067 - 7 Steps to Paying Off Your Medical School Loans Quickly and Increase Your Income In Medical Practice

In this podcast episode, Coach JPMD shares seven steps to help physicians pay off their medical school loan debt quickly. The steps include creating a budget, listing debts from smallest to largest, updating the budget and debt snowball monthly, living like a resident for three years, avoiding buying an expensive home, keeping the current car, and building habits around these steps. These steps aim to decrease stress and increase revenue for physicians.

Chapters

00:00 Introduction and Background
01:51 Seven Steps to Pay Off Student Loan Debt
02:20 Step 1: Creating a Budget
03:20 Step 2: Listing Debts
04:20 Step 3: Updating the Budget and Debt Snowball
04:48 Step 4: Living Like a Resident
05:44 Step 5: Avoiding Buying an Expensive Home
06:41 Step 6: Keeping the Current Car and Buying Pre-Owned
07:37 Step 7: Building Habits for a Debt-Free Life
09:35 Conclusion

Inspired by the 7 baby steps taught by Dave Ramsey https://www.ramseysolutions.com/dave-ramsey-7-baby-steps

Discover how medical graduates, junior doctors, and young physicians can navigate residency training programs, surgical residency, and locum tenens to increase income, enjoy independent practice, decrease stress, achieve financial freedom, and retire early, while maintaining patient satisfaction and exploring physician side gigs to tackle medical school loans.

Transcript

Coach JPMD (00:00.503)
And that's part of paying off your debt, but keep your current car. I should not have bought my C70, although it was a beautiful car. It was too expensive. I was making payments on it and those payments could have gone to paying off the debt.

Coach JPMD (00:26.862)
So if you're a physician listening to this podcast and want to learn how to decrease your stress and increase your revenue, this is the place for you. We interview guests, I have solo episodes, to help physicians understand things that I wish I understood when I was growing up in the medical profession. And today I wanted to share seven steps

that you can take to help pay off your student loan debt quickly. Now in 2014, I went through some life traumas. I went through a divorce and had some relationship coaches and therapists. And one of my therapists, one of my coaches actually mentioned Dave Ramsey to me and I had no idea who Dave Ramsey was. And if you don't know, he's the financial guru or is thought to be one of the financial gurus that helps.

Many people get out of debt and create habits that can help you live life powerfully. So today I'm gonna share those seven steps and some of them I've got from becoming a financial coach through the Ramsey Solutions team. And I wanted to share some of the things that I've gone through and that I've done to help myself get out of the.

the debt mess I was in. So if you are a recent grad, recent residency training grad, and you have over $200 ,000 in debt and really are drowning in trying to figure out how you're going to pay off these student loans, you got to listen to these seven steps. So the first step is you got to create a budget. A lot of people think that budgets are a way of kind of preventing you from buying the things that you want to do, but

I've had a budget for the past 10 years and what a budget for me is, creating a roadmap to what I'm going to spend in the next two weeks or the next month. And that allows you to understand where your monies are going to. Sometimes I help patients who are smokers and they smoke a pack of cigarettes a day, they smoke two packs a day. Some of them have cancer and they're still smoking and that's a whole other story.

Coach JPMD (02:47.97)
But it's not that it's a bad thing, right? Obviously it's a bad thing for your health, it's something that they are unable to, habit that they have developed, they can't break it. And so there are certain things that you can do to help break those habits. that is to become aware of the things that you're doing. And one of the ways you can be aware of what you're doing financially is to look at what you're spending your money on.

