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The financial Achilles heel conundrum of doctors

Posted on July 28, 2018January 30, 2021 by SmartMoneyMD

The most common hurdle that doctors have to becoming rich is overspending. The notion that good income guarantees great buying power not only delays building financial worth but also confines doctors to lengthier careers than needed. The solution, in a nutshell, is to make sure that we make prudent financial and career choices to complement our financial velocity. Easy, right?

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The reality is not so simple. Psychology is fascinating. Human behavior can function, at times, stochastically, yet can be very much predictable. Most people entering the field of medicine know that they ought to end up with relatively high incomes. Does a potentially high income actually harm our financial choices? Is the promise of high income a financial Achilles heel for doctors? If we can tackle this belief, we’d be able to secure a smoother path to financial success. Let’s look at two scenarios:

Wealth begets wealth

There is truth in the saying, “the rich get richer”. The best way to have wealth is to be born into it. Your hand is loaded with face cards, and if you are prudent with your life choices you can bring home the entire pot. When I was in medical school, my net worth was a solid negative six figures. Common financial choices I faced included whether to get the combo meal at Five Guys or just a burger so that I could cut the cost of my lunch down by half. Do I take the flight with two layovers in order to save $50? I lived in the present, and that meant finding out ways to reduce my student loan burden. Even with an income as a resident, I had no desire to borrow from “future me” for a better lifestyle because that would mean having less to repay my student loans.

One of my classmates frequently bought real estate thousands of miles away. He played the stock market in residency, and ran apartment rentals he owned on the side. We live in America. A $50,000 resident salary can fortunately be leveraged for the right investment. But I am probably too conservative to risk my residency salary for greater riches especially if I’m going for the burger without the drink. While I may never know his financial situation, I doubt that he solely relied upon his salary for his activities.

Likewise, one of the radiologists I know bought a $1100/square foot apartment in upper Manhattan straight out of residency. Six months later, he bought the adjacent unit and combined both units together. Radiology is a high-paying medical field, but this endeavor clearly had backers.

Once I am out of this cone, I will be unstoppable!

Those who began with greater financial firepower are generally more willing to take bigger chances. Sure they can stand to lose more, but they can gain a whole lot more with the appropriate risks. In this scenario, the thought of becoming a doctor made no impact on a one’s financial decisions.

What about everyone else?

I have a coworker who has an uncanny ability to borrow from her future self. Mercedes in residency. House in residency. Nicer house with world-class vacationing as an attending. Vacation home on an island. As far as I know, she doesn’t utilize balance transfer checks or credit card debt. But I cringe at the number of big ticket expenditures she is able to make without much second thought.

The fascinating aspect about appearance is that no one else would have any idea how much net worth exists behind the facade. I asked her recently how she was able to manage a seemingly envious lifestyle, and she bluntly replied that it was because she knew that she doctors earned good money. The mindset was cemented long ago, and she knew to borrow from future self.

This mentality actually is quite common most of my coworkers, although all of them have certain degrees of financial compunction. Several of them proudly proclaim that they contribute the maximum amount to their 401k’s, and still have plenty to go around. The problem is that saving solely through a 401k is insufficient at the spending rate that most doctors are accustomed to. Why don’t we realize it?

Are doctors delusional about their earning potential? Some of us truly are, but the majority of us are simply misinformed. You don’t know what you don’t know. Until you sit back and do a few simple calculations, you won’t really know how much or how little your bank account has. Only then will you be able to protect your financial Achilles heel.

Track your progress towards financial independence with Personal Capital. Sign up for a free account. Shed your financial Achilles heel!

Happy doctor basics for the early career doctor

Posted on July 21, 2018January 30, 2021 by SmartMoneyMD

It’s always nice to have an escape plan for happiness. As a doctor, you don’t want to be tied to your practice at age 68 because you still have to fund your daughter’s college education. If you are practicing medicine at that age, you’d want to be doing it because you love being a doctor. Fortunately the effort you put into becoming a medical doctor does pay off with a relatively good income, no matter where the healthcare system ends up. This allows you have that luxury to control your financial future. All you have to do is to play your cards right.

