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How Doctors Can Stop Living Paycheck to Paycheck


I lived P2P once in times when my full time work was to study and learn while paying a hefty tuition to do so (50k/year for 4 years of medical school). I was able to pay off my student debt a few months after graduating medical school because I always had a plan and I was diligent about it. Here are some ideas on how to stop the vicious P2P cycle.

I was inspired by Passive Income M.D.’s post on Why Doctors Live Paycheck to Paycheck (P2P) and would like to offer some suggestions to live the other end of the lifestyle spectrum.

I lived P2P once, in college and in medical school. These were times when my full time work was to study and learn while paying a hefty tuition to do so (50k/year for 4 years of medical school). I was able to pay off my student debt a few months after graduating medical school because I always had a plan and I was diligent and disciplined (mostly) about it, even though my cash flow was quite limited and expenses were high, as a student in a Bay Area medical school withan annual cost of attendance between 80-100k.

Now that I no longer pay 50k a year just to learn and study 80 hours per week, I instead enjoy a wage of 60k annual salary as a radiology resident, I continue to have a plan and stick with it.

What I have found is that not only am I not living P2P, but also, I’m accomplishing my financial goals much faster than what I had planned.

So here are some ideas on stopping the vicious P2P cycle.

1. Set a goal.

In fact, data from the Harvard MBA program showed that the 3% of graduates with formal written goals earned 10 times as much as the combined 97% of those without.

A goal may simply be:

  • I will pay off my student loans in 5 years.
  • I will max out my Roth IRA, 401k, and my kid’s Roth IRA starting this year.
  • I will pay off my home in 15 years.
  • I will save $100 bucks more this month.
  • I will do everything I can to get my company match this year.
  • I will save 30% of my income this year.

2. Track expenses.

This may seem painful at first. But do it so that you know where you money goes. Identifying your expenses is the 1st step to evaluating whether these expenses are truly worth the money you spend.

3. Make a budget.

My rules for making a budget include:

  • Pay myself first by making my saving/debt pay down goals as my #1 non-negotiable expense.
  • I don’t spend money on anything that doesn’t bring me joy.
  • Things usually don’t make me happy.
  • Experiences, learning, and serving others do.
  • Spend a little on things/causes that make me happy. For me, these include Mini wise money (my 8 year old)’s pilot and equestrian lessons, a little vacation fund for the family, and sponsoring Mariela in El Salvador.

4. Actually pay yourself first.

Do this by sticking to your budget where you commit to how much you want to pay yourself (build your net worth), either paying down debts, buying producing assets like index funds (low cost).

If you find that you’ve cut out all the fat in your budget but still in the red at the end of the month, then consider the following:

Do you have too much house? Too much car? Too much vacation funds? Eating out too much? Do you really need cable? (hint: you don't.) Is your high speed internet really necessary? Can you use work internet and just stick with phone internet after work? (Why are you on the internet rather than spending time with your loved ones anyways?) Spending too much on mobile phone services? (check out FutureProof MD's article on reducing cell phone bills).

Get out of the trap of paying everyone else first and give yourself what’s left. You deserve more than that.

5. Surround yourself with like-minded people.

It’s difficult to explain to my friend who’s ecstatic about her 5th Coach bag why that doesn’t make me happy and why saving money for my family’s future make me happier. It’s difficult to quit smoking, no matter how much you know it’s bad for you, if all your friends are chain smokers.

You can still love and care for those who are not taking care of their finances and future, but definitely seek out those who have successfully practiced the way you want to live.

6. Passive income.

YouTube. Blog. Books. Share your knowledge, expertise, and experience via these channels where once you put in the time to create the product, you could be sleeping or vacationing while the product generates income for you. Passive Income M.D. has lots of great ideas on doing this!

7. Smart credit use.

Ever thought of making money with credit cards on your necessities such as groceries? How about lowering your interest rate to help you pay of debt faster? When you dedicate $2000/month to pay down a debt/liability, without increasing your payment dollar amount, you can pay off that same debt sooner if you switch it from a 7% student loan to a 0% interest credit card balance, right?

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice