Why I will not be going into FM/Gen Peds/Gen IM

[Mt Kilimanjaro]

"Based on 7% interest"

Isn't that about what they are for people who aren't getting Perkins loans or disadvantaged loans? Stafford = 6.8; grad plus = 7.9

---

Members don't see this ad.

 

[deleted500612]

Isn't that about what they are for people who aren't getting Perkins loans or disadvantaged loans? Stafford = 6.8; grad plus = 7.9

Honestly not sure what the standard rates are for US lenders, I just find that shockingly high. I know that often people will consolidate their loans after graduation to get better rates as well. I'm currently paying 3% interest on my loans.

 

[sazerac]

Hopefully this picture is clear...

It shows a montly 10-year repayment of $4,082 on an initial $258k loan debt. Subtracted from those net monthly salaries for Peds, FM and IM (~$9-10k/month) things start looking bleak when you add in mortgage, kids, car, food, etc. I really think you have to have very limited debt (less than 120k or so) or a high-earning spouse to consider some primary care specialties these days.

View attachment 180243

Obviously nobody in this situation is going to sign up for the standard 10 year repayment plan. If you go to the AAMC MedLoans calculator you can see a realistic portrayal of how today's high-debt physician makes loan payments without an unsustainable 44% of their gross income going to debt service. There are many loan repayment plans besides the 10 year repayment plan. The most likely option would have less than 10% of their income going towards debt.

 

[DermViser]

The amount of taxes that people who make 150k+/year have to pay is INSANE! I am changing my party affiliation on Monday... You got a new member in your party my fellow republicans!

Can people in SDN stop posting these bleak pictures regarding PCP? Gosh!

Wait till you meet your classmates who believe money grows on trees, and that doctors make too much money.

 

[Perrotfish]

...before I've even rotated in them:

Full time jobs in gen peds earns ~150,000. A little more in fam med and General IM.

Enter that amount into paycheckcity.com, select your state as, oh say, California.

Take home pay is $92,744 after taxes. I'll be graduating residency with around $250,000 in loans. According to the loan repayment calculator at finaid.org, a 10-year repayment plan will allow $95,240.90 of interest to be added to the principle balance. In the end, I'll have paid $345,240.90 to Uncle Sam. Divide that number out by 10 yrs, and I'll be paying ~$34,524/yr in loans.

Therefore, my take home pay of $92,744 has decreased to ~$58,220. Someone without this kind of loan burden can take this amount home with a gross salary of just ~90,000. And also, I would be 32, so I HAVE to start saving for retirement, since I will be a latecomer to the game with an opportunity cost of 10 years of time in terms of compound interest. Conventional wisdom says I should save ~20% of my gross salary JUST FOR RETIREMENT. This takes another $30,000 out of my take home pay.

Now we're down to ~$28,220.

That's what I have to work with to pay:

Rent/mortgage
Utilities
Car
Food
Insurance
Educational costs for the kids
Etc.
Etc.

A mother-effing waiter can take home as much as that. I hate to say it, but I just can't stomach that.

I'm all for advanced financial planning, but...

1) I hate how people always come up with the absolute worst case tax scenario in all of space and time to justify feeling put upon. In this scenario you are worried about educational cost for the kids, but have no dependants. For that matter you are paying the single standard deduction and the single adult tax rate despite presumably having a wife and kids in the first place. You are worried about a mortgage, but have no mortgage deduction. You are sheltering none of your income as capital gains in an S corp, you have nothing in an HSA, no tax advantaged college savings plan for your kids, no IRA, and no anything else. You have no business expenses to deduct and give nothing to charity. And just for ****s a giggles you have chosen to live in the state with the (by far) highest income tax in the nation. This is not a reasonable set of assumptions.

2) You also forgot the 50K/year you earn as a resident. You don't start working, or paying down your loans, at 32, you start at 29 (which, BTW, is starting a little later than most of your peers, which I would assume means you worked even before that). 50K is significantly more than the average individual income, its no joke.

3) On the other hand, you have a retirement savings plan that would put you in the top 1% of the nation. You are proposing a plan that would net you 5 million in savings at the age of retirement. You are planning on living off of 25K/year now, and presumably 55 K when your loans are paid off, so that when you retire at 67 you can pull down 73K in social security income AND 200K in largely tax free (assuming you used mostly Roth IRA) capital gains without touching your estate. That's one heck of a jump.

4) Finally, related to #3, even if you followed this plan to a T, you are not making what the waiter makes. The waiter does not get 73K of social security benefits if he retires at 67, he gets something around 26K. He does not get 30 K 'extra' to put into a gigantic retirement account, his retirement account comes from entirely from the 25K he earns. He does not free up an extra 30K to spend when he pays off the loans, he's stuck with the 25K. That's the difference between middle class and poor: its not the standard of living, its the security of savings and hope of advancement in addition to the standard of living. I understand that medicine may not be as lucrative as you want, or think you deserve, but not being able to understand the difference between your income and a blue collar worker does not put you in a good light.

