Managing Student Loans & Finances for Residents

Season 1, Episode 11

Listen to a discussion about the financial challenges that residents face, including managing med school debt, how to balance saving and investing, and avoiding anxiety around money early in their careers.

Transcript

Cassandra Hume [00:00:07] Hi, everyone, this is Cassandra and you’re listening to Financing Ambition, a Laurel Road podcast. We’re joined today by Dr. Sanjay Juneja, also known as The OncDoc on social media, who’s a triple board certified hematologist and medical oncologist at Baton Rouge General Hospital and is the host of an innovative podcast called Target Cancer. We also have Dr. Chirag Shah, an anesthesiologist in Chicago, where he’s focused on surgical procedures for veterans and reducing dependence on opioids. Dr. Shah completed both his residency and fellowship in Chicago and prior to that worked as an investment banker in New York City. So we’re in good company today. Thank you both for joining us. Welcome.

Dr. Juneja [00:00:48] Glad to be here. Thank you for having us. And hopefully, we can learn some things that we’ve learned, you know, either the right way or the wrong way. Right?

Dr. Shah [00:00:55] Exactly, pleasure to be here. Nice to see you again, Sanjay.

Cassandra Hume [00:00:58] Today, we’re talking about the financial challenges that residents face early in their careers. And we’re thrilled to have you both here since you know firsthand the unique challenges that can hit you right after residency. First, let’s talk a little bit about the current rate environment. There’s news every day about rising interest rates and what might happen next. So what do you think residents should know about the world of finance right now?

Dr. Shah [00:01:19] That’s a really good question. And I think there’s a lot of uncertainty and it’s scary. I’m only two and a half, three years out of residency and fellowship. And one of the best things I did – and it was luck –  is refinance my loans. Most of us had fixed rates with the government about six, six and a half percent, and interest rates were low for a long period of time. So it was a great time to refinance. And, unfortunately, now we’re kind of heading back in that environment now where the Fed is raising rates. Just this past month, they raised 0.75%. And then all of that is going to get pushed into the student loans as well. So, rates are going to be rising when you refinance. So, it’s just something to be careful about. I do think that they’re still lower than the 6.8% that the federal rates were at back in the day before the forbearance that is currently in place. But rates will be rising for the foreseeable future from what it seems like. You know that you get some thoughts on this, too, because of your refinancing. So if you want to chime in with what you’ve been seeing out there.

Dr. Juneja [00:02:23] Yes, I mean, you know, when you think, fundamentally, the concept of student debt, it just means like, hey, we’re gonna let you basically loan out this 100-200K, but for the opportunity cost, because we can’t use that money, you’re going to give us 6.8% every year. And that’s because we’re giving it to you and we can’t use it. But then, what’s really annoying is (but reasonable, sure) is that, well, I can’t pay that 6.8% yet, or if I choose not to, they say, well, we need six, but we need 6.8% of that too, because that technically is more opportunity cost that we’re losing. So that’s the concept of debt. And then what’s happening during that time, if you aren’t able to also pay the interest on that debt, well I was always told, right, when the market was good and, you know, 7%, 6% whatever people were quoting you on the market return to like well you can refinance for, you know 3% to 6%. So take your time, this and that. That’s unfortunately just, like, a different playing field, it seems, going forward, because now, you know, nobody or if they are telling you that you want to see like, are we sure it’s going to be six, 7% sure I want to do this and that. And so that’s where it gets kind of sticky. And hopefully, some of the stuff that we cover today will kind of give you an idea of, okay, if I don’t like the uncertainty, maybe these are some of the things I should look into or think about just because things are dynamic. These are the tools to help you kind of curtail that or go around that if you don’t (and rightfully so) know who to trust on one side or the other.

