How We Crushed Half of Our Medical School Debt

Earlier in 2023, I published a post titled Why a Positive Net Worth is a Critical Milestone for Physicians. In it, I explained how ‘getting back to zero’ was a huge financial achievement for my wife and I. More recently, we have reached another financial milestone. We have now officially paid off half of our medical student debt! As I will show you throughout this post, we have paid way more than half, thanks to interest. That is why this feels like such an important step for us. Watching our finances change drastically over the past year has been incredibly motivating. As we eliminate our debt, our net worth has begun to accelerate. Let’s discuss how we crushed half of our medical school debt and why it matters.  

How much debt did we begin with?

For you to completely understand how we crushed half of our medical school debt, and why it is such a critical milestone, I need to explain where we started. If you wish to know the whole story, check out Tackling Our $670,000 Debt Fast!

To summarize what is mentioned in that article, at its peak (when both of us were in residency), our combined debt was $680,000! Now approximately $10,000 was in credit card debt and private loans to help pay for education. The remaining $670,000 was all the combination of medical education debt plus interest.  

When my wife was a resident, and I was an intern, we sat down and discussed our debt. We knew we would marry, and our debt would combine also. As we started to educate ourselves in personal finance, we truly understood the reality of our debt. As we were grinding through training, the addition of debt anxiety weighed heavy on us both. We had to create a plan. We had to find a way to eradicate our debt. 

Our debt elimination strategy

My wife and I overhauled our financial understanding. We read personal finance books, educated ourselves, subscribed to endless online finance blogs, etc. All the stereotypical personal finance advice, we did it. We began to be indoctrinated into the physician personal finance world. We learned about prioritizing high-interest debt, PSLF, refinancing, debt snowballs, etc…

Ultimately, we decided that we wanted to be debt free within five years of completing training. This was slightly more complicated as my wife completed subspecialty training in Emergency Medicine in 2019, the same year I started a pulmonary and critical care medicine fellowship. I ultimately completed my fellowship training in July of 2022. As such, what we consider ‘5 years out’ is slightly different for each of us.  

How we prioritized our debt

We did a few things to reach our goal. For starters, we prioritized all supplemental income toward our debt. All bonuses, unexpected pay, and moonlighting went towards building our emergency fund and debt. Period. 

Secondly, we refinanced our student loans multiple times to achieve the lowest rate possible. If you wish to learn more about why we chose refinancing over PSLF, check out Choosing Refinancing over PSLF. This article will go into the details of our decision. Lastly, as our income grew, we set an annual goal of paying $100,000 towards our debt, and we have not wavered from this since.

How we crushed half of our medical school debt

Fast forward to the present. My wife completed training in 2019, and I in 2022. I now have a full year’s worth of academic attending income. On the other hand, my wife has been receiving an academic salary for nearly four years. Where has that put us? I have created a net worth graph that hopefully explains better than anything I could write. Of note, we started tracking this data initially in April 2019, the year I would graduate from internal medicine residency.

Net worth graph

In this line graph, I have included our total debt in red and our net worth in green. As you can see, we recently reached a positive net worth. Further, our debt has continued to decline with each passing month. It was a personal choice to represent our debt as a declining positive number than as a diminishing negative number. Personal preference is all.  

As I mentioned above, our debt (medical education + credit card + private education loans) started at nearly $680,000. When this article is published, our remaining balance (interest + principal) will officially fall below $340,000! However, it is crucial to understand how much interest works against you when eliminating debt. Though we have destroyed $340,000 of principal, unyielding interest has fought us every step of the way.  

How interest hinders debt elimination

Reviewing our budget, since we started tracking net worth and debt elimination (April 2017), we have put $459,259.23 towards our loans, just to half our principal. This is the reality of interest and debt. Though we have eliminated half of our debt, we have paid $119,259.23 in interest to reach this goal. That is a tough pill to swallow, but a reality nonetheless. The silver lining is that debt elimination will continue to accelerate as interest accumulates on a smaller and smaller principal. This means more of each payment will go towards the principal, increasing how quickly we eliminate it.  

How has debt elimination affected our net worth?

Debt elimination was always a top priority when working to increase our net worth. Aside from the mortgage on our home, our educational debt is our only other liability. The sooner we eliminate this, the sooner our net worth increases. There are many things to consider when deciding whether to pay down debt or invest. For our family, our profound debt aversion plays a significant role. 

At our current rate of debt elimination, as well as maxing out retirement contributions, receiving employer match, and HSA contributions, our net worth is increasing by 5-figures each month! This has been incredibly motivating and a massive boost to our debt elimination momentum.  

The importance of debt momentum

Debt elimination momentum is meaningful. I mention this because eliminating 6-figure debt is a marathon, not a sprint. Unless you inherit a large sum or win the lottery, even the highest physician incomes will still take years to pay down their debt. (Here is the Medscape 2022 Physician Compensation Report for reference.)

One must have grit, determination, patience, and a long-term mindset to eliminate debt efficiently. Completing training was an income boost, and this helped. Another boost was avoiding lifestyle creep as we both entered our peak earning potential. However, creating a financial plan that prioritized debt and making sure my wife and I were on the same page with our financial goals was crucial. We have grown in our relationship, tackling our debt together. The momentum is something to be celebrated, and watching our debt fall while our net worth builds is incredibly energizing and impactful.  

Our future financial goals

So, what are the next financial goals on our horizon? Some of our short-term goals include getting my wife’s education debt down to 5-figures. This is set to happen on September 2023. Another goal is to have our net worth reach six figures (another goal set to happen at the time this article goes live). Longer-term goals on the horizon include eliminating my wife’s debt. This is set to happen in mid-2024. 

I receive loan reimbursement through my employer, so I am reducing my debt to what will be reimbursed, then not paying a penny more to optimize my loan reimbursement potential. If I pay off my debt to quickly, I leave money on the table. At this point, I will see my debt as eliminated (barring any changes in employment).  

Goals beyond debt elimination

Other important goals include growing my children’s 529 accounts early so they can sit and collect interest. Once my wife’s debt is paid off in 2024, with mine on autopilot, we will need to discuss longer-term goals. How much do we wish to live on in retirement? Are we pursuing FIRE, or just FI? How big should our nest egg be? Are we remaining in our current home or saving for another move? When do we wish to retire? 

Seeking professional advice

I aim to meet with a (fee-for-service) financial advisor in 2024 to discuss our goals and trajectory. I would love a third party to review our achievements and plans moving forward. A one-time visit will bring peace of mind and insight.  

Take home points

Crushing half of our medical student debt has been a milestone we have celebrated. Watching our finances change over the past few years has been highly motiving. Achieving goals as a couple is important, and debt elimination momentum is real. Our goal was always to eliminate our debt within five years of training completion. Since my wife graduated in 2019, we are on track to eliminate her debt in 2024.

We will achieve this goal. This is a manifestation of hard work and perseverance and applies to more than just finances. Creating a financial plan early in your training and sticking to it is vital. Avoid lifestyle creep early on, focus on your debt, make intelligent investment choices, and live below your means for the first few years after training. You will be debt free in 5 years, guaranteed.  

Stay motivated!

The Motivated M.D.

I hope you enjoyed this article titled How We Crushed Half of Our Medical School Debt!  If you did, please share it with others. Do this using the ‘share’ buttons located on the left-hand sidebar (on desktop) or below this article.  It would also be very helpful if you would follow us on social media!  Instagram and Twitter accounts can be found using the right-handed sidebar (on desktop) or below (on mobile devices).  Thank you!

How are you tackling your debt? What milestones have you celebrated? Let us know in the comments below regarding How We Crushed Half of Our Medical School Debt!  We love to hear from you!

Standard Disclaimer: None of the information on this website is meant as individualized financial or medical advice.  These posts may contain affiliate links.