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Debt Free Docs: Dr. CB

Welcome to another installment of the Debt Free Doctors interview series!  This week, I’d like to welcome Dr. CB who has accomplished the incredible feat of paying off her student loans and her house by the age of 38… while in family medicine!  I’m very excited to read her story and see how she did it.  Without further adieu…

Welcome, Dr. CB!

Please tell us a little about yourself.

Hello, I am a full-time hospital-employed Family Medicine physician. I graduated from Michigan State University’s College of Osteopathic Medicine in 2009. I did my post-graduate training at Henry Ford Macomb Hospital in Michigan.  After residency I stayed on as an attending and have been in practice now for almost 8 years. I have been married to my wonderful husband who is my constant source of encouragement and support since 2009.  We have been blessed with identical twin daughters, who are now 8 years old.

What are your hobbies or passions outside of medicine?

I enjoy traveling with my husband and children, spending time with family, spending time outdoors, and catching up on my favorite TV shows and movies.

Their Debt Free Journey

Did you take out any student loans?

Yes, for medical school.  Fortunately, I worked very hard in high school and obtained almost a full ride academic scholarship for a university close to home. I chose to live at home and commute to keep cost down, so I graduated from college with no undergraduate debt.  I graduated from medical school in 2009 with about $125,000 of student loans. When I took out student loans, I tried to be very smart about it and took out the bare minimum needed each year in federal loans, first maxing out subsidized and then only taking the amount of unsubsidized that was necessary to get by.  I went to an in state medical school with lower tuition and lived quite frugally during medical school.  For my first two years I lived in a simple apartment with a roommate.  During my clinicals, I took advantage of the free housing my base hospital offered.  The first year of medical school, I used about $25,000 of my own money I had saved from tutoring during college and waitressing at Olive Garden. Fortunately, I did not need to take out any private loans. 

By the time I reached residency, my husband and I were newly married, and we lived off our combined income while I started loan repayment immediately to prevent further compound interest. My husband is a server for the Capital Grille and although not glamourous, it helped us pay the bills for a long time and gave us flexibility in our lives.  Fortunately, he did not have any student loan debt or any debt when we got married so all the debt was mine and we took that on together. When we were dating, I did sit down and talk to him about credit card debt and helped him eliminate that before we got married.

That’s awesome that you had such a great conversation about money before you got married!  Did you have any other significant consumer debt (excluding house)? 

No.  No credit card debt. I was always taught to never use a credit card unless you can pay off the full balance at the end of the month.  My mom always said you should make money off your credit card,  and not let the credit card make money off you.  If you cannot afford something comfortably and it is not a true necessity, don’t buy it. 

Totally agree. Did you finance out your house?

We did finance our home.  Our first year of marriage, we lived in a small apartment to save money for a down payment.  Everything in our apartment was hand-me-downs.  I think the only new thing we owned was a wall clock that my best friend gave us as a shower gift. 

We were lucky that we purchased our home during the housing low in 2010 and moved into a good size home which could be our forever home instead of a starter home. It has appreciated in value greatly in the last 10 years, purchased for $208,000 and now worth $340,000, so we really hit the real estate lottery with that.  Right place, right time!  Initially I had a physician loan through Bank of America, it was a 7-year ARM at 4.375%. I honestly don’t even remember anymore what our down payment was, maybe 5%?  Four years into our mortgage, interest rates dropped and I wasn’t sure if I could pay off the house in 7 years and was worried that the ARM rate could adjust up in the future so we refinanced to a 15 year fixed rate at 3.5% in 2014. 

In total our home was paid off in 9 years and 11 months and about $60,000 of interest later.  I can only imagine the interest we would have paid if we stretched the life of our loan out over 30 years like the average American, it makes me cringe. I am so happy we paid off our home, no regrets.    

That’s truly amazing! 

A lot of people get mired down in consumer debt like credit cards before they can start making extra payments on their house.  Can you tell us more about how you use credit cards?

We do use credit cards. I put everything I possibly can on a credit card providing I don’t have to pay any service fees. Most of our credit cards are cash back credit cards with 2-5% back. I have three major credit cards I use and alternate between depending on what I am purchasing. If you are going to spend money, then you might as well make that money work for you.

We pay off our credit cards on time every month with the full balance being automatically deducted from our checking account, that way we never pay interest and make money instead. I was taught at a young age that you never put anything on a credit card that you can’t back up in the bank. My parents added me to their credit card when I was a teenager to help build my credit and I am happy to say that about 20 years later, my recent credit score was 830.

Dr. Blake's Mom

Their Debt Payoff

What motivated you to become debt free?

My parents, specifically my mom.  My mother grew up in Thailand and immigrated to the United States in the 1970s to get her PhD.  She is very frugal, and I definitely inherited the thrifty gene from her. I remember my parents did not have much when I was little.  I was 11 years old when they bought their first home and my mom had that house paid off in 4 years on middle class salaries! She always stressed the importance of financial independence and being debt free and I think that just rubbed off on me.

What debt repayment method did you use?

Debt avalanche.  When paying off debt, I did choose to pay off balances on high interest rate loans first. I am honestly not sure if this was the best way or not, but it worked for us. Some of my student loans were 6.8% and others 4%. I never consolidated my loans because my plan was just to knock them out quickly.  Any “extra” money I made, such as performance bonuses, went toward my loans.  I was 4 years post-residency when I paid off all my student loans at the beginning of 2017.   I paid them off just a few days prior to my 35th birthday.