Dr. Shah [00:04:00] And along those lines, I think there are two ways to think about it as well. Refinancing your student loans is free and you can do it as often as you like. So at some point, if you want to lock in a lower rate, it’s a good idea to do it. And there’s two ways to do it. You can do a variable rate or a fixed rate. So what I initially did was I had a variable rate and it was super low because the Fed rates were essentially 0%. So, essentially I was paying no interest and I was just paying principal off, which is great. Right. With the loans, with the rates rising now, those variable rates are going to continually reflect what the market is doing. So those have been going up. So at some point, you may also think, hey, it might be time to get into a fixed rate if you think the rates are consistently going to continue climbing. So it’s something to think about. I know it’s a little bit more nuanced, and the nice thing is you can get help with stuff like this. And it’s a good idea just to take a moment for yourself and think about where your money is going and how you want to kind of position yourself for the future.

Cassandra Hume [00:04:59] Thank you. So talking a little bit more about the point, right, when you’re coming out of residency and the things maybe that you might have done differently or wish that you had, starting with you, Dr. Juneja, is there something specifically that you wish you’d done or something that you might tell your younger self about managing your money at that stage in your career?

Dr. Juneja [00:05:18] Yeah. So to start I did something that if you are in residency, I suspect there’s somebody is listening to this that’s like, dude, I did exactly what you did. And that was, basically, hold off any decision about anything, cause I didn’t have time to even understand these terms, and I’m just going to put pause on it. That’s what I that’s what I basically thought this word meant, which is forbearance. And forbearance means suspend pause. Can’t address it. Got to do my medicine stuff. We’ll revisit this later. Well, I opted for that. That sounds easy. And then what happened was, you know, obviously, I got arguably wiser, maybe a little bit in that time. Now, my dad, he didn’t say many phrases, but one phrase he always said was no such thing as a free lunch. So it’s not a full pause button. You’re paying for that pause button. You’re basically just pausing on like your decisions, like the forbearance. You’re still getting interest.

Dr. Shah [00:06:14] So right, your interest is building up on your loans, that’s exactly right.

Dr. Juneja [00:06:16] See, if I had you as a friend, I would have known that it’s not a pause button. But that pause buttons cost me a pretty large number. And because my wife a large number, because these are the same three specialties and it took us forever. But number one, let me just make sure and it’s okay if you’re listening to this and you’re in year one, two, or three and you’re like “oh gosh, I hit the pause button! What did I do!?” You can unpause it. That’s always a choice, right? Every July, you are able to change that, too. That’s number one. Forbearance is not a full pause. There’s a cost to the pause. And that just means I’m not making a decision. But obviously that interest is still coming up.

Cassandra Hume [00:06:48]: Now of course that was true when you were in residency, and interest is typically accruing – but interest and payments, as we know on federal loans has been paused in response to COVID-19. Dr. Shah, what else would you recommend as an alternative after the pause ends?

Dr. Shah [00:07:01] So if you do income-based repayment based on your resident salary of, let’s say, $60,000, you’re still paying a very minimal amount. But each of those payments counts towards that ten-year frame. Obviously, if you can’t afford it and you can’t pay the minimum, it makes sense to do it. But it’s probably the least palatable option out of everything out there that I would pick if I was a resident.

Dr. Juneja [00:07:24] That’s exactly right. And, it’s exactly like Chirag said, after med school, if you are doing a fellowship or you’re doing one of these six, seven, eight years like my wife and I did, that’s like stuff, if you start paying on a 50,000, I think it was our resident salary. Like it’s pretty minimal because like it’s very low at the beginning. But I could have gotten six years right off the bat and then the other four considered doing a public, you know, whatever that set up, which we’ll get into later to kind of neutralize that ten years with six seven be mandatory. So that’s another huge boom. You’re listening to this. You should be excited just on two amazing things that I believe in and a lot of people don’t know. So, a tie in to all of that really to the especially the forbearance part was what I said at the beginning, which was you’re getting that 6.8% for the opportunity cost that any bank is losing, and that’s a reasonable thing. But then you’re also paying the 6.8% on top of that. And each year I paid more on 6.8%. 6.8 on that, on that, on that. That’s compounded. And I think that I just did not understand. I was really good at math, I was a math champion, I just I just never understood the actual semantics of it. And so to now, I really do wish in hindsight that I would have paid the interest off because then, that number that I loaned out would have stayed more or less the same. And if you can’t, even if you want to think about it as 6.8%, if youpay half, which is hundreds, you could at least pay half your interest off every month. So these are little tricks you can play to sometimes make it easier, but if you’re going into a long residency, it just makes such a big aggregate difference.