A good way to look at the effect of loans is to look at the effect on your lifetime earnings. An average high school graduate makes 1.2 M in a lifetime. An average college graduate makes 2M. A Pediatrician will pull down 5.25 M at 150K/year, and the loans eat about 500K of pretax dollars, even assuming you don't work a single extra hour early in your career to pay off the loans (which most primary care docs do). You're still making twice as much as a college grad and four times as much as a high school grad. If you feel that's not enough, and want to shoot for the moon with 12M in earnings as an anesthesiologist, then go ahead but that doesn't mean the Pediatrician is living in poverty.

And, of course, if you bet your life on the higher income profession be aware that we remain one medical advance or medicare payment schedule change away from completely different levels of payment. There were lots of radiologists who thought they were signing up to do what they loved, who ended up being really rich when CT and MRI imaging became mainstays of almost all hospital management, and there were a lot of radiologists who thought they were signing up to be rich who have found themselves looking for much lower paying work as their career gets more and more automated and outsourced. I would strongly consider passion and/or lifestyle before money, not so much because they're more important as because both passion and lifestyle are more stable over time.

 

[Bacchus]

^remind me to buy you a beer.

 

[Mad Jack]

FP in Texas, single, 2 federal exemptions, employee status, after-tax income on 200k, 8.75% set aside pre-tax as 401k savings: $131k
PAYE Monthly Payment: $1,667/mo, 20k/yr
Already set aside in 401k pre-tax: $17.5k/yr
Set aside after-tax: $22.5k
Total After-Tax, After Student Loans, After-Savings Income: $88.5k/yr, or $7,375/mo, hardly austere. That is the amount of after-tax money a person making roughly 125k per year would have after taxes if they saved absolutely nothing for retirement (YOLO!) and had no student loans (unlikely for someone making 125k).

Not saying FM is awesome, just that you aren't condemning yourself to complete poverty for the rest of your life by going into it.

 

[deleted500612]

This is funny, yet ironic because the guy in the picture is Italian businessman, Flavio Briatore. He failed out of public school twice. Then when his parents put him into a private school he graduated with the minimum passing grade. Never attended post-secondary. This would be more like the picture your son shows you when he asks why he has to study.

 

[Priapism4tooLong]

My daddy said, "follow what's in your heart and have passion for it, the money will come. I just hope your passion isn't being a garbage man."

 

[punkedoutriffs]

I'm all for advanced financial planning, but...

1) I hate how people always come up with the absolute worst case tax scenario in all of space and time to justify feeling put upon. In this scenario you are worried about educational cost for the kids, but have no dependants. For that matter you are paying the single standard deduction and the single adult tax rate despite presumably having a wife and kids in the first place. You are worried about a mortgage, but have no mortgage deduction. You are sheltering none of your income as capital gains in an S corp, you have nothing in an HSA, no tax advantaged college savings plan for your kids, no IRA, and no anything else. You have no business expenses to deduct and give nothing to charity. And just for ****s a giggles you have chosen to live in the state with the (by far) highest income tax in the nation. This is not a reasonable set of assumptions.

2) You also forgot the 50K/year you earn as a resident. You don't start working, or paying down your loans, at 32, you start at 29 (which, BTW, is starting a little later than most of your peers, which I would assume means you worked even before that). 50K is significantly more than the average individual income, its no joke.

3) On the other hand, you have a retirement savings plan that would put you in the top 1% of the nation. You are proposing a plan that would net you 5 million in savings at the age of retirement. You are planning on living off of 25K/year now, and presumably 55 K when your loans are paid off, so that when you retire at 67 you can pull down 73K in social security income AND 200K in largely tax free (assuming you used mostly Roth IRA) capital gains without touching your estate. That's one heck of a jump.

4) Finally, related to #3, even if you followed this plan to a T, you are not making what the waiter makes. The waiter does not get 73K of social security benefits if he retires at 67, he gets something around 26K. He does not get 30 K 'extra' to put into a gigantic retirement account, his retirement account comes from entirely from the 25K he earns. He does not free up an extra 30K to spend when he pays off the loans, he's stuck with the 25K. That's the difference between middle class and poor: its not the standard of living, its the security of savings and hope of advancement in addition to the standard of living. I understand that medicine may not be as lucrative as you want, or think you deserve, but not being able to understand the difference between your income and a blue collar worker does not put you in a good light.

A good way to look at the effect of loans is to look at the effect on your lifetime earnings. An average high school graduate makes 1.2 M in a lifetime. An average college graduate makes 2M. A Pediatrician will pull down 5.25 M at 150K/year, and the loans eat about 500K of pretax dollars, even assuming you don't work a single extra hour early in your career to pay off the loans (which most primary care docs do). You're still making twice as much as a college grad and four times as much as a high school grad. If you feel that's not enough, and want to shoot for the moon with 12M in earnings as an anesthesiologist, then go ahead but that doesn't mean the Pediatrician is living in poverty.

