We’ll pick up right where we left Sonya, the intrepid daughter of a boar wrestling mother and doily-designing father. She just graduated from her internal medicine residency at the University of Wisconsin with a net worth of -$61,874. That student loan debt that looked so fearsome is starting to appear more house pig than wild boar.

Fellowship, Year 1 : Sonya is lucky and matches into the GI fellowship program at Wisconsin, so she doesn’t need to move and will be able to continue paying off her mortgage at the fixed interest rate. She can also continue to moonlight at hospitals she is already familiar with, where she makes a hefty $2,000 a night. Her fellow’s salary is higher ($60,000), but she has less time to moonlight and cuts back to average 2 shifts per month, so her total income after taxes falls to $82,000. With her expenses and standard of living relatively fixed, she is only able to pay $16,000 off her student loans while contributing $5,500 to her Roth. Her student loan burden is now roughly $125,480 ($135,000 after a year of 4.8% interest with compounding is $141,480, less $16,000 in payments).

Fellowship, Year 2 : Her schedule improves, her salary goes up to $64,000, and she is again able to moonlight three nights a month. Her income after taxes is $108,000, so she is able to contribute to her Roth and put $40,000 towards her loans. Her condo continued to appreciate at a slow but stable rate and with her increased principal, it’s net worth to her (value-mortgage debt) is $30,000.

Finally, it’s big money time! She decides she wants to move home to Arkansas, interviews with several practices there, finds a couple good fits, and uses negotiating skills she learned as a VA way back in medical school, as well as her hog-tying mother’s tough-as-a-boar approach, while leveraging the competition to negotiate a signing bonus of $40,000 (in 2016, over 30% of physician bonuses were $25,000-$75,000). Her financial picture at 31 is starting to look rosy:

Retirement Savings (Roth IRA): $73,049

Education debt: $91,503 ($125,480 with a year of compounding at 4.8% interest – $40,000 in payments)

Cash (bonus): $40,000

Principal in condo: $30,000

So Sonya passed the mythical Net-Zero threshold sometime in fellowship, and is now on her way to financial independence! Plus she’s now a gastroenterologist, meaning she can reasonably expect to make anywhere from $250,000-$350,000 right out of the gate. When she sells her condo she can use that money and her bonus to pay off her student loan debt entirely, or save a portion of it for the down payment on her next home (even with the magic of a zero down physician loan, she’s better off with a traditional fixed mortgage if she plans to stay in a house for 10+ years).

Takeaways

Sonya achieved net zero much quicker than almost of us. How?

-She recognized the value of an undergraduate concentration that gives easy access to well-paying internships, unlike schmucks like me who decide to do Biology because it’s the quintessential pre-med major. I made $8 an hour on my summer jobs.

-Sonya avoided costly “additional” expenses while she was living on loan money. A dog or cat you get in undergrad or professional school can end up costing you $81,760 by the age of 31- that’s the cost of food, vet bills, damaged property, and pet fees paid with loan money. Categorically similar: anything bought with credit card debt (especially food, clothes, travel), a car payment (interest on top of interest!), and really expensive toys.

-She had no undergraduate debt and went to the cheapest medical school she could find

-Sonya made a plan that included contributing to retirement in the highest impact, lowest input way: an automatic deposit in a Roth IRA that automatically buys index funds. I have accounts with Vanguard and T Rowe Price that accomplish the same thing.

-She put in the extra effort to earn a small amount of income in medical school.

-She chose a specialty with a moderate training time but excellent opportunities for moonlighting. Mine (oral surgery) has similar moonlighting capabilities. I’ve heard also Radiology and Anesthesia are good for this. Unfortunately I don’t have an encyclopedic knowledge of other specialties, and opportunities vary with regions and programs. I know other oral surgery residents who make six figures moonlighting, many people who moonlight overnight in rural ERs, and some who work in telemedicine. The opportunities are out there! I’m looking forward to exploring this further.

-It was a well-researched gamble to buy a condo, and she got lucky that she was able to live there for five years.

-She created healthy and sustainable habits while limiting the other commitments on her time (yard work, chores, pets) and dedicating herself to her profession at appropriate times

-Perhaps most importantly, she avoided significant lifestyle inflation. It’s the biggest trap we fall into: gradually increasing our cost of living as we go through training. It’s most dangerous when it’s insidious. If we take the time to occasionally examine the big picture, make smart decisions with our biggest expenditures (housing, cars, travel, food), then we can afford to let some elevated standards creep into our day-to-day lives. I use and recommend Personal Capital to look at how your spending is allocated, and areas that change significantly.

 

Wild Cards: Reasonable things that would have delayed the journey to Net Zero

-Relationships: Sonya kept a fairly strict schedule and limited expenses. This is easier to do on your own, but many of us don’t want to wait until we’re Sonya’s age to get on with the rest of our lives. Does it cost us a couple years in the journey? Yep. Worth it? Absolutely.

-Health problems resulting in big bills: In this fake scenario, Sonya avoided major health problems or other financial catastrophes. As long as we have insurance, get disability insurance at the appropriate times, and maintain a generally healthy lifestyle, I’m not sure there’s much else we can do. Those of us with known ongoing healthcare or medication expenses should consider using an HSA (account where healthcare costs are paid for pre-tax). Ditto for elective procedures like laser vision correction.

-Market swings: Sonya’s index fund could underperform, of a housing crisis could precipitate a drop in the value of her condo: understood and acceptable risks. Her Roth IRA is less of a risk than the condo: even if the market crashes while she’s in training, historical data suggests that it will bounce back and over time generate the 7.7% return I used here for calculations. Later in life she will need to educate herself or hire help to diversify her holdings and prevent the devastating effects that market fluctuation closer to retirement age could have. I recommend books and blogs directed at this age group, like The White Coat Investor or Physician on FIRE. As a young person who is 30-40 years from retirement, she can essentially afford to ignore this.

 

Well, what do you think? I can anticipate the objections:

• It’s impossible to work in professional school and do well !

It may be difficult, and it may be unconventional, but it is far from impossible. Almost every pharmacy student works significant hours as a tech during pharmacy school, and I work 3-5 days per month while writing this blog as a medical student. I also worked during summers in dental school. I think it’s important that any work you do is high-paying for the time, flexible, and can be done remotely or on your schedule.

• $2,000 a night for moonlighting isn’t realistic !

Well, it’s certainly high, and most jobs probably won’t be quite this efficacious. But I took this number from real life. My moonlighting job is based on collections (what patients actually pay for the work I do), and it averages to about the same hourly rate as Sonya’s in this case study. Doctors and dentists get paid a lot; it’s on us to take advantage of it when it matters.

Notice, also, that Sonya has some wiggle room. At the end of this scenario, her net worth is a staggeringly positive $51,546, and she’s about to start a job where she makes more than 95% of Americans. Even if you fall short in some, or most, areas, you can be well ahead of your peers!

Well, whaddya think? Does this seem possible? Are you sick of pig pictures?