MD & DO Medical school debt is not nearly as bad as people make it out to be

[DrOngoGablogian]

They represent 0.9% as opposed to docs who represent 27% plus 17% of the total 1 'percenter'... I am sure there is some overlap (doctors or lawyers who married secretaries, school teachers etc...) in these numbers because these number are for households...

Yea, size of box is number of top 1% within field, color of box is % of field in top 1%. The color is the key driver here, at least in terms of what an individual should identify as “best chances of top 1% income”.
I saw that page a number of years ago and I always wished they went higher than 30% or above as the darkest color, and I wished they’d split 10-20 into 10-15 and 15-20. Purely out of interest to see where physicians % dropped off and where the big block of lawyers would be. Don’t care enough to do my own research.

In regard to the mention of teachers and secretaries—my wife has 2 cousins both specialists married to teachers who are both definitely in the 1%, and my friend another specialist is married to a teacher also. So there’s 3 right there contributing to the size of that block, but you’re right that doesn’t prove anything except there’s a lot of teachers out there, only the color matters.

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[shouldvestudied]

Giant oof. Imagine trying to disagree with someone about financial literacy when you don't understand how marginal tax rates work. I use effective tax rate in all of my calculations. You mention a federal tax rate of 35% if you earn $250k in your red state...lol. Your effective federal tax rate is 23.18%. Only $43,000 of your $250k income is taxed at 35%, which is an insane thing to explain to someone who thinks they are correcting people on finances.

It wouldn't be a finance thread without someone completely ****ing up marginal vs effective tax rates.

 

[GadRads]

I clearly said that $600k was a meme level salary that an attending on SDN said was needed to pay off $300k in debt on a 10 year loan. I carried over my rant from that discussion. When I say worst case in terms of $600k, I mean taxes. I made sure to also run through a realistic scenario of $320k for a hospitalist. Oh, I also never used a sub 20% tax rate lmao. Check your math. The tax rates of low 20s I used are accurate. Again, check your math.

My spouse's tax rate as an attending is about 40%. Your numbers are incorrect.

 

[Chibucks15]

My spouse's tax rate as an attending is about 40%. Your numbers are incorrect.

What state?

 

[GadRads]

What state?

Think of states with state AND local income taxes.

 

[Vivid_Quail]

Think of states with state AND local income taxes.

What level of income?

 

[Dr.K124]

My spouse's tax rate as an attending is about 40%. Your numbers are incorrect.

To be frank, that's your decision to live there.

I already demonstrated how an $800,000/year income can have a tax rate below 30% in a taxless state.

 

[Vivid_Quail]

To be frank, that's your decision to live there.

I already demonstrated how an $800,000/year income can have a tax rate below 30% in a taxless state.

Exactly.

Also I never said 40% was impossible or even unlikely if you file single and/or live in a state with high taxes. Obviously no one should get married just for a tax break, but choosing to live in a state like CA/NY and then complaining about taxes is something that I will never understand. But maybe I am just a dumb southerner who is too uncultured to understand the coastal lifestyle.

In the comment they quoted, I was referring to low 20% taxes for someone married in a 0% state income tax state. Their spouse and them are making combined >$700k in NYC (federal AND high state AND high city taxes...yuck) or their spouse is filing separately in NYC and making >$350k to get a >40% tax rate. Or their spouse is lying too them about how much Uncle Sam takes and has an extra account somewhere lol

 

[Dr.JMoon]

@Dr.K124 Any idea what is the market like in Pinellas & Hillsborough counties for general ophthos and retina?

 

[Splenda88]

@Dr.K124 Any idea what is the market like in Pinellas & Hillsborough counties for general ophthos and retina?

These counties are tough even for hospitalist...

 

[GadRads]

Or their spouse is lying too them about how much Uncle Sam takes and has an extra account somewhere lol

I know how much my spouse makes and I see all the paychecks. And yes, we live in a relatively high-tax state. I would move, but life is more complex.

 

[Sleepingdoc]

LOL... Yep if you slave away your life.... with this much debt??? people should report take home pay, not the gross salary...

 

[ACSurgeon]

What’s the point of this thread? Should we embrace the debt? Are we not allowed to complain about it?

most people started this path with an idea of sacrificing their 20’s and half of their 30’s to come out and be able to start living comfortably and catching up on life and savings. NOT spending another 5+ years living somewhere far from family or having your life still on hold. House prices have nearly doubled in the last 20 years. Life is expensive. Physicians still make good enough money that with some planning you can achieve all your goals but as school becomes more expensive and life becomes more expensive, it has become harder for physicians to live the way they thought they could live while hitting all other milestones.

So to the OP, the sky isn’t falling, but come back in 5-10 years and tell us how easy it is to pay off the debt while trying to meet all your other financial goals.

the days of doctors graduating with debt that they can pay off within months and being able to afford luxurious houses/cars/vacations/country club dues/private schools for their kids etc are gone. Medicine currently remains financially worthwhile but so much worse for us then it was for our parents’ generation.

