I recently came across a post on Sermo written by a family medicine doctor who claims to earn slightly more than a manager at Starbucks and is over half a million dollars in debt (not including the house mortgage and car payments). His wife apparently is going back to school and incurring additional debt. The rest of his post essentially consisted of contemplating what options he has to get out of his predicament.
Is this guy for real? Last I checked, I don’t believe a store manager at Starbucks earns more than $75k a year. A family medicine doctor should earn at least a six figure salary, which is still a pittance for the level of education needed and debt incurred. Many physician’s assistants command salaries similar to that of some family medicine physicians. Unfortunately, this type of story is common on Sermo, which seems to have become an online venue for doctors to vent. While it’s not possible to verify the validity of his situation, it still does confirm my suspicion that physician debt is alive and well. I truly feel sorry for the guy and hope that he figures how to bail himself out.
He clearly has a spending problem.
Mr. Money Mustache calls it a “hair on fire” situation. Even if his family’s spending habits aren’t horrible, he still needs to cut out any lavish spending habits. If the car payments are going toward new cars, he’d better not be driving a Mexican-made German luxury vehicle that gets 15mpg! I see many doctors actually lease cars, stating that they deserve something new every few years. That’s one of the fastest ways to get yourself in financial trouble. His house should not be a McMansion, and he could even consider renting if his work environment is unstable.
Salmon at $28.99/lb at Whole Foods is definitely out of the question. As are Louboutins for the wife, $400 Burton ski jackets for his kids, or a monthly membership to the local car wash.
The spending problem started with educational debt.
While it’s not difficult to dig yourself into serious debt from medical school, it does take some effort to dig yourself half a million dollars in the hole during medical school. You simply combine a non-miserly lifestyle with a non-working spouse and kids. If you’re going to do that, then you need to have a strategy to get yourself out of debt and avoid financial ruin before you even start your career. I was able to pay off almost $150,000 in debt by the end of my first year of practice earning a low six-figure salary. That was without sketchy arbitrage business with loan disbursements either.
If this family medicine doctor were earning $150,000 a year, I’d expect him to take home at least $100,000 after taxes. I would expect him to dedicate at least half of that amount towards his debt for at least a few years until his income situation improves. His kids should not expect an inordinate amount of financial assistance for college either. The wife should consider helping the family diversify their income streams as well when she is able to. This is unfortunately their situation, but there is still hope.
Don’t panic and formulate a plan.
Doctors need to take some of their own medicine. I often have patients who are a nervous wreck for no reason, and fail to listen or take initiative in controlling their diseases. The “more” proactive ones ask for a magic pill to cure everything while others simply don’t attempt to do anything. Likewise, a debt problem isn’t the worse thing in the world. As long as you have income potential, you can still take control of it. Just formulate a plan, stick with it, and adjust as needed. Rinse and repeat.
What strategies have you implemented to get out of debt or avoid getting into debt?