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The FinancialMD Show - Ep 003 - How To Budget As a Resident

Updated: Oct 26, 2022

Podcast: Play in new window | Download (Duration: 39:28 — 18.1MB)

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  1. Budgeting Basics [0:03:18]

  2. Trevor’s Expense Perspective Before and After Med School and Residency [0:04:43]

  3. Tracking expenses: Mint/Dave Ramsey Envelope System [0:07:35]

  4. Enjoy The Things That You Enjoy Including Spending Money [0:10:06]

  5. Geography Plays A Role In Budgeting [0:12:56]

  6. Budgeting For The Future During Med School Is Smart [0:22:01]

  7. Reverse Budgeting [0:29:39]

  8. Focus On One Number Instead Of 10 Different Categories [0:30:02]

  9. Takeaway: What Is That Number For You. Find That Surplus Number [0:35:47]

Welcome to the Financial MD Show. This is the only podcast designed specifically for residents and young physicians to help you become educated on financial planning for physicians and avoid many of the common financial mistakes doctors make. Your hosts, Jon and Trevor, explore a different topic with each episode. Jon Solitro is a financial planner and certified financial education instructor. He’s been working with young physicians for the better part of the decade and lectures to graduate medical programs around the country. Dr. Trevor Smith is a board certified ophthalmologist with a full time practice and he has learned the ins and outs first-hand what it takes to make smart financial decisions as a young physician. And now here’s your hosts, Jon and Trevor.

Jon: Hello and welcome to the third episode of the Financial MD Show. Thanks for joining us. You’re in a for a treat. I’m excited about today’s show because we’re going to talk about the boring old basics of the budget. That’s an alliteration for you. Trevor and I are going to share what we see as a budget and how budgets are done wrong and how budgets are done right in terms of what we’ve seen that works, what’s successful, what’s been successful with ourselves, and from my end, I’ve worked with hundreds of residents over the years and been able to identify what are ways that work on a resident’s salary and a resident’s expenses and that kind of a lifestyle. Next, we’re going to talk about technology and how to properly utilize that just to make your life easier. You guys are busy; how can we automate some of the tasks. Lastly, we’re going to talk about what that magic number is that you need to concentrate on with your cash flow and with your budget and give you some tools and resources that you can look up on how to actually find that number and make that number work for you. So without further ado, here’s our show.

Jon: All right, welcome to the Financial MD Show. I’m your host, Jon Solitro. Joining me as always, Dr. Trevor Smith.

Trevor: Hey!

Jon: Good evening to all, whatever time you’re listening to this. It’s an evening to us. I’m in a hoodie today because it just feels like that kind of day. It’s rainy here in Michigan and that’s okay. It’s almost October and it’s supposed to be that way. We get spoiled with an Indian summer from time to time and we had that last week and got that out of our system.

Trevor: Yup, just got to soak it up. I actually hit the beach on Saturday, but it was quite a windy Michigan beach day, but we still like those, right? I mean you got to soak it up when you get out.

Jon: Oh, absolutely! Like we went to – you know where Shelby is? Hart, Whitehall?

Trevor: Oh, yeah, actually. Yeah, I’ve been there old township.

Jon: We went there Friday, so walked out there. We love it. Yeah, we’re actually looking at a house up there.

Trevor: Oh, cool!

Budgeting Basics [0:03:18]

Jon: All right so, we are stoked today. I love covering the basics because as tedious and boring as they might seem, they are super useful and super practical so today is going to be the quick and dirty with a few tips on budget, specifically, a resident budget. We can talk about attendings a little bit. They are a little more difficult to get into a budget although I personally believe that budget’s good for everyone. Not necessarily budget meaning here’s all you have to spend and you have to stick to this, but we’ll talk about this today. I do a kind of what I call a reverse budgeting approach and I think it works for everybody but it helps you to put the main things and make sure that you are focusing on the priorities that you’re supposed to be focusing on no matter what stage in your career. So we’ll give a few tips to start up, but I guess first, Trevor, give me your expense perspective, getting into and out of med school and the residency. What was your budgeting approach or cash flow management? What did you do? What helped? What didn’t work?