Cassandra Hume [00:08:56] Thank you. Thank you both for sharing that. Yeah, there’s so many considerations obviously at that kind of phase in your life. Yeah, I was going to say, Dr. Shah, is there anything you would add on that front? Again, sort of if you had to kind of boil it down to a few things that you could do right after residency, during residency, to get your finances in order?

Dr. Shah [00:09:13] Yeah. So I graduated from med school and went straight to residency like most of you. And I actually started paying off the minimum on the 6.8 based on an income-based repayment. But I didn’t stay in a not-for-profit environment. So, what I actually wish I’d done was refinanced. I’m an anesthesiologist and I knew I was going to do private practice (initially, anyways.) and then my career path changed a little bit where I’m actually at a public institution now, but, I knew that at some point that I want to be in private practice. What I should have done is I should have refinanced that 6.8 down into 1%, 2%, whatever rates are being offered, because those are all-time low rates. Even now, I think they’re probably at three or 4%. These are all-time historic low rates. And instead of the balance building up, like Sanjay was saying on the 6.8%, it would have been 3%. Under 4%. And even companies like Laurel Road, where they make the minimum payment $100 a month. So at least you’re paying down something towards that interest that’s building up at a much lower interest rate. And that’s kind of a key component here. The 6.8 isn’t a one year thing. Let’s say you have $100,000 and an interest rate of 6.8. Your balance will go up to $106,800 if you don’t pay any of it off. But then the next year, it’s 6.8% of that new number. And it’s compounding, like Sanjay was saying. And then the year after in your third year residency, it’s 6.8% of even a larger number. So whatever you can pay off, your best bet is to start paying off as little as you can, or as much as you can. But I understand it’s a little number when we all start out.

Dr. Juneja [00:10:50] Definitely agree. And, and I like what you said earlier, because some people do look at that variable versus fixed. And it’s just like I feel like everyone has two versions the way the right way to do things like Chirag that you’re all going the way that Sanjay could have been Chirag. But at least there is some merit to my thinking. This is what it does. It usually hasn’t gone up in ten years, this blah, blah, blah. I’m like, Dude, at the end of the day, you’re telling me if it goes up 20% and it follows the market, that I could be responsible on a variable rate for 20%, then I want fixed. And so the fix is always more. Now, in hindsight, again, if I would have done it, I would have actually benefited for a solid number of years at a much lower variable rate. But those are things to consider. And just listening to you, Chirag, I didn’t even think about it. Exactly like you said, refinancing is free. I could have refinanced that variable for a while and then done a fixed later if you started getting nervous.

Dr. Shah [00:11:45] And you can refinance as much as you want. There’s no prepayment penalties and there are no application fees. So that’s, I think, one of the important things to know. Like, maybe I should lock in a lower interest rate right now and then if the rates keep falling, then I can refinance. But if the rates keep going up, at least I’m locked in at this period of time at a certain rate. And I really do think that’s an important concept to understand here, because the rate environment we’re in, it seems like the rates are going to be rising for the foreseeable future. Obviously, no one can predict the future, but that’s what it seems like. So to me, if the national forbearance plan goes away and you start paying an interest rate of 6.8%, you should really think about refinancing.

Dr. Juneja [00:12:27] I’ll tell you something that’s really bad that you’ve spoken on is, tell me about the interest rates and compounding and that compounding on credit cards. That’s a whole different conversation, right?

