This week, I’m honored to welcome Dr. Bonnie Koo, a dermatologist and fellow physician finance blogger. She recently launched her new site, Wealthy Mom MD.
I couldn’t be more excited to have Bonnie here. She has helped me throughout the process of growing this blog and I hope she will help you find your way out of student debt.
Dr. Bonnie Koo's Background
Dr. Koo, please introduce yourself and your work.
Hi there! I’m Bonnie and a dermatologist. I’m currently 4 years out of residency. I originally started out in academics running an inpatient consult service (yes I actually showed up at the hospital!). I then transitioned to a private practice after I had my baby. I’ve since transitioned again to locums PRN and may take on some very part-time work.
That’s very exciting! Going back, can you tell us about your student debt? How much student debt did you pay off? How long did it take you? Did you get PSLF?
When I graduated medical school in 2009, my loans were around $150K. I thought that “wasn’t bad” for a private medical school in NYC. But I made no payments during training and the interested capitalized … so my total payoff amount ended up being $210,000!
I paid them off about two and a half years after finishing residency.
I totally could have pursued PSLF but I didn’t learn about it until way too late. But that’s ok, I don’t really feel like PSLF are meant for dermatologists.
Are you married? Does your spouse have a job and/or student loans?
No. We are engaged. Matt has no student loans (paid off long ago) and he currently is a combo of stay at home dad and business partner.
Do you have kids? Do they have any educational expenses?
We have a son together and Matt has a son from his prior marriage. My stepson attends public middle school. Our son is a toddler and goes to daycare part-time. So we have some time to figure out the school situation but we are leaning towards private school.
Dr. Koo's Student Loan Story
Did you refinance your loans?
I refinanced about half of my loans. The other half was already had a low rate of 2.5-3.5%
That’s a great interest rate. What made you decide to pay off your student loans?
We paid my student loans off early despite having really low interest rates. We got a windfall from selling Matt’s condo and we decided to become debt-free.
Sometimes I wonder if we should’ve invested the money instead. But, we’ve had a few financial whammies hit us since and being debt-free has saved us!
That’s awesome. I agree paying off loans has the benefit of mitigating the risk of having life throw lemons at you. How did you pay off your loans?
I refinanced the 6.8% loans almost immediately after residency. I made extra payments every month. I was on track to pay them off about 5 years after residency. But we ended up paying them off early. I can’t say the fast pay off was totally my effort (unless snagging Matt counts ;-)). I met my fiance Matt soon after residency and he paid off most of my loans with the sale of his condo.
Investing During Debt Payoff
Did you invest for retirement during debt payoff? If yes, what percent of your salary and why?
Yes. I maxed out all of my tax advantaged retirement accounts at my first academic job– 403b, 457b and a Roth IRA. I also got generous employer matching in the 403b account. I was living in NYC (aka HIGH taxes) so pre-tax retirement accounts helped a lot. I think it ended up being around 15% of my gross salary. You can never go back and fill up the tax advantaged retirement accounts so I felt strongly about maxing those out.
I was still able to make extra payments towards my loans. No doubt being single and kid-less at the time helped with that part.
Words of Wisdom
What advice would you give yourself during medical school?
Gosh. I wish I simply lived within my means. But I do not regret all the trips I took :).
Amen. What advice would you give yourself during residency?
The same! I wish I lived within my means and made some loan payments. I totally could have – I was able moonlight virtually the whole time.
What advice would you give yourself during your first few years as attending?
Well I am still in the first few years of attending-hood at this time, but sometimes I wish I could relax more about how we are handling our finances. Sometimes I feel guilty about spending money.
Student Debt Free Living
How does it feel to be free of student loans?
It is hard to describe being debt-free.
I often see folks haggling about investing over paying off low interest debt. I think either is fine.
Being debt free changes how you think about money. It gives you more choices and leverage when life sometimes goes a little awry. It has already saved us from a precipitous drop in income and allowed us to take some risks, like going locums!
What are your plans for the extra money in your budget now that your loans are paid off?
We still invest a lot of our money and we don’t really think twice about going out for a meal or taking a really nice trip.
Any parting words?
I think people fall into two camps – being debt-free asap or leverage debt to invest and create passive income. Only you know which one feels better.
But, I’ve yet to meet anyone regret becoming debt-free sooner. If you do end up regretting it, just take out another loan ;-).
I am a believer in continuing money education so I encourage everyone to keep learning more about money. My views on money and investing are changing as I learn more and grow. Money used to be something that gave me a lot of anxiety and stress. Now, money is fun and easy.
Thank you, Bonnie, for being here! Make sure you check out Bonnie’s new site, Wealthy Mom MD, for her great money tips.
Standard Disclaimer: Not meant as individualized financial advice.
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