 

[Dr.K124]

What’s the point of this thread? Should we embrace the debt? Are we not allowed to complain about it?

most people started this path with an idea of sacrificing their 20’s and half of their 30’s to come out and be able to start living comfortably and catching up on life and savings. NOT spending another 5+ years living somewhere far from family or having your life still on hold. House prices have nearly doubled in the last 20 years. Life is expensive. Physicians still make good enough money that with some planning you can achieve all your goals but as school becomes more expensive and life becomes more expensive, it has become harder for physicians to live the way they thought they could live while hitting all other milestones.

So to the OP, the sky isn’t falling, but come back in 5-10 years and tell us how easy it is to pay off the debt while trying to meet all your other financial goals.

the days of doctors graduating with debt that they can pay off within months and being able to afford luxurious houses/cars/vacations/country club dues/private schools for their kids etc are gone. Medicine currently remains financially worthwhile but so much worse for us then it was for our parents’ generation.

To be fair, the same can be said about any job, now. Everyone is experiencing the rising costs of just living life.

 

[Coldwater_Adler]

Its interesting reading through all this as someone who has barely ever made over 20k annually with a wife and three kids. That physician salary will be much more than used to even with my projected debt of 400k.

 

[sylvester500]

The following real life quotes from a variety of people have inspired this post:

• "Physicians barely can afford to raise a family with the amount of medical school debt we are forced to have"
• "Physicians don't earn that much once you account for medical school debt"
• "Just do finance or law if you really want to make money. You won't get rich doing medicine"
• "I am still paying off my debt and I graduated med school 20 years ago. Just wait until you have kids...a physician's salary doesn't go as far as you think."

It is pretty tiring having the same conversation over and over again on forums (if talking to a resident or attending) and in real life (if talking to a fellow med student) about how American medical school debt is nothing in comparison to American physician salaries. So, hopefully I can convince a few more people of the reality of basic finances by sharing my rant of how you don't need a laughable $600k/yr salary to pay off a $300k 10 year loan. Why $600k and why did I write this dumb rant? That was the recommended salary needed for $300k of debt by an attending on this website. Oh, also remember that only 17% of American medical students have >$300k of total student loan debt so this is a pretty extreme scenario (I am one of those 17%, yay multiple degrees before med school). Anyways, here it is:

Saying you need to earn 600k pretax to pay off 300k in loans is a hilarious and sad example of how horrible some physicians are with money, for a variety of reasons.

600k pretax is WORST CASE (Los Angeles, filing single, not married) $340k post tax or a ridiculous $28,300 PER MONTH after taxes. Now, let's say it took you a long and difficult 7 years after med school to become an attending (not unheard of for gen surg + fellowship or neurosurgery, otherwise, PGY-5 or 6 is where most high paying specialties like anes, rads, ortho, surgical optho, Mohs derm finish training, but we are talking about a worst case here). Let's also say for your $300k of debt you payed the minimum income based payment using the REPAYE plan during residency/fellowship. This puts your interest rate at about 3%. We will just ignore those little income-based payments and pretend you just let your debt balloon from interest with 0 payments (makes the math easier). Again, this is worst case, but with some financial acumen because you did use REPAYE to get half of your interest each month paid by Uncle Sam.

Now you are an attending and your debt is $370,000 in 2021 dollars (your debt increase in reality has barely out paced inflation...your inflation adjusted interest rate is more like 1-1.5% but we are doing worst case here so we will ignore that). You don't know any better so you don't refinance your loan down to 3% from 6% now that you make too much money to qualify for IBR/REPAYE.

Ok, here is the hard part: you have just 3 years to repay your loan (10 year loan - 7 years of residency = 3)!!!! Oh no!!! Sounds like a financial disaster right? Not at all. Your monthly loan payment for $370,000 of debt paid that needs to be paid off in 3 years is $10,700/month. So every month for 3 long years, you throw $10k at your loans and have to live like a peasant off $17,600/month post tax. Or in other words, you are going have a net income of $211k/year post tax and after loan payments. Better get used to ramen and a 300 square foot apartment in a rough part of town. For reference, that post-tax salary after loan payments is what a single person in LA making $350k would bring home...also known as the 97-98th percentile household income in the US.

Now, a more realistic scenario is making $320k/yr as an FM trained hospitalist. You want to pay off your debt quickly so you take a job in a state with no state income tax and a lower cost of living. You are lucky enough to be married by age 30 so you get that sweet sweet "married filing jointly" tax break. You are looking at $250k/yr or $20,800/month post tax . You are used to living off $55k/yr as a resident, or about $4,000/month post tax. You give yourself a 100% raise so now you spend $8000/month. You throw the remaining $12,800k of disposable income at your loans and pay it off in 2 years and 4 months. Afterwards, you ride off into the sunset working an average of 42hr/week making an income in the top 2-3% of one of the richest countries in the world.

Bonus fun fact: if you want to get about of debt in a year after your 3 year FM residency, work residency hours for a year (65hrs/week) and pick up extra hospitalist shifts. You can clear $500k pretax/$366k post-tax...live off $46k, pay off your $320k in loans in one year.

Tl;dr: you don't need $600k/yr to pay off a 10-year $300k loan. You can knock that amount of debt out in 2-3 years in a specialty with a 99% match rate as long as you break 210 on step 1. Thank you for coming to my ted talk.

I wish your voice rang more clearly above the pessimists'. You need to speak at every med school admissions "Financial Aid Presentation."

 

[Vivid_Quail]

I wish your voice rang more clearly above the pessimists'. You need to speak at every med school admissions "Financial Aid Presentation."

Thanks. Unfortunately with stuff online, actually helpful and good content is going to be drowned out with snarky comments like "lol I haven't ever seen math this bad since I was in 1st grade." And then when you ask someone to back up their point, their math is even worse, but people like the quick sassy replies that reinforce the echo chamber, more than they like actual facts that disagree with their world view.

Same reason why people like reality TV with all of the best comebacks and burns edited into a 30 minute episode. Or how the History Channel went from cool, fact based documentaries when I was a kid to aliens and a pawn shop reality tv show. But I will stop since now I am starting to sound like /r/iamverysmart haha

 

[LimpSpatula]

 

[ACSurgeon]

To be fair, the same can be said about any job, now. Everyone is experiencing the rising costs of just living life.

Right and if I was on a forum for any other profession I’d have the same issue, not try to make it a non-issue

 

[thepoopologist]

Writing out the numbers is easy and isn't the same as actually working the hours needed to make that money after finishing years of residency. I'm not discounting the money or the fact that someone can make great strides with their loans and life despite everything, but the experience is much harder than it sounded when I was reading about it on SDN as a med student or resident trying to keep my spirits up.

 

[thepoopologist]

Frankly, our profession is the conservative bet, like buying a S&P 500 ETF with a high expense ratio. The argument that we'll do fine with our debt despite taxes and the abuses we endure appeals to the conservatively minded mentality, who are looking for the stable job.

But there's also an argument that we deserve and should demand better, since there are actually forces (administration, media, the government, etc) outside of these clean examples of income and debt that are seeking to push our income down and push our debt upward.

 

[Giovanotto]

Sorry to say, but I don't believe our career is worth the cost. 300k tuition has essentially killed the profession. And if you're not in it for the money to some degree, I can't even relate to you as a person. I value my time outside of work way too much to put up with the current shenanigans going on.

 

[doyinDO]

Like others have said, it's easy to run the numbers and say you can "pay the debt down just like this. Debt is overrated!" Life is way more complicated. Not everyone can get their family on board to live like a monk. Unplanned expenses always come up. People have other financial goals, not everyone gets a high-paying job etc.

The debt isn't overrated. It's reasonably talked about so much because it's approaching dangerous levels. The average debt is increasing every year and I think outpacing the rise of salaries. 20% of grads have 300k+ debt. This doesn't even include other debts people may have. DO students especially have higher debt (300k is basically average) and many end up in primary care not making 300k.

Anyways, at least we aren't as bad as dental yet. On a side note, there should be more of an incentive to go primary care.

 

[Splenda88]

Opinion | How to Get Really Rich! (Published 2021)

Getting into the right job is the key.

www.nytimes.com

Lol...

 

[Way Too B-- A--]

Dear Lord.... It appears that some here still do not understand “graduated income taxes.”

Put simply, “everyone is taxed the same.” You do not have *all* of your income taxed at >37% just because you make $1.00 into the next tax bracket.

You are taxed the same as a teacher, RN, EMT, custodian, hotel manager, whatevs, except for the income that climbs above their range. That income that climbs above, is the only amount that is taxed more, and even then, if you have a good accountant, you can greatly “reduce your base pay” so that you pay less. (ie- many doctors can afford the best CPAs so will likely pay *less* taxes than most of the other professions listed.)

I’ve unfortunately known a lot of bitter doctors. As a “non-wealthy” non-trad just starting the process of applying, it seems to me that “expecting greater wealth” is a major source of bitterness.

Money is a legitimate concern of course, but if it is your main concern and/or motivator, then you need to step back. None of use are “doing the world a favor by becoming a doctor.”

I wish that there was a weeding out process for people who are bitter about med school loans and taxes, and a way to funnel these people into other professions like law, engineering, or research. Because many other bright students with high MCATs and GPAs would gladly take their place.

For most (all?) specialties, bitter people make half-assed doctors. They feel that this profession, and sometimes society, owes them something which detaches them from a care giving mindset.

Maybe they hustle patients out the door just to get through the day. Maybe they don’t listen close enough to patients’ concerns. Maybe, and this is an actual example from IRL, they tell a patient, “I don’t think we have samples” because they didn’t want to take a 2 minute walk and “waste their own time” to check, so the low-income patient is forced to pay $500 out of pocket when the cabinet was stocked with what they needed.

Does anyone seriously think that the world needs more Narcissistic and entitled doctors?

Maybe this profession just overlaps with a personality type that will never be satisfied.... idk.... but that is not the same as a perfectionist.

 

[ace_inhibitor111]

Dear Lord.... It appears that some here still do not understand “graduated income taxes.”

Put simply, “everyone is taxed the same.” You do not have *all* of your income taxed at >37% just because you make $1.00 into the next tax bracket.

You are taxed the same as a teacher, RN, EMT, custodian, hotel manager, whatevs, except for the income that climbs above their range. That income that climbs above, is the only amount that is taxed more, and even then, if you have a good accountant, you can greatly “reduce your base pay” so that you pay less. (ie- many doctors can afford the best CPAs so will likely pay *less* taxes than most of the other professions listed.)

I’ve unfortunately known a lot of bitter doctors. As a “non-wealthy” non-trad just starting the process of applying, it seems to me that “expecting greater wealth” is a major source of bitterness.

Money is a legitimate concern of course, but if it is your main concern and/or motivator, then you need to step back. None of use are “doing the world a favor by becoming a doctor.”

I wish that there was a weeding out process for people who are bitter about med school loans and taxes, and a way to funnel these people into other professions like law, engineering, or research. Because many other bright students with high MCATs and GPAs would gladly take their place.

For most (all?) specialties, bitter people make half-assed doctors. They feel that this profession, and sometimes society, owes them something which detaches them from a care giving mindset.

Maybe they hustle patients out the door just to get through the day. Maybe they don’t listen close enough to patients’ concerns. Maybe, and this is an actual example from IRL, they tell a patient, “I don’t think we have samples” because they didn’t want to take a 2 minute walk and “waste their own time” to check, so the low-income patient is forced to pay $500 out of pocket when the cabinet was stocked with what they needed.

Does anyone seriously think that the world needs more Narcissistic and entitled doctors?

Maybe this profession just overlaps with a personality type that will never be satisfied.... idk.... but that is not the same as a perfectionist.

Taxes are still high even with all the proper calculations for graduated taxes. Just plug a typical salary into ADP calculator and the net tax after all calculations is still 32%+ for most new physicians in most states.

What makes me upset is not paying for an education, it’s that most of what I’m paying for is frankly wasted, not used for anything that would actually help me take care of patients. Tuition has been increasing out of control just because medical schools can, even though a few decades ago it did not cost nearly as much to train a physician. I don’t understand this anger you have for students questioning why they are pressured to go into greater debt. Not to mention it disproportionately affects low income students and hinders social mobility in the process.

 

[MavFab]

Exactly. Even at your big baller income, you aren't taxed at the rates that you here people on conservative talk radio shrieking about.

He also made a good choice by living in FL.

 

[MavFab]

Considering they are probably in their early to mid 20s and joined WSB within the last year, I don't think they knew what a stock was 15-20 years ago.

No one can time the market consistently but there are certain obvious opportunities such as last March.

 

[sylvester500]

Thanks. Unfortunately with stuff online, actually helpful and good content is going to be drowned out with snarky comments like "lol I haven't ever seen math this bad since I was in 1st grade." And then when you ask someone to back up their point, their math is even worse, but people like the quick sassy replies that reinforce the echo chamber, more than they like actual facts that disagree with their world view.

Same reason why people like reality TV with all of the best comebacks and burns edited into a 30 minute episode. Or how the History Channel went from cool, fact based documentaries when I was a kid to aliens and a pawn shop reality tv show. But I will stop since now I am starting to sound like /r/iamverysmart haha

Bro everything you just wrote resonates with every grievance I have about this god damn world. Let's grab a beer sometime. You should read "Amusing Ourselves to Death" by Neil Postman.

 

[doyinDO]

Taxes are still high even with all the proper calculations for graduated taxes. Just plug a typical salary into ADP calculator and the net tax after all calculations is still 32%+ for most new physicians in most states.

What makes me upset is not paying for an education, it’s that most of what I’m paying for is frankly wasted, not used for anything that would actually help me take care of patients. Tuition has been increasing out of control just because medical schools can, even though a few decades ago it did not cost nearly as much to train a physician. I don’t understand this anger you have for students questioning why they are pressured to go into greater debt. Not to mention it disproportionately affects low income students and hinders social mobility in the process.

I think the medical education process is outdated. It needs to be a lot more streamlined, especially for primary care.

 

[jambro]

I agree with the OP overall but want to add something else to the conversation that i rarely see mentioned. Another double whammy as far as the physician pipeline is the way in which the salary works. Everyone is obviously happy to 5x their income after residency, but it sucks because as soon as you're making a bunch you're paying a bunch in taxes, and then you have to start making real after-tax payments to student loans. It'd be much better to be paid higher as residents and lower as attendings (obviously to the point it evens out) since that would reduce the tax burden as an attending and prevent the huge lifestyle creep that hits new attendings with all the new money.

 

[Angus Avagadro]

Dear Lord.... It appears that some here still do not understand “graduated income taxes.”

Put simply, “everyone is taxed the same.” You do not have *all* of your income taxed at >37% just because you make $1.00 into the next tax bracket.

You are taxed the same as a teacher, RN, EMT, custodian, hotel manager, whatevs, except for the income that climbs above their range. That income that climbs above, is the only amount that is taxed more, and even then, if you have a good accountant, you can greatly “reduce your base pay” so that you pay less. (ie- many doctors can afford the best CPAs so will likely pay *less* taxes than most of the other professions listed.)

I’ve unfortunately known a lot of bitter doctors. As a “non-wealthy” non-trad just starting the process of applying, it seems to me that “expecting greater wealth” is a major source of bitterness.

Money is a legitimate concern of course, but if it is your main concern and/or motivator, then you need to step back. None of use are “doing the world a favor by becoming a doctor.”

I wish that there was a weeding out process for people who are bitter about med school loans and taxes, and a way to funnel these people into other professions like law, engineering, or research. Because many other bright students with high MCATs and GPAs would gladly take their place.

For most (all?) specialties, bitter people make half-assed doctors. They feel that this profession, and sometimes society, owes them something which detaches them from a care giving mindset.

Maybe they hustle patients out the door just to get through the day. Maybe they don’t listen close enough to patients’ concerns. Maybe, and this is an actual example from IRL, they tell a patient, “I don’t think we have samples” because they didn’t want to take a 2 minute walk and “waste their own time” to check, so the low-income patient is forced to pay $500 out of pocket when the cabinet was stocked with what they needed.

Does anyone seriously think that the world needs more Narcissistic and entitled doctors?

Maybe this profession just overlaps with a personality type that will never be satisfied.... idk.... but that is not the same as a perfectionist.

You are correct regarding the graduated income tax. The effective tax rate, ie. What you actually pay, for someone in that 400k is around 24 percent. With respect to a good CPA, there are not many deductions for W2 income from an employer. Mortgage interest helps, but if you give the Govt $2 and they give you $1 back, when can you retire? Better to have no mortgage and put the $2 in your pocket and save the interest on the loan. So after mortgage interest, what else is there? Interest on home equity loans, if used only to remodel your property, not buy a car or a vacation. Investment losses? Great, so I lose money to save money. Also, not a great deal, but useful if you are rebalancing. If you own your own business, that provides better opportunities to take advantage of the tax code, but I think most physicians are now just employees. It is much harder to run your own shop as payers don't want to negotiate with solo docs,, just groups. I am just saying a good CPA doesn't afford the avg employed physician much of an advantage as no big tax deductions exist for W2 income. My wife and I still take the standard deduction as the tax regs, as I believe, you need around 25k in deductions before it makes sense to itemize. Living beneath your means and utilizing early and systemic savings is the safest way to hit that retirement number. Also, check out the FIRE movement if you want to retire early.

 

[jambro]

You are correct regarding the graduated income tax. The effective tax rate, ie. What you actually pay, for someone in that 400k is around 24 percent. With respect to a good CPA, there are not many deductions for W2 income from an employer. Mortgage interest helps, but if you give the Govt $2 and they give you $1 back, when can you retire? Better to have no mortgage and put the $2 in your pocket and save the interest on the loan. So after mortgage interest, what else is there? Interest on home equity loans, if used only to remodel your property, not buy a car or a vacation. Investment losses? Great, so I lose money to save money. Also, not a great deal, but useful if you are rebalancing. If you own your own business, that provides better opportunities to take advantage of the tax code, but I think most physicians are now just employees. It is much harder to run your own shop as payers don't want to negotiate with solo docs,, just groups. I am just saying a good CPA doesn't afford the avg employed physician much of an advantage as no big tax deductions exist for W2 income. My wife and I still take the standard deduction as the tax regs, as I believe, you need around 25k in deductions before it makes sense to itemize. Living beneath your means and utilizing early and systemic savings is the safest way to hit that retirement number. Also, check out the FIRE movement if you want to retire early.

Is it difficult as a physician to set up an s-corp or incorporate yourself so that you can "contract" with other clinics and set up things to defer income, etc? I agree straight w2 sounds like it kinda sucks. I assume that if you're a partner there should be opportunities too.

 

[thumbz]

All right, caveat, I didn't read the thread. Just the OP and the first few replies saying he/she is a crazy person.

Unpopular opinion - I actually agree with the OP.

Real life n=1 situation

IM trained outpatient doc graduates in 2011. Takes job #1 at $175k/yr. Does this for 18 months. Takes job 2 at $185k/yr, with bonus makes $230k/yr (all RVU bonus, see more clinic patients = make more money). Fast forward 3.5 years to 2015. Takes job #3. Sign on bonus is $100k student loan repayment up front, payback clause over 5 years.

In 2015, with the 100k bolus, the student loan of $240k @5% (balance in 2011) was paid off. Technically that means the loan was paid off in 2020 (see 5 year repayment clause above).

9 years post graduation my wife was totally student loan free making the average salary for an outpatient IM doc in a desirable area. She drove a used Lexus and bought a $200k house with a $1250/mth mortgage. Threw everything at her student loans, save for $1k/mth toward retirement.

I didn't have a salary when we met, she did this entirely off her own money. Now it's 2020, we have only a mortgage left and make $800k/yr between the two of us. Because you know what, sometimes you move to BFE and realize you love living there.

Is it easy? No. Is it possible? Yes.

Edit - @VA Hopeful Dr is 100% right about the take home pay. My base salary is $265k/yr. My every 2 weeks paycheck is $5200. Retirement, HSA, taxes, deductions, etc eat up a lot of my $10k pretax every 2 week salary.

 

[Vivid_Quail]

Not everyone can get their family on board to live like a monk. Unplanned expenses always come up. People have other financial goals, not everyone gets a high-paying job etc.

Living like a monk?? In what world is post tax $8k/month living like a monk. That is the number I used in my OP for an attainable and "average" repayment strategy. You are the person this post is for. You clearly didn’t read the actual numbers involved and have this stuck mindset that the only way out of debt is a frugal, Spartan lifestyle as an attending. Then you imply that any plan will get blown up by “unexpected expenses.”

You know what the best part of bring home $20k and living off $8k? If something truly horrible happens that blows through your 6 month emergency fund, then you have plenty of cushion to absorb it. That’s the entire concept of living below your means: the psychological and practical flexibility. A huge reason why doctors feel like they barely make enough is they push the limits of what they can afford, so cutting back hours or getting a slightly lower paying job feels impossible. If you are saving 30-50% of your income for retirement, that gives you so much flexibility.

Excluding <1% type scenarios of pediatricians in NYC or SF, every doctor gets a high-paying job. If you don't, that is your choice many times over (low paying specialty, high cost of living area, low paying job within that high COL area, etc). Doctors making <$200k/yr are even less representative than doctors making >$700k/yr.

Debt is undeniably rising too fast and is outpacing salaries. But at current levels, salaries are high enough for the debt to be significant, but not financial imprisonment like a lot of people make it out to be.

 

[Vivid_Quail]

Is it difficult as a physician to set up an s-corp or incorporate yourself so that you can "contract" with other clinics and set up things to defer income, etc? I agree straight w2 sounds like it kinda sucks. I assume that if you're a partner there should be opportunities too.

The problem with an S Corp. is that you have to justify the salary that you pay yourself every year out of the corporation. So if your S Corp. is bringing in $800,000 of profit as a private practice gastroenterologist, you can't just pay yourself a salary of $200,000/year, pay income taxes on that, and then divert the remaining $600,000 to investments in the S Corp. $200,000 a year is not a fair market salary for any gastroenterologist. Any tax savings you get from an S Corp. is probably not going to be significant considering the time spent and the possibility of an audit that ends up costing you a lot of money anyways. This is especially true for physicians that are in the highest income bracket. The IRS is much more likely to go after you as opposed to some freelance translator that is making $40,000 a year 1099 and set up an S Corp. to save on FICA taxes.

 

[Splenda88]

I didn't have a salary when we met, she did this entirely off her own money. Now it's 2020, we have only a mortgage left and make $800k/yr between the two of us. Because you know what, sometimes you move to BFE and realize you love living there.

Is it easy? No. Is it possible? Yes.

Edit - @VA Hopeful Dr is 100% right about the take home pay. My base salary is $265k/yr. My every 2 weeks paycheck is $5200. Retirement, HSA, taxes, deductions, etc eat up a lot of my $10k pretax every 2 week salary.

 

[joeception]

Ahh the good old medical school isn't really that expensive if you look a decade down the road and "live like a resident." This is the exact mentality that has allowed the tuition rates to sky rocket and the continued justification that you shouldn't worry about it as you will make money down the road. There is no guarantee about the future and medical school is truly an enormous amount of debt. What about those that do not match? What about those that failed out along the way? There is a ton of risk along the way to becoming an attending physician and there truly is no good reason that tuition should increase several thousand dollars every year. It is really ridiculous if you take a step back and think about it that after 4 years of undergrad and 4 years of medical school that you are lucky if you are making minimum wage in residency.

 

[thepoopologist]

On a more practical note,
1. Brute force paying off student loans with salary + moonlighting has its benefits.
2. Buying a home and contributing to retirement dropped my taxable income a ton.
3. I'm in PSLF, but it seems every year they implement something to make the employer certification more difficult (preventing me from getting to the 120 count as easily).
4. Govt cut my annual salary by 30k last June, crossing my fingers that its restored soon. On the brighter side, admin decreased their expectations and I'm taking more vacation days.

 

[Vivid_Quail]

Ahh the good old medical school isn't really that expensive if you look a decade down the road and "live like a resident." This is the exact mentality that has allowed the tuition rates to sky rocket and the continued justification that you shouldn't worry about it as you will make money down the road. There is no guarantee about the future and medical school is truly an enormous amount of debt. What about those that do not match? What about those that failed out along the way? There is a ton of risk along the way to becoming an attending physician and there truly is no good reason that tuition should increase several thousand dollars every year. It is really ridiculous if you take a step back and think about it that after 4 years of undergrad and 4 years of medical school that you are lucky if you are making minimum wage in residency.

Ah the good old I didn't read the thread but I am going to vomit out a hot take anyways. I never once said to "live like a resident" when you become an attending. In fact I said it is a good idea to immediately give yourself a 100% pay raise (double your take home pay) to get some immediate gratification for finishing residency/fellowship.

The match rate for family medicine is like >99% for domestic medical graduates so the madness over not matching into your desired specialty is very real, but NEVER matching is not a realistic fear. We all worry about it for sure, even if it is super unlikely, but it is an irrational fear. Failing out would suck but that goes for any graduate or undergraduate degree.