When I had all the student loans paid off, I started working at whittling down our mortgage.  Three years later we were debt-free.

Did you “live like a resident” as a young attending?

For the most part we did live like residents. Neither myself of my husband require fancy things. The motto we live by is that we live comfortably but not extravagantly.  We won’t deprive ourselves of experiences, but we also don’t need a whole lot to be happy and live fairly modestly.

Did you frugal down or try to earn more to pay off debt or both?

I think I have always been frugal. Like I mentioned before, it was the way I was raised.  

I buy groceries on sale.  I take advantage of Black Friday deals for more expensive purchases. We do not go out to eat often (but do enjoy splurging occasionally).  We don’t have fancy cars or tons of designer clothes.  It really didn’t seem like we ever had to frugal down, we just continued to live our normal lives without developing more expensive tastes along the way.  

We do enjoy life and live comfortably so I don’t feel like our happiness has ever been compromised because our happiness has never laid in material objects or possessions.  

We do enjoy traveling.  I love making memories and I would say that is the one area in our lives where we “splurge.”  But I do extensive research prior to our trips and find great deals on airfare and nice hotels so even travel is done with a budget in mind. 

Do you/did you do anything to bring in extra income?

No side gigs.  I work very hard at my job and when the day is done, I go home.  My time at home with my husband and children is the most valuable part of my life and although making money and becoming debt free were important goals of mine, I could not take extra time away from my family to achieve that.

Their Investment Strategy

Did you save for retirement while paying off debt?

Yes, I have always contributed to my 403B as long as I have been employed, even as a resident, but initially I was only contributing about 50-75% of the maximum and then by two years in as an attending, I started maxing out my 403B and a couple years after that starting maxing out a 457 account all while paying off my student loans.

At what age did you become debt-free? How does it feel?

38.  I love being debt-free.  I feel like it is such a huge accomplishment and always something I had planned to do by age 40 and I beat myself to it!  It is so nice to know that if something unexpected should happen, my family is protected and would not be stuck with lots of expenses. 

I wish I would have consolidated/refinanced my student loans a lot sooner to get them to a lower interest rate but that is really my only regret when it comes to my debt-free journey. 

Being debt-free has not changed the way I feel about medicine at all.  I do have a “magic” number in my head of the amount of savings/investments I would have to obtain before I could feel really comfortable with retirement and if I achieve that number prior to retirement then I would consider going part-time but until then, since I am the major breadwinner in my family, I just keep moving forward.

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How are you investing now? 

I max out my 403B and 457 every year.  I also have a backdoor Roth for both myself and my husband that is maxed out each year and I contribute to a solo 401K the last several years since I have had some 1099 income. I typically use a target retirement age-based allocation for our tax deferred accounts and index funds for the other.  Since I am a long way from retirement, I typically pick more “high risk” index funds since I have lots of time for the market to recover. Now that I am finally debt free, I need to start to really think about where I want to put this extra money that always went to paying off debt. I just picked up Bogleheads Guide to Investing and that is my next read. 

No real estate investments. I like to keep life simple and that just seems scary to me, lol.

If you have children, are you investing for them? How?

We have 529 accounts for both our children.  Unfortunately, and I consider this one of my greatest financial mistakes, we did not start contributing to them until our kids were 6 years old.  I wish I had started contributing at birth, even if it wasn’t much, to allow for compound interest but at that time I was a resident and was barely funding my 403B. I have front loaded their accounts and contribute the maximum tax deferred amount Michigan will allow each year and often more than that since I am making up for lost time.  My goal is to have about 80% of their undergraduate education covered by 2030 when they graduate high school. Hopefully, they will pick an in-state school to stay close to home and keep costs down like mom did.   If they decide to go to graduate school, that is on them, just like it was for me. 

Do you donate to charity?

God has blessed us with so much that it is only right to be a blessing to others. We pray over our money and help God guide us to use it where there is the greatest need.  

We do tithe 10% to our church and contribute to a couple other charities that are near and dear to our heart, including several medical missions, one being Smile Train which provides surgeries to children born with cleft palates and FEDS, Families Exploring Down Syndrome, since our niece has Down Syndrome and that organization has provided so much support to my sister-in -law over the years. 

We do not use any tax advantaged methods. That is definitely something I am interested in learning more about.

Any other thoughts or advice? 

My debt free journey in all reality is not that exciting.  It’s not like I paid off half a million dollars in two years or anything.  I think with my debt free journey, consistency and persistence were the biggest factors to my success.  I set goals and we kept our lifestyle simple to achieve those goals. We were fortunate in many ways, like the timing of when we bought our home, but I also knew what we could comfortably afford without strapping ourselves and chose not to buy the huge and extravagant “doctor” house.  We live below our means and don’t worry about keeping up with the Joneses.

I think my biggest advice is limit your debt to begin with and start making wise choices at a young age if possible.  The less you need to borrow, the faster you can pay it off.   I think quite a few of the decisions I have made in my life (taking out the minimum amount of loans needed to get through medical school, choosing to stay in-state, having any “extra” money we earned go straight toward loan repayment vs. wanted luxuries, having a spouse who was on the same page as me and working toward a common goal), really allowed me to hit this level of financial freedom at a fairly young age. You just have to keep your eye on the prize and keep excessive spending down, but it still is possible to enjoy life and be debt free.

Thank you for being here, Christina, and sharing your amazing story!  Congratulations on being Debt Free!!! 

‘Till next week!

Stay frugal, y’all!


Check out the rest of the series!

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