doctor

Yes I’m a Doctor, yes I still live on a budget: 4 steps I took to change my spending habits

 
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To the outside world, I’m a rich doctor who can buy what I want. In reality, I’m a sleep-deprived resident physician struggling to keep my head above water. No one told me life would be like this, at least not before I started taking out tens of thousands of dollars in student loans each semester, but I digress. The point is that even [future] high-income earners like myself need to have a budget. Without one, our money disappears faster than a post-call resident leaving the hospital. 

Unfortunately, realizing I needed a budget and actually creating one were two different things. Like a diabetic struggling to shed those unwanted pounds, it takes time to actually move from one step to another. Coming to terms with the fact that I work super hard and still can’t afford all the things I crave is its own beast that has taken me several attempts to tackle. Just in case some of you are in the same boat, let me shed some light on my own come-to-Jesus moment.

Step 1: I had to let go of my pride and accept that I was spending too much money. 

I’m almost ashamed to admit, but a few years ago I didn’t think a budget was necessary. I thought they were for poor people living paycheck to paycheck. Now that I’m a doctor living paycheck to paycheck I have a lot more sympathy (and humility too). It wasn’t until 6 months ago that I finally let go of my pride and began to accept that my habits needed to change. I was tired of running out of money at the end of each month. I was tired of relying on my credit cards for basic living expenses or holding my breath every time I had to pay for an oil change. 

Step 2: I had to sit down and actually write down my budget.

Honestly, I think the only reason I finally sat down and tried to make a budget was because I had this incredible distaste for debt. I had heard horror stories of older doctors whose student loan burden was sapping all of the happiness they once had with their jobs. It’s as if their lack of financial independence had turned the job they once loved into one they despised. I didn’t want that to happen to me. I wanted to know that my bills were paid on time each month and that my credit card debt was getting smaller and smaller. I wanted to make sure all my bases were covered. Creating a budget was one of the first steps I took to get on the right track. 

Step 3: I had to download a budget app to track my spending, and actually check it. 

Sounds simple, but for me, this was not an easy feat. The anxiety I had even thinking about opening Mint.com is one I cannot even begin to describe. But...I got through it. Slowly but surely I began to look at the numbers. I saw how much money I was actually spending on food each week. How my impromptu trips to the mall resulted in unnecessary clothes and holes in my budget. How the Uber rides, overpriced drinks, and club fees from weekend shenanigans added up to much more than I anticipated. I finally opened the app, stared at the numbers on the screen, and faced the fact that my spending was out of control. 

I was barely staying afloat and knew I had to do better. I couldn’t use the fact that I was a med student living on loans as an excuse. The spending habits I had wouldn’t magically change once I started getting paid as a resident physician or even as an attending physician. I needed to get rid of the bad behavior now, so that when I do experience an increase in pay in the future, I don’t just squander my wealth. 

Step 4: I had to put boundaries in place and stick to them. 

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It wasn’t enough for me to track my spending each month. I needed to put some protections in place to “save me from myself.” I opened mint.com and set up budget notifications that send an alert to my phone whenever I’m nearing my weekly allotment for food or entertainment. For example, if I limit myself to $100 every two weeks for transportation, the app will send me an alert whenever my Uber rides approach the $80 mark. That way I know when I need to forgo that weekend party invitation and maybe host a game night at my place instead. I was well-intentioned before, but setting boundaries through budget apps and spending notifications has really challenged me to stick to my goals.

Full disclosure, I am still a work in progress. There are times I ignore those alerts only to face regret when I log into my bank account afterwards. Thankfully, those times happen a lot less frequently than they used to. When it comes to my spending habits, I am far from perfect. I still struggle, but by simply making these 4steps my spending habits have improved exponentially. 

Tell me, what steps have you taken to improve your spending habits? What was it like when you first tried to make a budget?



 

Becoming a doctor helped and hurt my ability to build wealth

I just graduated from medical school and will begin my first job as a doctor in a few weeks. Yay! Unfortunately, I am not about to hit the jackpot or start making the salary people google online, just yet.

Although it is true that doctors make a high income, we have to complete residency first. This is a period of 3-7 years in which we are paid a government salary of around $60,000 while working 80 hours a week--not exactly the best lifestyle. In fact, there are several ways in which going to medical school and becoming a physician helped AND hurt my ability to build wealth.

 

Ways it helped me build wealth:

1.) I will have a high income. Most doctors make at least $200,000 a year, once they finish residency training. Since everyone needs access to physicians and reliable health care, doctors have a high level of job security as well. Mathematically speaking, it is much easier to pay off debt, save for retirement, and build wealth with a high income, especially when it is virtually guaranteed.

2.) It gives me access to exclusive perks and profitable investment opportunities. Some lucrative real estate deals, such as large multifamily homes and syndications (in which people combine their money to invest in an apartment building), are only available to people who have a high net worth and/or make at least $200,000 a year. Many physicians qualify for these deals. Doctors are also favored by banks (since we have a high income and rarely default on loans). As a result, we have the ability to purchase homes with no down payment or private mortgage insurance and are excluded from paying some of the added fees associated with the home-buying process.

