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White Coat Investor Podcast
MtoM #259: PA Pays Off Student Loans in 16 Months and Financial Boot Camp: What is a Bond?
00:30:37
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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 podcast number 259. Pennsylvania pays off student loans in 16 months. If you're a high income position, you already know how hard you work for every dollar. The question is, how much of it are you actually keeping after taxes? GHELT is a tax firm focused on proactive tax strategy guided by expert CPAs and optimized via in house AI tools. They work with physicians and practice owners to use the tax code more intelligently so your entity structure, deductions and income timing all work together to help you keep more of what you earn as a White coat investor. Visit whitecoatinvestor.com Gilt to book a free strategy intro and receive 10% off your first year with Gilt. It's time to start using your tax plan as a lever for growth. Thanks so much for listening to the podcast. This podcast is all about you. We want to feature you on it so you can sign up@whitecoatinvestor.com Milestones. We'll bring you on. We'll celebrate whatever financial milestone you've accomplished and hopefully use it to inspire somebody else to hit the milestone that they're working on. We're offering five scholarships to medical students or residents to attend the Physician Wellness and Financial Literacy Conference virtually for free. You can apply for this WCICON scholarship through February 4th. The conference is designed to give you clear, practical education on topics like investing, insurance, avoiding burnout, leadership, and building a strong financial foundation. As a physician, we understand that even a virtual conference can be a stretch during training, and we don't want cost to be the reason you miss out on education that can both teach you how to become a multimillionaire and save you hundreds of thousands of dollars over time. The scholarship is our way of investing in you early when the payoff of good information is the highest. If you're in medical school or residency and want to be intentional about your financial future, we encourage you to apply. Please share this with those you know who would be eligible. Go to whitecoatinvestor.com WCIConscholarship to submit your application by February 4, 2026. All right, stick around. After our interview today, we're going to talk about bonds for a minute. What is a bond and what you need to know about them? Our interview today I think you're going to love. It's a PA who's done a fantastic job with her student loans and let's find out how she did it. Our guest today on the Milestones to Millionaire podcast is Arden. Welcome to the podcast.
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A
Thank you. Thank you so much for having me.
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B
Tell us what you do for a living and where you're at in your career.
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So I'm a physician assistant. I work in psychiatry. I graduated in 2022, so I'm about three years out.
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B
You're three years out now? All right, tell us what milestone we're celebrating today.
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A
We are celebrating a debt payoff. I paid off all of my student loans over $150,000 in 16 months.
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B
16 months as a PA and I've got written down $155,000 I think I have in my notes.
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A
Yes, that's correct.
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B
You know, last I looked at PA salaries, that's about what a PA makes. Am I wrong?
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A
Yes, a little less, actually, I think.
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B
Okay, so what'd you live on for those 16 months?
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A
Well, I cut my expenses drastically. But more important than that, I was working like three or four jobs for that amount of time. So that's how I supervised.
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B
So you truly, for lack of a better term, lived like a resident, not only in the way you spent, but in the way you worked?
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A
Exactly. It's funny you mentioned that because that's literally what I told myself. I said, if all the med students do it, I'm going to have residency too. And I looked at it like a self imposed residency for a very short amount of time. Luckily not, you know, three, five, seven years. But that's how I looked at it. And I figured if all the medical students can do it and all the doctors can do it, then I can definitely do this for a short amount of time.
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B
So there wasn't some inheritance? Did you move into your parents basement?
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A
No, I had.
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B
Are you married and somebody else supported you?
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A
I mean, this was all me. I'm married now. I was not married at the time. So this was all my income. I didn't sell anything. This was purely cutting expenses and earning money as a new grad pa. So a new grad salary and everything? Yeah.
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B
So how much did you make that once you started working? How much did you make in that first year?
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So I think my income at its like peak, peak, you know, like overtime, differential, bonuses, everything like that was probably around like 260, I would say.
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260. And by the time you pay taxes, you're down to at least two, maybe a little less than two.
