Best way to address debt repayment as an Attending?

[tegs15]

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A couple recent posts about how/when to begin job search coincide with my recent thoughts about my future financial plans and have got me thinking. I have not been able to find any post addressing this and any help would be appreciated.

Just a little background first: single income earner, non-trad, started undergrad with a family that has grown during undergrad and med school. Attended my State college but went to private med school. All has combined to equal SIGNIFICANT debt (as I can tell, largest debt load of anybody in my med school class), luckily IBR exists during residency. As I will have teenagers upon finishing residency and subscribe to the "Dave Ramsey" debt free goal for my future life. I have been formulating a plan to address this debt burden as quickly as possible and would like some input, especially if anybody has seen or heard of anything similar.

My current plan/hope would be to have 2 full time jobs. Each one working 24hr shifts and 7 shifts per month, this way I would be working 14 shifts a month. The goal being to work 24hrs on and 24hrs off, I know it sounds crazy. I know my sleep habits/needs and feel comfortable with this plan escpecially if they are lower volume EDs where I can sleep 1-3hrs a night. If I can earn $150/hr +, this will allow me to decrease my debt by at least half in the first year. I would work like a dog for 12-18months and then leave one of the jobs.
As anybody ever tried or heard of this? Would it even be possible and am my hourly wage expectations reasonable? If possible, where in the country is it most likely going to work (want to end up in the mid to mountain west).

The alternative would be to find better paying areas and work twenty 12hr shifts a month, but this actually seems more tiring to me, any thoughts? Please feel free to PM me with any suggestions. Thanks for all of your help.

 

[BADMD]

My current plan/hope would be to have 2 full time jobs. Each one working 24hr shifts and 7 shifts per month, this way I would be working 14 shifts a month. The goal being to work 24hrs on and 24hrs off, I know it sounds crazy. I know my sleep habits/needs and feel comfortable with this plan escpecially if they are lower volume EDs where I can sleep 1-3hrs a night.

This plan will kill you. Avoid at all cost. This will take a huge toll on you mentally, physically, and will likely take a large toll on your family. Also, based on your anticipated income, you will have a much lower marginal return on your extra hours. It is very likely that as much at 50% of what your will earn will go to taxes.

As I will have teenagers upon finishing residency and subscribe to the "Dave Ramsey" debt free goal for my future life.

You have to take Dave Ramsey with a grain of salt. While it is important to "Act your wage," debt is not necessarily an evil that must be disposed of as quickly as possible or at all cost. His plan does not really have in mind the high wage earner with a crap load of lower interest, student loan debt.

For example, the interest rate on my Stafords is so low, that at many points in the last 5 years, my rate has been below inflation. I'm sure as heck not paying that off with dollars now when I can pay it off with less valuable dollars later.

Don't forget retirement. Again, based on your student loan rate, it may make more sense to dump your extra money into retirement, especially if you can do it pretax, than to dump it, post tax, into debt.

It is one thing to get the debt payed off so that you don't have huge financial pressures and are at risk of financial ruin with a broken furnace. It is another thing to kill yourself and your family just to get rid of it.

Instead, come up with a realistic plan, if you want to pay things off faster. Build a budget and stick to it. Add extra money to the highest rate debt and snowball it into the others. But killing yourself and your family for it, probably isn't worth it.

 

[doctorFred]

great advice BADMD. although for anyone whose graduated from medical school within the past 3 or 4 years, the idea of interest on debt below the rate of inflation doesn't exist. my "low" interest rates are 6.8 for my staffords, and my grad plus rates are 8 percent (comprising half of my loans.) i think this is essentially the case for anyone who took out loans between around 2005 and 2009.

 

[jbar]

I'm not a financial expert, but the question to ask is 20 years from now will it make a big difference that you payed off your loan in 3 years vrs 6 or 8? i'd also look into if there are options for extra shifts that aren't 24s (which would probably be a little easier on the body and soul) Have you looked at traveling for one of the big companies? You might be able to make a decent amount of extra cash traveling a few days a month.

 

[tegs15]

I'm not a financial expert, but the question to ask is 20 years from now will it make a big difference that you payed off your loan in 3 years vrs 6 or 8? i'd also look into if there are options for extra shifts that aren't 24s (which would probably be a little easier on the body and soul) Have you looked at traveling for one of the big companies? You might be able to make a decent amount of extra cash traveling a few days a month.