Dr. Shah [00:12:37] That’s a whole different ballgame because you’re looking at 18 to 20%, if not higher. So if I was a resident right now, the first thing I would do is put those loans on the back burner if I had them and pay off my credit card loans, because a lot of us had moving expenses. We didn’t have a lot of money saved up when we got out of med school. Right? We had this big amount of debt. We were moving to a new city, getting settled in a new apartment. We have to have car payments. We have to have a down payment for the apartment, for the rent. And sometimes we have to take a cash advance or figure it out. And those interest rates are killer at 18 to 20%. So as soon as you get your first paychecks, ideal world, what you could do is pay off your credit card debt and then move onto your student loans. And obviously, you may have some other forms of debt, but you should always think about paying off your highest interest rates and then move down to your lowest interest rate products, whatever those may be. And the other nice thing is actually some of the doctor banks and companies out there may even give you a loan at a lower interest rate to pay off your credit card, which is really beneficial because you’re taking a 6% interest and applying that to a 20% interest. So it’s like saving 14%. Credit card debt really is the worst thing you can do for yourself starting out in any career, especially as a resident that’s making 50, 60,000 like we all did when we got out of med school. So I totally agree with you, Sanjay. I think the most important thing is to pay off your high debt and move on to your lower debt after that.

Cassandra Hume [00:14:00] So we’ve talked about a few of these sort of key concepts with compound interest. Obviously understanding your options when it comes to refinancing, when it comes to paying off debt. You’ve both mentioned that coming again right out of residency, sort of. Where do you turn to for financial advice so that maybe institutions are bombarding you with marketing offers? Dr. Shah, how would you advise with with your experience in the financial sector to start to navigate some of those different offers?

Dr. Shah [00:14:25] So it’s really difficult, right? You’re in a profession where your future payoff is going to be substantial. And anytime you have an instance like that where you maybe don’t have the business knowledge or the financial knowledge, people are going to jump in and try to give you advice on X, Y, Z, whether it’s financial advisors trying to cold call you on LinkedIn or trying to match with you on LinkedIn or Facebook or what have you, and everyone’s going to want to give you advice. I think the most important thing you can do is look for a fiduciary, meaning that they have your best interests at heart. And number two is maybe to spend a little bit of time trying to educate yourself by going to a few nonaffiliated websites that aren’t trying to sell you anything or that are just an information depot. There’s a lot on TikTok. Sanjay knows, he’s quite active there. There’s also many websites online, and there’s other people that are easily accessible on Twitter where you can just message and say, hey, this is what I’m thinking. And it’s surprising how people will get back to you and kind of give you a path and a map, maybe help you chart stuff out. But the one thing I wouldn’t do is sign up with someone that wants money to give you that advice or is trying to sell your product that’s going to net them money. And I think you just have to be really cognizant of who you’re attaching yourself to.

Dr. Juneja [00:15:43] 100%. I mean, I think, you know, again, being on the other side, my number one advice is do not feel pressured for anything. There’s no reason to feel pressured this early in your training. Plenty of time to do it. When you make your decisions haphazardly, you are potentially doing something that you didn’t ideally want to do. You have plenty of time to figure it out. That’s for that’s for sure. And I think that’s the number one thing. And then learn the basic concept phrases. Start simple, get the education, then you’ll actually feel less pressured and less kind of like influenced because you kind of know what they’re talking about. You’ll really appreciate how you have tried to figure things out.

Dr. Shah [00:16:40] Yeah. And the other thing that I think people really come at you with during residency is, you know, you have to lock in disability insurance right now. You have to get life insurance right now. You have to do this and that right now. And I think a lot of times it’s good to take a step back and kind of see what your needs really are for any of those products. And then try and go to non-biased sites, find out information about it, and then make an informed decision. Just so you’re not buying or kind of falling into the scare tactics that people may employ. So, like I mentioned, I would go to as much as I can, non-biased sources where I’m just getting information. So I would go to a site that doesn’t sell life insurance or disability insurance and try and find out from them what their viewpoints on those products are. And I think that’s a really smart way to kind of propel your financial education, because we’ve spent four years in medical school learning about sciences and learning about the human body. But we haven’t really been taught how to manage our bank accounts. And this is the first time we’re really getting a paycheck is as a first year resident. So it’s important to know how to allocate and how to spend and how to conserve and how to kind of think about your budgeting, because it’s probably the first time we’re all taking an active role in that. So just be careful about where you’re finding your information, who you’re listening to, and what you’re spending your money on.

Cassandra Hume [00:17:49] So coming back to that idea of education, obviously med school debt is probably going to be one of the top-of-mind concerns. Is there anything else that you think is really important to consider on that front? We’ve talked about refinancing. We’ve talked a little bit about public loan forgiveness. And then when it comes to refinancing, is it a good idea in the current economic environment?