I often overhear discussions in the doctor’s lounge on how to “get out of medicine”. Sometimes I get sucked into the discussion peripherally. There are often two categories of doctors who seem to get involved: (1) late-career doctor who is still working due to financial needs, and (2) early career doctor past her happy-that-i’m-making-some-money phase but realizes that the hospital is paying me pennies on the dollar for my work. It’s unfortunate that there is a lot of negativity floating around, but the key to longevity in our profession is to focus on the positives while crafting what you envision your future to be.

Goals for the early, early career doctor

You’ve finished either residency or fellowship! Congratulations! Maybe you’re even board certified now. Perhaps you feel very comfortable with your specialty already and are willing to tackle all of the challenging cases that are thrown at you. The truth is that you still need a few more years to really become a hotshot. This is your opportunity to become highly proficient in your specialty. This is what you should focus on.

You might not be getting the best salary for your field, but remember that this is your post-training training. If you’re lucky, you might even find a few mentors who could help guide your way. Watch out for lifestyle inflation, start repaying your loans, and you’ll be ahead of the game.

All doctors need to focus on their savings rate

There is evidence that your percentage savings rate impacts your happiness level. This is independent of your income. If you are the paycheck to paycheck type, now is the time to make the change. You will never be happy with a $50,000, $200,000, a $500,000, or even a $2 million income if you grow into your earnings. The wave doesn’t last forever, and we all will need the prepare for that day. I’ve met a few ER doctors who travel the world, live in luxury, but always seem unhappy. Some of these gals (and guys) are picking up more shifts in the process. They also seem pretty unhappy during these shifts too. Maybe they have a big purchase coming up, who knows. Most ER doctors earn more and work less than the average internist, so income probably isn’t even a problem. Maybe the problem is really a spending problem.

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The beauty of focusing on a savings rate is that you will never exceed your earnings. Your expenses will also be tied to a percentage of your income. If you don’t cheat yourself, you will always be able to save. Your lifestyle can improve as your job position grows, but you can keep ahead of your savings by controlling the percentage of income you spend. Some of the more popular money bloggers out there actually treat their savings rate like a game, and track their savings rate obsessively every month. Fortunately, we don’t have to to micromanage our savings rate in order to win the finance game. Slow and steady wins the race, and doctors don’t have to have to play any strategic financial game in order to win. Focusing on your savings rate will get you far into your financial career.

Sometimes being basic works. Don’t try harder than you need to be happy.

Financial happiness comes automatically with the appropriate savings rate

Financial happiness appears to correlate with savings rate. The more you save, the less you become dependent on your day job. Early in your career this tends to be more psychological, although staying ahead of your basic financial needs builds your financial independence. The less you depend on your day job, the happy you will become.

Even if you never receive a raise for the rest of your career–and you might not in this existing healthcare climate–you will be able to estimate how much you will have saved when you decide to retire. If you need more for your nest egg, you can increase your savings rate by spending less or earning more. Easy peasy.

Track your progress towards financial independence with Personal Capital. Sign up for a free account. You’ll love it!

Do doctors need to establish a trust for their heirs?

Posted on July 7, 2018January 30, 2021 by SmartMoneyMD

One common question that doctors face in estate planning is whether to establish a trust. This topic gets brought up in the doctors lounges, especially after someone gets a pitch from their financial planner. Most doctors who bring up the topic are quite enthusiastic, and cite that doctors need a trust because “we make a lot of money.”

Fair enough.

Medical students and residents probably do not need a trust

I’ll get this one out of the way. If you’re still in training and have very little wealth tied to your name, you don’t need a trust. You can always establish one later. If you actually need a trust while you are in residency, then you already know why. In this case, your parents probably already have set one up for you. I had several classmates in college and medical school who did have living trusts, and it was obvious. It’s good to have old money.

Establishing a living trust doesn’t necessarily break the bank

Doctors (and everyone else) can have strong opinions. Some of us can’t be convinced that we are wrong. I’ve long decided that my job in this world isn’t to convince everyone else who is right or wrong. Living trusts, along with insurance policies, real estate, and gold are various financial vehicles that can make sense for some people but can instigate argument to no end.

