Welcome to another episode of the Doctors Free of Student Debt Series! Being a doctor is a privilege and an honor, but it requires over a decade of study. Over this time, student loans pile up and accrue interest. Far too many highly paid professionals carry hundreds of thousands of dollars in student debt for decades. This series highlights doctors that have taken charge of their debt and have paid off their student loans fast, using the immense lever of their income.
This week, I have the pleasure of introducing Dr. James Turner, also known as The Physician Philosopher. Dr. Turner accomplished the amazing feat of paying off $200,000 in student loans in 19 months. He also just published a book, The Physician Philosopher’s Guide to Personal Finance. He is here to share his story and his wisdom.
Dr. Turner's Student Loan Story
Welcome! Please introduce yourself.
Hey everyone. My name is Jimmy, I am a sinner married to a saint, father of three, author, inventor, and big college sports fan. I also blog over at The Physician Philosopher (yep, it’s non-anonymous now).
For my main gig, I practice academic anesthesiology full-time. In fact, I work 1.3 FTE currently at work. Hoping to cut that back to 1 or 1.1 in the next six months to year. I completed a fellowship in regional anesthesia and acute pain medicine.
So, I practice regional anesthesia 60% of the time and general anesthesiology 40% of the time.
Noble work. What are your hobbies and your passions other than medicine?
What I am most passionate about is my family. I really want my kids to grow up living intentional and balanced lives. My wife works full-time as a early learning childhood coach for a local county. She works with about 8 different schools and helps support kindergarten teachers.
My biggest passion outside of medicine – and outside of my family – is my blog where I write about personal finance for physicians. My focus is on behavioral finance (or the “why” behind money). After all, if you don’t know what your goals are, it becomes pretty hard to achieve them. And, after you know your goals, you must create a system that gets the worst enemy of financial success out of the way – ourselves.
As a result of this passion, I just finished writing a book , The Physician Philosopher’s Guide to Personal Finance: The 20% of Personal Finance Doctors Need to Know to Get 80% of the Results. I really enjoyed writing it. If people find it helpful, I would not be surprised if I decide to write another in the next year or two.
Other hobbies include being a huge Wake Forest sports fan, watching & playing golf with friends, enjoying craft beer (I used to brew before kid number 2 was born), watching shows with my wife, and reading.
Sounds like a very balanced life. Congratulations on your accomplishment of publishing! Along with all of the above, you recently shared that you paid off your student debt! So, how did you do it? How much student debt did you pay off? How long did it take you? Did you get PSLF?
I probably need to say a little bit about how we got there before sharing our number. See, I graduated with a little more than $100,000 in student loans. Because I knew nothing about money back then, I took forbearance on that debt for four and a half years. And with an interest rate hovering around 7%, it ballooned to $150,000.
My wife went to grad school for a Masters in Educational Leadership when I was finishing up training. And that added another $50,000 to our plate.
So, all told, we were in for $200,000 in student loans when we started paying them back in earnest in July of 2017. It took us 19 months to pay that debt off. We shipped the last check at the end of January 2019.
Amazing. Do you have kids? Do they have any educational expenses?
I have three kids. My oldest is in the 2nd grade and goes to public school, though she requires care before and after school given that my wife and I both work full-time. This costs us about $350 each month.
The other two are in daycare, which costs us ~$1,800 each month. We CANNOT wait until our second goes to Kindergarten next fall and we can chop this payment by more than half and start paying for the same before and after school care that my oldest currently attends.
All told, we spend about $2150 in childcare costs each month. This will be down to $1600 in the Fall.
Thankfully, we take advantage of two tax-efficient ways to save money on childcare costs. This eases the pain a bit.
Ugh, I feel you on childcare costs. Much thanks to lawmakers for giving us some ways to help. Did you refinance your loans?
We refinanced our student loans with Common Bond. We used a 7 year variable plan, which brought us down to an interest rate somewhere in the 3.5-4% range. As interest rates climbed, we ended up being near 4.6% by the end of the 19 months.
The two ways to lower that interest rate are to take a shorter term, and a variable rate. We definitely saved money doing a variable instead of a fixed rate given how quickly we paid it off.
Looking back, I probably would have gone with a five year variable plan to lower our interest rate even further.
Dr. Turner's Student Loan Payoff Strategy
So how did you do it? How did you manage to pay off $200k in 19 months?
We did it by avoiding lifestyle inflation after finishing training. We also joined the financial independence cult. Obviously, it’s not really a cult, but it is a counterculture where we view money very differently than the average person.
Most people manage their money the wrong way. They get their take home paycheck, spend what they’d like (which is usually most or all of it), and then see what is left to save – if they can. My wife and I took the exact opposite approach. We sat down and looked at the big picture, first.
We decided that we wanted to be free of our student loan debt by 24 months after training, and that we wanted to be financially independent in our mid 40s.
In order to do this, we needed to average a little less than $10,000 per month in student loan payments. So, we started putting a fixed $5,500 towards our student loans. Then, we used The 10% Rule – our key to financial success – and put 90% of any bonus money and a house sale (~$23,000 profit) towards the loans, too.
In the end, we averaged more than $10,000 per month and paid the loans off in 19 months.
That’s so inspiring! I love the 10% Rule idea… that way you get to enjoy some fruits of your labor, but still make significant progress towards your loans. Brilliant. Did you invest for retirement during debt payoff?
