Our Loan Repayment Progress in 2024

We hit a major milestone in our finances, and I wanted to take a break from our regularly scheduled content to discuss it.  Though the past eight weeks have been predominantly dedicated to writing chapters for my Doctor Money content series, this milestone is one I do not want to allow to pass without dedicating a week towards it.  Further, I can often get a little burnt out when writing chapters, and taking a much-needed break to write freely is nice.  This week, I wanted to take the time to discuss our latest milestone in debt elimination and further elaborate on our future.  Here is our Loan Repayment Progress in 2024. 

Our Previous Loan Repayment Updates

In Spring of 2022, I published a post called Graphing Our Loan Repayment Progress.  This was the first dedicated post to my personal finances and debt-elimination journey.  Further, It was one of the first times I remember being truly transparent with our financial journey and publishing a graph from our budget.  The response humbled me. 

Following this, I decided to create a post dedicated to our debt elimination story (Our Loan Repayment Progress series) with each year or milestone… whichever came first. In 2022, our biggest milestone was my impending graduation from fellowship and the expected future attending income. 

In 2023, that transitioned to the end of my formal ‘grace period’ for my previously refinanced private student loans.  My significantly larger payments began, and with my attending salary, my wife and I had a better idea of how much discretionary income we could put towards our debt.  We were doing our best to live below our means and max out our retirement savings while still putting $100,000 towards our debt annually.  Here is Our Loan Repayment Progress from 2023. 

Each of these posts sought to tackle two topics: the state of our finances and our future plans. Each included a snapshot of our current net worth as well as a bar graph interpretation of our debt elimination journey. With this post, I hope to continue this tradition as we celebrate our latest milestone and provide another annual update. Drumroll, please…

Paying Off My Wife’s Student Loans

We officially paid my wife’s medical student debt when this post was published!  This is largely the most significant milestone we have reached to date.  Thought I would refer to prior posts to fully describe our debt elimination journey, here are the highlights:  At it’s peak our combined educational debt totaled nearly $680,000, $324,000 of that being hers.  We elected to refinance for various reasons.  My wife is two years older than me and completed her fellowship training in July of 2019, the same time I started a three-year fellowship in pulmonary and critical care. 

Though my spouse and I were already funneling money towards our debt during our years in residency and fellowship, our ability to make dents in our debt didn’t begin until we both were making attending incomes.  However, as this started, we followed our financial plan to make sure we were saving appropriately and living below our means so we could pay off her debt within five years of her training’s completion.  I can happily write that we have done it!  Here is the most updated version of our Loan Repayment graph followed by our net worth:

Our Loan Repayment Progress in 2024

Though my wife’s debt was slightly less than mine, that is still nearly $324,000 paid to completion in exactly five years. 

If you are doing that math, that is an average of $64,800 annually, not factoring in interest.  If I had the willpower, I would log in to her account and review all the tax documentation over the past five years… but you get it.  Though she started with $324,000 and refinanced when it was down to $262,000, we paid well over $324,000, given how hard interest works against you.  This is why you must buckle in and pay it down promptly.  It is large consistent payments that will thwart interest. 

What is wild to remind myself is that we achieved this goal while simultaneously making $4900 monthly payments towards my debt, purchasing our first home, starting a family, taking care of an in-law, and employing a full-time nanny. Though it is important to remember that we are a dual-income physician household, it is truly incredible what our incomes afford us with some intelligent investing and lifestyle constraints.     

Important Financial Milestones

There are a few important financial milestones that overlap with this achievement.  For those who have followed my content in the past, you are likely aware that I advocate for keeping financial goals as a tab on your shared budget.  Though a budget is clearly for monitoring and navigating your expenses, it can also be a motivational tool.  With the payoff of my wife’s student loans, we have reached several financial milestones in one fell swoop.  Here are a few:

For starters, we paid off well over half our debt.  Technically, we paid off half our debt a while ago; however, it genuinely feels like we have eliminated a colossal portion of it.  Though ‘paying half’ was a milestone worthy of celebration, this one feels more profound.  My wife is now a working physician without the weight of debt.  She has returned the income utilized to achieve her professional dream, and now she can march onward in her career without the shackles of debt weighing her down.  It is an incredible feeling. 