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Right.
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And you put something like, you know, $125,000 of that toward your student loans.
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A
Right.
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B
Pretty awesome. But you know what that still means you were able to live like the average American household.
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I set aside 3% of my take home pay. I said this is going to be my fun money. And since I was working so much, luckily that was like a larger amount than if I had been working one job and I went out to dinner with my boyfriend or went out with my when I wasn't working. But those days were pretty rare. And then the rest of it, everything went to my debt. I mean, the thing is that you don't have a lot of opportunities to spend a ton of money because I was literally at work from 6am until 11pm 9 out of 10 days. And so it, they kind of compound on each other where it's easier not to spend money when you're working all the time. And the thing is when you know that if you cut a certain expense, you're there 15 days closer. And if you do that, you know, 10 times when you're working so much, you're like willing to do anything to cut that time down. And at that point when you're not going on vacation and you're not really going out to eat and you're working every weekend, who cares if you're not getting your hair cut or you're not having coffee out? Like at that point it just doesn't even make a difference on the quality of your life that you're just willing to cut and cut and cut and then you're done sooner. And so it's win, win in that way.
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B
Did you feel like it helped you get good at your job quickly to work that much?
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A
Yes, it did. I'm actually really grateful for that because I worked three different physician assistant jobs. So I'm in psych. So I worked an outpatient job. I worked at a ketamine clinic and then I also worked in the emergency room and then I picked up some additional shifts inpatient. And so I got such amazing experience. And in psych, it's nice. They all feed off of each other. One thing helps the other special, you know, the other role helps the other role. That I know how inpatient works really well. I can talk to my outpatient patients about that. And so it was very difficult. I felt very insecure for basically, you know, like the first three months at every single job. I had no idea what I was doing. Unlike residency. Well, I guess it is similar to residency. You know, it's not really a formal training. You don't really know what you're doing and you kind of just, it's like baptism by fire. But looking back, I'm just so glad I went through that because a lot of my classmates are like, oh, my gosh. You know, everybody tells me, don't change specialties for two years. You've got to find your footing. You need the experience. And in my case, that just wasn't true. I really was able to do it and I was able to be good in all of the roles that I was in. If anything, it was beneficial one for the other that I was getting all of this experience.
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B
Did you feel like you got adequately supervised?
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At some jobs, yes. And then at some jobs, not as much as I would like. It really did depend. I worked some virtual jobs and it really didn't, you know, I had a virtual job where I felt like I had amazing supervision and then another virtual job where I felt like the supervision wasn't that great, looking back. But for the most part, I felt like it was really good. And, you know, you're able to work with a team and there's time in between patients to bounce ideas off each other or ask questions or look things up or talk to, to the doctor about what their opinion is, that kind of thing. So I felt like for the most part it was good. And now, you know, I'm at a place where I don't really feel like I need that much supervision. I don't really ask that many questions anymore in my jobs.
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B
Let's get to the finances. Now you, I mean, clearly this was important to you when you came out. You were focused on your finances. When did you become financially literate? When did your finances become important to you?
