Anyone feels poor at the age of 35 without a house, with a 20 year old car, without a penny in retirement savings, and with a student loan the size of a large mortgage (300-500k) snowballing at 2-3 times the interest rate of regular mortgage.
Perhaps I’m preaching to the choir.
It’s not hard to know that you are poor when you are 35 without a house, with a 20-year-old Honda Accord, without money in retirement savings, and with a student loan the size of a large mortgage (300-500k) snowballing at 2-3 times the interest rate of regular mortgage.
I am surrounded by PYG’s (residents and fellows) and freshly minted attending physicians whose financial picture is just as I described above.
In case you belong to the group that believe the contrary about physician’s financial fitness, here are five reasons why a career in medicine is a financially bad choice.
1. Tuition is exorbitant.
I attended a medical school, where cost of attendance is about 85k-100k per year. That’s about 400k not counting the origination fees of student loans (ranging from 1-4%) and the interest accrued while I dig my nose in the books to learn and become the best/most knowledgeable doctor I can become.
Mini Wise Money, the apple of my eye, was 3-7 years old while I attended medical school, in order to reduce living expenses, we downsized from a $1700 rental home to a closet size bedroom for $350/month. We also lived with my parents for a year rent-free. But my other friends with family unfortunately graduated with 400k+ of student loan debt just before starting internship PYG1.
The 2015 AAMC debt fact card states that the average med school debt is 183k upon graduation. Taking into account some of my classmates who graduated with $0 student debt as their families had paid their med school costs, no surprise on the other end of the spectrum of this 183k average, there are plenty of med graduates with 400k of debt.
2. Uncle Sam is against you.
I don’t know how else to explain why big bank can get bailed out with “free,” unclear terms tax payer dollars, yet aspiring physicians pay 1-4% loan origination fees, which instantly roll into the debt principle which the 7-11% interest rate accrues on.
It is sad to see that US banks are too big to fail yet the everyday ordinary people like you and me who aspire to devote our lives to serve others borrow at 7-11% to further our education and profession.
3. Time value of money is against you.
As I wrote about how I could retire at 38 as a radiologist, and yet I could retire at 31 as a plumber, this shows precisely how time value of money works against the average physician.
Instead of making 50k steadily since the age of 18 and stocking away Roth IRA 5.5k annually, most aspiring doctors find themselves not able to afford putting away money until late in residency and in fact most doctors “wait” until they get their attending paychecks before even contemplating about retirement savings.
We are usually in our 30’s, some of us, like me, mid-30’s before we get our first attending paycheck, for which many worthy causes that have been put on hold are vying for, including Uncle Sam.
We get the pay raise, with it, tremendously higher taxes especially if we are W2 employees without business deductions. Then we start catching up: retirement savings, saving for a down payment for home purchases, college saving for kids, pay down/off our student loans, and entertainment funds.
In our 20’s, time value of money worked against us as we passively allowed our debt to balloon at 7+%. In our 20’s, we miss the time value of money working for us as we did not have or did not direct cash flow to maximize our net worth/ return.
4. Society is unaware and unsympathetic.
Most of society still believes doctors are rich. People of almost all trades feel justified to charge doctors more since “he/she’s a doctor. He can afford it!”
5. Doctor’s price tag may be internalized.
Worst of all, the societal belief that doctors live at large frequently gets internalized by physicians themselves. To the point that when I said I could retire at age 38, the first thing other doctors (especially attending doctors) say is that “well, most doctors may want higher standards of living in retirement…”
Why is an average non-doctor Jane who’s otherwise just like myself ok to retire at a certain standard living lower than that a doctor’s expected to retire?
Doctors ultimately have become victims to the doctor’s price tag society puts on them. Why can’t we give ourselves the permission to make less and live more richly in non-material ways?
So as I started this article, if you want to be rich, don’t be a doc.
However, if you are like me, and want the most amazing reward of saving someone’s life and/or improving one’s life quality tremendously because of your knowledge skills, which you spent 1/3 of your life and ½ million dollars to acquire, medicine is still it for you.
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