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How Does Someone End Up $1,000,000 in Debt.

I am an early to mid-career physician in a mid-sized city.  I was raised in an agriculturally dominated community on the outskirts of my current home.   With the guidance of my parents, managed to use hard work, public education, and scholarships to become the first physician in my family.   I managed to accomplish this and reach medical school debt free.

In medical school, I was introduced to the concept of student loans.  At that time,  tuition and student loan debts had not exploded like they have today.  The concept that someone would just deposit thousands of dollars in my account to pay my tuition and to live off of while I was able to spend my hours studying was a blessing and a curse.  I would have never been able to pay for medical school without those loans but I never understood the true impact of that debt until years later.

I managed to finish medical school with under $200,000 worth of debt.  I quickly managed to consolidate the debt at some of the lowest rates in years.  The common thinking was at 2.875%,  what is the hurry?   Just spend your money on something else, it’s free money!

An Auto Loan Showed I was Bad at Budgeting

Looking back, it is obvious to see the errors in my personal finance decisions.  Like most poor decisions, the problem wasn’t faulty logic around finances, but faulty emotions.   I started residency across the country, but the truck that I had eeked through undergrad and medical school was not going to make the journey 3000 miles away for residency.

My old truck had left me stranded on more than a few occasions.  As a student, in a city I knew well, it wasn’t’ a big deal.  I could get it towed to a repair shop that knew me and the truck and I was late for class a few times.   It was easy to roll with the occasional breakdown.

Now, a new city with no contacts and the expectations of being in the hospital well before dawn, that made me nervous.  Thinking I was being responsible,  I wanted reliable transportation and nothing was more reliable than a new car.

The new truck lasted two years before I finally realized the loan payments, insurance, and parking fees were crushing my resident budget.

Now well established in my new city and no-one to care for besides myself,  I quickly sold the truck and commuted by bike for the next decade.  I paid off my auto loan and was debt free except for student loans.

A House Compounded My Budgeting Problems

Shortly after starting my career,  we bought a house.  A 100-year-old money pit of a house.  We loved the wood floors and old plaster but didn’t appreciate the financial implications of knob and tube wiring and outdated plumbing.

We also didn’t appreciate the adage that any time a contractor gives you a quote,  multiply it by 1.5 to get your real cost.    A couple hundred thousand dollars on home renovations put us over the $1,000,000 debt mark.

We Still Have Work To Do

I got here by heading a stereotypical “Rich Physician Family.”   The choices that we made early in my career were made without enough thought about long-term financial implications.

We did it because it seemed to be what everyone else was doing.  Little did we know that many of our peers are making the same mistakes.

Now, seven years out from the end of training I realize the folly of our decisions.

The choices we made are the same choices that most middle-class families make, the magnitude of the numbers is what sets them apart.

Follow along as we dig ourselves out from having a combined million dollars in debt to financial independence.   It will not be easy but,  let’s see how long it takes for us to go from a million down to a million up with hard work and thrift.  I officially started the journey in May 2016.

Warnings & Examples

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