Here is this week’s rapid response report. Included are some links and useful information curated for busy professionals.
+ Private Schools is Becoming Out of Reach for Middle-Class Americans: Private school for our children is very important subject for us. We spend a ridiculous sum of money to send our kids to private school each year. I am always amazed at how middle and lower-class families manage to afford the tuition.
+Income Equality Has Continued to Rise: I wonder if as physicians, we are losing touch with our patients. I see this divide manifest itself in the health of our upper and lower class patients. When I see this, I begin to wonder about the future and how long this divide can continue to grow?
Here is quick roundup of some of the awesomeness I ran across on the web this week
+Amazon Prime Day Was a Monster: Part of the reason the name of this blog is Doctor-in-Debt and not Doctor-retired-on-the-beach-by-now is Amazon Prime makes shopping lazy in our house.
I don’t know about you, but by the time I go to work and come back, it seems like the 2-day shipping is already at my doorstep.
+Why Simple Beats Complex: This concept works at the hospital as well as your investment account. We get caught up in making things so complex that they are sure to fail the first time we encounter adversity.
One of my jobs in the hospital is to make our operating rooms simple so that complex surgery can be safe for our patients.
The important point here is less Is more. Too much is just as bad as not enough.
+ For Those of You With Children: If you have kids at home, you are probably familiar with Walter Mischel’s Marshmallow Test of self-control. Apparently, 4-year-olds from Cameroon performed much better than 4-year-olds from Germany.
The study calls into question Western assumptions about ideal parenting style.
+My New Favorite Blogging Tool: For the readers who are also bloggers, This is my new favorite blogging tool. I have never been a great writer, which is terribly ironic considering this little bit of fun I have going on here. It has been a gem at helping me with my spelling, grammar, and basic sentence structure.
Check it out if you were not the best English student in school!
Have a great weekend and thanks for following along,
This post was proofread by Grammarly
Early July is an exciting time in teaching hospitals across the country. A new batch of medical students suddenly makes the transition from debt accumulators to debt repayors. According to some statistics, the average medical student now has over $180,000 of debt when they graduate from medical school, and they are woefully unprepared to manage it. Debt management is not covered in medical school, and sound financial advice for new residents is rarely found on the agenda of new resident orientations. Even if it was on the agenda, most new residents I work with are not worried about their debt; they are concerned about being on call for the first time!.
If you have school age children, investing in your children’s education is one of the wisest investments you can make. There is no greater head start to success you can give your children. Education is also one of the most expensive decisions you can make. There are seven reasons why physicians spend tens of thousands of dollars a year to send their children to private schools despite the high costs.
Is the cost of private school for your children worth the investment? Like most financial decisions, the answer is, it depends. Let’s look at a young physician family with three children at home.
As an employed physician, are you tired of seeing half your paycheck go to taxes? Employed physicians face a lack of tax-sheltered savings space compared to their business-owning counterparts.
After you max out your 401k/403b, there are few options for tax-deferred savings. There is an option offered by some hospitals and health systems, the 457(b) plan.
On the surface, the 457(b) plan appears to be just what employed physicians need, more tax-deferred savings space!
How are you today? The common refrain we greet each other with, rushing to the next pressing item of our day. More often than not, the response has become “busy.” You likely respond with it yourself more than you would like to admit. Being busy seems to have a positive connotation that we associate with being important or doing well. Because of these positive connotations, we often forget to consider the high costs of being busy and find ourselves in constant motion.
As a high performing professional, balancing your expanding responsibilities at work and your family at home is challenging. If you are working on a side hustle, then there isn’t’ any time left over. You have too much work and too little time to fit it into.
All this busyness has costs. You intuitively know this, but the list of costs doesn’t show up as a line item in your budget. Many of them are subtle and only show their true cost over time.
If you take the time, you find that it adds up to a significant amount of money each month.
Have you stopped to think what you could save by slowing down?
How is your financial health? Are you financially ill yet you don’t have any symptoms? Without regularly checking your financial vital signs, you could have a lingering problem for years costing you thousands of dollars and not even know about it.
When you visit a doctor for a clinic appointment, one of the first things that happens is a nurse will take your vital signs. Height, weight, blood pressure, heart rate, oxygen saturation, pain, and temperature. The physician uses these vital signs, along with the physical exam and other information to make the diagnosis and guide your treatment.
Your financial vital signs are similar. They can be used to diagnose and treat trouble with your personal finances. They include things like your monthly budget, savings percentage and debt to income ratio. Your should record these numbers on a regular basis to trend how you are progressing on your goals.
As of 2014, there were a dozen medical schools with the AVERAGE student loan debt over $200,000. I work with some residents that finish their training with over $500,000 of student loan debt. It has been stated many times before, but this is a major problem for our generation of physicians.
The average millennial physician’s starting financial situation is so much worse than previous generations that they should not be buying a home until they are five years out of training and have their student loans under control.
We could be outraged over this unfairness, but that will not change our circumstances. Instead, you are going to crush that debt on your way to financial independence.
We have to live life as it is, not as we want it to be.
Welcome to the first Annual Letter for Doctor in Debt. Now that 2016 has wrapped up, and we are just hours away from a new year, I cannot help but get excited to see what 2017 will bring. Before we kick off next year, let’s see what this year brought us.
What I Accomplished in 2016
2016 was a year of action for me. I tend to be a perfectionist by nature, and this trait worked well for me in school and at my day job as a physician, but waiting for perfection as a writer is counter productive. I had started then stopped the process of blogging at least a dozen times, but 2016 was the year that I sat down and made it happen.
What is a Personal Line of Credit
A personal line of credit is an unsecured revolving account with a variable interest rate allowing you to borrow money as you need it. Essentially, you can use it as a credit card to cover significant expenses at places that don’t take credit.
The Major Benefits of a Personal Line Of Credit:
First, I would like to be clear that you never want to borrow money unless absolutely necessary. I use a personal line of credit to smooth out major expenses and want to share what I learned looking for and setting up my account.
Warning: If your problem is an imbalanced budget, a personal line of credit is not the answer. Borrowing for routine living expenses is a sure-fire way to end up in the poor house.