During this time, we lived on 20-30% of our income. This is was the source of the power to pay off our loans so quickly.
I’d have to look back to see exactly what our savings rate was during this time, but it was at least 20%. (We were putting 40-50% of our take home pay into loans over the same time period). I also got a hefty employer match that fell just a little short of filling up the $55,000 403B space for 2018.
We post our quarterly net worth statements on The Physician Philosopher. In our 18 month quarterly net worth update, we have gone from negative $208,000 to positive $107,000 in the 18 months since finishing training.
Of that ~$315,000 improvement, $200,000 came from paying off our student loan. The remaining improvement in our net worth is money that we have saved and invested. All told, we have about $130,000 in invested assets at this point.
We intend to save north of $100,000 annually from this point forward by continuing to live on less than half of our income. Though it may slow the math down to get to our number, we also believe firmly in giving to charity, too.
Words of Wisdom
What advice would you give yourself during medical school?
Just one thing.
Live within your means.
My wife worked full-time in medical school. My debt came from taking money out for living expenses. This never should have happened. We should have lived frugally and not taken out the additional loans. Unfortunately, it seemed like a drop in the bucket back then, which obviously ended up being very false.
Oh, and file taxes fourth year of medical school to get into an income driven repayment program in residency.
Yes, if only we could go back! I did the same thing. It all seemed like play money back then. How about residents? What advice would you give yourself during residency?
I would have told myself (like I do for all of my residents now), forbearance and deferment are not options. Well, technically, they are but not one that 99% of residents should consider.
Instead, make a budget and start with your anticipated student loan payment. Fortunately, REPAYE now exists (it wasn’t around when I walked up-hill-both-ways-in-the-snow).
Then, after you’ve made room for your payment, see what is left to live on. Don’t go buy a house or a car that you cannot afford. Live like a resident. I would even recommend you do this in the first 2-3 years as an attending after finishing training.
Oh, and if you have additional money to save after realizing how important it is to save money during residency, then I would have told myself to fill up a Roth IRA (our 403B was not matched for residents).
What advice would you give yourself during your first few years as attending?
What I tell people (linked above) is to look at compare the last take home paycheck as a resident and the first take home paycheck as an attending. Take 10% of this money and spend it on whatever your heart desires. I would spend it intentionally, but there are not rules. The purpose is to enjoy a small lifestyle creep given all the hard work you just put in during training.
Then, take the other 90% and do what you should with it. Pay down your debt or invest that money for the first few years after becoming an attending. If you do this, you will be well ahead of your peers and on a glide path to early financial independence.
Sit down, figure out how old you want to be when you are financially independent (25-30 X your annual spending). Do the math to figure out how much you need to save to get to that number by the age you’d like. Then, build that budget backwards again – put the money away for savings and destroying debt FIRST, then spend what is left.
Love that. For our finance beginners, the concept of financial independence is to achieve enough passive income to cover all your costs of living, so you never HAVE to work again. Sounds nice right?
Student Debt Free Living
How does it feel?
It feels amazing! Having the debt burden was a big deal for us, because I was hosed by an insurance salesman when I was in medical school. The entire time we had loans, I could not get personal disability insurance.
While I could have stopped payments if I became disabled, the loans would have started to accrue interest again. And permanent disability is very difficult to qualify for, which is the kind of disability that is required to get the loans forgiven in most situations.
Oh man! That’s terrible. I’m glad you have all that extra room in your budget now to self insure. What are your plans for the extra money in your budget now that your loans are paid off?
Our monthly budgeted payment was $5,500.
$2,000 is already going towards our new mortgage (we did the math and realized we could pay off our loans and buy the house we wanted in the same month).
$550 (10% Rule!) will go towards lifestyle improvement. This will likely go towards lawn care and cleaning, given my wife and I both work full time. And we now own a steeply slanted yard I have no interest in mowing with no personal disability insurance!
$1,500 will go into a taxable account to get to our annual savings goal.
The remainder will be saved for Backdoor Roth IRA contributions for the year.
Once our savings goal is reached, we will enjoy whatever money is left for vacations, trips, and leisure. Though, knowing me, I’ll probably start paying off more debt with it.
Haha! Well I like your plan a lot. I may emulate it. Any parting words?
Anyone reading this needs to know that YOU CAN DO IT. First, you must make your financial goals clear and put money towards these goals first. It’s the whole idea of paying your future self first, and your current self last.
If you do it the other way around, it becomes very challenging to make your financial goals become a reality. Decide on your timeline. Put money towards your loans and savings goals.
And, only then, should you look to see how much is left to live on each month.
If you know your “why” and you set up everything to occur automatically, anything is possible. And any surprise money along the way, you can consider following The 10% Rule.
The whole physician finance blogging community is here to help you, if you ever need it!
Jimmy, thanks so much for sharing here. You are an inspiration and are doing a great service to our community! Congratulations on being Student Debt Free!!!!
I hope you enjoyed reading, TFP Tribe! There is so much good information here. I hope you feel as inspired as I do. Until next time!
-Dr. D
Standard Disclaimer: We have no financial ties with The Physician Philosopher. This article contains affiliate links. Some images from Unsplash.com. Not meant as individualized financial advice.
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