So far in my limited experience 24hrs on and then a day off is much better then a string of 12hr shifts. Maybe my preference will change with more experience. But especially if could get a couple hours sleep most nights I think I would be golden. Additionally, I find that I like the regemented schedule verses the chaos of on 1 off 2, on 3 off 1, etc.

Every year I'm accruing 40K+ in debt, so the difference between 3 and 6 years is at least 120K. I'll need to look into the traveling idea and see if it is an option, there is some benefit to sleeping in my own bed every other night though.

 

[tegs15]

This plan will kill you. Avoid at all cost. This will take a huge toll on you mentally, physically, and will likely take a large toll on your family. Also, based on your anticipated income, you will have a much lower marginal return on your extra hours. It is very likely that as much at 50% of what your will earn will go to taxes.

My understanding of taxes is limited and before pursuing this plan I would seek out financial planning/tax advice, but the difference between the highest two taxes brackets is 2%. So anyone (single or married) that makes over 177K payes 33% and if you make over 374K you pay 35%. Additionally the alternative minimum tax (AMT) really muddies the waters but it is safe to say that earning 400K vs. 600K doesn't appear to have any additional tax burden.

You have to take Dave Ramsey with a grain of salt. While it is important to "Act your wage," debt is not necessarily an evil that must be disposed of as quickly as possible or at all cost. His plan does not really have in mind the high wage earner with a crap load of lower interest, student loan debt.

Sadly- current interest on student loans is 6.8+ as drfred mentioned. This equates to $40K+ worth of interest a year.


Thank you for the advice and items I must consider. But have you heard of anyone doing this or something similar?

 

[gutonc]

So far in my limited experience 24hrs on and then a day off is much better then a string of 12hr shifts. Maybe my preference will change with more experience.

Have you ever worked a 24h ED shift? Or just 24+h surgery/IM/OB shifts? Because while those suck, there is always some amount of downtime, however limited. Downtime in an 8h ED shift is a luxury. One of the reasons I didn't go into EM was because I absolutely hate the balls-to-the-wall nature of the work. I like to have a chance to sit down and think, or eat, or pee. I can imagine wanting to kill myself after about a week of the work schedule you describe. I quit a hospitalist moonlighting gig because every shift felt like I was working in the ED.

Moral of the story, you're going to take such a physical and spiritual beating from the type of schedule you describe that you won't work long enough to pay off your debt.

 

[BADMD]

My understanding of taxes is limited and before pursuing this plan I would seek out financial planning/tax advice, but the difference between the highest two taxes brackets is 2%. So anyone (single or married) that makes over 177K payes 33% and if you make over 374K you pay 35%. Additionally the alternative minimum tax (AMT) really muddies the waters but it is safe to say that earning 400K vs. 600K doesn't appear to have any additional tax burden.

Don't forget state tax, city tax (maybe), and medicare (unlike SS it isn't capped). If you are an independent contractor, you also will be liable for unemployment, workers comp and the other half of the medicare tax. You may find that your marginal tax rate is actually significantly higher than you think it is. As a note, I believe you are looking at the tax table incorrectly, as there is a significant difference between single and married filing jointly.

While your percentage rate doesn't go up, the pain of earning each extra dollar does while the amount you take home doesn't increase, as much proportionally.

It sounds like you have an incredible amount of debt (~600K) and while it would be nice to pay it off, a more realistic, slower plan would likely be better. You have to be conscious to work in the ED and your program will turn you into a bitter burnout. Also, keep in mind that as you attack principle, your accrued interest will decrease.

 

[deleted109597]

39.6% is the highest tax bracket if the tax cuts aren't extended.

 

[old_boy]

39.6% is the highest tax bracket if the tax cuts aren't extended.

This is an interesting thread. If tax cuts aren't extended (a big if) highest federal tax rate will be 39.6%, but with medicare and state tax marginal tax rate will be close to 50% in many states.

One question: where is the OP going to find an area with two 24hr shift options in the same metro area. My understanding was that these jobs are generally only available in rural areas, which aren't going to have two hospitals in close proximity. Plus, it would require very careful shift planning and an understanding boss.

A much more sane option would seem to be to take a high paying job in a less desirable location and supplement that with extra shifts as the schedule allows.

 

[Obnoxious Dad]

There is a tremendous disparity from state to state in the salaries paid to physicians. Look at the data published by the Bureau of Labor Statistics.

Instead of practicing in California or New York where living costs are high and salaries are low, move to Wisconsin, Iowa, Utah or Minnesota where living costs are low and salaries are high. The schools in Wisconsin, Iowa and Minnesota annually produce the kids with the best ACTs in the country as well. It may not be terribly exciting in Appleton Wisconsin, but it's a great place in your situation. 🙂

 

[deleted65604]

One question: where is the OP going to find an area with two 24hr shift options in the same metro area. My understanding was that these jobs are generally only available in rural areas, which aren't going to have two hospitals in close proximity. Plus, it would require very careful shift planning and an understanding boss.

I agree with this point. 24 hour shifts are few and far between geographically. You also tend to make less at these jobs. You are shooting for 2 separate jobs at 120-140 per hour (these positions in rural facilities tend to pay even less than that). Why not just shoot for a well paying job in a city with reimbursement in the 180-200 range and ask for a couple more shifts every month. Much more feasible.

Having said that, I'm sure there are facilities in the west and midwest that would fly you out on a small plane. I have some misgivings about this plan in midwinter- too dangerous in those small planes at times. This lifestyle is also tough on the family... Bye, see you guys in a couple weeks!

 

[DrHoffy]

I attended the AOA/ACOEP conference in San Fran last week. They had a group come talk to us that deals specifically with debt, taxes, how to minimize your payments but get the maximum benefit. All they do is professionial school debt management. They gave a very informative talk re: the new programs out there and available to us..and did not try to sell us their service.

So if you want some professional help: www.gladvisors.com

M

 

[roja]

Another point to consider (I heard this from an attending when I was a medical student who had teenagers in medical school and was a single mom):


If you consolidate low (even 6-8%) this is lower than most other kinds of loans.

Student loans are non-inheritable (unlike home loans, etc), so if something happens to you, your children don't inherit them. I have chosen to not consider my student loans mentally as regular debt. It was an investment and so I simply pay off the minimum every month and focus the rest of my financial planning on forward stuff..

 

[deleted109597]

Texas pays a lot, and doesn't have state income tax. As mentioned above, it makes a pretty decent difference once you start making 6 figures. Some areas of NY the marginal rate is over 60% for small businesses.

I have heard about a hospital in California where you work 1 week per month, 7 days in a row, all 24s. You see about 0.5 pph. I don't know the pay, because I genuinely wasn't interested in it, but apparently it is in Alturas. You could fly there for a week per month.

The best advice you won't get in this thread though. Hire an accountant that you're comfortable with, because they will be the one that gives you the answers.

 

[tegs15]

I agree with this point. 24 hour shifts are few and far between geographically. You also tend to make less at these jobs. You are shooting for 2 separate jobs at 120-140 per hour (these positions in rural facilities tend to pay even less than that). Why not just shoot for a well paying job in a city with reimbursement in the 180-200 range and ask for a couple more shifts every month. Much more feasible.

Having said that, I'm sure there are facilities in the west and midwest that would fly you out on a small plane. I have some misgivings about this plan in midwinter- too dangerous in those small planes at times. This lifestyle is also tough on the family... Bye, see you guys in a couple weeks!

Thanks for all the great input!

I thought of the 24hr shifts after speaking with a new attending, who works in KY, WV or Virginia (one of the states) who works seven 24s a month and normally gets 4-5 hrs a night. The idea of getting paid to sleep is appealing!

I'm definitely open to WI, IA, MN or TX.

Can somebody quantify what better paying is generally? $180, $200, $225 or $250+ an hour? As a private contractor or group employee/partner.

 

[southerndoc]

an somebody quantify what better paying is generally? $180, $200, $225 or $250+ an hour? As a private contractor or group employee/partner.

I've seen $120 on the low end and $200 on the high end for the Southeast. Granted there are always exceptions (i.e., know of one job that pays $90/hr and another that pays $250/hr).

 

[deleted109597]

Highest I've seen is $210 guaranteed, I've seen $200 plus RVUs.
Be forewarned that places that pay a lot generally (but not always) have a reason for paying so much.

 

[The White Coat Investor]

Agree that 14 24-hour shifts are a bad idea.

Agree paying down debt is a good idea.

Agree paying it down in less than 5 years is a bad idea.

Rather than concentrate on increasing income, I'd concentrate on watching your expenses. It might have been a better idea to have begun doing that 7 years ago, but better late than never.

The way to take care of all this is to buy a house that costs $200K less than your colleagues' houses. Now your monthly payments are the same. 🙂

The other thing to keep in mind is even if you make a lot of money, it takes time to get onto a solid financial footing.

Example:

You make $16K a month.