And, of course, if you bet your life on the higher income profession be aware that we remain one medical advance or medicare payment schedule change away from completely different levels of payment. There were lots of radiologists who thought they were signing up to do what they loved, who ended up being really rich when CT and MRI imaging became mainstays of almost all hospital management, and there were a lot of radiologists who thought they were signing up to be rich who have found themselves looking for much lower paying work as their career gets more and more automated and outsourced. I would strongly consider passion and/or lifestyle before money, not so much because they're more important as because both passion and lifestyle are more stable over time.

This really shines a light on how much I have left to learn. I've recently just started trying to become financially literate and as shown by your post, there is a lot of nuance I'm obviously unaware of. I suppose this tempers the deterrent to going into a primary care specialty.

 

[Arkangeloid]

My daddy said, "follow what's in your heart and have passion for it, the money will come. I just hope your passion isn't being a garbage man."

Actually I heard being a garbage man isn't too bad in terms of compensation.

Honestly, I think being a trucker would be kinda cool, but that's just because I enjoy long drives (not flights though).

 

[Winged Scapula]

This is funny, yet ironic because the guy in the picture is Italian businessman, Flavio Briatore. He failed out of public school twice. Then when his parents put him into a private school he graduated with the minimum passing grade. Never attended post-secondary. This would be more like the picture your son shows you when he asks why he has to study.

Also, filed under "why in the hell do I know this": Flavio Briatore's ex-GF is Heidi Klum with whom he fathered her first child. He was slightly thinner then, but no less rich and unattractive.

 

[Perrotfish]

This really shines a light on how much I have left to learn. I've recently just started trying to become financially literate and as shown by your post, there is a lot of nuance I'm obviously unaware of. I suppose this tempers the deterrent to going into a primary care specialty.

Its not a bad concern to have. You're not wrong that this debt sucks. Which is why I have also been doing a lot of financial reading lately. If you like multiple specialties finances are a great tiebreaker.

However when you get too freaked out about debt just remeber to take a step back and run the numbers before making an emotional decision. Chances are you don't need to sell yourself to a specialty you hate just to pay off your debt.

 

[Mt Kilimanjaro]

Obviously nobody in this situation is going to sign up for the standard 10 year repayment plan. If you go to the AAMC MedLoans calculator you can see a realistic portrayal of how today's high-debt physician makes loan payments without an unsustainable 44% of their gross income going to debt service. There are many loan repayment plans besides the 10 year repayment plan. The most likely option would have less than 10% of their income going towards debt.

Good point.

I have heard that only about 15% of physicians take longer than 10 years to pay off loans though. Not sure if that's true after looking at these numbers.

 

[sazerac]

Good point.

I have heard that only about 15% of physicians take longer than 10 years to pay off loans though. Not sure if that's true after looking at these numbers.

The medical student tuition and loan environment was a lot different in 2004.

 

[yesno]

...before I've even rotated in them:

Full time jobs in gen peds earns ~150,000. A little more in fam med and General IM.

Enter that amount into paycheckcity.com, select your state as, oh say, California.

Take home pay is $92,744 after taxes. I'll be graduating residency with around $250,000 in loans. According to the loan repayment calculator at finaid.org, a 10-year repayment plan will allow $95,240.90 of interest to be added to the principle balance. In the end, I'll have paid $345,240.90 to Uncle Sam. Divide that number out by 10 yrs, and I'll be paying ~$34,524/yr in loans.

Therefore, my take home pay of $92,744 has decreased to ~$58,220. Someone without this kind of loan burden can take this amount home with a gross salary of just ~90,000. And also, I would be 32, so I HAVE to start saving for retirement, since I will be a latecomer to the game with an opportunity cost of 10 years of time in terms of compound interest. Conventional wisdom says I should save ~20% of my gross salary JUST FOR RETIREMENT. This takes another $30,000 out of my take home pay.

Now we're down to ~$28,220.

That's what I have to work with to pay:

Rent/mortgage
Utilities
Car
Food
Insurance
Educational costs for the kids
Etc.
Etc.

A mother-effing waiter can take home as much as that. I hate to say it, but I just can't stomach that.

Op I got it worse. I am older than your traditional med student and I'll be doing 6 yes of residency. So I will not be 32... also its a more competitive field so I will not be in California. And when I am done there is no guarantee that I'll male more per hour than primary care. Especially if u got some business skills. And to add fuel to the fire some Obama voters treat me like a poor slob. I was just sitting at McDonalds working on my laptop- admin bullsjit such as OSHA evals etc when a 40yo manager with golden teeth told me she has a business to run here. Same people will expect free service from me in 10 yrs. If I were a cop is have it muchuch better

 

[circulus vitios]

Join a group that offers student loan repayment incentives, go on IBR/PSLF, or stick it to the man by moving to another country and not paying your loans.

Or just don't do FM/IM/peds.

 

[rocketbooster]

Not sure why no one has brought this up but basically every state med school has a primary care loan forgiveness program that erases your debt if you do 4 years of primary care in an underserved setting. That usually counts as a rural area, VA or I think even an academic setting.

If you're doing primary care and will have tons of loans, you should def consider it.

 

[evilbooyaa]

I can't believe I missed the appropriate window to respond to Arkangeloid responding inappropriately in ANOTHER allo thread.

That is all.

Perrot, really nice post in regards to the OP.