C
Yeah, I mean, growing up, my parents were Big Dave Ramsey people. I remember I was like, man, 10, 11 years old, driving home from school. My mom always had him on in the car. And it worked.
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B
She brainwashed you and it worked.
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C
It took a long time for it to work, but I didn't really understand it until, you know, I was at a school and she was in residency, and I was looking at how much debt we had, and I was like, okay, I'm gonna start listening to him again. See? See how that works? And then, obviously, she found you, so we started listening to you. And just the combination of those two, man, just really inspired us to knock it out.
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B
Yeah, that's pretty awesome. What was the hardest thing? While you're paying off the student loans, what was the hardest thing you denied yourselves in order to knock this out in six months?
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A
I think there's a lot of things that we wanted, or even things like I maybe wanted for the practice, like, you know, bigger purchases. And we kind of just had this, you know, unspoken rule between us, you know, that we were going to avoid those big purchases until we had all of our debt paid off. So just keeping, you know, things very minimalistic, you know, the necessities, I think that was, you know, we never felt super denied. You know, we still ate well and all those things. You know, had two kids. So I feel like we had a good balance of things. We just kept the necessities, but didn't necessarily do any excessive spending.
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C
It was definitely Hard because we saw how much money, you know, we were bringing in and we weren't, you know, just our agreement between ourselves is we weren't going to spend it. It was just all going to student loans. It was hard seeing how much money we were bringing in, but then not being able to actually enjoy it. That was, I would say there was, that was really difficult. But you know, now that we're debt free, it's, you know, really, we can kind of very blessed. We can, we can do what we want now. It's a pretty, pretty cool spot to be in for sure.
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B
So how much of that money that was going towards student loans is now going toward investments and how much of it are you going to spend?
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Most of it is going towards investments now. It's that dilemma that a lot of people have, like to invest or to pay off debt. I think for us, we did the debt first and we didn't necessarily focus too much on investing. You know, Josh has a 401k and so he was doing that. But more recently is when I started getting more of my retirement. We opened up the kids 529. So I feel like that kind of opened up the doors for us to do more investing. You know, now we both have our 15% of our income towards retirement and the kids, the kids school. So it feels good to be able to kind of diversify a little bit and not just being put, putting all that money towards debt.
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C
Just. Yeah, now we're building for the future instead of paying for the past. So it's, it's really cool. Even though there's still a lot of money going out, it's going to what we want it to go to instead of student loans.
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B
And, and it, and it's nice when you see those balances going up as opposed to the student loan balances going up. Right?
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C
Absolutely.
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A
Yep.
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B
So Kaylee, you, did you pay for med school basically entirely with borrowed money or was there an inheritance or some help from parents? Or was that all you borrowed? The whole cost?
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A
Texas is notoriously cheap for med school. So I took out 180 for all four years. By the time I got finished, it was. The balance was about, you know, 200, close to the 205. And so. And then obviously it, that stopped during residency, the interest. So yeah, wasn't, wasn't really too bad. You know, it feels like a lot of money, but I know compared to some people it's a lot less.
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B
Yeah. So how did you feel in med school when you were signing for 40 or $50,000 every, you know, every year. Did it feel like monopoly money or what was that like to indebt yourself in that way?
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A
I was, I feel like I was pretty responsible about it. Like, I had a budget. I never took out the full amount that was offered. You know, we, we definitely had lectures about it, you know, how the, the $20 pizza turns into a thousand dollars and all of that. So I, I felt like I did pretty, you know, pretty well and just took out the minimal amounts. I wasn't, you know, spending excessively. I had three roommates, you know, so definitely, definitely didn't take advantage of, of the money.
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B
Yeah, but who was teaching those lectures somewhat?
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A
At our med school, we had some financial classes. I know your book was thrown around too, in med school for sure.
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B
So very cool.
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A
Doing a good job of getting that out there. Definitely helps a lot of people.
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B
Yeah. Excited to see that message getting out to more medical students for sure. All right, well, there's somebody out there that's in the situation you were in a few years ago and worried about their debt or trying to figure out what they're going to do with it. What advice do you have to them?
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A
Yeah, I would just, you know, say tackle it as soon as possible. You know, try and get, get it down and pay it off as soon as possible so you don't have that burden over you. You know, find a healthy balance between, you know, living within your means and paying down your debt.
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B
And how's it feel? I mean, your student loans are gone, these other debts are gone. How do you feel? Do you have a different outlook on life?
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A
Yeah, I think it, you know, it definitely feels a lot better. You know, you don't worry about as much about the day to day kind of spending or, you know, things for the practice. I'm able to kind of, you know, buy the ultrasound machines and things that I want to have. So I feel like, you know, in the long term, it's gonna definitely gonna benefit, you know, me and, you know, the whole family. Our kids get to grow up with not seeing us have a bunch of debt and hopefully we can kind of teach them that way.
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C
Yeah, I think the coolest part for me is, you know, before we started this journey is looking at our net worth and we were in the whole, you know, we were in the red like 300,000. And now we look at it and it's like completely flip flopped. And just seeing that, seeing that happen is just like, oh, man, this is, it's very cool, man. Very cool feeling.
