We’re delighted to welcome back a guest author who, less than two years ago, was an Emergency Medicine attending wrestling with student debt. Now, with a net worth of $275,000, he’s here to share his inspiring journey from debt to financial independence.

In “Charting My Financial Path: A Physician’s Journey to Wealth,” he offers invaluable insight into overcoming financial obstacles common among physicians, achieved by navigating risky decisions and celebrating small victories along the way.

Where the Path Started 

The path to become a physician creates a daunting financial hole that can seem insurmountable to just get out of the red; here’s how I’ve grown from a net worth of -$160,000 to $275,000 in less than two years after finishing residency. I last wrote to you all in the Fall of 2021 as I was starting out as an Emergency Medicine attending in the Heartland.

As a quick summary, I was worthless!

My net worth was approximately -$100,000 and my wife and I had nearly $175,000 in combined student debt.  What I did have going for me was that I had been a long-time reader of the Physician on Fire blog and the White Coat Investor, so I was ready to hit the ground running as I started seeing the attending paychecks hit my bank account.

Here is my chart of net worth from early residency to graduation. As an emergency medicine doc, I try to avoid seeing a flatline on any monitor, but that’s basically what we see throughout residency with a slight trend up and the final bump in assets was a signing bonus when I secured the attending position.

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The First Milestone

I’ve been using the White Coat Investor’s list of 14 milestones worth celebrating to provide checkpoints to my own family’s progress. My first milestone is listed as milestone number 2 by the White Coat Investor. Shortly after I had signed my first contract in 2021, I bought a home in the city where my new job would be.

The common advice is to rent for a couple of years when starting your first attending job, as this would ensure the job and location were a good fit. Despite this great recommendation, I chose to buy a home, as we were familiar with the location due to family in the area and were willing to take a chance on the job working out to be close to our loved ones. This was a similar decision that the Prudent Plastic Surgeon made as a new attending and his decision-making process aligned closely with my situation.

This coincidentally ended up being a great time to lock in a low mortgage rate and we benefited from a bit of luck with the timing of our home purchase. In the tracking of my net worth, I don’t include our primary home, so this decreased my net worth due to cash being used for the downpayment. You can see in my net worth graph below there is a dip in July 2021, but it felt great to own the place we were living in!

Getting Out of the Red

Coming out of residency and after the home down payment, I had a net worth of -$160,000. and by the time of my initial post, 5 months out of residency, I had reached an even -$100,000.

One year after residency graduation I was able to reach the first milestone listed, becoming worthless with a $0 net worth. It was great to see the attending income-making progress getting a steeper upward trajectory on the charts!

Reaching SIX Figures

After getting back to broke, it was finally time to start building positive net worth. This is when I truly started to feel I was making ground financially. Only 4 months after getting to $0 net worth, (16 months after residency) I attained the $100,000 net worth milestone.

There were definitely some gains in my investment portfolio created based on some of the simple portfolios describe by Dr. Dahle  from The White Coat Investor.  The increases over these four months provided some great motivation that I was on track and making the right moves.

Tackling the Debt

In my first post, I ended with a question about where I should focus my funds. The options I had proposed were student loans, a brokerage account, or trying my hand in real estate. The most common recommendation was to stick any extra money in a brokerage account given that my student loans had been refinanced to a low (2.05%) interest rate and real estate can end up as an extra job.

I ended up doing a split approach between the student loans and investing in a brokerage account initially but eventually just wanted to be rid of the student loans. I decided to follow the Mr. Money Mustache approach and treat my debt as “a HUGE FLAMING EMERGENCY”  and be done having to decide between investing and debt paydown.

I felt that by paying off the loan as fast as possible the difference in the interest rate on the loans and any gains that would have been made in the market could be minimized and I would get a big jump in my monthly cash flow without a loan payment. With this rationale, I achieved the next milestone of student loans paid off 20 months after residency graduation. I had been building up cash in a savings account that was getting a higher rate than my student loans and once I had enough cash, I paid off the remaining balance of about $120,000 in one lump payment.

