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Debt Free Doctors: Dr. Randolph

How This Family Became Debt Free in Less Than 4 Years!

It’s time for another debt free doctors interview!  I love featuring stories of inspirational doctors and learning from their experiences.  I think you’ll find this interview especially inspirational.  Dr. Randolph and her family went from deep in debt for two cars, six figure student loans, a HELOC, and a mortgage to debt free in less than 4 years!  Without further adieu, please welcome Dr. Julianne Randolph!

Welcome Dr. Randolph!

My name is Julianne Randolph, DO, I am currently a full-time practicing Pediatrician who works 0.6 FTE as a Pediatric Hospitalist, 0.3 FTE as a private outpatient pediatrician at a nearby clinic, and 0.1 FTE are administrative duties as the Medical Director of Pediatrics for my community hospital (I have had this work arrangement for about 3.5 yrs – did different iterations prior to that). 

I graduated from Midwestern University- Chicago College of Osteopathic Medicine in 2008, then completed residency with UCSF-Fresno in 2011. I married my husband in 2011, and had my first child in 2014, followed by my second child in 2016. 

We’re a family of 4, plus 2 dogs, and live in Central California. 

Welcome!  What are your hobbies or passions outside of medicine?

I love to travel and be outside, hiking and biking are my favorite activities and I rarely miss a workout. 

That’s inspirational.  I wish I could say I don’t miss a workout, but COVID has really thrown a wrench into my workout routine.  Anyway, let’s talk about your debt free journey.  Did you have to take out student loans for medical school?

I am the first doctor in the family, and did not come from great means – I handled the entirety of my educational expenses. I applied for every scholarship possible for undergrad – I ended up going to Point Loma Nazarene University (small private Christian College) on a 75% tuition scholarship and worked odd jobs and was an R.A. for 2 years to supplement. 

I finished undergrad with $25K in a combination of federal loans and some private. I went straight to medical school and was forced to finance the entire amount plus living expenses for the first 2 years, again with a combination of federal and private loans (but in 2004-2006 the interest rates were relatively low). 

For the final 2 years of medical school I received the National Health Services Corp full scholarship, which gave me a monthly stipend for living expenses, covered tuition, all mandated expenses like health insurance, etc. I lived in section 8/subsidized housing with a roommate to make ends meet. 

All in all, I had about $125K in federal and private loans at the end of schooling. The highest interest rate was 9.25%, which I quickly refinanced. I was able to get $60K of it locked in at 2.25%, and placed everything in deferment through residency. 

When I married at the end of residency (2011), my husband had a small home that we rented to his friend, and a $75K debt in the form of a HELOC on that home, which was worth very little at the time. He fortunately had no student debt. He started his own Structural Engineering firm in 2010, and we had months in the beginning where he wasn’t pulling a paycheck. We were underwater in his home for years and couldn’t sell until we paid off his HELOC – which was an awful “interest-only” loan and we paid on it for years and the principal never went down. 

The only debt aside from my student loans and my husband’s HELOC were our cars – we made the mistake of buying new cars and bought a new Prius in 2013 and financed $20K for it, and then purchased a new Honda Pilot in 2016 and financed $23K. We paid both off vigorously, and have learned lessons since then. We have had a firm stance against credit cards and have never had credit card debt. 

The Debt Free Journey

Great job on paying those cars off!  It sounds like there was a significant turning point there.  What motivated you to pay them off so vigorously and to become debt free?

When I became pregnant with my son I was working crazy hours with a Federally Qualified Heathcare Center and had just fulfilled my 2yr “payback” commitment for the NHSC.  My husband’s company was doing better (he was making $60-80K/year at that time), and I decided to create my own S.Corp and contract with local clinics on a part-time basis.

I was able to create my own schedule and it had great time-benefits, but my income dramatically dropped. We were paying private health insurance prices, had increased living expenses with a new child and childcare fees, and our debt wasn’t dropping.

We did this until I had my daughter in 2016. 

My husband and I were literally living paycheck to paycheck as a doctor and a structural engineer.

We looked at each other baffled as to how other not so well-employed people were living with what seemed to be so much more.

We signed up for Dave Ramsey’s Financial Peace University in the fall of 2016 and committed at that moment to get off the hamster wheel. 

So, you decided your debt was the problem and decided to get after it.  What debt repayment method did you use?

We did the debt snowball, starting with the smallest loan (cars), then rolling those payments into bigger loans, eventually attacking our house payment.

We left my student loans alone (paying minimum monthly amounts) because in 2017 I qualified for a student-loan-repayment program that would be fulfilled in 2020, and the highest interest rate was then <2%. 

Their Frugal Habits

Wow!  That’s amazing progress!  And congratulations on earning your student loan forgiveness, as well.  Please tell us a little about your spending habits and your money management methods.  Did you “live like a resident” as a young attending?

I think we still live below our means, but we lived like an attending at first, then went back to living like a resident after we made a lot of poor financial choices. We were quite frivolous for the first 2 years of marriage and did a lot of expensive household “projects” without having the means to do them and we failed to save. I justified random purchases by telling myself I deserved them – but even trips to Target added up. We didn’t have a firm budget until 5 years after I graduated from residency. 

