Post-Training Mistakes Residents and Other Professionals Make: Part I by Clark Gaither, MD, MRO, FAAFP

In medicine, our first charge is to do no harm. As providers in healthcare we are always cognizant of this imperative. We live with a certain fear of missing something, omitting something, of making a mistake which might bring harm to a patient. Those are the kinds of mistakes with which we concern ourselves most often. Much less attention is provided to another category of mistakes which providers make with regularity, those which have more to do with determining the kind of life and career the provider will have.

All newly minted healthcare providers have at least some notion of their preferred future. Following training, with their hopes and dreams in tow, they eagerly dive into the work of their chosen profession. The thought, “nothing can stop me now” runs through everyone’s head. Yet, sadly, some things do stop many.

Practicing clinical medicine for 23 years, becoming an expert in the arena of professional job related burnout, and serving as Medical Director of the NC Physicians Health Program have afforded me a certain perspective—knowledge guided by experience. I’ve seen the devastating consequences resulting from common mistakes made by newly graduated professionals. I have made them and continue to see colleagues make them. Lives and careers have been ruined by deceptively simple but poor decision making. I would like to pass along some sound, prudent advice on how to avoid the major pitfalls graduating residents make. This is the first in a series of posts offering a compilation of the most common mistakes physicians make following training and how to avoid them.

The Slavery of DEBT

It’s not uncommon now for residents to complete training saddled with $150,000 to $200,000+ of student loan debt. They are graduating with a mortgage and no house. These costs will only rise with time. For years, physicians in training have delayed a great deal of gratification to reach their goal of becoming a physician. Very soon after entering the workforce they are presented their first big fat pay check. The big pay-off has finally arrived.

Or, has it? Instead of a big-pay-off, what usually happens is a big borrow-up. First comes a big house, usually more house than is needed, with a big mortgage attached. This is usually followed by a new car or cars every three to four years, also on borrowed money. Later, the beach house or mountain get-away seems a must have, which is mortgage number three if you’ve been paying attention. Of course, joining the country club or buying the big boat seems eminently doable. Private school for the kids, sure, why not?

Debt, upon debt, upon debt. It’s okay though, because you have this big income. Right? Maybe you do, maybe you don’t. It would break your heart to know how many physicians in their 50’s and 60’s come to the NCPHP for help, high income earners for their entire practice career, and they are dead broke. All it takes is a divorce, a business failure, an illness, an addiction, or an accident for the whole leveraged house of debt cards to collapse. We see it so often it is no longer surprising. Remember, the borrower is always a slave to the lender.

If you recall from previous posts on job-related burnout, we know that only 10% of the time does the provider burn themselves out. One of the ways this occurs is with workaholism. With so much debt, physicians begin to work more to earn more. Instead of enjoying their income they worry continuously about money which seems to evaporate as quickly as it is earned. Working long hours, extra shifts, weekends, holidays, giving up time off all contribute to individual burnout. Not to mention the negative impact this has on the family who never sees the provider because they always seem to be working. Missing family get-togethers, sporting events, recitals, anniversaries, graduations, birthday celebrations strain interpersonal relationships. This contributes to the high divorce rates among providers. A divorce can easily wipe away one-half or more of a provider’s net worth. Yet, the debts are never wiped away. Freedom from debt means freedom in many other arenas of one’s life.

Consider this. Instead of paying off $200,000 in student loan debt in ten to fifteen years, why not pay it off in two to three years? Instead of borrowing money for cars or a house, why not pay cash for them? At first blush, you may think this is impossible. Allow me to show you how this is possible. Using round numbers, let’s say you owe $200,000 inn student loan debt and you accept a job right out of residency paying $200,000 per year. You will bring home roughly $140,000 net, plus or minus $10,000 depending on your state of residence. Now, if you were living on $50,000 per year through residency, and you continue to live on that same amount out of residency, this leaves $90,000 per year to throw at your student loans. Using these numbers, you would be debt free in two years and three months, sooner if you owe less or earn more.

The key here is to delay gratification a bit longer until you are free of student loan debt. After that, any overage above living expenses can be repatriated to save or purchase other items instead of going to principal and interest payments. This means, using the same numbers above, you could purchase a $60,000 automobile in eight months or a $200,000 home in another two years, three months and pay cash for them.

Let that sink in for a moment. You could pay off $200,000 in student loans, buy a new $60,000 car, and a $200,000 home and be debt free in five years and two months out of training. Think of how this would advantage you in terms of your overall practice career and future earning potential.

I am a huge fan of Dave Ramsey and his book, Total Money Make Over. He has the right strategy for getting out of debt and staying out of debt. Millions of Americans live debt free thanks to his simple and highly effective program. All residents about to exit training would do very well for themselves by applying the principles he teaches in his book. Another added benefit to renting those first few years post-training as opposed to buying a home is that it makes you nimble. It is much easier to relocate if you discover you hate the city you’ve moved to or find yourself in a toxic work environment.

In my next post, Part II of this series on Post-Training Mistakes Residents and Other Professionals Make, I’ll be discussing employment agreements. Stay tuned.