I remember just before submitting the payment, I happened to be at an auto show and realized I had enough cash on hand to purchase a brand-new Chevrolet Corvette. I’m far from a “car person” but for some reason seeing that fancy car as a concrete example of what had been achieved has stuck with me. Getting back to my net worth chart, this large payment created a dip on the asset line with an equally sized drop-off in my debt.

Net Worth Update – 22 months after residency

In my first post, I broke out my net worth and at the time I had included my primary residence. Moving forward I don’t plan to include my primary residence in the calculation since I don’t plan to move anytime soon and with the volatility in real estate prices it doesn’t really feel like “my money” until I choose to sell.

This is opposite to the approach that the Passive Income MD uses, but that is why personal finance is personal, we all get to decide how to measure ourselves. Here’s the big update on my progress in the 22 months since graduating residency!

Net worth: $275,000

• Assets: $327,000
• $65,000 Cash
• $75,000 Roth IRA
• $140,000 Pretax Retirement (401k/457b)
• $16,000 HSA
• $27,000 Brokerage
• $10,500 I Bonds

Liabilities: $52,000

1. $0 my student loans (still feels great to see that 0!)
2. $9,500 wife’s student loans
3. $41,500 family loan

Future Goals

So now the first 5 celebratory milestones are in my rear-view mirror. I expect the remaining milestones will start to come less frequently as I enter “the boring middle” of building wealth. With my student loans gone, I am allowing for a bit of lifestyle growth for my family, and we are putting more money into our vacation funds to create memories and pay for experiences while we have the gift of youth and health on our side.

We celebrated reaching $250,000 net worth by booking our first international trip as a family to Europe. The trick now will be making sure the lifestyle growth doesn’t balloon into lifestyle inflation that inhibits our financial goals.

I am aiming to achieve the $500,000 net worth milestone by the end of 2023. I will need to increase my net worth by about $225,000 over the next 7 months to be successful. The majority of this will end up going into the brokerage accounts since my employer sponsored retirement contributions will soon be maximized.

I will also continue to pay down my liabilities with the goal of $0 in debt. We will see what happens with governmental student loans to decide how to manage my wife’s loans that are currently at $0 payments and 0% interest. The family loan I plan to cut in half by the end of this year and then be able to have paid it off in 2024. This $500,000 net worth goal feels like a bit of a stretch, but I think it is attainable; especially if I get any help from the markets.

I was fortunate to have taken on an additional role at the hospital that came with a pay increase and the opportunity to renegotiate my group’s contract. Combined, these career updates will push my annual income a bit above mid six figures and combined with trying to slowly grow into an attending salary this has been the fuel to my rising net worth.

The biggest potential barrier to reaching half a million by the end of this year is trying to complete a different milestone — buying a vehicle with cash. As a more personal update since my last post, I now have a 16-month-old son. My wife and I are starting to feel some growing pains with an aging vehicle that is due for replacement.

We moved to be close to family after residency and our summers are often spent camping. However, the form of camping my family does is in climate-controlled campers with modern plumbing. This requires a vehicle that can tow a camper and I am realizing that with global supply chain shortages, even used trucks are expensive!

Summary

Many of us in the medical field start deep in the red nearly a decade after finishing our undergraduate studies. Fortunately, as an attending, you are provided the income to get out of the hole. I didn’t follow the perfectly optimized financial plan.

I bought a house instead of renting, I paid off loans when it made no sense to do so from a mathematical standpoint looking at interest rates, and now I’m considering driving something other than a Honda or Toyota sedan to the doctor’s lot. I’ve still been able to increase my net worth by nearly $450,000 in less than two years out of residency and hoping to have a net worth increase of more than $650,000 by the time I reach 2.5 years out.

As I enter the “boring middle” stage of my financial journey and the debt vs invest question is no longer top of mind I am beginning to debate new questions. Is buying a brand-new vehicle going to pull me into the trap of lifestyle creep we saw with Dr. Benson, or is this an allowable lifestyle upgrade? Do you include your primary home in your net worth calculations? How have you chosen to manage your student loans with the low or 0% interest rates we have had the last few years?

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