What is the difference between 11 and 6? The average number of years spent in school for a physician vs. the average master’s degree student. It also represents a time of little to no pay and long hours in the hopes of a promising career for either person. The only difference? The physician may have a lot more accumulated debt to pay off than the Master’s degree-holder. Your old college roommate has been earning six figures for five or six years longer than you have, and that is where the income disparity begins.
Speaking with a physician client of mine who is at the end of his career recently provided some enlightening points about this problem. While physicians are in the “learning” phase of their lives, they have to make sacrifices, put life on hold and watch friends who are not in the medical profession advance their lives, have families and establish careers. Once they finish residency, they expect that new contract after the “learning” phase to be higher to compensate for those years of work. Now it is their turn! Make no mistake that medicine is a higher calling and provides challenges that the profession provides. It also requires the medium that all doctors are told to ignore when treating patients, and that is money.
The average student debt load for graduating doctors is $166,000, and that’s all before interest rates of 7.5% or more are tacked on.
But wait, there’s more! Next comes the new home, the premium car and credit cards, all because the earning potential for a doctor is much higher than the average worker. Add that all up and the cycle of never-ending debt can take over a new doctor’s bank account, draining it every month and placing more stress and anxiety on the doctor, something that the Family Physician tells patients to avoid.
How do you manage these debts and become focused on your burgeoning medical career? Follow this course of treatment and you will improve your financial position over time.
1. Do No Harm (to Yourself)
The Hippocratic oath works with debt as well. Use a tool that pain management practices use: acknowledge that the debt is there and it will be your friend until the end (of paying off the balance). It’s OK, the decision has been made, the signatures have been inked and the money is (hopefully) well spent.
When you feel yourself getting overwhelmed, use this simple stress relief tool: Pick three things that you appreciate in your life and recite them whenever you feel anxious or depressed. This method can help you keep focused on your career while you still have debt on the books.
2. Take a History of the Present Condition
Go ahead and get all of your current debt listed on one piece of paper. Look at the balance remaining, your monthly payments, interest rates and the types of loans. Then use a debt calculator to decipher the lifetime cost of existing obligations and optimize the best reduction strategy. There is a process to getting out of debt and it takes discipline, which brings us to the next step.
3. Begin Treatment
Write down an action plan. There is no better therapy than putting it on paper (and I don’t mean the digital kind). Set up a plan and stick to it. Create a habit of consistently making monthly payments on time — a major factor of credit scores. (You may also want to see where your credit score stands. You can pull your credit report from free every year on AnnualCreditReport.com or check your scores for free each month on Credit.com.) With student loans, there are various payment programs that will adjust as earnings are made.
4. Monitor & Adjust as Necessary
There are some ways to accelerate the debt payoff. Look at new methods of reducing the cost of the debt, particularly revolving debt (credit cards, etc.). There are many strategies, including debt consolidation or debt settlement, that you may want to consider, depending on your particular situation. There are also websites that can help you find freelance physician work, which could potentially help you pay loans back more quickly.
5. Get a Professional Second Opinion
Sometimes a physician may recommend a patient see a specialist or consult one of their colleagues before beginning a course of treatment. So, too, should you. You could consider finding a certified financial planner who specializes in helping medical professionals. Ask if potential planners do debt management plans and can help you stay on track with a program.
Keep in mind you may want to avoid sacrificing any retirement savings to first paying off debt. Saving early compounds over time!
Remember, it can be OK to have debt. Debt is often how businesses get started, grow, and even transition. People use financing to buy homes, cars and fund education. Try to enjoy your life in spite of your situation. If you create and stick to a game plan, your debt will pass in time.
More on Managing Debt:
- The Credit.com Debt Management Learning Center
- How to Pay Off Credit Card Debt
- 5 Tips for Consolidating Credit Card Debt