3.) Many people in my network have a high net worth. As a physician, I completed medical school and thus know at least hundreds of other doctors and high net worth individuals that were once classmates or colleagues in the hospital. Having friends and associates who are well-educated and also earn a high salary is advantageous. There is a greater chance that people within my social circle have a high net worth. Not only does this give doctors like myself greater insight on how to build wealth, but it also increases the number of people with whom I can share ideas, pitch investment opportunities, and depend on for various levels of support.

 

Ways it hurt my ability to build wealth:

1.)   I could not work in medical school. As a medical student, I went to class all day then went home to study all that material at night while also trying to squeeze in time at the gym, cook dinner, and maintain some semblance of a social life. Just in case some of us could miraculously do all of this with time to spare, the administration forbid us from working. That’s right. I gave my word that I wouldn’t work a job and would instead focus all of my energy and attention on medical school. This is well intentioned, but the simple fact is that medical school is 4 years long. That’s 4 years of my life that I couldn’t work, 4 years in which I didn't contribute to retirement accounts and work the magic of compound interest, 4 years that I was unable to save up for a car or a down payment on a home, and 4 years of potential wealth building and lucrative investments that I missed out on.

2.)   I have less time to establish additional streams of income. Unlike many of jobs that require their employees to work 8-9 hours a day with nights and weekends off, med school and residency (our first 3-7 years as a physician) are the complete opposite. We often work 12-hour days, have several periods in which we work night shifts for weeks at a time, and are often scheduled to work holidays like Thanksgiving and Christmas that most other professions get off. While I absolutely love medicine, it monopolizes my time. Because I work so much, I have less time to devote to passion projects, side hustles, and the creation of additional revenue streams. People typically build wealth by actively investing their money or creating a lucrative business. Both of these avenues require a substantial amount of time and can be difficult to pursue when the vast majority of my time is spent working in medicine.

3.)   I acquired lots of debt. Perhaps the biggest reason going to medical school hurt my ability to build wealth is all the student loan debt I accumulated. The average medical student has $200,000 in federal student loan debt and unfortunately, I was not an exception to this rule. In case it isn’t obvious, having $200,000 worth of debt at a 6% interest rate that started accumulating well before I could even finish medical school is not a winning formula for wealth creation. Plus, there is a good chance I may accumulate even more debt from a [future] wedding, have increased monthly expenses from having kids, buy a newer car, or finally give up apartment-style living to purchase a home. Either way you spin it, having increased monthly expenses with a high debt burden can make building wealth quite challenging.

Overall:

As someone who wants to build wealth, I recognize the ways my love for medicine has impacted my ability to reach financial freedom in a timely manner. Nevertheless, I don’t regret anything. With good money management, I can overcome the obstacles set before me and still reach my financial goals. Even with its disadvantages, I’m glad I choose to go into medicine.

Money Tips You Didn’t Learn In College

Money Tips You Didn’t Learn In College

Be strategic about using credit cards. While having access to credit cards can provide added “protection” during emergencies, it also can be quite dangerous. I don’t know about you, but knowing I can use a credit card to pay for almost anything I want tests my self-control in ways I could have never imagined.

5 Things To Do As A Young Professional To Set Yourself Up For Financial Success

5 Things To Do As A Young Professional To Set Yourself Up For Financial Success

Learn about finance. I get it. Finance can be boring. You don’t want to spend the free time you barely have studying a subject you don’t really like. Hopefully this site can give you some quick tips about finance so that if you merely browse the info on this site you will have some semblance of what to do. Plus, if you want even more information you can use this site to find the resources and tools you need.

You should start caring about money

You should start caring about money

I know, I know finance is “boring.” It is “not your thing” and you plan to just “hire a money person” take care of everything for you in the future.

I hear these excuses and more from my classmates, friends, and other young professionals I come across daily. In the words of famous author Robert Kiyosaki “You think just because you will have a high-income job that you don’t need to worry or learn about money, but that’s wrong. Truth is, most people who make more money just get into more debt”  

Why I started learning about money, despite my [guaranteed] doctor salary

Why I started learning about money, despite my [guaranteed] doctor salary

How could I, a person with nearly $200,000 in student loan debt, even begin to think about financial freedom, investments, or retirement plans when I had no job and was still in school?

Truth is, I had to start somewhere. I simply couldn’t afford not to. The more I waited to educate myself on money management, the longer I would spend making bad financial decisions that could dig me deeper in debt and delay my life of prosperity. Things needed to change and they needed to change now.

Money mistakes to avoid as a graduate student or young professional

Money mistakes to avoid as a graduate student or young professional

Don’t take out more loan money than you need. Figure out your monthly expenses (rent, food, transportation, gas, school expenses, incidentals, etc). Only take out in loans the amount that you need and do so at the lowest interest rate you can find. Although it’s nice to have “just in case” money, for emergencies or unexpected expenses, most of us just end of using the extra money for shopping trips or vacations. So unless you have an unprecedented amount of self-control, it is probably best to only take out what you need.