Dr. Juneja [00:18:19] Yeah. I think appreciating those concepts, of like, if I had to basically triage it, it’d be like, number one, public loan forgiveness. That’s ten years. Where do I really see myself going? I was pretty confident to be in private practice, wanted to go back to my hometown practice, you know, in a clinic and stuff. So immediately, boom, that’s the first step. And then the next step is, okay, if I’m not getting locked into this ten year, then suddenly that qualifies me for a refinancing because I’ve said I’m probably not going to be ten years in this in this arena, then on the on that second level. Okay, refinance. The questions are when? Do I do it now or do I forbear? I think you can appreciate hopefully like where the forbearance can be detrimental, at least for long term, how much you end up owing and if you are going to refinance, variable or fixed, or what does everything look like right now with the variability part, can I ride out something that’s really nice and low now knowing – because you heard this –  that you can swap then for a fixed. I remember thinking for six or seven years or whatever my term is, you’re telling me if it goes up, I’m stuck like they say, Well, yeah, it’s a variable. They don’t tell you. No, actually you could refinance somewhere else or here again and you’ll like just be fixed. Do fixed at that time. Like if I would’ve known that I would be like, yeah, give me that. Less than 1% that Chirag had. But that was really just remarkable when I heard that. So that’s the second step. Figure it out – do you want to or do you not want to? And then, we already touched on it, but definitely help is a lot of different places with people. I’m not trying to put it on you. There’s like credit unions and there’s, you know, again, refinancing services. But when I say help, I mean for loans. Like if you need additional money, like avoid the credit cards. That MD / DO or that professional certification that actually, that is for us, or a somebody that a lender that wants to lend you something like I, I know on average and statistically your chance of being able to pay me back are very comfortable. So that’s, that’s the reason it’s not like, ooh, you’re a doctor, may give you a better deal. No. It’s the security of knowing you’ll get paid back, which allows them to take more risk. And so you always want to explore those things, if you can, to help meet those needs.

And then, I think Chirag talks about this, and he hit this hard to me when we met in New York, was like when you go into practice and stuff, if you can get free money, which basically means a match in a system where you’re able to kind of store something away and not get taxed on it and just let it grow in the background, opt for it. Does anyone know what that is? I’m going to give you 2 seconds. One, two, three. Just that 401K, that’s what he told me to go right into like kind of after residency, hey, get a match. Let somebody give you money. If I understand that correctly. And then literally, you know, not have it taxed at that high income. Usually when you start, they give you a nice comfortable income to get you to that practice right. You’re in that really high tax bracket and stuff. So it’s nice to be able to put that away. If I didn’t misspeak, Chirag.

Dr. Shah [00:21:07] No, you’re right on. So I think you should really think about three things. One, what is my debt and how do I get rid of my debt? So if I have student loans I need to be thinking about as a first year resident doing to refinance, yes or no. So right now, I wouldn’t refinance anything. You have public, you have forbearance from the government and each of those counts towards the Public Service Loan Forgiveness. Until that program goes away, I would not touch my student loans because your interest isn’t building or anything like that and you’re not repaying it, which is great. And each month that goes by is coming towards a repayment. Once that goes away, exactly like Sanjay said, you need to make a decision. Am I going to go for Public Service Loan Forgiveness, a ten-year program, or am I going to be in private practice? If you’re going to be in private practice and your interest rates are 6.8%, go out there and see if you refinance what the rates are going to be. Whether you choose a variable or a fixed, at least get an idea of what you can get on the open market at the rates. Obviously, then you’re going to be worried about making your minimum payments. Most of these places like Laurel Road have $100 a month payment while you’re a resident. So keep that in mind and you can always pay more too. If you’re saving up, you can always pay more. So the interest isn’t building and you probably eat into the principal. So once you pay off your credit card debts, number two, think you think about your loans and the number three. Think about your 401k. How do I get free money? Free money is the best money. So if someone is going to give you money just to save money and not tax it and allow it to grow on a tax free account. So instead of putting it in a savings account, I would put that in my four or one K account. Now the only downside is you can take out your savings account any time, but the 401K becomes a little bit more restricted, obviously, until retirement. So that’s something to think about. But essentially if you’re getting a match on it, it’s probably worth it. So those are the three things that I wish I would have thought about knew about as a first year resident.