Trevor’s Expense Perspective Before and After Med School and Residency [0:04:43]

Trevor: Sure. I mean before med school – so I went pretty much straight through. I took a little bit of time off. Just by default because I ended up applying the fall after my senior year in college. So yeah, there’s like kind of spring, summer default time off, but yeah, pretty much a regular going from college and med school.

Jon: Okay.

Trevor: I wasn’t making any money so it didn’t really matter how much budget. It was just like don’t spend all the money in your bank account because you’re making a couple hundred dollars a week kind of situation.

Jon: This was in med school?

Trevor: But getting into med school – that was like right before med school.

Jon: Okay.

Trevor: Getting into med school and starting med school, I didn’t think a lot about it which is not surprising in any way but I essentially was just like, okay, again, this is the money in my bank account. I wasn’t working in a job. I knew a few people that worked during med school but it’s usually side gigs. I remember talking to a med student not that one who grew tree frogs and sold those kind of rare tree frogs. Unless you have a random kind of side gig or preexisting business, it’s kind of hard to do in med school but you get your money from the student loan, not I want to say reimbursement, disbursement.

Jon: Disbursement again, that’s probably a good word.

Trevor: Yeah, disbursement. At the beginning of semester, so you just get a big lump sum amount of money and that’s supposed to last you the calendar year.

Jon: Which is? You know I’ve always had a problem with doing it that way. I feel like they can do a little more to help stretch it out a little bit or break it up.

Trevor: Yeah, they should be breaking that up into little chunks because it’s a great way for them to make more interest slowly over that whole year. The earlier somebody gives you money, the more interest they make off of you holding onto a period of time.

Jon: Yeah, so that’s probably why they do it.

Trevor: Yeah. I’m not sure of the details when it starts accruing interest. I think it might actually be after you graduate.

Jon: That’s probably true on student loans, yeah.

Trevor: I think it doesn’t gain any interest until after you graduate, but regardless, they do give it to you upfront and it does inspire super rational decision-making. I remember I bought a 300 hundred-dollar pair of sunglasses and really you don’t need sunglasses most of the time. This is an ophthalmologist talking. You could buy a really cheap pair and they would pretty much get the job done and most of them have nice filters and all the stuff you need for it.

Jon: Okay, totally.

Tracking expenses: Mint/Dave Ramsey Envelope System [0:07:35]

Trevor: Anyway, I can’t imagine how much I actually paid for that because usually depending on how long you wait along the way, a good 10 years later, you paid at least probably twice as much. So it was 600 dollar-plus pair of 300-dollar sunglasses. But for budgeting? I wasn’t doing a ton of budgeting. I was just trying not to spend money and there was a period of time where I was planning on doing international medical health stuff. I was trying to keep it really tight, really minimum, and I just used Mint. That was not too much longer like that was kind of in the Mint heyday. I cannot remember when it came out but I want to say it came out in the mid to late 2000s. They got pretty big in the late 2000s and I thought that was going to be a great product and they build it out. I think a lot of people actually thought that. I just had automated stuff for credit cards and connected it with my student loans and different bank accounts and kind of used that a little bit in residency, but it never ended up having really feature build out so I just did automated stuff and tried to ballpark some different categories and I remember the Dave Ramsey book and I tried the envelopes with cash which is hilarious. Nobody does that anymore. Nobody carries cash.

Jon: No, and the reason I don’t is because if I carry cash, I’d spend it typically is what I find. Even if it’s in envelopes, it’s going to float out of there.

Trevor: Yeah. I mean if I had an envelope of cash right now for my spending per month, that would be an irresponsible amount of spending. Imagine you hold it out and you actually did the full thing and you included your student loans.

Jon: It’s just dollar, yeah.

Trevor: Yeah, exactly. It’s a good method. It was a good method, I would say. But it’s a pretty retired method in my opinion. I didn’t do a lot of that then, and in residency and in fellowship I did keep an eye on spending but my philosophy on budgeting ended up even before I read this book that I just read this last year called I Will Teach You To Be Rich by Ramit Sethi. Awesome, really, really good book because it’s so doable and practical. I was pretty much spending.

Jon: All right, we will take notes.