I also never said that medical school debt was fair or appropriate or should not be lower. All I argued that was that medical school debt is not the doom and gloom that a lot of people make it out to be. Should medical school be more heavily subsidized by the government? Hell yeah it should. Should the loans be 0-2% like they are in basically every other Western country? Yep. The concept that the government makes profit off loans to educate its own citizens is disgusting. They should be losing money on our loans due to inflation!!! That is how it works in all of Europe and Canada.

It is really ridiculous if you take a step back and think about it that after 4 years of undergrad and 4 years of medical school that you are lucky if you are making minimum wage in residency.

It is really ridiculous to be so out of touch with the minimum wage that you honestly think residents are "lucky to be making minimum wage is residency." You have either never worked a low-wage job and/or are parroting a common anecdote medical students and residents say. A PGY-1 in Texas makes like $55k pre-tax. You would have to work 145 hours per week to earn that much while making minimum wage ($7.25) or 154 hour/week if you get the 3 weeks vacation most residents do, even no minimum wage worker is getting vacation time. Tons of states have a minimum wage of $7.25/hr. Some states have a minimum wage in the $9-12/hr range. PGY-1 salaries in those states are normally like $60k. To make $60k in Maryland with their minimum wage of $12/hour, you would need work 96hr/week with no vacation, 102hrs/week with 3 weeks vacation. Then there are the states and individual cities with that juicy $15/hr minimum wage. To make less than than minimum wage in these states as a PGY-1 making $60k, you would need to work 76hrs/week with no vacation, or 81hrs/week with 3 weeks vacation. Here is a chart:

Minimum wage, PGY-1 salary	Hrs/wk need to make less than min wage (no vacation)	Hrs/wk needed with 3 weeks vacation
$7.25/hr, $55k salary	145 hours/week	154 hours/week
$12/hr, $60k salary	96 hours/week	102 hours/week
$15/hr, $60k salary	76 hours/week	81 hours/week

So yes, some PGY-1 residents working in LA, DC, SF, and Seattle might approach the minimum wage if they are going over 80hrs/week. But that combination of things is not common. Very few residencies average >80hrs/week over an entire year, even less so if you restrict it to a few cities (the state minimum wage in NY and CA is like $12.50-$14).

Now let's be clear, I think that residents should make at least as much as NP/PA's. There is really no economic argument against this, other than hospitals' profit margins combined with 0 bargaining power on the part of residents. But "you are lucky if you are making minimum wage in residency" is some impressive hyperbole.

 

[Chemist0157]

Going into medicine was always about the long game. I did not have any loans from undergrad, but I did accumulate $240k from medical school, and once out of fellowship, I was at $330k. That was 2018. I have been paying loans off aggressively (I could have done more) and should be out by 2023 at least. That's five years of payment after accumulating debt for 9 years. I have family, have bought a house, and have everything I need. I'll be a few years behind in terms of retirement, but I'm already contributing to max 401k and Roth IRA for my wife and me. I'm doing this in a lower paid specialty, I'm told. I'm missing out on dumping more in index or mutual funds or moving forward with real estate plans (rental property in a favorable travel area), but...how much savings/investment do you think the average American does with an average salary? Doctors do well.

So chill. It's not been all fun and games, but I'm still very happy to have gone into medicine and will be fine money wise.

 

[Splenda88]

Going into medicine was always about the long game. I did not have any loans from undergrad, but I did accumulate $240k from medical school, and once out of fellowship, I was at $330k. That was 2018. I have been paying loans off aggressively (I could have done more) and should be out by 2023 at least. That's five years of payment after accumulating debt for 9 years. I have family, have bought a house, and have everything I need. I'll be a few years behind in terms of retirement, but I'm already contributing to max 401k and Roth IRA for my wife and me. I'm doing this in a lower paid specialty, I'm told. I'm missing out on dumping more in index or mutual funds or moving forward with real estate plans (rental property in a favorable travel area), but...how much savings/investment do you think the average American does with an average salary? Doctors do well.

So chill. It's not been all fun and games, but I'm still very happy to have gone into medicine and will be fine money wise.

How can you be content making less than 500k/year?

 

[Chemist0157]

How can you be content making less than 500k/year?

 

[hmockingbird]