Dr. Juneja [00:22:55] And I will say just on that point, Chirag, that we both had about probably loan forgiveness for private practice, if you got your calculator like I did mechanical engineering, like to get into medicine, give me more. You want to crunch some extra numbers. You think about the difference on what you would get as a private practice doctor for those additional four years. Like I said, I had six years, right for three specialties. I need it four more. I did the math and said private practice that makes X, you know, a public forgiveness kind of set up or academics I make Y, and if that delta and it often isn’t any specialty is six figures and the six figures you know times four then you’re seeing like on the saving that interest are like getting it forgiven, you can start doing some math there. Either way, it still would have like I don’t know, it really depends on the specialty. Some of them actually it would have made more sense to go private because that’s probably could be the sum entirely of what your loans are, depending on what you have. So if you want to geek out, that’s kind of what you want to see is the averages and don’t look online as much. It’s literally cold call even or ask the people in the home town or city that you want to go to, what things look like, and they’ll give you a good idea of what the different like salary incomes are. Usually people in the same profession want to help each other out with those kind of things.

Dr. Shah [00:24:03] Exactly right. And there’s even online, there’s a bunch of websites that’ll tell you. This is the private pay, public pay.

And then going back to PSLF. So just to kind of go over what it exactly is. So Public Service Loan Forgiveness is where, basically, you’re working for a not-for-profit organization for ten years. Most of our residences are not for our not for profit hospitals. And at the end of those ten years, if you make a payment every single month on time, the government will forgive the remaining balance you have on your loan after those ten years. So that’s kind of the gist of PSLF and that’s why it’s a great program, because most doctors do have long residency periods, anywhere from myself, a residency fellowship, five years, Sanjay, I believe, had six. And if you can kind of get those at a lower income bracket where you’re paying off a minimal amount and having those years count, then when your salary does jump up as an attending, yes, you’re paying a little bit more, but you only have three or four years left and then the rest of that debt is forgiven. So it’s really a great program. It’s something to be aware of. Now, for me personally, I went right into private practice after, and I didn’t qualify for it. So at that point, I refinanced my loans. Now again, I kind of wish that I knew that or thought about that from the beginning because I paid four years of interest at 6.8%, which is a lot higher than like Sanjay said, I ended up getting like 0.25% interest on my variable rate loan refinanced in my first year of practice. So it’s it’s really tremendous out there. If you just take a look.

Dr. Juneja [00:25:30] That’s amazing. That hurts.

Dr. Shah [00:25:32] Luck. I was very lucky. It was a great time to graduate.

Dr. Juneja [00:25:37] And he’s humble.

Dr. Shah [00:25:38] Well, interest rate environment is now really different. Right. So it’s something to be cognizant of.

Dr. Juneja [00:25:41] Right.

Dr. Shah [00:25:42] And I really do think that, you know, with the Fed, I think that you owe it to yourself to see what you can refinance at. Now, I wouldn’t refinance until the moratorium goes away on repayments and forbearance, but after that goes away, if you haven’t kind of done your homework at least a little bit to figure out where you can lock in your rates. You’re just hurting yourself in the long term.

Cassandra Hume [00:26:03] And I would just add, as you both said earlier, there’s this need for constant education. The economics keep changing. The rates keep changing. Currently, there’s also a lot of questions about the future of student loan forgiveness. So it’s constantly evolving, but you certainly need to understand your options no matter where you are in your career.

Dr. Shah [00:26:19] And it’s tricky, right? It’s not super like I’m trying to simplify it, so I’m just trying to simplify it to the lowest common denominator. But everyone’s individual situation is so different. I wish that there was more help out there. Something like that, if I had access to when I was a resident would be really helpful to get that information. Kind of that’s not biased and presents me what my options are and what I can do that I’m not beholden to meaning that I can still check rates at multiple different banks or institutions or credit unions. But this is their advice, and I think something like that is really, really helpful.

