If I Knew Then What I Know Now – Finance Version

This post regarding our finances is inspired by Boglehead author Michael LeBoeuf. In 2014, he gave a talk to a room full of college students at Arizona State University called “If I knew what I know now.”

It was epic. Read it for yourself here: If I Knew Then What I Know Now

I’m here to share with you my version of “If I knew what I know now” and the financial mistakes we have made during the medical journey so far.

Michael LaBoeuf said:

Experience is a very tough, expensive teacher because you get the test first and then you get the lesson. It’s always cheaper and easier to learn from the experiences of others.”

As I share details from our lives, may we be a lesson for you.

First: Know That Your Mileage May Vary

Before I dive in, I need to tell you that finances are very personal. YMMV (your mileage may vary). While we may have a ton of similarities, we will also have differences.

Second, this post is list-heavy because it was the best way to deliver my information. There’s a reason why I love grocery checklists!

So get ready to be hit in the face with one hundred bullets.

Let’s begin!

BEFORE MEDICAL SCHOOL

My husband and I were college sweethearts. After graduation, both of us worked and earned two tech salaries as engineers. After that, my husband went back to school and became a non-traditional pre-med student.

Family situation:

  • We were engaged.
  • *No kids yet.

Actions:

  • Compared to medical training years, we were “rolling in dough” so we maxed out all accounts available to us.

What we did well:

  • Not freak out in 2008 during the recession and sell. Had we pulled out our money, we would have missed out on the bull market that came after.

What we wish we knew:

  • *What the heck did we do with so much free time before kids!?!?

My advice for this stage in the medical journey:

  • Choose the cheapest medical school your DrSpouse can get into.

MEDICAL SCHOOL

When my husband became a medical student, he made zero income and accruing tuition debt.

Family situation:

  • We got married during the first year of medical school. At the end of medical school, we had Child #1.
  • We owned our home with the money we saved before medical school from our jobs. #nontraditionalpremed #weareolder

First day of intern year (left), Last day of intern year (right)

 Actions:

  • I worked to support him and funded all accounts available to us.
  • He no longer had a 401k he could fund from work.
  • *We stopped funding his IRA.
  • **We opened a 529 for Child #1.
  • We wrote a will when Child #1 was born.

What we did well:

  • Discovered Boglehead and FIRE culture. Binged White Coat Investor, Boglehead Guide to Investing, and other great resources. Repeat, lather, and rinse with other books.
  • Switched from “big name brokerage” with high-fee funds to Vanguard low-cost, well-diversified index funds.
  • Lived well below our means.

What we wish we knew:

*I should have continued to fund his spousal IRA while he was a medical student. I thought he had to have earned income to do so, but I was wrong.

**We didn’t have to wait to have a kid to open a 529. We could have had a head start and opened one up for me, then transferred it to Kid #1 when he was born.

My advice for this stage of the medical journey:

  • Don’t carry a balance on credit cards. If you are, cut up your cards and go cash-only.
  • Once you have dependents, get a will. While using an estate planning attorney is the way to go, you can use a FREE one from LegalZoom for now.
  • Read one financial book a year. I suggest starting with Boglehead’s Guide to Investing book.
RESIDENCY

Internal Medicine Residency was 3 years long and a big change to our cash flow with both of us working again. We were moving up in the world and “adulting!”

Family situation:

  • Child #2 was born during PGY2.

Actions:

  • We both worked and funded all accounts available to us.
  • He now had an HSA, which he previously didn’t have before, and funded that.
  • We got into a income-driven repayment plan for his student loans.
  • *We submitted paperwork for Public Service Loan Forgiveness (PSLF) every year.
  • **We bought term life insurance for both of us in PGY1.
  • ***For his student loan payments, we waited until Child #2 was born to increase (+1) the number in our household.
  • We bought own-occupation (“own-occ” for short) disability insurance for my husband in PGY1.
  • We opened a 529 for Child #2.
  • He moonlighted as soon as he was allowed.

What I wish I knew:

*Because we were planning to do PSLF, we could have gotten out of the 6-month $0 grace period to have a head start on having more low payments count towards PSLF. We didn’t because we thought the grace period was mandatory.

**Ideally, we should have bought term life insurance as soon as Child #1 was born in MS4. Instead, we waited until PGY1.

***Because Uncle Sam counts unborn children when calculating student loan payments, we should have increased (+1) the number in our household when I became pregnant and not waited until I gave birth. This caused us to miss out on 8 months of lower IDR payments.

What we did well:

  • Lived below our means.

My advice for this stage of the medical journey:

  • Buy term life insurance as soon as you have dependents. Stay away from whole life and its cousin variable life.
  • As soon as intern year starts, get disability insurance quotes from an independent agent for ALL six own-occ companies.
  • Handle those student loans and get into the right IDR payment plan (assume REPAYE unless proven otherwise like if you’re filing taxes separately) the moment he graduates. If his residency program is #1) not a 501(c)3 or #2) you know 100% that he wants to go into private practice, refinance.
  • For the vast majority of families, renting will come out ahead over buying a home in residency.
  • Save more aggressively because you’ll need to pay for interviews and boards coming up.
  • Begin saving for retirement even if it’s $50 a month. But save something.

FIRST FELLOWSHIP

Towards the very end of residency, my husband became interested in subspecializing in GI. By the time he decided to go into it, he hadn’t published enough research that’s needed to match into GI. So he didn’t match the first try. Instead of becoming a Hospitalist and giving up on his dream, we decided to a Clinical Nutrition Fellowship aka his “first fellowship” to match into GI.

Family situation:

  • Child #3 was born 10 days after he started First Fellowship. With three kids who were three and under, our cash flow was the tightest it ever was in our lives.

Action:

  • Child #3’s birth was a tipping point between SAHM vs. working mom. I could choose either, but I chose to be a working mom.
  • We lowered or stopped our contributions to our accounts.
  • We opened a new 529 for Child #3.
  • *Learning that my husband is more interested in private practice and highly unlikely to go academic, we considered the possibility that he might abandon PSLF. But we’re still filling out paperwork for PSLF just in case.

What we did well:

  • Continue to live below our means.

What we wish we knew:

  • *I wish we have a crystal ball to tell us whether he’s going into private practice or not, so I would know whether to abandon PSLF or not. Time will tell.

My advice for this stage of the medical journey:

  • I typically like to mathematically optimize all our decisions, but the truth about finances is that sometimes not all decisions are based on money. Kids are part of our dream. Right now I’m consciously “slowing down” my career to grow and raise our family. I write this post while our three carefully budgeted, dream babies are asleep. #blessedmom

GI FELLOWSHIP

My husband matched into GI and will start in July 2019! To continue to see how we progress along our medical journey, subscribe to my emails and follow me on Facebook and Pinterest.

Your Turn

Imagine yourself going back in time. What would you tell your younger self? Share below in the comments. It may help a lot of people.