Paying off debt quickly is the first step to financial independence for doctors.
One of the most significant stressors graduating medical residents face is repaying their student loans. Approximately 75% of graduating medical students have student loan debt. Not surprisingly, the median debt at graduation continues to rise, last year topping $200K. More medical students graduate owing $300K or more due to recent changes to federal student loan borrowing limits.
Let me share a personal story showing how anyone can be overwhelmed by student loans. When I started my anesthesia residency, I was sitting on roughly $300K in student loans between undergrad, medical school, and law school. Like so many of you, internship and residency were a blur of days, nights, months, and years.
My financial life was a mess! I used credit cards to pay for dinners out and vacations. Every single envelope that remotely looked like it came from a student loan lender went straight into a box, unopened, where it sat until I graduated. Occasionally a lender would reach out by phone – or even worse, calling my department – to tell me my loans were out of deferment, and my payments were late. My credit was wrecked. I felt trapped and defeated by my student loans. Does this feel familiar for any of you?
This was one of the moments that led me to get my financial life in order and start my journey as a financial planner. My wife and I got married the following year. Between us, we owed close to $500K in loans. Talk about a sinking feeling. I knew I didn’t want to feel like this for years, so my wife and I sat down and promised each other we’d be out of debt in 5 years. With a bit of learning and a lot of perseverance, we paid off all those loans and were debt-free in under five years! I still remember how liberating and free we felt. We were working because we wanted to – not because we had to make loan payments – and could turbocharge our wealth building.
Every single one of you can get your student loans under control and start your wealth-building Student loans can be confusing. There are many federal loans to keep track of – Stafford and Perkins (RIP), subsidized and unsubsidized, PLUS loans. That’s not even mentioning the private loan universe. It’s ok – more to come on how to figure this out!
Whew! Ok, so that was a little stressful (and hopefully didn’t make you feel a little sick). Just know it can be done. Accepting where you are starting from right now is the critical first step.
This article was originally posted on DocWorking.