Enjoy The Things That You Enjoy Including Spending Money [0:10:06]

Trevor: Oh, yeah, that’s a great one. He talks about to just enjoy the things that you enjoy like you’re going to spend money. Part of the reason you have money is to enjoy it and you should just pick a couple of categories where you know you won’t ruin your goals by “overspending” according to financial gurus. It’s just like overspend on lattes or overspend on pizza or whatever you really enjoy, just enjoy the heck out of it. For me, that category has always been restaurants. I’ll spend definitely in the hundreds of dollars on restaurants every month. I just prefer to eat in a restaurant than make meals most nights of the week and I’m single so I’m not paying for two kids and a partner. I can afford to buy myself a 30-dollar meal a few times a week and it’s not going to move the needle. If you do the math, it’s not even going to move the needle on paying off my loans and I could be debt-free approximately two or three weeks earlier if I sacrificed for two years reining in the spending on restaurants every single month for 24 months in a row. I can be debt-free two or three weeks earlier.

Jon: Yeah. It’s that cost-benefit analysis.

Trevor: It’s not worth it. I think Ramit Sethi has probably had more of an impact for me. I like feeling comfortable with spending in different areas in a non-traditional budget approach and then I’d talked to other friends too. Anybody who has a high income – and it’s weird to think that I’m one of those people now – but if you have a high income, you can kind of like ballpark your budgeting to a degree and I have a lot of student loans but then I’m aggressively paying them off. But you have cushion if you have a decent amount coming in. For the residents, you have to keep it tight those little like refinancing your student loans and only having a hundred dollar a month payment. I did that, made a huge difference, and then I don’t have to feel as guilty about spending on things I enjoyed while still not going crazy and then now I just allow myself a little bit more freedom in the hundreds of dollars range for restaurants. That’s definitely my big category and if try hard to lower it, it stays the same. If I try hard to spend extra, it magically stays the same.

Jon: Okay, so you kind of found your number?

Trevor: The exact same. Yeah. I’m just like, well, why should I feel bad about it? I’m not going to ever blow the roof off and it’s not going to move the needle for any of my goals. That’s what I do. It’s been good.

Geography Plays A Role In Budgeting [0:12:56]

Jon: Well I think part of that too and a lot of these budget conversation can revolve around the geography and area that you live in as well. A lot of things play into this budget conversation.

Trevor: Oh, that’s so true.

Jon: I had a resident – anesthesiology resident – in New York City and different story on budget and while walking through our whole budget exercise at our first meeting and we get to the eating out category and she’s like, ah, probably 2000 dollars a month, and I’m like, what? Now, yes, she is in New York but still New York residents don’t make any more than residents anywhere else for the most part. It’s easier to spend a lot of money in New York, I get that, but it just probably takes that much more discipline to not spend that. The other thing about a budget is like you said, we’re talking about mindset philosophy on budget on spending. The book you’re talking about sounds like it kind of gave you a mindset shift a little bit on spending and cash flow and a lot of that comes from how we were raised and our environment. You know there’s that whole nature and nurture conversation. Some of us just no matter how we’re raised, we’re going to be terrible spenders or great savers or whatever case might be. But I think our parents and our culture we came from certainly has some impact on that. My dad was pretty frugal. He made good money but you wouldn’t know it and he’s kind of that millionaire next door that retired with a couple of million bucks in their 401(k) which was plenty for him because he didn’t have a big lifestyle to maintain and he’s never going to spend all his retirement investments.

Trevor: That’s great.

Jon: Plus, he’s got a pension so it’s just even more. It’s just going to sit there and I have to push him to be like, dad, you can spend some money. Spend something. Buy a corvette like do that stuff. That certainly rubbed off a little bit on me, but like all of us do with our parents, we take a little bit of the good and a little bit of the bad and create our own. I’m probably more frugal than some but not as cautious and conservative as my dad was, and maybe it’s the millennial in me, and I’m just kind of on that borderline. There’s still some value in experiences and a dollar isn’t just a dollar. To my dad, it was. Everything could be put a price tag on it and I think my wife and I feel a little bit differently.

Trevor: Yeah. I totally agree. There’s all those kind of hot articles about if you stopped eating lattes, it’ll be worth a hundred thousand dollars in 30 years and stuff. But you went 30 years without eating a latte.

Jon: I think you meant 30 years.