Establishing a living trust won’t break the bank. If you decide to do it yourself, you might spend a few hundred dollars. If you go through official channels with a professional, it might cost you several thousand dollars. If you must, put in a few extra shifts in the ER or cut back on some of your other spendings. It’ll be healthier for both you and your coworker who is trying to talk you out of getting one.

The fundamentals of living trusts

In a nutshell, living trusts are written so that your assets are distributed according to your wishes after you are no longer able to make decisions. You also have to have some net worth that is to be distributed to your heirs too.

Let’s rephrase it:

You probably won’t be enjoying any of your hard-earned assets when the trust comes into play. So the entire premise in establishing a trust is so that your beneficiaries will benefit from your demise. If you wish to have a clear allocation of your assets to those other than your spouse or heirs, then you can specify on your trust.

He does not have a living trust to rely upon!

Won’t a will give me the same results?

Once you die, your will has to be executed through probate court. The exact policies vary per state, but the intention is to make sure that your debts are paid off prior to distribution of your assets to your heirs. This often does not happen immediately and will incur attorney fees.

A living trust allows heirs to bypass probate courts, because the assets in the trust are considered to be part of the trust in the eyes of the probate court (but not to Uncle Sam). Interesting, eh?

There are two types of living trusts: (1) revocable trusts, and (2) irrevocable trusts. The main difference is that the designated instructions in an irrevocable trust cannot be changed once you’ve finalized it unless the benefactor grants her permission. The entire premise behind an irrevocable trust is that you established it for tax reasons. This means that you have enough assets to benefit from this vehicle. Most doctors aren’t going to fall into this category because we probably aren’t going to reach the estate tax limits. In 2018, the gift tax limit is over $11 million. Even if your net worth exceeds this amount, there are plenty of ways to draw down your assets beforehand.

Revocable trusts provide an instruction set on how to handle one’s assets during her lifetime, once she loses her ability to make financial decisions, and death. The person who establishes the trust is labeled the “grantor”. In a revocable trust, the grantor has full control of the assets of the trust during her lifetime, and can add or remove assets into the trust at any point. All taxes from the trust are treated as pass-through to the grantor.

Where the revocable trust comes into play is when the grantor is unable to manage the assets or dies. The designated trustee in the trust will then take over and execute the instructions given by the grantor accordingly. This transition proceeds seamlessly without any involvement of local probate courts. Of course, the grantor’s debts will still have to be paid off, but someone (not the grantor) will end up saving several thousand dollars and the beneficiaries will likely get the inheritance more quickly.

There are also nuances and clauses that can be attached to living trusts, just like in any job contract. What might be most helpful for some doctors is a spendthrift clause. Suppose that you wanted your child’s inheritance dispersed annually until she is an adult instead of in a lump sum. You can specify the terms in the spendthrift clause of your living trust down to the tiniest details.

Interesting material, although it is somewhat morbid to think about it. After reviewing all of the stipulations, I’d imagine that whether to establish a trust is going to be a 50/50 split for doctors.

Do you have a living trust?

Debt-free medical school a financial blunder for doctors?

Posted on June 30, 2018January 30, 2021 by SmartMoneyMD

Education can be expensive. Higher education can be even more expensive. Even partial scholarships can be deceptive as one might opt for a more expensive school for the sake of redeeming “free money”. As a student, I had no financial understanding of return of investment when I was considering higher education. All in, I plowed through more than a quarter million dollars in my college and medical school after substantial scholarships and grants. And that was a long time ago. If you are finishing medical school today funded solely on loans, you’ll likely owe slightly south of $200,000—if you attend a private school expect to add in another $100,000 to the tab.

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Fast forward to today. My medical school alma mater recently announced that it will become completely tuition/debt-free for all students. That’s right. Zilch. You don’t have to be surviving on subsistence living either. No need to strategize on Public Service Forgiveness Loans either. If you are admitted, your education will be free.

