new m.d.
Finance 101 for New M.D.s

If there is one area in which young doctors do not receive enough training, it's finances. When I was younger, my financial plans were haphazard at best. I was fortunate and only had to borrow money for living expenses in medical school. I was living within my means, based on my student loans, but it never occurred to me that I might suffice on less. My then-boyfriend and I spent our holidays in Paris and Granada, and our "path lab" sessions at Sushi-Yoshi. Like my peers, I felt medical school was the time to focus on studies and that it would be easy to pay back loans once I was working. By graduation, I was cash-strapped, due in part to interviewing at 15 ophthalmology programs, so I borrowed an extra $10K from a private bank.

After matching at Boston University for residency, I decided to do my internship in Denver, Colo., at a program permitting two international rotations. Alas, I was only allowed 1 month abroad, which I spent working with a cornea specialist in Rio de Janeiro, Brazil. Even so, the skiing back "home" and camaraderie of my colleagues made it a wonderful experience.

One day, a brochure arrived in the mail and by chance, I consolidated my student loans at "a historically low fixed-rate." I didn't even think to compare rates or penalties. When June 30 finally arrived, I sold my stethoscope on eBay, packed the essentials, and moved to Boston to start my ophthalmology training.

Digging Out, Saving Up

Again I was lucky. The residents at BU are the highest paid in Boston. However, two interstate moves in 12 months had left me with a few thousand dollars of credit card debt. I lived with a roommate and sent what remained after paying rent to my Visa. My second year, a new boyfriend, exasperated by my disorganization, convinced me to buy a computer. Empowered by Microsoft Excel, I created the spreadsheet I still use to track my bills, which I cleverly titled "Money." And thus for the first time, I started to track my finances at age 28. The spreadsheet prompted me to organize the balances and interest rates on my credit cards. I transferred my credit card debt to a 0% interest AMA card and gradually paid off the $10,000 private loan, followed by the balance on the AMA account. Excel readily demonstrated that small payments wereadding up.

The next phase in my financial education occurred just as haphazardly. Late one December night, in my last year of training, I was chatting with a resident who had previously worked as an investment banker. John casually mentioned he was procrastinating on his Roth IRA. I was clueless, but John was patient in his explanation. A few days later, I borrowed $3,000 from my now ex-boyfriend and scrambled to open up a Roth before the year's end.

By this time I had gotten into the habit of saving money. I had finished paying off my personal debts, and started paying the interest on my student loans. I was quickly amazed how much I was spending on interest, without touching the principle. I began to mail an extra $25 toward the balance just to ease my mind.

Frugality Pays Off

Now I'm an attending. My salary has increased threefold; but in truth my lifestyle is more modest than it has been in years. Repaying my loans and saving for retirement have taught me to invest in myself, instead of in lattes. My advice to residents: live beneath your means and start paying off loans or saving for retirement now, if only to gain appreciation for compounding interest. In this young doc's mind, true financial independence is the power to pay cash on your next trip to Rio.

Roxanne Woel, M.D., practices at Koch Eye Associates in Warwick, R.I. Her e-mail is roxannewoel@hotmail.com.