Trevor: They’re eating a pizza. It’s like, that’s sucks, man. Who wants to live that life? It’s not about a hundred dollars at that point. If you did that with bigger things like a nice car or if you just slammed dunk the more expensive stuff then yeah, a really nice car for me right now would be like giving up a million dollars in retirement. That’s worth thinking about for sure.

Jon: Yeah.

Trevor: Maybe you’re going to be worth it. If you’re going to plan to being on worth 25 million dollars then you’re like, okay, well, do I want to just have a fast car when I’m 55 or would it be more actually fun to have one when I’m like 35? That’s a fair trade-off as long as you’re making a trade-off like you’re seeing it for what it is. I mean you can do that.

Jon: That kind of leads to what I was telling you before. I mean my wife and I were looking at this house in Lake Michigan. I don’t make a million bucks a year. I’m not. We’re not in that category where it necessarily makes sense right now but we kind of had a frank conversation earlier this year and we’re like, how about we not wait for retirement on some of these dreams? Why did these have to be retirement dreams? What if we just got a little bit creative and try to find a way to make this work now? It’s kind of one of those strangest secret things where it’s like the secret. You speak something and you kind of have it on your mind and it’ll just somehow magically happen, and we’re like okay. We’re going to start taking step towards that. We’re going to research it. We’re going to talk to people and let’s just like believe that this is going to happen at some point and may be a way will come out, and like the house we’re looking at this week was right now out of our price range just to get it and use it but I’ve started talking to some really interesting people that have had profitable vacation rentals in that area and I’m just like if we can just break even and so I’ve met several different property management companies that specialize in vacation rentals and they can run some numbers for me and tell me and I’ve started to feel like, I think this could work, and I don’t have to spend any of my money. So that’s exactly it’s that same kind of thing where it’s like maybe we don’t put this off. I mean, life is short, of course, and then just a concept of a dollar today is worth more than a dollar – not inflation standpoint but just to me. You and I are going to have more money in 20 years than we do now and so I know if we put that away and it grows and invest, that’s great, but there are things that have value today. Anyway, a dollar has different value in different places so for example, I talk to residents all the time about the conversation of, should I take this dollar and pay my credit card down or put it in savings, and I always say like, if you don’t have an emergency fund built up, you need to get that done because in my mind, a dollar liquid in the bank ready to use is more valuable than that same dollar put on a credit card even though he hasn’t pays off interest, but right now for you that’s more valuable in the bank and savings. That’ll change in six to twelve months when they have their emergency fund funded, then yeah, maybe we can talk about paying down your credit card.

Trevor: Right.

Jon: Yeah, gets into that just value conversation. So talk to me. You got into residency. You used Mint and kind of start to work with that a little bit. What did you find that worked well when you got out of…? Well, I guess let me just kind of go back to med school a little bit. Did you find something that worked well when you got that lump sum disbursement that helped you to kind of hang on to some of that? You know I definitely had some friends a lot.

Trevor: I couldn’t really figure out what to do correctly on that and most of my time was just spent studying. I really, really genuinely was like you studied the first year a lot and you think that all of that stuff you learned is going to really matter and a lot of it actually doesn’t but you’re just kind of learning how to study to a certain degree too like there was a lot of inefficient study time but for me I had to do that and then I was efficient to study the more valuable material the second year. I went to the University of Michigan and they even change their curriculums substantially now. You get into rotations a lot earlier, even in the second year, I think, and it’s a little bit different. Anyways, back to the budgeting. I mean I got a bunch of money. I didn’t really know what to do with it but I don’t want to pay it back. I don’t want to give it back because I don’t really know what to do if I ran out, and I was like okay. I don’t even know what the numbers were. Let’s say it’s like 8,000 or 10,000 dollars and it’s just sitting there in the bank and I’m paying 700 or 800 a month in rent month after month and I kind of just ballpark calculated it out and I was, this is how much food is going to cost, and then maybe some other amount of things I’m going to spend here and there. Some little bit of clothes or stuff. I’m not a big spender so it wasn’t like I was planning on breaking the bank at J.Crew every other week – not that they’re a place people shop anymore, I don’t think.

Jon: I know. They actually file for bankruptcy.