Given that we have paid off my wife’s debt, that also frees up a large amount of discretionary income.  We now have the freedom to prioritize other financial goals.  Though we keep a working ‘priority’ list, it will be nice to better fund our children’s 529s, save for a bigger car, and expand our emergency fund.  Further, we are excitedly expecting our third child, and being a family of five with a mother-in-law who lives with us most of the year means we need bigger vehicles.  We can save enough to pay for this larger car in cash while still having significantly more financial wiggle room.

Lastly, we finally feel we have the opportunity to grow our wealth without any real expectation of expanding our lifestyle over the next few years.  Our family is growing, but we have a few years left in our current home to decide what our needs are and contemplate the repercussions of purchasing a larger home in the current housing market.  We are in no rush. 

My Loans on Autopilot

With this post about paying off my spouse’s debt, it is logical to ask about what remains of mine.  The good news is, genuinely nothing will change.  I am still on track to pay off my debt in roughly three and a half years, and that is because I am on a five-year repayment plan.  Better yet, I have no incentive to pay it off faster as I have previously negotiated loan reimbursement. 

I receive loan reimbursement up to a previously disclosed amount annually for five years.  Given that I am on a five-year repayment plan, I will make my regularly scheduled payment monthly, reach my target repayment goal annually, and then be reimbursed.  With this, I can make large lump sum payments towards other financial priorities that I cannot do during the rest of the year. 

Largely, we have decided to make all these reimbursement payments towards our children’s education savings.  If you have not read Chapter 1: The Doctor’s Dilemma from our Doctor Money: A Personal Finance Guide for Physicians, I suggest you check out the college and medical education costs section.  Put simply, it costs a lot, and the cost of education is increasing, sometimes outpacing inflation.  Because of this, the sooner I substantially fund all three of my children’s 529 accounts, the sooner interest can work for me. 

With my debt now on autopilot and my wife’s paid off.  I feel like I can breathe.  I can, only now, sit back and reflect on the impact of our financial decisions and dedication.  So, now that most of my debt is paid, with the rest being reimbursed, do things feel different?

Arrival Fallacy?

The Darwinian Doctor (Dr. Daniel Shin) published a great post about the arrival fallacy as it applied to his peers.  We find that this expectation of paying off our debt or purchasing our ‘forever home’ will lead to unending happiness and a state of euphoria that will never leave.  So often, however, we realize these feelings are fleeting.  That new car smell quickly fades, that new home requires upkeep and discretionary income is utilized through lifestyle creep. 

To be honest, the day we paid off my wife’s debt, I felt unchanged.  I believe so much of this feeling, or lack thereof, is because of our larger financial goals.  Paying off her debt within five years of her training completion was just part of the plan.  We stuck the landing and now turned to climb the next mountain. 

Sure, having less debt looming over our heads is an incredible feeling, but it does not change much about our day-to-day.  If anything, I hope it allows me to navigate our daily expenses with slightly less financial anxiety and slightly more wiggle room.  Maybe now I can stop worrying about our coffee breaks or that extra item at Costco.  I just paid off $324,000 for crying out loud!  I can let go of the little things. 

I also think that my wife and I have created financial habits that will long outlive our debt elimination.  As such, now we apply the very same habits that helped us achieve loan repayment success and apply them to all of our other goals.  However, it is quite refreshing to target something other than debt for once… thank God. 

What the Future Holds

So what does the future hold?  Well, a lot, in fact.  Personally, we are using the next few months to see what our finances look like without extra loan payments.  Further, our quarterly bonus will no longer be beholden to debt.  Now we can start to prioritize our other goals too.  Our third child will arrive later this year, which will impact our finances in some small way.  It is our third go-round, so fortunately, we already own everything needed for the infant and toddler phase.  No biggie. 

We have both already decided to live in our current home for a couple of years, avoid lifestyle inflation, and find some financial breathing room.  We will monitor the housing market closely in our area and make a game-time decision on upgrading our home again when the time is right.  In the meantime, we will build equity in our current home and save for a downpayment at some point in the future. 

Regarding The Motivated M.D.,  I will continue to tackle chapter after chapter in our Doctor Money content series. I still wish to complete this 15-chapter endeavor by the end of 2024, ideally before my third kid arrives! If you have not seen the first half of our book, make sure to check it out here. 

With all of that said, I will also take the time to pause, reflect on our achievements, and write more about where our financial journey takes us next.  As always…

Stay Motivated!

The Motivated M.D.

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