Dr. Juneja [00:26:53] Yeah. Just to piggyback that, you’re fortunate again with your salaries that you’re not worried about the next year or two or three years. I mean, you’re thinking about your life years down the line and really what you’re able to do or not do. So that’s why I one, don’t rush or stress into it. Do take your time. If I heard this podcast, 30 minutes, 45, whatever, condense it down to I heard that going into it in one hour. Right. I was actually commuting 4 hours between places, wife and kids at one point. It would just been so helpful. Right, because it’s the simple concepts that really do go a long way by compounding over six years, that kind of like patience and and and how to explore this, the vision on even knowing the first basics to be able to go kind of explore and tease down as much as much or as little as you want to.

Dr. Shah [00:27:53] Well, it’s hard, right? This is not exciting. Like, I don’t get excited thinking about finance like most of us. And I think you just owe it to yourself to spend maybe an hour a month. I know that maybe a lot or even hour every few months to this kind of take stock of where your finances are going. It’s it’s super easy to just have a check, come in to your bank account and kind of disperse whichever way it does. But think about your budgeting. Think about where your money is going and think about how you can kind of set yourself up for you over to your future self. I think that’s the analogy Sanjay uses, right? Like, if I could tell my future self this, I wish I had. And if I could tell your future self something, it’s take an hour or two. You spent all this time studying in medicine, take an hour or two and educate yourself on your finances. It’s really important for your future, especially kind of setting up a nice, broad foundation to build on. And this is where it starts when you start making money in residency. It’s a great time. It’s a very exciting time in your lives because you’re finally on your own and you’re making money. You’re not taking on more debt unless you do forbearance like Sanjay.

Dr. Juneja [00:28:57] Oh, really? Oh, the way you’ve been so gracious so far. I knew I eventually needed a jab. It was called for.

Dr. Shah [00:29:06] But I’m teasing, you know, but you owe it to yourself. Build that foundation, spend a little bit of time kind of getting that knowledge base and you’ll be much better off. And the knowledge will just kind of build on itself once you get into it. And I think that if you don’t do it, you probably might kick yourself a little bit three or four years down the road when you’re graduating and getting that attending salary.

Dr. Juneja [00:29:25] On top of that, if you’re a type-A personality, I know it always cause me background stress when somebody would bring it up and say a term I didn’t understand. Pre-tax. Post. IRA. Roth. I would just get literally like visceral, like anxiety and I would still just push it away more. If it was completely in actionable or like you didn’t take any action on your knowledge, I guarantee you your comfort level and that background kind of thought and angst that may eventually lead to an impulsive or rash decision just to make that feeling go away all at once. Instead, that feeling would go away, even with no actions made with it alone. And that’s pretty invaluable.

Cassandra Hume [00:30:04] I was going to ask about your anxiety and intimidation and that sort of feeling of it, but yes, I think you’ve just hit it on the head there too. That idea of like finding out the answers that can give you a little bit of mental peace and well, it’s not the most fun thing to sort of research. What is the information that will make you feel a little bit better about about your financial choices? Would you say that there’s something as a resident that you can do to give yourself future-self less anxiety?