Budgeting For The Future During Med School Is Smart [0:22:01]

Trevor: Yeah. I’m sure I spent money there fairly more than I could afford. I guess it would have been nice to just have somebody to be like, okay, let me help you figure how much money you actually need for the year, and then, okay, are you going to work in the summer or not? Okay, if you’re not going to, then you need money for that. Budgeting to project in the future during med school would have been smart.

Jon: So budgeting like a semester at a time?

Trevor: Yeah or even like, I think, yes, measured in time. They don’t make it easy for you because they kind of wait to tell you how much tuition is it going to be until later. It would have been nice to be able to project annually but I’m thinking now I don’t think they told you the exact amount until maybe early winter or spring semester. They’d be like, we think that’s going to be approximately 50,000 dollars again but it’s going to be probably an extra if they tack down like one or two thousand per year each year increase which is insane.

Jon: And that’s the racket that is universities.

Trevor: Yeah, like five to ten percent increase per year.

Jon: Yeah, way for inflation, but it’s another topic for another time, another client.

Trevor: Definitely, yeah. So if I was thinking what would have helped me, it would have been somebody to step in and try to help me figure out how much I actually needed because I borrowed. I’m 100 percent sure I borrowed more than I needed all four years or even to sort of get financial coaching before I started like, hey, if you get some roommates, you can cut your cost by 30 percent, and it’s not a ton. It’s fine to do your own thing and spend money on housing and stuff, but for four years straight, that’s 48 months. That’s a lot of time. It’s a lot of rent. Splitting that with other people is smart. I did that. I had really cheap rent living in like a co-op. I did pretty good. That was probably part of the reason I had extra money because they went by averages but they just give you a ton of money and then you’re not really sure what to do with it.

Jon: Crazy.

Trevor: In retrospect, it’s amazing. I mean sure I went to college but still just like you graduated from high school without a financial education, you graduate from college without a financial education, just fine that you’re premed.

Jon: Yeah. So what changed when you went to residency then?

Trevor: Well, the thing that changes when you enter residency is you’re not an adolescent anymore. You’re like this delayed adolescent if you went straight through it for college. Anyone who had a job, there’s tons of people who do that and they go consulting for some three years, five years or something.

Jon: Yup, research or something.

Trevor: Go back to medicine. Yeah, it’s something. I mean anything where you’re really paying your own bills substantially. I mean just to be honest, I worked at restaurants or coffee shops before med school and then I borrowed the money I needed to live on for all of med school. I didn’t work. So I started residency and you’re in over your head in a bunch of different ways but then you finally have to be an adult. I mean you have to pay your bills. Your budget becomes really, really real because you’re like, okay, my med school sat down with me for an exit interview instead. You can either do Student Loan Forgiveness in Form A, B, C, or D, or you can start paying and it’s going to be this many thousands of dollars starting three months in and you’re like, okay, these are some really rough options here. Then you run the numbers. If any interest in that like defaulting on your loans or losing your housing or not having enough money to spend on things that you enjoy, that was the driver for me. I was like, I’m not going to have enough money in my checking account if I don’t figure this out. As a resident, you’re definitely living month-to-month and that’s just the way it is so some people will rack up credit card debt or personal loans but that’s less common or some of the savvy people like a radiologist and certain professions, you can sign early with companies or with hospitals. They’ll pay you throughout, so there’s some much more savvy ways to do it than what I was thinking about. I wasn’t even considering that. That’s not super available in my field of ophthalmology. People don’t really do that so it’s not handed down or advised from people years ahead of me. You have to budget when you know you’re running out of money like constantly so that was the motivator for me.