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B
Love the Black numbers much better than the red numbers for sure.
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A
Yeah, yeah.
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B
Very cool. You guys should be very proud of yourselves. What you've done is no small feat, and you have gotten yourselves off to a fantastic start to your financial lives. So thank you so much for what you're doing on a day to day basis as well as coming on this podcast to inspire others to do what you've accomplished.
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A
Yeah, absolutely.
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C
Thank you.
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A
Thank you for all you do. Definitely been a great inspiration. And I want to give andrew@studentloanadvice.com A shout out too, because he definitely helped get us on the right plan to help prevent that interest from occurring. So I appreciate that and yeah, thanks for all you do.
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B
All right. That was a great interview. Those guys have done so well. You know, they took advantage of that, you know, 0% time period, $0 payments. They got good advice from studentloana advice.com and when they figured out their plan, they went after it full bore. Right. $200,000 in six months. Right. And they make good money, but they don't make incredible money. Right. That was a whole big chunk of their income that was going toward those student loans. They really made some sacrifices and they really knocked it out of the park. Right. I love the acceleration they had as well. Right. They started off with a $3,000 check, and then they were writing a $40,000 check. And you know what? When you send 10, 20, 30, $40,000 a month to your lender, your student loans go away very quickly. So figuring out how to keep your lifestyle down to a level where you can write those checks is the hard part. But you're really not done with medical school until you pay for it. So you might as well get done with it as soon as you can. All right, I promise you, at the top of the hour, we're going to talk a little bit about health insurance. Understanding health insurance is surprisingly challenging, even for doctors who accept payment from health insurance all the time. But it's important to understand this very important health insurance. First of all, the most important point is this is one of those financial catastrophes. I fell off a mountain a year ago, and when I fell off, I got two helicopter rides. One was covered by the National Park Service. The other one was covered by my health insurance. My health insurance paid $44,000 for that helicopter ride. I get my annual out of pocket maximum before I ever got to the hospital. And when something bad happens to you, whether it's a diagnosis of cancer, a diagnosis of some chronic disease like Ms. Or something, or Whether it's trauma, like in my case, that bill can run up very quickly and put a huge dent in your financial resources or even keep you from being able to get the health care you need. So health insurance is a critical type of insurance. You've got to have it. Don't go bare. There are some health insurance alternatives out there that might be worth considering, but you need some sort of coverage. Don't ignore this insurance you need to have. But let's try to understand the different pieces of it. What's the deductible? Deductible is the portion that you pay, okay? And sometimes there's a whole overall deductible per year for the policy. You pay the first $500. You pay the first $2,500. Sometimes there's a deductible for each doctor visit, right? Maybe you pay $50 every time you go see the doctor, whatever, right? Every policy is a little bit unique, but a deductible is your portion to pay before the insurance company starts paying. There are also co payments, right? And this is like the payment you make to a doctor every time you go. If you gotta pay $50 or maybe you gotta pay 20% of the cost, that's the co payment. And you not only pay your deductible before the insurance starts paying, but then you pay along the way with the insurance company, and then eventually you hit an out of pocket max. Once you've hit the out of pocket max, the insurance company's on the hook for the rest. Like in my case, you know, my ICU bill was $106,000. My helicopter was $44,000. I got a surgery on my wrist, right? I don't know how many thousands of dollars that was, but when you have all that happen to you in one year, you hit your max out of pocket, and then you're not responsible for additional payments above and beyond there. There's also another term that's thrown out there a lot called co insurance. And all that is that's the percentage of costs of your covered health care insurance that you pay after you've met your health insurance deductible. Okay? So it's a lot like a copay, but that's what coinsurance is. You know, just like your employer might make you pay 20% of the premiums for your health insurance, your insurance company might make you pay 20% of what it's paying or what the costs are until you hit your maximum out of pocket. But once you've hit your maximum out of pocket, that's all you pay for the year. Everything else is free. Now why is health insurance set up this way? Health insurance is set up this way so you have some skin in the game. If there were no deductibles, if there was no co pay, if there was no coinsurance, there's nothing to keep you from just spending willy nilly on everything. So the reason they put these in place is to help you to be a little bit wiser consumer of healthcare. Maybe think twice before you buy something that maybe you really don't need or even really want. But it not only keeps your premiums, what you pay for your insurance down, but it allows you to or allows the insurance company to be able to make sure you have some skin in the game and that you're making logical decisions when it comes to what you're consuming. But at the end of the day when things get really bad, what you really need is that catastrophic coverage. You need them to take care of the amount above your out of pocket maximum. So buy health insurance. Understand how it works. Not only will it help you to be a wise consumer of health services, it'll help you to be a better doctor so you can explain how these things work to your patients. This podcast was sponsored by Bob Bayani at Protuity. One listener sent us this review. 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 and Bob has been able to help explain the implications underwriting process in a clear and professional manner. Contact bob@whitecoatinvestor.com Protuity today you can email infoprotuity.com, you can call 9737719100 to get disability insurance in place today. All right, that's it for today's episode. If you want to come on this podcast, you can you just apply whitecoatinvestor.commilestones until next time. Keep your head up, shoulders back. We'll see you next time on the podcast.
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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.