You pay $4K in taxes. You live on $7K a month. That leaves $5K a month to invest for retirement or pay down loans. In 2-3 years when you make partner, your income may go up to $25K a month. That'll leave $10K a month to invest/pay down debt.

It won't take you too many years to get rid of your loans, probably 5-10. But don't try to do it in 2 years. You'll burn out.

Expect to make $110-150 an hour until you make partner, then $200-250 an hour.

 

[EM6771]

Very informative. Thanks to all you seasoned vets for sharing advice. Generally speaking, is it a better move financially to take a lower paying job out of residency with the hope of making partner and seeing a significant salary boost or taking the higher paying job for a couple years?

I intend on moving back to Michigan long-term but am willing to spend a couple years (3,4,5) at a less than desirable location for the right job/price. In my minimal searching it seems that jobs in the Detroit area are not nearly as lucrative as I had imagined given the location. Would you think I am better off moving to say Texas for a few years or getting in early with a group in a location I would want to live long-term?

Thanks for any advice.

 

[simha1487]

i'm unsure if you've considered the public service loan forgiveness option (google it). if you are already consolidated into direct loans and are already on ibr, then if you work for ANY non-profit as it stands now, for 10 years (including universities), then the remainder is forgiven in 10 years

if you want to go the academic hospital route full time and work some community part time to boost income, this might be viable, if your debt load is significant as you say. and academic in the midwest still pays well (though not as well as community i'm sure)..

now, congress might see the loophole that academics with most universities is considered "public service" while you are earning >200k a year, and close this in 10 years, which is the greatest risk.. but if you are inclined that way, its worth a look

 

[crewmaster1]

Check out Apollo MD if you want to make some cash. They pay the traveling docs 200/hr plus all travel expenses (flight, hotel, car) and they will block your schedule. This would be a nice way to supplement a normal job and make some good money.

 

[Arcan57]

Very informative. Thanks to all you seasoned vets for sharing advice. Generally speaking, is it a better move financially to take a lower paying job out of residency with the hope of making partner and seeing a significant salary boost or taking the higher paying job for a couple years?

I intend on moving back to Michigan long-term but am willing to spend a couple years (3,4,5) at a less than desirable location for the right job/price. In my minimal searching it seems that jobs in the Detroit area are not nearly as lucrative as I had imagined given the location. Would you think I am better off moving to say Texas for a few years or getting in early with a group in a location I would want to live long-term?

Thanks for any advice.

Make sure you look at percentage of new docs that make partner if you're doing the low pay til partnership track. You don't want to find out 2 years into it that everyone has their contract terminated before making partner.

 

[deuist]

Paycheck City has a calculator to determine your taxes based on location. The results are pretty shocking for places like NYC and Cali.

 

[deleted109597]

The idea of getting paid to sleep is appealing!

While it is appealing, in actuality it's more like being on call. If you view it as "hey, I get to take a nap now", then it's fine. But if you go to work expecting to sleep then your shift will be miserable.
I've had plenty of nights where I could sleep while moonlighting, but only 2 so far that I have.

 

[tegs15]

Makes sense if your denied your preconceived expectations, you might be a bit frustrated. Thanks for all the input by the way.

I was speaking with a community doc who has worked 24hr on and 24 off, for short periods of time (1 month). He did say one of the benefits he noticed is that it didn't really effect his circadian rhythm. For that reason he found it very appealing. He says he doesn't do it now because he has no need for that much $.

I'm still hoping to hear from others that have given it shot and learn there personal experience.

 

[Mighty Mouse]

I moonlighted (moonlit?) in a free standing small rural ED. 8 beds. 24 hr shifts. Advertised as being able to sleep most nights. What ended up happening was nothing during the day -- getting lit up from 5p - 1a when the kids were out of school, people done with work, doctor's office closed. Then everytime I'd go lay down, some straggler would come in with something. Very little continuous sleep. Felt very much like being on call. Money made me gut through it, but I only did it a few times a month. Doing it multiple times a week for a year or more is a asking for problems.

Find a job you like, work hard, the money will come. Spend it/save it wisely. Debt will disappear in due time. There's a difference between being in debt and having no way to pay it back vs being in debt and making 6 figures. Its a bill to pay every month, just like your mortgage and car. When you have extra money to throw at it, you do so.

You invested a ton in your brain. You sacrificed for a long time to get her. No sense making yourself miserable or forcing yourself to live paycheck to paycheck as you try to knock out huge portions of the debt every month.