Jon: Yeah. One of the things that we start doing in residency is starting to, okay, and we try to start this as early as we can. They know what their salary is going to be so I do a quick projection on what we put together this basically a spreadsheet that breaks it down. Okay, here’s your income. Here’s what your taxes are probably going to be and the other paycheck deductions. Here’s what your take home will be. Let’s start breaking down the things that you know. Here’s what your rent’s going to be and you kind of work through those fixed expenses then we kind of ballpark some of the discretionary stuff like going out to eat or just any of that stuff and then we get down to kind of the big final number which is – maybe not big – but the final number which is the surplus, and everything the line item of expense takes away a little bit more from that surplus and they see, okay, here’s what you should have in your surplus, and the number that appears in that surplus calculation is very rarely the number that actually is in their surplus or in their bank. When they look at it, they’re like, oh, that’s says I should have 5,000 dollars a month or that says I should have 500 dollars a month leftover? No. They’re like, there’s no way. Well, let’s go back and look at it. I mean the math looks right. What we do is we say, okay, I said if this looks right, these expenses look right, then this is just the surplus you should have, and they’re like, yeah, I guess so. And that’s normal, like money just goes places and most people have no idea – I mean most of us – and here’s tip number one: Take a look at your checking account and your credit card, most people can find little subscriptions, stupid things they forgot about that’s costing five, six, eight, ten dollars a month. That’s stuff adds up. You can find 50 bucks a month sometimes just by getting rid of those things. There’s a term for it now like phantom subscriptions or something like that. Netflix knows how many of these there are, they know how many people pay and have not actually been on their account in six to 12 months.

Trevor: Oh, wow.

Jon: It’s so crazy the number, I can’t remember this but it sounds like, and then what? And they’re like, what do you want us to do? Like reach out to these people and ask them to stop paying? No.

Trevor: That’s crazy.

Reverse Budgeting [0:29:39]

Jon: Yeah, and a lot of us it’s probably not Netflix but has some sort of subscription like that. Anyway, I call it reverse budgeting because in my mind it’s that thing that is we start with the end. So once we get to that surplus I have the conversation with the residents and just say, hey, okay, what can we do to be smart with the surplus, and then basically it becomes a lot easier because then I say, okay, let me help you with this 500 dollar a month surplus. I’ll give you a few smart things to do with this. Then I tell them, you can do whatever you want with the rest of it because you know you’re making smart decisions with that surplus. You’re doing the important things that you have to do and you’ve got freedom to do what you want with the rest of it. And we find that works pretty well.

Trevor: Yeah.

Jon: See if I can put a copy of this. I’ll show you what the template looks like here.

Trevor: Once I became an attending – which is still very weird for me to say – once I became an “attending,” or to say private practice doctor, the first time I calculated that out, I was, oh, wow. I can pay off a lot of debt if I want to, and then I waited a month or two, I didn’t pay off the debt and I didn’t have my own money in my bank account. I think I got a little more generous on paying for a tab at a dinner with friends one too many times and I bought who knows what on Amazon probably some extra books and I don’t know. Definitely Amazon is my number one disappearing category because this is Amazon.

Jon: Oh yeah. That’s the one right now we started putting in a whole separate category just for Amazon in our budgets.

Trevor: Yeah. It’s like, oh, yeah, remember, you bought that really cool-looking air filter. Now your air is more filtered.

Jon: Right.

Trevor: You can’t do that several times a month. I’m a gadget guy. You can’t just like buy gadgets.

Focus On One Number Instead Of 10 Different Categories [0:30:02]

Jon: Well, that’s the thing. If you think of something or you see something or you research something, the problem with Amazon is you can now two seconds later buy it. We had a little bit of discipline before Amazon because before we’d have to go to the store to get it, and we’re like nah, I don’t need it that bad. I feel it’s a problem for consumers. So here’s my spreadsheet I use. We put in the things we know – the income, any 401(k) deductions – and then we start working with the fixed expenses and work our way down and then as we do, it starts kind of eating away at the surplus until we get to this yellow box here which tells them in big bright letters what their surplus should be, and again, rarely is it actually that but I say, okay, focus on this number. If we can do smart things with this number, you’re going to really move the needle on your time in residency as far as the impact that it makes in your financial future and you can still live a lifestyle you want to live in residency and not to have to suffer too bad. We’ll put this as a downloadable file on the show notes as well so people can feel free to play around it and see if it does anything for them. I find it’s much easier to just focus on that one number instead of trying to stay within 10 different categories or more. All I say is, okay, I know your busy. I know life is crazy right now in residency. Just focus on this number. Let’s do smart things with this and then I don’t care which you do with the rest because you know even if you spend everything else, you at least kind of what they say pay yourself first, whether it’s saving, whether it’s emergency fund, whether it’s disability insurance – those are the things that we talked about and say here’s the order you should be doing things and let’s be smart with that.

