Resident Other

Money magazine’s latest print issue (sorry I could not find the article online) has an interesting article by George Mannes about a young doctor couple that is under more than $700,000 in debt (school, med school and mortgage) and expecting a child.  Although most of us only have one medical doctor in the marriage, if you’re like my wife and I, you probably have your own college debt above their colossal medical school debt.   You might want to read it if you happen to get a copy of the magazine in your hands.

I thought it was an iteresting look into the life of residents who make $50K or less and basically start life with a net worth of at least -$450K in their case.  The article notes that in 1996 the average education debt of a medical school grad was $96,500 while for 2006 it rose to $130,500.  I don’t think I have to tell you how ridiculous this amount is because you are living it like we are.  It is obvious in the article that the couple is making a great number of sacrifices.  How is any person expected to attain that much debt (87% of medical students do according to the article) and still be expected to be in it for the good of humanity — for the sake of helping people?  With the cost of medical school and the small resident salaries, one must go into it thinking that it is an investment and accept the pressure to choose high-paying specialties in order to make the money and the effort worth it.  No wonder primary care specialties are mortally wounded.   To amass $130K in debt and only earn $40K as a doctor? no thanks.  I know I’m not the first and hopefully not the last to rant on this issue.

The article does point out a couple of interesting strategies which are specific to the highlighted couple and may not apply to you.  First, the magazine’s financial advisors say the couple should stop putting money away for retirement. Yes, folks, that’s right.  But they have a good point:  Since they are so short on cash for child care, debt repayment and life insurance it is ok to temporarily put a stop on retirement savings.   I know retirement planning is a big thing for us right now since I had a late start to my career and I keep trying to “catch up” on my retirement savings.  But as my wife’s med school loans are about to come off grace period, putting off retirement for a few months might be a good idea.

 Second, they are advised to get life insurance since if one of them were to die the expenses would overwhelm the survivor.  I know we haven’t thought about that part much, but I will definitely be looking into it now.  I have ignored life insurance for quite a while mostly because of our age, but it’s true, it can happen at any time.

 Third, they should deal with debt.  yes, back to that again! I think the most important advice for them was to address the high interest loans as much as possible.  The cutoff should be at loans with interests of 4% or more.  They should address the loans at lower rates later as it is the cheapest money one can find.

 And fourth, they are reminded that there is light at the end of the tunnel.   As their incomes rise after residency, that they will have a way to tackle their debt with more impact.  But you know, I do happen to be partly pessimistic and I can’t exactly ignore that while many people start life with positive net worths, residents start in the red and have on average very little choice.  It’s hard to share that burden with my wife, especially when I am not also a doctor and have such a high expected income down the road.  It will be interesting, if not difficult to manage her desire to raise kids, be a doctor and do charitable medical work with the dark cloud of loans above us as we depend on my income. 

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