The cynical side of me says that the medical school did well for itself: enough of its alumni have become hotshots so that its scholarship fund is big enough to fund its future graduates. That’s a nice pot of money, especially since tuition today is over $65,000 a year. Getting into medical school itself is challenging enough; going through it without paying a dime is like winning the lottery. The rarity of this windfall is akin to that of Qatar discovering oil and natural gas…big.

The motivation for a debt-free medical school

The elimination of educational debt confers significant advantages for medical students. Remember the Hippocratic oath? It mentions nothing about prepayment, prior authorizations, Bugatti’s, or care contingent upon reimbursement. We chose to become doctors in order to care for others. That is how medical education was intended. The reality, however, is that we also have to make decisions based on practicality. Imagine going through medical school supporting a family with 1.5 kids and studying nearly every waking moment of your day? Your spouse wants to go back to work, but you contribute nothing to the cost of day care. Many medical students contact me simply to ask about the compensation and lifestyle of a particular specialty. Many of those students are drowning in debt. You’d better believe that if you’re half a million dollars in the hole, you probably aren’t going to be tooting the virtues of pediatrics, no matter how much you love children.

If you wipe out educational debt from the picture, you might be more inclined to choose a potentially less lucrative but more enjoyable career path for the long haul. Perhaps you’d end up realizing your calling as a geriatrician and do great work for the elderly.

Debt-free medical school lifts a psychological burden as well. As a medical student, I was always torn between budgeting my time and saving money. Do I study an extra hour and buy take-out for dinner, or do I need to sacrifice precious study time in order to cook dinner? Do I spend my Sunday mornings buying budget groceries for the week or enjoying my limited free time? Without the big price tag attached to medical education, we might even have happier students.

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A happier person makes a happier doctor. Do happier doctors make healthier patients? If you love what you do, you’ll likely be a better doctor. When educational debt is eliminated from the picture, society benefits from having a better doctor.

Debt-free medical education is bad

How can free ever be detrimental?

Because free implies the absence of cost. Free is easy. Easy doesn’t fire the synapses in our brains. And we all know that our brains need to fire in order to learn. Remember the college chemistry exam that you didn’t study for because you thought the class was too easy? You’d bet your tail that you remembered to study for the rest of that semester. No matter how conscientious we try to be, human nature dictates that we are less alert if we are in a comfortable situation.

Free medical education will make you complacent.

Being in debt allowed me to understand the importance of finance and how much doctors are worth. Society does not value doctors adequately. It is appalling to compare my medical school experience with one of my friend’s business school experience. My research job the summer after my first year of medical school granted a $3000 stipend for three months of living expenses. My business school friend secured a two-month internship with a salary of $10,000 and free meals! Neither of us were truly viable in our respective professions as students, yet society was able to value a business trainee much higher than a healer in training. Would I have cared if medical school didn’t come with a big bill? Maybe not. If weren’t already financially invested in medical school, I might have jumped ship straight to a business degree.

Paying for medical school teaches you how much you are worth

As service professionals, doctors exchange their skills and time for money. Fundamentally that is the only way that we are compensated (side hustles and real estate aside). Our earning power is limited by time. And healthcare is constantly devaluing our time. You don’t earn more by spending an extra two hours of your day charting. Quality metrics are great in principle, but the goal of our profession is to provide emphatic expert care.

Having been in debt makes you hungry to succeed in life.

I don’t think that I would have such a profound opinion of the value of our medical skills if medical school did not come with a price tag. Knowing that I invested a significant portion of my youth and finances towards medical knowledge has allowed me to negotiate a fair salary for my time and experience.

The cost of medical school teaches frugality

After digging myself in a hole of student loan debt, I knew not to crank up my luxurious expenditures when I started making good money as an attending. I wanted no chance of reliving those days. Would I have become as conscientious about money if medical school were free? No way.

Obviously medical school debt isn’t the only way to learn frugality, but medical students frankly don’t have many opportunities to learn it. Most doctors never hold a real job before becoming a high-income doctor. Our training is arduous and takes many years. Sometimes the only thing that gets me through my long days of surgery is the thought of buying an overpriced outfit or car. What often reels me back to reality is remembering that medical school came with a big price tag that took a lot of effort and sacrifice to repay.