So that's something that I do every two weeks. So we sit down, of, I my wife and we kind of go over the budget and figure out where our monies are going, where they've gone in the past month. And then just devise a plan. And the second thing that you can do is list out all the debts that you have from smallest to largest, whether it be credit card debt, whether it be student loans, car payments, you know, all kinds of things that we spend our monies on, monies on and

and you list them up from the smallest to largest. And what you want to do is create a plan that's going to get you out of debt and get into a habit of paying off that debt from smallest to largest. It's what we call a debt snowball. And Dave Ramsey is really big on that. And then with that, you need to update that budget. That's number three. You need to update that budget and this debt snowball at least once a month and share those goals with someone that you trust, like your kids, like your...

best friend and they can keep you accountable when you're actually trying to get out of debt because then others can help you understand where you may be going wrong. And my kids do that a lot and it's nice to hear them do that because I feel like I'm actually teaching them something. So the fourth thing is to live like a resident.

for three years. I know this is gonna sound really hard and I made the mistake of buying a C70 Volvo Turbo the year after I graduated or year after I graduated residency, I think. And I was driving a Nissan Sentra for years and it was a beat up Sentra and I just had to buy that car and I had to make purchases that I should not have made knowing that I had over $150 ,000 in debt.

Coach JPMD (05:08.846)
And it was a mistake. And it took me over 20 years to pay off my student loans. So my recommendation is, hey, use those first three years after residency. You're used to living like you are in residency. So an extra three years will go so much further in getting to your goals of decreasing your stress and increasing your revenue. Because if you don't have the debt and you're not paying someone else,

then the monies that you make really go back in your pocket or go straight to your pocket. And then number five is hold off on buying that beautiful home in the most expensive neighborhood. Many of us do that and I think it's a mistake. we have to remember that physicians, us physicians, we rank in the top 5 % of average household income in America. So if you were to do the first four things and get out of debt quickly,

And there's no reason why in the next 15, 20 years of your practice, you can't amass the wealth that you want to amass without having to pay someone else. We talked about the car and that's part of paying off your debt, but keep your current car. I should not have bought my C70. Although it was a beautiful car. It was too expensive. I was making payments on it and those payments could have gone to paying off the debt. So someone once told me that if you have

student loans with a, you know, interest rate of 8%. They asked me, you know, Jude, if you could guarantee an investment 8 % every year, would you think that is a bad investment or a good investment? And obviously it's a good investment. you can, someone can guarantee that you're going to get 8 % a year on your investment with no downside potential. Obviously it's a good deal. Well, if you have 150 ,000,

$200 ,000, $300 ,000 in debt. And that debt is accumulating an interest at 8%. Paying off that debt will automatically give you that 8 % return that you think you could not get in investment. And most investments do not provide you a guaranteed 8 % return. So paying off your debt will provide that because you won't be paying an interest. And number seven, step seven is building habits around steps one through six.

Coach JPMD (07:36.57)
and surrounding yourself with like -minded people, growth mindset people that can help build healthy habits. And so that's kind of the seven steps. Creating a budget, number one, listing your debts from smallest to largest. Number two, number three, updating your budget and debt snowball at least once a month and share those goals with people that care about you and that trust that you trust. Number four is live like a resident after.

the after three years after residency or fellowship. Trust me, if you do that, you'll be in such a better, better position and you'll be able to negotiate better contracts with your jobs. Cause if you don't need to make a certain amount of money to pay off your debts, then you're able to save more. You're able to travel more. You're able to do the things that you really want to do as a physician, build your, grow your family, improve your relationship with your, your spouse or your, your significant other.

So step four, live like a resident so that you, after that three years, on average it takes about two to three years to pay off your debt if you're totally focused on doing it. So that's number four. Number five, don't buy that beautiful home in the most expensive neighborhood. Don't live like the Joneses, because most people don't realize that the Joneses are broke. So buy a house that you can afford that can be within your budget, less than what you make. Keep your current car if the car works.

Obviously if it doesn't work, then you kind of figure out what you need to do. after, I think I bought one new car in the past 20 years, and I think it was leased, which was a crazy story, but ended up keeping that car 10 years. And then every car I've bought since then has been cash and pre -owned. And that's a habit of people that are very successful. So that's number six. Number seven, build habits.

round steps one through six. And I think you will have the opportunity to do things that I wish I did. And it's really the best way to live life free of debt. And that's how you're going to be able to decrease your stress and increase your revenue during your host residency training days. So if you liked this episode, hit like on your favorite app and

Coach JPMD (10:04.898)
We hope to see you next time.