Session 94

In today’s episode, I talk with Ryan Michler, a financial advisor who specializes in working with physicians.

Ryan shares with us his experiences working with physicians. He tells us about the mistakes physicians make that lead them to be broke even with a salary of over $400,000 a year. We discuss how you can align yourself with success at any stage in your premed or medical career.

You might think these topics won’t be pertinent to you until you’re an attending physician, but you need to pay attention and set yourself up for success now!

Listen to this podcast episode with the player above, or keep reading for the highlights and takeaway points.

How Ryan got involved working with physicians:

• His background initially in retail management and joining the military
• Realizing he wanted to impact people’s lives through financial planning

The biggest mistakes physicians are making with their finances:

• Failure to create the right habits
• Getting into debt prior to medical school (credit card debt, car loans, and mortgages)

The biggest mistake of physicians with high income who still end up being broke:

• Huge debt
• Along with massive student loans, buying excessive vehicles, toys, and home destroy their ability to get ahead
• Entertainment is specifically a huge budget item for many people (dining out, vacations, and travel)

[Related episode: How to Pay Back Your Medical School Loans.]

The financial habits you should start forming as a premed and medical student:

1. Budgeting

Understand that you have to get a hold of your finances. Worry about your cash flow—the lifeblood of your money. Understand where every dollar is coming in and going out. Budgeting is one thing you can’t delegate.

Budgeting tools you can take advantage of:

• Mint.com
• YNAB (You Need A Budget)

2. Include in your financial discussions the people that need to be included.

Include your spouse, your financial planning team, or your parents when discussing your finances.

3. Take out emotions and really live by the rules.

Whatever guidelines and budget you set, live by them. Don’t adjust immediately when you start desiring something outside the budget.

4. Save.

It doesn’t matter how much you start with—just get into the habit of doing it.

5. Figure out the order you should pay off your debts.

For example, the debt snowball or pay down strategy—prioritize which loans you pay off first based on three factors (interest rate, term, and payment).

Why Ryan suggests to work on your smallest debt balance first 90% of the time:

• Psychological victory when you get a debt line paid off.
• Increased flexibility

6. Track your savings, investment, cash flow, and debts.

When talking about investment and savings, use percentages instead of fixed dollar amounts. Pay yourself first—then you can spend the rest of the money however you want. Increase the percentage you save as your income increases.

7. Have the mindset of paying your debt and not replacing it with new debt.

Don’t put yourself on a treadmill of paying off your debt only to accumulate more debt immediately again.

8. Spend less than you earn.

It’s the same as the advice for losing weight—calories in versus calories out. You need to have more dollars coming in than going out.

9. Surround yourself with the right people.

Surround yourself with people who are living in line with what you want to accomplish.

Should you pay off medical school loans or start investing for retirement first?

A lot of physicians with medical school loans aren’t sure whether they should wait until they’ve paid off their loans before investing. There are actually pros and cons to doing it either way.

Paying off loans first:

• Pros:

• • Guaranteed rate of return
  • Getting debt-free before investing

• Cons:

• • Flexibility issues

Investing first:

• Pros:

• • You get into the habit of investing
  • You get rates of return that outpace 6-8% in investments
  • More flexibility

What Ryan suggests…

Find a happy medium between paying off loans and investing.

[Related episode: Common Mistakes in Financing Medical School.]

Some pieces of advice for premed students, medical students, fellows, residents:

1. Set up an account at mint.com.

Start getting a hold of what money is coming in and going out. Budgeting alone is not enough, but it’s a start.

2. Address protection issues.

Consider disability insurance or life insurance. These are underutilized areas but really important even when you’re in school. If you have a 401K through a previous employer, don’t cash it in.

3. Use the pay down strategy to pay off your debt as fast as you can.

Resources you can use:

1. Find people in your life that have the type of success you want to have.
2. Investopedia.com: Learn how to invest and learn about all the terms.

Links and Other Resources:

• Check out my Premed Playbook series of books (available on Amazon), with installments on the personal statement, the medical school interview, and the MCAT.
• Related episode: Setting Yourself Up for Financial Success, Starting Now.
• Related episode: How Do I Pay for a Postbac and Can I Repay Loans?
• Need MCAT Prep? Save on tutoring, classes, and full-length practice tests by using promo code “MSHQ”
  for 10% off Next Step full-length practice tests or “MSHQTOC” for $50 off MCAT tutoring or the Next Step MCAT Course at Blueprint MCAT (formerly Next Step Test Prep)!