Trevor: Yeah. I took that number and played around with it in my Excel with my budget and I ended up making multiple other sheets at the bottom, different kind of tabs or pages, whatever those are called – these are called sheets. I used that number and I was, okay, I was job hunting earlier this year, I was like what if I get a job that pays this or what if I get a job that pays like signing bonus, and I put in all those things that it would trickle down into, this is the surplus you’re going to have per month on the same overhead budget cost, and then I looked at like how fast can I pay off my loans, and then now I have a magic number of this is when my loans are going to be paid off like a date like in months from now, basically from signing with whatever practice. Now I got the same surplus, then how many months until I am “hitting a million” in retirement funds. And then I had to figure out like what’s my number back calculate where I can live on 80,000 dollars a year. Once you know what your surplus is per month, it enables you to project into the future like, what is my life going to look like in x number of months with a given scenario. It empowers you to make better decisions for your life and for your family, partner, whatever, like whoever you’re considering in that scenario – a family wherever you want to live – and it’s like informed decisions that are life-changing and it’s starts with the budget. That’s where it becomes a powerful tool, not a tool to be like, oh man, you can’t get this latte.

Takeaway: What Is That Number For You. Find That Surplus Number [0:35:47]

Jon: Yeah, absolutely. Like you said, you can give yourself permission in that budget if you still got a surplus as long as you still got a surplus. I think the big takeaway from today is what is that number for you, how do you step one figure that out because knowing is half the battle, and then what do you do with that surplus? Are you making smart decisions? Here in Financial MD, we can certainly help with that. That’s kind of our specialty. I feel like we’re the only ones in the world that are spending the time and have a specific program for residents on how to get started on the right foot, how to build these habits early, and what to do with that surplus number. Find the surplus and then be smart with it, and sometimes we got to dig back in and cut some expense and things because there’s no surplus but 95 percent of the time, we can find the surplus and enough that we can make some big impact. It doesn’t feel like it today but the decisions that you make today in residency are going to impact your financial future absolutely, and Trevor’s talked about this before, whether it’s disability insurance, getting it now will make a huge difference on your financial future, making student loan decisions, refinancing – all that stuff – can make a big decision. We can’t stress that enough but find that surplus number, let us know if you need help. You know how to reach us. Go to Check out our videos. We’ve got the weekly didactic minute on YouTube so subscribe to that and you get notified as soon as those come out every week. Little financial tips we put out. Lastly, join the Financial MD Facebook community and get involved in the conversation that’s going on between other physicians, ideas, takeaways, and just different things to give you a little bit of an edge. So any final thoughts, Trevor?

Trevor: That’s it. I think I’ve shared more than enough from my life and experiences, and I agree. I think the big takeaway is what is that surplus number. I mean that’s your tool – that’s your number one tool for planning your financial future.

Jon: Yes, the catalyst, right? It’s like your Sleep Number, like a Sleep Number mattress. What’s yours? What’s that number for you?

Trevor: That’s great.

Jon: All right, well, that’s it. Again, I’m Jon and this is Trevor. We’re saying see you next time.

Trevor: Thanks Jon.

Thanks for joining us for another Financial MD Show. Be sure to head over to to get more in-depth resources on financial tips for physicians and don’t forget to join the Financial MD community group on Facebook, where physicians at all stages of their career gather to share tips and get ideas on achieving true financial success. We’ll see you next time.

The Financial MD Show is for informational purposes only and is not an offer to invest. It is not financial, tax, or legal advice. Be sure to seek financial, legal, or tax professionals when making any financial decisions. Before investing, you should make sure that any investment strategy or investment meets your individual investment needs, goals, and objectives. Financial MD makes no claims or guarantees to individual investment performance. All investing involves the risk of loss as well as the potential for gain.

Resources and Links:

  1. Mint: Budget Tracker & Planner –

  2. Dave Ramsey book: Financial Peace University –

  3. I Will Teach You To Be Rich by Ramit Sethi –

  4. Definition of Cost-Benefit Analysis –

  5. Student Loan Forgiveness –

  6. Financial MD: Help for Busy Doctors –

  7. Downloadable Budget Spreadsheet –

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#personalfinance #doctor #studentloans #residents #investing #physician

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