How I play financial catch-up

April 21, 2006

Better late than never is this doctor's motto. Here's how he made up for lost time.

Like Gordie Howe and Nolan Ryan, I know what it's like to be considered old long before your time. A first-year medical student at the ripe age of 38, "old man" and "fossil" were my aliases. Nevertheless, I kept my eye on the prize and received my medical degree when I was 42 years old. It was a goal I'd long dreamed of and planned for.

What I hadn't planned for, however, was how I was going to get back in the black. After a career in a low-paying job as a geologist, I'd returned to being a full-time student (in order to fulfill my premed requirements) before going on to med school. Upon graduation, I was saddled with student loan debt and my financial IQ at the time didn't exactly qualify me for Mensa status. It was time to go into high-gear monetary catch-up mode.

It's been almost 10 years since graduation and, while I still may not be ready for my CNBC close-up, my money management and investment skills have increased exponentially. I wish I'd possessed my new-found savvy years ago, but since I can't rewind the clock, I'd like to at least help others benefit from my experience. So if you're a latecomer like me-whether to the world of medicine or money or both-hopefully, my advice will help you make up for lost time.

But several months into my residency, my wife declared that she wanted to stay home with our newborn daughter. My father-in-law suggested that I transfer my residency from Maine to New Jersey, so we could live with them until I could afford to have my wife stay at home. I'll be the first to admit, it wasn't always easy; in fact, it was downright stressful at times. Do you know what happens to rats when their cage becomes too crowded? We do. But by the time my residency was over, we were able to buy a place of our own and, thankfully, the relationships seem to have made a full recovery.

Pay yourself first. In order to ensure that we put our money where our priorities were, we set money aside for savings before we even see it. I put the maximum allowable amount into my 401(k). Initially, I was hesitant, I confess, but a friend turned me on to the miracle of tax-deferred compounding, which can only be topped by a matching employer contribution.

I also set up automatic withdrawal from each paycheck to be directly deposited into our nest egg and our growing family's 529 college plans. Saving for retirement and tuition automatically is relatively painless. When the money is taken out before we ever see it, we don't seem to miss it. Moreover, we aren't tempted to spend money that's been theoretically earmarked for college funds on our endless home improvement projects.

Pare down debt. To help whittle down debt, I looked for ways to boost my income. I searched online for moonlighting opportunities and found a position in the Prison Health Services, working two nights a week. Although it cuts a little into family time, it enables us to comfortably pay more than the minimum on debt payments. A caveat: If taxes aren't taken out up front, be sure to squirrel away a percentage for the money you'll owe Uncle Sam on the extra income.