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A
Well, I've always been a bit individualistic and so I've always kind of been interested in like, going against the grain or like these like, anti establishment movements, I guess. Like, I was a vegetarian for 10 years and I tried to home birth with my first baby. And so I've always kind of been drawn to, like, what are people? What is against the norm? And is there any benefit in what the average person isn't doing? And when I graduated, I was gonna, you know, I had been working minimum wage jobs up until that point, getting experience for PA school. So I was gonna have a significant income for the first time ever. I wanted to do right by it. And so I read a handful of like the best, you know, personal finance books out there, and all of them told me, you know, your interest rate is not high enough to justify paying off the debt. And I really ran the numbers and I charted my net worth over the next 10 years. And I was going to have a negative net worth for five years. And that just felt ridiculous to me that I was going to be like getting my company match and contributing to my 401k and going on vacation and telling myself that I'm making six figures and I'm a successful PA and I was going to be completely broke for five years. So I just, that just didn't make sense to me at all. Not to mention my payment was like the size of a small mortgage. I mean, $150,000 is insane. And I realized that I could very quickly pay it off. If I worked, you know, like 80 hours a week for two years, I could be done. And I was like, why would I do that when everything in life would be 15% better once I was out of debt, I was like, I just need to give myself that gift and suck it up for a couple years, you know, have this like self imposed residency on myself. And then after that, everything in life gets better. My vacations are better, my house can be even better. I can get in a house sooner. You know, you have so much more flexibility. And so for me, once I really got that vision of being debt free and what that would look like and how it would impact every area of my life in a positive way, there was just no talking me out of it. I mean, I. I was like addicted to this idea that I could pay it off. And when I ran the numbers and saw how much quicker I could pay it off than I, than I thought I would have thought I would have to be working crazy hours for like four, six years or something like that because the number seems so big compared to my salary too. And I realized that it was too just so much more doable than I thought. And at that point I was like, you know, I can definitely do this.
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B
You were motivated enough and interested enough that you actually developed an app to help you keep track of all this. Tell us about the app and where, where people can get it.
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A
Yeah, so if you're interested in doing what I just talked about, you know, seeing your net worth, tracking that, seeing where you are with your debt. Most people don't even know how much debt they have. So if that's you, you're not alone. You can download the toolkit basically that I use to help pay off my debt so at she's financially free.com starterkit. And so go online and get that. It's completely free. And I shared it with a few friends and I realized that there was just like A small demand for this app that I designed and you know, my budget sheet and things like that that I used. And so definitely go online and get that.
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B
Okay, so what was the hardest part? I mean, at some point in this 16 months, it felt really hard. Do you remember that moment? Tell us what that was like and how you pushed through it.
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A
Absolutely. And I think that if you're listening, it might surprise you that it really wasn't a sense of burnout or the exhaustion or not seeing the sun some days because I would wake up and go to the office and then leave the hospital and you're like in the walls for, you know, 15 hours and you don't even know what the weather is outside. It wasn't that. It was actually being so set on this goal and then all the setbacks to get to that goal. So I was a new grad pa. I was a very unattractive candidate for a lot of these job applications because we require a lot of upfront training that they basically the employer has to take on while paying us the full time salary. And so it's kind of as a pa, an unspoken agreement when you get hired that there's going to be some onboarding period just at the beginning for the employer. And so when I'm competing with other PAs with experience who don't need that kind of attention or training, it was very difficult to get jobs. And that's especially true for part time work. They don't want to invest that time in you for a part time position. And that's really what I needed to fit around the schedule. And so I got so obsessed with this idea, I'm going to get out of debt, it's going to be so great. And then it was like months and months of applying to jobs and I would get an interview and the online job posting said it was virtual and it was in person. And that wouldn't work for me because I didn't have access to a car. I couldn't make that commute in that amount of time or they didn't hire new grads and it didn't say that online. So that was really the hard part was when I knew that if I could be working those hours, I would be out of debt that much sooner. And I wasn't able to work. So I was babysitting and spending my weekends babysitting for like 60 bucks instead of working as a PA where I could make like, you know, $70 an hour or something like that. And then, you know, the credentialing gets delayed and then your start date gets delayed and then they're cutting, you know, the amount of overtime that you're getting. And there were just so many setbacks like that. It was unbelievable for how short a time it was. It literally felt like every single month a job that I thought was lining up wasn't. And each time that debt free day gets pushed back. And all that time you're not going out to eat, you're not doing anything really fun. And so that was really what took, like, I would say, like the most grit is just being committed to this vision. And when it felt like everything was stacked against me and that maybe this wasn't what I was meant to do. Like, really just holding tight to that, like having a compelling vision for the future that you want, what it's going to look like, feel like, tastes like when you're officially done with this debt. And that really gets you through all of those roadblocks.
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It's interesting, you know, you're. It's not. We talk so much about burnout being an issue and you are wanting to work more. You know, you, you know, you looked at it as opportunity rather than something that you had to do. So how has your work life changed since you paid off the debt?
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A
So since I paid off my debt, I mean, I dropped my hours down. We were able to build up our emergency fund really quickly, luckily, and go on a really nice honeymoon. Once I got married, which was awesome, we went to Alaska, and then I had my first baby a year ago. And so I actually was able to stay home with her for the whole first year of her life. Luckily. PA, there's a lot of flexibility with the job, which is something that drew me to the position in the first place. But I wouldn't have been able to do that if I still had my debt. And I'm glad that you mentioned burnout because I really look at my debt payoff and this aggressive debt payoff as burnout prevention. Because when you're working those kind of hours of your own volition, you really don't get burnt out. You're like excited to be there. You're appreciating every paycheck. It's not like the, ugh, I have to work this weekend. Burnout, I think, comes from when you are working and you don't have agency over that. You're working late and you don't want to be working late. You're working that weekend and you would prefer not to be there. And so now that I've paid off my debt, it really is burnout prevention, because I never have to pick up an extra shift again if I don't want to. There's so much flexibility in my life. I have so many more options. And I think that, you know, for your listeners, I really would think about that, you know, not having payments and working for a finite amount of time to get rid of those loans for life. Decades and decades and decades, really, I think as a form of burnout prevention, especially in healthcare now, at about the.
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B
Time you were wiping out this debt, you were also moving into a marriage. How did that impending date affect your attitude toward the debt? And what did your spouse, your fiance's spouse, think about the fact that you had all this debt and your plan for the debt? And how did that impact the marriage decision?
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Yeah, I think that, to be honest, it didn't really influence my decisions that much. We got engaged, like, a month before I paid off my debt, and so I knew that I was going to be out of debt by the time we got married. I was very motivated to pay off the debt before we got married. I'm a believer in that you fully combine finances once you're married. And I didn't want any of his help paying off my debt. I really wanted this to be an accomplishment that I could hang my hat on alone. And I felt like since it was my debt, I had gone into it and I knew I could do it. I really wanted that all for myself, and I wanted, you know, to start the marriage with a clean slate. It was great to not have those student loans, and it really would have impacted, I think, a lot of decisions going forward, especially what postpartum looked like for me with our first baby. I don't think it would have even been an option for me to take that much time off when you have this huge payment that now this other person has to shoulder alone if you decide not to work. And I would have felt guilty even if we were able financially to make that decision. I think I would have felt a little guilt and a little like I was shirking my financial responsibility a bit to not take that on now when I had the option to now. And I knew that I would be choosing deliberately not to pay it off when I run the numbers and knew it was possible for me.
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B
So what's the next financial goal you guys are working on?
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A
I think we want to buy a house. So I think that that's the next decision. We're like kind of nomads right now, so we're not really sure where we're going to be living. But once we figure that out, I really would love to get in a house and decorate and paint and all that stuff.
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B
Awesome. Well, you've done a fantastic job. You should be very proud of yourself. And I'm sure you'll be inspiring others, whether they're coming out of PA school or farm or, you know, coming out of residency or whatever to get after it. And you don't have to drag these things around for decades. So thank you so much for being willing to come on the Milestones Millionaire podcast, share your story with others, and hopefully inspire them to do the same.
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A
Yeah, well, thank you so much for having me.