Do you agree on the principles of a free medical education?

Why do young doctors hate medicine so much?

Posted on June 23, 2018January 30, 2021 by SmartMoneyMD

There is a perpetual mentality that generations after our own seem more entitled than we ever were ourselves. Since when did a second grader ever need the latest cellphone? Avocado toast, month-long honeymoons, extended vacations after residency, and baby moons are just some of the luxuries that prior generations were unlikely to have experienced. Maybe society is simply more advanced, or maybe I’m just getting old.

In the medical world, more doctors are asking for more time off, shorter workweeks, less call, and more pay. No way would younger doctors willingly sign onto a job with a call schedule of every other day. Is quality of life that much more important to us even though many recent graduates have upwards of a quarter million dollars of educational debt? I once had a senior partner who opted to take more hospital call when he was in his thirties so that he’d earn more to support his family. What happened to good work ethic?

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I see this trend in doctors not only in generations after my own, but also in a few years my junior. They seem to be working less, wanting more, but all seem to hate medicine. Some of these gals are doing amazing things, like resuscitating dead people, putting in new heart valves, and curing cancer. What is there not to like?

What gives?

Medicine offers a lot to be disgruntled about.

If you remove the aspects of patient care, healing, and all of the reasons why we became doctors, there really isn’t much left over to praise. Prior authorizations, meaningful[less] use, patient satisfaction scores, inordinate amounts of charting, useless meetings, and reimbursement cuts are just some of the recent inventions in medicine that erode the enjoyment out of medicine. Autonomy frequently gets replaced by mandates. How sad.

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The irony about these unfavorable healthcare mandates is that most of our administrators tell us that with a little more hard work, we can accomplish all of the expected tasks. Most doctors are not opposed to working hard—we did go through a decade of servitude in order to master our specialties—but the problem with the ancillary tasks associated with medicine is that there is little perceived return in our effort.

The intention of these time consuming tasks associated with medicine is primarily to improve safety and cut costs in the healthcare system. There are so many layers in the bureaucracy that it is essentially impossible to determine whether working doctors harder is going to pare down the cost of healthcare.

Follow the Benjamins and you will realize why doctors are unhappy

Capitalism. I love it. If it works well, there is a direct correlation between hard work and return. Unfortunately, capitalism doesn’t always work if you’re an employed physician. The reward for completing more charts and seeing more patients doesn’t always translate into direct financial gain. In fact, if you save the healthcare system more money you might actually benefit the guy in the C-suite or the company’s stockholders first.

Young Padawan with $300k in debt has a lot to learn from the elders

Several weeks ago, I was in a meeting where one of the administrators in my organization (who holds a pseudo-degree from an online for-profit institution) alluded that one of the trauma surgeons ought to be working harder given that the group was paying him $X. That amount was about a third of what a normal trauma surgeon ought to be earning. I was blown away that this trauma surgeon was even willing to work for a fraction of what he is worth. I was even more shocked to hear that the administrator thought that the surgeon was overpaid.

These instances reflect that people holding the power in healthcare still believe that doctor salaries play a role in cutting down the cost of healthcare. One hospital that employed 60 doctors reported a deficit of $87 million. There is a problem when you think that cutting your neurosurgeon’s salary is going to solve that problem.

Do doctors who aren’t considered young have the same sentiment?

In general, we all do. The difference is that doctors who have been working twenty or thirty years are in a different point their careers. Most of their children who are out of the house and even self-sufficient. Some of them even practiced medicine in the heyday and hopefully invested their earning appropriately. Maybe some of them are financially independent. They are no longer in the earning phase in their careers, so many of the burdens that we endure do not necessarily impact their long term career plans. If the hospital mandates too many EHR clicks or an excessive number of patients per day, they can just hang up their hats and ride off into the sunset.

What can younger doctors do in this situation? You already know the answer if you’ve read this far. Make it so that you, too, can ride off into the sunset if you have to.