Dr. Juneja [00:30:29] I think we’ve covered most of it. But one thing I do want to mention that a lot of people don’t think about. Kind of really off not off topic but doesn’t relate to these things specifically is that if you know where you want to go. Every time I ask people, oh, you know, where are you looking at to go and stuff? And obviously I want to bring more oncologists here. We started practice and a lot of need in the South, unfortunately, like, like, oh, you know, I’ll start looking third year if you know where you want to go. That is very easy for the most specialties to negotiate a stipend and a bonus if you know you’re headed there anyway. That’s one element of it’s less stress, but to if you consider it even your stipends, the bonus is going to be nice and that can be enough to get you to that fellowship if you put your stipend towards paying back your loans or you even started putting into some of the things we talk about in future episodes with like, you know, let me just put it in this kind of market thing or this way where it would just grow by itself in the background or let me do a, a pretax because my insurance is so I mean, my, my taxes are low as a resident, if there’s any three tax things I can do, that would be amazing, right? Those are things you can explore by getting that stipend early. And because if you can put that sum in and you’re not compounding and compounding that interest, that’s building over time, it literally goes such a long way. So that’s number one. That’s really cool. And the second thing in the I’m like three mortgages in now. I didn’t know, for example, that I could have gotten and I think we talked about this in the future, but there are places where you can get basically a promise in the future to get some points off of your mortgage rate because by when you refinance, you’re already not compounding your interest or if you are that a lower amount locked in and for your future self, you’ve already hooked him up or hooked her up with some points off your mortgage if you have that account, everything in place. So all these tricks that fortunately somehow you’re listening to this and you’re going to get them in a couple of episodes that will literally plan. All this needs to be able to look out for your future self. They’ll make you less anxious even if you did nothing. Probably will do some things and basically be headed in the right direction.

Dr. Shah [00:32:32] Those are great points. And, you know, I love mortgage products, so I’ll tell you a little bit about it before our next podcast. So I was able to get a condo in the city of Chicago as a resident with essentially 0% down. And that’s one of the great things that our field has. Lenders know that physicians are going to make good money down the road, so they’re willing to give you a 0% down on a loan just based on your profession. So I bought a condo with 0% down, and I would make my monthly payments. My monthly payments were actually the same as what rent would have been. So instead of paying rent, I was essentially paying the mortgage company the same amount of money. And I was building equity, which is the part of the principal that I would actually get to keep on my property.

Dr. Juneja [00:33:14] Even that simple thing is hard for people to understand. Instead of rent, when you’re done, that money’s gone. What Chirag was doing is he didn’t know anything more for what that $400,000 let’s just say condo was what it was. when he sells it, even though most of the money has three quarters, it’s still the banks. That quarter that he did pay in quote-unquote rent was actually going towards his equity, towards the mortgage, toward the amount he took away for his condo. And then he pays the bank back and just got to keep what he was paying while he was there. I mean, that concept is even a big one, right? Like, it’s it’s so huge. If you can get the 0% down, it’s it’s unreal and it is there. And that’s the same thing, actually, we were able to get here.

Dr. Shah [00:33:51] And we’re so lucky as physicians that we have that available. I think that’s one of the best programs out there. And then the other thing I just want to touch on before we end this is don’t be anxious. Even if you do forbearance or can’t pay something or have credit card debt, we’re all going to be fine. We’re all physicians. We’re all making really good salaries as attendings. You too will get there if you’re a resident and if you’re a first year secondary attending, you’re going to be fine. We’re all going to have a good lifestyle. I wouldn’t stress, saying, Oh, man, I did this and this. At the end of the day, I think this is just stuff that’s going to help you get ahead, but you’re going to be fine. And I would leave you with that is don’t let the stuff stress you out trying to educate yourself and learn and you’re going to be fine.

Cassandra Hume [00:34:36] Thank you. Thank you both for sharing all of those insights. And you’ve teed up really nicely our next topic, which will be talking a little bit more about mortgage and physician mortgage and again, what those look like in the current market.

Dr. Juneja [00:34:47] Thank you so much, Kiran. Thanks for having, you know, sparing just one jab. This was very helpful and I hope it helps a lot of people.

Dr. Shah [00:34:55] It was great talking to the both of you and I’m looking forward to next month.

Cassandra Hume [00:34:59] Thank you again, Dr. Juneja and Dr. Shah and we’ll look forward to seeing you next month when we’ll be talking about physician mortgage. Thanks again and see you then.

Disclosures [00:35:11] Any opinions, findings and conclusions expressed in this podcast are those of the participants and do not necessarily reflect the views of Laurel Road. In providing this information, neither Laurel Road nor KeyBank nor its affiliates are acting as their agent or as offering any tax, financial accounting or legal advice. Our guest, Dr. Sanjay Juneja and Dr. Chirag Shah have promoted Laurel Road and have received compensation for their time. Laurel Road is a brand of KeyBank and a member FDIC and Equal Housing Lender and NMLS number 399797.