I'm thinking about starting a website for my fellow young physicians to improve their financial literacy (which is essentially absent) and subtly turning them frugalitarian. I just drafted a post and, since you are all expert Mustachians, I wanted to float it and see what you think. It's specific to physicians but the concepts are MMM.
Why “live like a resident” is dangerous financial advice
“Live like a resident”. I bet this advice on how to get out from under the burden of our student loans sounds familiar. If you’re like me, you nod your head “Oh, yeah, I should totally do that” and then continue to do absolutely nothing differently. It's so frustrating to be living on a resident salary in your 30's while high school and college friends are all debt-free except for what they've overspent on their McMansions and Mercedes. Every time I hear a financial advisor tell a group of residents, fellows, or young attendings to “Live like a resident,” I facepalm.
Seriously??? Who would make it out the other side of residency and choose to plunge back into the fires of medical education purgatory? When most of us finish residency, we smile in the graduation party pictures while secretly imagining flipping a match as we walk out the door. Being told to “live like a resident” might be intended to encourage us to avoid lifestyle inflation, but tapping into our collective PTSD doesn’t motivate anyone.
Even worse than being advice that we can ignore with impunity, telling us to “Live like a resident” is perversely counter-productive. Somewhere along our medical education, we are instilled with a sense of entitlement. We develop a belief that we deserve to live it up once we finish residency or fellowship.
Why? Maybe it’s because the hierarchy of academic medical centers suggests that once we complete training we move up a rung and should act accordingly. Maybe it’s because our non-medical friends or families expect us to be rich or have no problems once we start making an attending salary. Maybe it’s because we need to picture ourselves in a shiny new car or our kids in a house with a big yard to make it through the rough shifts. It becomes normal to pretend like we don’t have to let six-figure medical education debt get in the way of our lifestyle. Telling us to “Live like a resident” during our early attending years does nothing more than remind us how much we feel like we deserve to be living better.
I watched a session on financial planning for residents the other day. The session was a panel of “experts”, two financial planners and one young attending who still has more than $100,000 in student loan debt. I’ve been to my share of useless financial planning sessions as a resident and fellow. Same advice, over and over again, that nobody knows how to take. But this session was particularly bad.
One of the financial planners on the panel opened with a cautionary tale. A doctor that he works with finished residency with nearly $500,000 in student loans. He and his wife bought a condo as soon as he started his first job. After a few years, their young family had outgrown the condo but he had trouble selling it. So, about 5 years out from residency, this doctor had two mortgages and student loans totaling over a million dollars in debt.
What do you think came next from that financial planner? A truckload of truth being served upon the residents in the audience? A harsh dose of reality about how bad things can get if they try to bury their heads in the sand? Nope. The follow-up was “Through no fault of his own, this young doctor has found himself in a rough situation. Let’s talk about how to decide whether to invest in taxable or tax-sheltered investments.”
Are you kidding me? It’s mathematically impossible that this guy could ever invest his way out of a million dollars in debt. The interest on that debt will eat his life. It will eat his childrens’ lives. Even worse, in what universe did this guy end up over a million dollars in debt “through no fault of his own”? Owing a million dollars is not a congenital disease. The doctor in the story made choices that resulted in his debt. I made choices that resulted in my six-figure educational debt. We have all made choices, some good and some bad, that have consequences for our financial bottom line as young physicians. Graduating from residency doesn’t erase them and we’re not entitled to anything.
We are not special snowflakes. We have to acknowledge where we stand financially, just like the barista at Starbucks that has student loans from her English literature degree. We aren’t entitled to have our troubles melt away at the end of medical training. But we do need help in managing our debt while having a fulfilling personal life. We need advice that is candid and realistic.
Hey, financial planners who give advice to young physicians, I’m looking at you. Get relevant or get out.