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B
All right. I hope you enjoyed that. I love the focus. You know, clearly Arden is a hustler. She's not afraid to hustle. She's not afraid to work hard. She's not afraid to set a goal and go crazy achieving it. But look at what you can do, right? You know, if you're a doc and you're making, you know, doc kind of money and you have doctor type student loans, this is not crazy. To pay off your student loans in 16 months or 20 months or 24 months. Yeah, you gotta work a little harder than you might the rest of your career. Yeah, you gotta live on less than you will the rest of your career. But, wow, you can be free of your medical school, your dental school, your law school loans very early in your career. You can just take them in the corner, drop an anvil on them and be done with them. And that's a pretty awesome feeling in a lot of ways. You're not really done with medical school until you've paid for it. Well, Arden has paid for her school, and she is done with that. And now she can do what she wants the rest of her life. You know, for instance, she just took a year off to have a baby, raise a kid. Right. It's awesome to have financial freedom because look at the cool things you can do with it. Right? They built up an emergency fund. Now they're working on getting into a house. Right. You can do all kinds of things when you're not burdened by these payments that for some people last decades. They don't have to last decades for you. All right, let's talk for a minute about bonds. A bond is a relatively safe type of investment when compared to other investments like stocks or real estate or speculative investments like cryptocurrency or precious metals. At its essence, a bond is just a loan. Whether you're loaning money to a government, whether you're loaning money to a corporation or whether you're loaning money to people who have taken out a mortgage. And the way you make money from a bond is those people who borrowed the money pay you interest. So a typical bond will have interest payments that are made periodically, perhaps once a quarter for the term of the bond. If it's a one year bond or a five year bond, it'll make payments every quarter for that period of time and then you get the principal back at the end. There are generally three main risks of bonds. The first one is interest rate risk. This is the risk that you buy a bond and interest rates go up. And in that sort of a situation, if there's someone else that wants to own a bond, they're going to buy the new bond because it pays a higher interest rate. And so the value of your bond must be lower until the yield, the interest rate paid on those bonds is equivalent. And so that's a risk for bonds. If interest rates go up, then your bond becomes worth less. If interest rates go down, the opposite happens, of course. But that is a risk of bonds. And that risk gets more significant the longer the term on the bond. It's much more significant for a 30 year bond than a two year bond. The second risk of a bond is that default or credit risk. This is the risk that whoever you loan money to doesn't pay you the interest, or doesn't pay it on time, or maybe doesn't even give your principal back when they're supposed to. And this risk varies. Most people consider a loan to the US Government to be pretty darn safe, given the US Government's military dominance in the world and their ability to tax their citizens. Alternatively, loaning money to a corporation is not nearly as safe. Corporations go bankrupt all the time, and the more likely they are to go bankrupt, the more junky their bonds are. An investment grade bond is pretty low risk as far as default, but a junk bond, that's not insignificant at all. And depending on the status of the company, their bonds may be classified as risk junk bonds. And there are entities out there that quantify this risk for each different type of bond. And you can look up bonds on those lists and see what their ratings are. The third risk with bonds is the risk of inflation. Because almost all bonds are denominated in just nominal terms, right? They're not indexed to inflation. And so if inflation goes sky high for a few years, 9%, 10%, 15%, whatever, that's going to decimate the real or after inflation value of Your bond. So the things that make the value of your bonds go up and down are changes in interest rates, changes in that default risk, changes in inflation. Those are all things that change the value of your bonds. Now, each bond traditionally came with a coupon, and back in the day, you would cut the coupons off your bonds each quarter and you'd go redeem them and get that interest payment back paid to you. Now, these days they just refer to that as a coupon payment. Everything's done electronically, but the coupon is what that bond pays. So if it's a 5% bond, when you buy it, it always pays a coupon of 5% of that initial value of the bond. So that's a coupon payment. Par is the value which you paid for the bond when you first bought it when it was first issued. That's par value. And if you hold it until the term is up, as long as they don't default on it, you get par back. Right? If you bought the bond for $1,000 and you get interest payments over the next five years and the value of it goes up and down as interest rates change, but after five years you get your principal back at par value. And that is one reason why some people prefer to buy individual bonds. This can be risky though, if you don't have very many of them and they're not particularly high grade bonds. Putting