How doctors should be using the Internet to get smart…and rich

Posted on June 9, 2018January 30, 2021 by SmartMoneyMD

The beauty of building stealth wealth, saving more than you spend, and achieving financial independence is that the knowledge to achieve all that is freely shared among the online community. Communal knowledge is power. If there is some convoluted financial calculation to be proven, you can bet that someone online will have the time to do it. If you have a money question that needs an answer, you will likely have more than one anonymous online surfer who will be more than willing to offer you her opinion. Make a mistake, and you will also be put in your place. I love the Internet!

Medical knowledge cannot be mastered through online forums

This is my soapbox. I like that our search engine engineers perform miracles to scour the Internet for answers. Medical knowledge is free to be absorbed by the masses, and improved medical knowledge by the masses has overall been positive for our society.

The problem with medical knowledge is that the material is vast, and there is probably a reason why it takes at least nine years from the start of medical school until finishing general surgery residency just so that you can remove someone’s appendix. What you can find in any textbook or online forum simply cannot substitute for the pain, lost sleep, and diligence in those nine years of training.

This is where an educated layperson can go wrong. How about engineers charting their PSA scores and arguing with you the best way to treat their prostate cancer? (Looking at you @WallStreetPhysician). Or a self-taught expert in herbal medicine substituting their U100 insulin with cinnamon tea? We’ve all had our cocktail hour stories of getting in discussions with our patients who, if they had gone to even 6 months of medical school, probably would have realized that their reasoning is puerile.

I once had a patient whose stomach had no antrum from prior surgeries who was severely vitamin deficient. He claimed that doctors were trying to “poison” and “torture” him from the megadoses of parenteral vitamin shots while a simple “low-dose” pill with plenty of water would have done the trick. He bought his pills from an online retailer in India.

One answer: first-pass metabolism. (The bit about mail-order vitamin supplements isn’t worth my energy to discuss).

I know I speak for all surgeons that after mastering this model, caring for horses will be a piece of cake!

Doctors can (and should) use the Internet to further their lay knowledge

Basic knowledge, however, can be gleaned from self-education. This can be done quite effortlessly through online forums. Doing so can save you a lot of headaches and money if properly applied.

Case in point: Your air conditioner breaks down in the summer. The local HVAC guy, who provides free estimates, gives you an itemized quote for a repair job. Even if you knew nothing about air conditioners, you could probably find the average hardware store price for the equivalent part. When you realize that the markup cost is like 9000% of the retail cost, you could probably ask the repair man a few questions. Hint: folks in this line of work rarely buy parts at even retail cost. Even if you were completely off base with unfounded questions, you hopefully learned something.

We get asked unfounded questions all of the time in medicine. I’ve been asked by patients to operate at a “cheaper” hospital or to decrease the price of surgery, when the patient very well knows that I work for a hospital and simply have no authority over the health insurance company to make these calls.

Do yourself a favor and invoke your resourcefulness to your advantage.

Use your resourcefulness to get rich

Doctors are in demanding professions. Some of us are in specialties that consume more of our free time, but the beauty of Internet knowledge is that you can learn as much or as little as you choose. Pick the highest yield tasks to outsource, and deal with what you enjoy.

You might also like: The calculated approach to outsourcing your life

This is how the wealthy become wealthier. If you plan to take out a $1 million mortgage for your McMansion, you’d benefit from learning a little bit about mortgage lenders, points, and rates even if it takes some time away from your golf game. If it only takes a few hours of online surfing to save you tens of thousands of dollars on a home renovation job, you ought to do it. Eventually you won’t be able to afford the extra back pain from pulling extra shifts in the ER to make up the difference in savings.

Remember, you were quite resourceful to make it through medical school and residency. Think outside of the box. You’ve made it into a career that confers good income. Extend that income even further by learning to be smart with your finances. Surprisingly, it really doesn’t take much time.

What knowledge do you typically use the Internet to acquire?