I haven’t done the math but I agree with the general point of this post. I think a lot of people on here lack perspective about physician salaries and debt. While it seems intimidating, it doesn’t have to be and it also doesn’t mean you’re going to be poor. Also, there is more to the US than the coasts and living in the west/Midwest/south doesn’t automatically mean you can’t live in an urban, diverse and/or liberal area.
For two perspectives —
Me: pediatrician, making above average salary compared to my residency classmates, single. Own a home in a small Midwest city that is really growing, has a great food scene which was honestly my priority for location lol. Set a goal to pay off my loans in 5 years (but don’t need to). My mortgage is about 10% of my monthly take home (this is after retirement). Already own my car. Other bills (utility/car insurance etc not counting spending $ on credit cards) maybe 5%. Also donate about 2% ish to various charities. Currently putting 50% of my monthly take home into loans. Pre-Covid I travelled a lot, partly for family reasons, but it didn’t stress my budget. But currently I have all the streaming services I want, DoorDash frequently (used to be going out to eat), get a fancy coffee before most work shifts, continue shopping online lol. Still able to save. I have a really nice lifestyle. Working on learning how to invest which is my next goal.
My childhood: dad is a physician with an academic job and while I don’t know what he makes exactly I think I make more than he ever has. SAHM. 3 kids one with a serious chronic illness. Lived in a wealthy suburban school district in the Midwest/close to the NE. Able to go on one nice vacation each year (it was domestic but I think with how budget airlines have spread now an international trip would’ve been in the budget) + trip(s) to visit family. Allllll the extracurriculars, museum memberships, orchestra subscription tickets etc (to broaden the mind lol). Private religious school (this was cheaper than non religious private schools in our area), eventually switched to public school for academic reasons. While we didn’t eat out as often as I do now it never stressed the budget. Super nice Christmases. Had cable TV when some of my friends did not. Parents paid for all of our undergrad (not grad but they did pay some of my living expenses during med school). “Budget” things: Drove cars until they really needed to be replaced/didn’t get a new model frequently (I know people will argue for the financial benefits of leases too so that varies). We did have a sizeable house with acreage but it wasn’t as impressive as most of my friends’. Didn’t get the latest movies, game systems, clothes when they were released but had to wait for Christmas. Clothes were usually from places like Target, Kohl’s, (later) H&M, Forever 21. When we were old enough to get jobs we had to and were required to pay for extra things we wanted (eg band trips) plus savings. My dad paid off his loans when I graduated HS. He also invests separately from his retirement plan and they also donate money (again I don’t know details bc my parents don’t talk finances with us). The only time I remember them being financially stressed was during the recession because two of us were in college, they had a lot of car issues back to back (maybe some other surprise bills too, can’t remember) and I think my dad’s pay got cut temporarily.
Yes things were different and the loans were smaller in the 90s but I know I could give my hypothetical kids a similar lifestyle because my coworkers do. It’s all about prioritising and budgeting. My dad has a fancy sports car now that he bought around when my youngest sibling graduated HS, no *that* wasn’t in the budget with 3 kids at home/in college but eventually it was.

 

[Coldwater_Adler]

Slightly off topic, but isn't it strange that to make a decent, and only decent living, in America you have to be in the top few percent of incomes? The economy only seems to work for people with the salary of a doctor or higher? That's a terrible economic system

 

[MedDoc305]

Slightly off topic, but isn't it strange that to make a decent, and only decent living, in America you have to be in the top few percent of incomes? The economy only seems to work for people with the salary of a doctor or higher? That's a terrible economic system

Though I do agree cost of living is becoming unbearable for most people in the USA, I wouldn't say you need a physician's salary to have a decent living. A two-income household of 100k-120k would live quite comfortably while saving for retirement

 

[AnatomyGrey12]

Though I do agree cost of living is becoming unbearable for most people in the USA, I wouldn't say you need a physician's salary to have a decent living. A two-income household of 100k-120k would live quite comfortably while saving for retirement

It was only recently my parents crossed the 120k threshold now that my mom works full time since me and my siblings are all out of the house. When I grew up it was below 100k, and we never wanted for anything. Yeah they sacrificed some vacations and stuff like that so we could play sports, but I think the idea you need to make 200k+ to live comfortably in the US is simply wrong.

This isn’t to say we shouldn’t work to make the COL more tolerable.

 

[Coldwater_Adler]

My point was that the great majority of people do not get to six figures. No, you don't need 200k to make a living, but you need to make more than the vast majority of people do. As someone who has lived below the poverty line for many years now, it's wild to me to even be discussing buying a house or a semi-new car. Yet, most in America live on 70k or less with student or other loans. It's a ****e system.

 

[Splenda88]

It was only recently my parents crossed the 120k threshold now that my mom works full time since me and my siblings are all out of the house. When I grew up it was below 100k, and we never wanted for anything. Yeah they sacrificed some vacations and stuff like that so we could play sports, but I think the idea you need to make 200k+ to live comfortably in the US is simply wrong.

This isn’t to say we shouldn’t work to make the COL more tolerable.

If you have kids and want to live in nice suburbia with good school district, you better be ready to spend 400k+ in a house. That is a $2300+ house payment (mortgage + HOA + property tax + insurance). That will stretch your budget if your household income is not > 120k/yr.

 

[AnatomyGrey12]

If you have kids and want to live in nice suburbia with good school district, you better be ready to spend 400k+ in a house. That is a $2300+ house payment (mortgage + HOA + property tax + insurance). That will stretch your budget if your household income is not > 120k/yr.

Well I already own a house in a good suburb with excellent schools and only pay $1300/month total..... so... I’m going to disagree with you.

Going to be selling this house and buying one for residency and will be in the exact same situation. In many places I’ll probably be spending less a month actually. And yes that includes mortgage, taxes, insurance, HOA, etc. No you don’t need to make 120k to do that at all.