all your bond money into a couple of bonds to two different companies may not be very wise. You're generally smarter if you diversify that default risk, at least as far as you're loaning money to somebody besides the United States Treasury. And the way a lot of people do that is with a bond fund, just like any other mutual fund, you get professional management with this, you get economy of scale when it comes to costs. You get daily liquidity, and of course you get the instant diversification. And so a lot of people choose to invest in bonds via bond mutual funds. And you can use an index bond mutual fund as well. Very low cost and very broad diversification. However, if you want to be 100% assured that you're going to get the value of that bond back at the end of the term, you want to use an individual bond, usually an individual treasury bond, because bond funds can actually lose value because that bond fund manager may have to sell them while the value is down as people exit the fund or sell them when the value is down, because the bond fund is trying to keep an average term on those bonds of five years. So maybe it sells bonds when they get down to two years. And so there is a possibility of actually losing principal when you use a bond fund that doesn't exist with individual bonds, at least as long as those bonds don't default. Maturity is the term that is used to tell you how long until the bond matures until you get your principal back. But a more useful measure of your interest rate risk is called duration. This is kind of a complicated mathematical formula, but basically what it means is if the duration is five years and interest rates go up 1%, you're going to lose 5% of the value of your bond. So it's a measure of interest rate risk and a good way to compare one bond fund to another. Now, I mentioned earlier that there are all kinds of entities that you can loan money to. You can loan money to the US Government. Those are called treasury bonds, and they're generally considered to be pretty safe. You can also loan money to states and municipalities. Those are called municipal bonds, and they're pretty safe as well. They do have an interesting feature though, in that their interest is tax free as far as federal income, state taxes go. And so the yields on those are generally lower. But if you're in a high income tax bracket, the yields are often higher after tax. So it often makes sense if you're investing in bonds in a taxable account, to use municipal bonds or muni bonds in order to get that higher after tax yield. If you're buying municipal bonds that are in your state, they also might be state and even city tax free. There are corporate bonds that loan money to corporations. These are considered a little bit more risky than Treasuries and municipal bonds, but you can often get higher yields because the risk is a little bit higher at its riskiest end. In companies where people are really worried about them not being able to pay you back, those are called junk bonds. And the default risk is not insignificant when it comes to junk bonds. So the yields tend to be significantly higher. There are also mortgage backed bonds that are in essence loaning money to people who have taken out mortgages on their homes. And they have their own unique set of risks. Inflation indexed bonds such as treasury inflation protected securities and I type savings bonds can help eliminate one of the risks of bonds that risk that inflation spikes while you own the bond. However, during normal times, they're generally priced so the return is going to be equivalent or maybe slightly lower than what you would get from a similar nominal bond. There's a lot to learn with bonds, but at their essence, they're not that complicated. They're just a loan and you get interest. That's how you make money off it. And they generally don't fluctuate as much in value as your other investments like stocks and real estate and speculative investments. If you're a high income physician, you already know how hard you work for every dollar. The question is how much of it are you actually keeping after taxes? GHELT is a tax firm focused on proactive tax strategy guided by expert CPAs and optimized via in house AI tools. They work with physicians and practice owners to use the tax code more intelligently so your entity structure, deductions and income timing all work together to help you keep more of what you earn. As a White Coat Investor listener, visit whitecoatinvestor.com Gilt to book a free strategy intro and receive 10% off your first year with Gilt, it's time to start using your tax plan as a lever for growth. Thanks for being with us today on the podcast. It's a joy to create these for you. It's awesome to see your success and to see you crushing it out there on whatever you're working on. So please stay focused on your next milestone. You can do this. You'll be surprised how quickly you knock it off and maybe you too will choose to come on the podcast and share your story with the rest of the White Coat Investor community. Till then, keep your head up, shoulders back. You've got this. We're all here standing behind you to help and we'll see you next time on the podcast.
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A
The White Coat Investor Podcast is for your entertainment and information only and should not be considered financial, legal, tax or investment advice. Investing involves risk, including the possible loss of principal. You should consult the appropriate professional for specific advice relating to your situation.