Now, we have a monthly budget and stick to it.  In 2016 started paying cash for many things like groceries, travel, etc.

We stick hard to a budget and use the “Mvelopes” app for our budgeting software.  We ditched cable immediately.  We used the prius for cost savings in travel, cut expensive trips, use groupon and coupons, go out once every other week at a cheaper restaurant (or bring salads to a bar that allows outside food), etc.

Hard things were delaying household projects until we could pay cash (e.g. no baseboards for 9 months after getting new floors because we needed to save up the cash).

That’s a lot of discipline, but well worth it I’m sure!  We made similar substitutions to our spending, as well.  Did you do anything to bring in extra income during your debt snowball?

I would pick up additional shifts where I could, but I didn’t want to take away from home life much. Less than ten percent of our income is additional shifts.

We did have my husband’s initial home until 2019, and tried to have passive income with that but ultimately it didn’t pan out as hoped so sold that property (after getting out from underwater). We did do some investing with a financial advisor, but have yet to reap significant benefits from that. 

They're Debt Free!

At what age did you become debt free?

I am 38, with 2 kids and a husband, and just now debt free.

We made a lot of mistakes, and put in a lot of hard work and had some good luck to get here.

I would do a few things differently, like never buy a new car, never finance a car or anything other than a house, continue to save before doing a project on our home, and we will always live on a budget.

We will also never pull out a HELOC to do something with our home! Being debt free has given us freedom and I feel sad when others tell me how much they owe on things like a home or car.

I certainly value my job and income potential, but I refuse to be a slave to work so that I can spend more. 

Amen, sister!

How Do They Invest?

Let’s switch gears and talk about investing real fast.  

Did you save for retirement while during your debt snowball?  

I have always, even in residency, contributed the IRS maximum allowable to retirement via my employer or with a SEP-IRA during the time I was self-employed.

How are you investing now?

I have a employer-matched 401K currently, and my employer matches 8.5% of my income (which is basically the IRS maximum for employee contributions) – I “max” this out annually and now that we are debt free I also contribute to a Roth-401K (post-tax contribution) of $250/paycheck ($6500/year).

My husband maxes out his Traditional IRA and a SEP-IRA. I had a SEP-IRA that I contributed to during my period of self-employment, which is just sitting and growing now.

We have ~$50K in the stock-market currently in a variety of things such as Disney and Amazon, but we don’t need to depend on that money. We had invested in real-estate with my husband’s first home that we kept, but that was not a great investment so we got out in 2019 and rolled that money into our home mortgage to speed the payoff. 

We have 2 kids, and started 529s for them and contributed about $3K for my 4yo and $2K for my 2yo when we opened the accounts, and plan to contribute something annually when we can shell the extra cash. Neither my husband or I feel that fully funding their education is our responsibility, and we both want them to have some “skin in the game”. We do not plan to do anything other than a free-charter or public school for them prior to college. 

Do you use credit cards?

We each have a shared credit card and I have my Target credit card that I sometimes use (and hope to soon change to a target Debit card). We pay off the small debt (<$25 unless we use it for some odd travel expense like a plane ticket) each month.

Honestly, I would like to find a card with good rewards and use it for anticipated expenses where we know the value, but the fear of becoming comfortable with debt again or missing hidden fees/expenses makes me nervous. 

Do you donate to charity?

We have always given 10% or more and give freely to charity. Last year we did close to 18% of our income by simply being more generous. We didn’t necessarily plan to do that, but when we tallied at the end of the year that is what happened. We support Medical Ministries International, and several other faith-based organizations in addition to our local church. We always get tax receipts and report everything at the end of the year. 

Words of Wisdom

Thank you for sharing your inspirational story.  Any other thoughts or advice?

I do recommend Dave Ramsey’s program – even though we didn’t follow every piece of his advice.

We didn’t start the debt snowball method until 2016, and within 3 years had paid off everything except school loans, and those came 6 months later after the fulfillment of the loan-repayment program.

I would recommend looking for student loan repayment plans – I received $90K for 3 years of working in a job I already had! Apply for whatever you can find and keep applying year after year until you get something. 

We did live below our means, but we weren’t living on Top Ramen.  There are other things we could have cut out and been stricter on but we would make decisions together.

Give yourself and your significant other an allowance – early on in our budgeting I would get angry because my husband would spend $20/week of our $700 food budget at Starbucks, and then I’d feel guilty if I just really wanted a pedicure every 4th month. We settled a lot of issues by giving each other a monthly “allowance” for personal use. I no longer feel bad if I want an Apple Watch because I can just save my allowance and get one – and my husband can have all the Mochas he wants guilt-free.

Ultimately, we don’t feel like we’re missing out and any “larger home jealousy” can be tamped down when I remember I am not a slave to a large mortgage.

I recommend meeting with your significant other at least once a month to discuss finances and review a budget together.

I love it!  Great to see awesome results with many techniques discussed on this site, as well!  

Thanks again for being here, Julianne, and congratulations on being Debt Free! 

Stay frugal, y’all!

Disha

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