What to do when your expenses exceed your budget

Posted on June 2, 2018January 30, 2021 by SmartMoneyMD

It can happen. It’s happened to me time after time. I remember in grade school, lunch meals were $1.25, and I usually brought $1.25 to school every day. Except the many days where I forgot to bring an extra quarter or simply lost the quarter that I so carefully kept in my front pocket. Those were the days where my expenses exceeded my budget.

Fast forward several decades into medical school. I was purchasing a latte and a pastry from a cash-only local barista, and ordered a ‘tall’ cup. Rookie mistake. On their menu ‘short’ was the smallest size, and I only had $10 to my name. I exceeded my budget once again (I opted not to take the pastry so that I actually had enough to pay).

Fortunately both of those financial faux pas were trivial, but recurrent large expenses can leave you in financial ruin especially if you are in your later years of your career. These are situations that we all hope to avoid, but just because you crushed your board exams doesn’t mean that you won’t make financial mistakes. Exceeding your budget is incredibly easy, with credit card companies extending incredible lines of credit to doctors who otherwise earn slightly more than minimal wage.

Don’t allow your expenses to exceed what you can afford

The easiest way to bail yourself out of budget-breaking activities is not to get yourself into that situation. If you don’t have the money to buy something, then don’t do it. With the number of physician bloggers out there, it’s clear that many of us have some sort of fundamental understanding of frugality, whether from our upbringing or experience. I don’t expect the majority of the online crowd to have a spending problem, but the majority of doctors still do not have that mindset.

If you aren’t sure if you have a spending problem, then do yourself a favor and figure out how much you have leftover every month after your expenses. Track your expenses on free software like Personal Capital. You can see how much is coming in, and where your hard-earned dollars are going towards.

What can you do if you do end up overextending your pay rate? While I hope that no one ever gets herself into this situation, but the following are some short-term strategies to dig yourself out of a financial disaster.

Balance transfer checks can actually bail you out

I get these blank checks relatively frequently in the mail from credit card companies. Some of them actually have 0% interest for even two months. After that, mega-interest rates kick in and destroy any hope of repayment. If you are in a high-interest repayment sort of situation, perhaps from a credit card or [loanshark], you can potentially negotiate a balance transfer to buy you a month or two to get your act together. I kid you not—I have seen doctors use these to make short-term repayments on loans.

Figure out what is bleeding your savings

The next step is to figure out what is destroying your bank. As most doctors generally have high incomes that negate most bad financial choices, it usually isn’t enough if you have multiple streams of big-ticket expenses. Multiple vehicle leases, multiple mortgages, bad real estate investments that require recurrent contributions, kids’ education, and expensive hobbies are some of the items that can destroy you. One of the doctors that I work with actually cut short her lease on a Mercedes SUV and purchased a Honda Civic (I’m not sure of the circumstances, but I suspect it was financial-related). Plan to unload any property that’s bleeding your savings. Too many handbags or outfits in storage that aren’t getting use? Consider unloading them on ThredUp, and figure out how to stop making unnecessary purchases. You can always ease back in slowly once you get your financial act together (try not to).

Puppy strollers can definitely bleed your earnings

Expenses for your children are harder to deny, but remember that financial support does exist for education. This is a valuable lesson for everyone to realize that there is always a cost-benefit analysis involved with education.

You might also like: Is a degree from a prestigious medical school advantageous for doctors?

Your kids will have to learn that few opportunities come for free, and the earlier that they become involved in financial decision-making, the more likely they will be equipped to make financial decisions for themselves. If they choose to go to fancy private primary school, they have to realize that mom and dad had to make sacrifices to make it happen.

Generate more income

If you need extra income to bail yourself out of a financial pickle, you can try to work more. Specialties that are structured around shifts like Emergency Medicine or Hospitalists will be more conducive to earning income. I’ve seen some people take locums positions while on vacation from their primary job too! Working harder isn’t necessary the best long-term solution to our financial problems, but our profession fortunately can help dig us out quickly.

Once you’ve bailed yourself out of short-term financial disaster, head over and read: A financial plan for busy people – finance.

What other ways can you destabilize your budget?

P.S. Try out Personal Capital. It’s come a long way, and does a nice job with graphs and trending on your net worth.