Debt Free Doc Interview 4
Here’s our latest interview with a debt free doctor (or soon to be). These stories allow us to continue to learn from those who are free of debt or currently on the path to do so.
If you’d like to be considered for an interview, drop me a note and we can talk about specifics.
Be sure to read all the way to the end and either leave your questions or comments.
My questions are in bold italics and his responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am 43, my wife is 42. Married for 17 years
Do you have kids/family (if so, how old are they)?
We have a 10 and a 9 year old
What area of the country do you practice in (and urban or rural)?
How much student loan debt did you have?
It depends on what time period and what kind of debt
How much other debt did you have?
My wife and I are both health professionals and finished undergrad, grad school and residencies (two residencies for her) with a combined debt of 55k. My wife had no student loan debt.
After graduate school and residency, I owed 3 years of active military service a but I also looked at is as a “time related debt”.
We had car debt of 25K in addition to the student loan debt but paid both off during the 3 years while in the military. We rented the first year and bought a 350K house we never should have with 10%down and PMI.
We were fortunate to sell the house at basically “a break even” before I was honorably discharged 2 years later after my commitment was completed.
After the military, I joined a practice on the East coast and incurred a 35K hard assets debt and a sweat equity debt of 650K. My wife finished up her second residency one year later into my private practice buy in.
We decided to rent that first year of practice and when my wife finished up her residency, we bought a 3500sq ft house for 650K that was closer to both of our respective jobs.
We put another 150k into upgrades that we paid for with cash. We initially took on a 30 year fixed mortgage but paid the house off in a little over 6 years.
Is your house paid off? Yes.
What was the defining moment that made you decide to tackle your debt?
I cannot say there was one defining moment, although personally, I was always conscientious about not incurring debt ( ie a significant reason why I chose the military route to help out with grad school).
What really turned the page for both my wife and I was our introduction to Dave Ramsey’s way of thinking. It really gave us a solid base in understanding how to work together toward reaching our financial goals.
What type of plan did you use to pay off your debt?
Well, after the military and residencies, we really had no debt until my practice buy in and our home purchase which totaled approximately 1.35 million.
Our plan was to:
- live on much less than we made
- pay off the 35K practice hard assets over 2 years vs the 5 year plan offered
- attack our mortgage paying more as “bonus” money allowed
- pay off the sweat equity of the practice as scheduled over 7 years since no interest would be applied
We did decide to take an aggressive approach to the sweat equity buy in by paying more down the first 4 years and gradually paying less the last 3 years instead of doing the opposite.
Yes, the latter approach would have freed up more income for us but we chose to be tighter on the budget earlier and reap the higher income later.
Did you make any mistakes or hit any snags along the way?
We stayed fairly focused. I suppose our biggest mistake was doing more upgrades to the house rather than just put those resources toward the mortgage.
How long did it take you to become debt-free?
3 years the first go around and a little over 6 years the second.
What is your profession?
Both healthcare professionals
What is your annual income?
Upper 6 figures
What’s your work-life balance look like?
My wife and I both “work to live rather than live to work”. She works 2 days a week and I work 3 days a week in the summer and 3.5 days the rest of the year. editor’s note: (Wow, that’s awesome!)
We take ~ 8 weeks of vacation per year. It was important for both of us that she was able to be home with our kids while they were younger and turns out, now, we’re really both home a lot. Maybe more than our kids want us to be! Ha!
Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?
I teach part-time which is something I enjoy outside the normal private practice grind and we have passive real estate investments that currently replace half of my monthly salary. Our goal is to have passive investments completely replace one of our incomes.
What is your annual spending (personal not business)?
Hard to say. It seems to vary yearly depending on what we decide to do with our giving and vacations.
What are the main categories (expenses) this breaks into?
We really only have the usual fixed household expenses insurances, etc. We are fortunate that our kids have excellent public schools to attend so no private school tuition at this point.
We belong to a local country club and are planning on purchasing a horse in the near future as my wife and daughter enjoy riding.
Do you have a budget? If so, how do you implement it? (who creates it, who monitors it, how do you work together on it (if married), etc.)
We do have a budget but it is much more related to savings and where are resources will be directed:
- toward retirement accounts both taxable and 401k
- 525 plans for both kids
- passive real estate investments
We also budget out our yearly giving and vacations as we love to travel both in the US and abroad.
What percentage of your gross income do you save and how has that changed over time? Close to 40% but again varies based on what we do on a yearly basis. Last year, it was more as we bought a house for my family
What do you secretly love spending money on?
- Experiences and Travel! I value these much more than things such as fancy cars, clothes and a huge house on the water. We love our vacations and spending quality time with our kids. We also plan nice trips that include our families.
- Giving to charities special to my wife and I and helping our families out. This has provided us with the greatest joy in our lives outside our kids.
What is your investment philosophy?
Live on less than you make. We have always lived by this motto despite our income rising over the years.
What’s been your overall return? (rough estimate is fine)
12% on retirement plans so far
What is your current net worth?
Do you have a target net worth you are trying to attain?
Not necessarily. We could essentially retire now and be ok with living a frugal life in retirement although we also realize that if we continue to live as we normally do (well below are means yet enjoy ourselves within reason) we can establish a legacy not only for our kids, but our grandkids and their grandkids.
editor’s note: Proverbs 13:22 “A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.”
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- Retirement accounts
- Mutual funds taxable accounts
- real estate both passive and rental
When do you plan on retiring?
Not anytime soon as we both still really enjoy what we do. We do often talk about in our early 50’s, it may be time to hang it up. Life is too short and health is never guaranteed!
What are your retirement plans? (both financially as well as activities in retirement)
We really have not discussed our ultimate retirement plans but I would bet both my wife and I will keep plenty busy with hobbies and giving back both with our time and finances to things we believe in most.
What advice do you have for Debt Free Dr readers on how to become debt free?
Be on the same page with your spouse and live on less than you make. Do not get caught up competing with the Joneses on who has the fanciest house or cars and where your kids go to school.
My wife and I both drive paid for American made cars and our kids go to public schools and we are completely ok with knowing how secure we are financially if everything tanked tomorrow.
How did you learn about finances? Was it from someone you knew, school, books,etc.?
Dave Ramsey and a special friend who first introduced me to him way back when! (Maybe the DFD??)
Who inspired you to excel in life? Who are your heroes?
It wasn’t as much of “Who” but “What”. I came from a very poor upbringing and was the first to attend college in my entire family, not just immediate. I always wanted to better myself. That was the motivation.
Do you give to charity and/or tithe? If you do, what percent of time/money do you give?
We typically give 10% of our gross income to charities and tithing annually but some years it has been more as previously mentioned.