Luckily I am still somewhat early in my career so I haven’t had a lot of time to make too many financial mistakes. I’ve had the good fortune of discovering The White Coat Investor, The Physician of Fire, Mr. Money Mustache and others to help me avoid costly mistakes. However, I didn’t discover them for a couple years after my career started and so I did make some mistakes. I’m sure I might make more, but with all of the resources I have out there, they should be small and few and far between. Here are 7 mistakes I have made along my financial journey.
Not being from a state with a dental school: Ok, this isn’t really my fault. I went to an out of state dental school because I had no choice. Thus, I had to pay out of state tuition. I chose one of the “cheaper” out of state schools, but it was still very expensive. I was really jealous to learn what the in staters were paying. My advice to anyone reading: go to an in state school if at all possible. Most dental or other professional schools give similar educations for varying costs. Both out of state and private schools can be very expensive. The best thing you can do for your future wealth is get into as little debt as possible from school. I had over $400k from dental school alone. Ouch.
Declaring forbearance during my residency: I did a one year general practice residency. Since I got paid so “little” ($45k for the year)I thought that I couldn’t afford to pay a loan payment. I went into forbearance and didn’t have to pay for that year. But the interest was very unforgiving. Interest was a little foreign to me at that time. I couldn’t even comprehend my debt of $400k. So I put it on hold. But I soon got to understand interest.
One of my favorite quotes about interest is from J. Reuben Clark and it is so true:
“Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation. … Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.”
I did have two kids and a stay at home spouse, but I think I could have lived more frugally and at least made some minor payments while in residency. But I didn’t, and it was a mistake.
Working where I wanted to live: After residency, I went and worked where I wanted to live. I soon found out that seemingly every other dentist wanted to live there too. The competition was too fierce. I made what most people would think was a good salary, but with my crushing debt with an interest payment of $2000/month, it wasn’t enough. I paid interest only for two years. Then I decided I needed to live where I could make more money. We did research, and found a state to live in where dentists do much better. We have been here for almost 4 years, and fixed my mistake. It has been well worth it.
Buying a home: While in the area we wanted to live, naturally we bought a house. Why wouldn’t we? We wanted to live there forever and didn’t want to throw money away in rent. However, plans changed and we moved and had to sell the house. We lost money. I wish I would have known this advice from the White Coat Investor : Rent until your job and family situation are stable. We did take that advice when we moved; we rented for 2 and 1/2 years until we knew this was the best place for us.
Once we moved and were making more money, I discovered the White Coat Investor. It made me very motivated to pay off my student loan debt. But I was so consumed with paying off my debt that I didn’t heed his advice about saving for retirement (at least a little) simultaneously. I paid off my student loans in a little over three years. This was a huge feat. But I wasn’t saving anything for
retirement financial independence at the same time. Honestly, with $425k in loans I think just paying those off and not saving for retirement is not that big of a mistake. But maybe it is a little.
Buying a timeshare: Honestly, this isn’t a mistake for me. But it is for a lot of people so I thought I’d mention it. I could have put this money towards retirement. Most people think that even if you can afford it that timeshares don’t make sense. But it does make sense for us. We are happy with it, use it, and plan on having it forever. We have it paid off (there is still yearly maintence fees that we can easily afford), and since we don’t spend a lot of money on expensive cars or boats or other toys, this is something worth it for us. Again, it’s paid off.
Buying a new car. After my loans were paid off, I thought an upgrade from my 2000 Ford was warranted. Luckily for us, I’m not a car guy really. Cars that cost $50,60, 100k have never been a temptation to me. I bought a new reliable car for $28k. To be hones I could afford it. But honestly, I would have been fine with a used car for $15k. Like I said, I’m not a car guy. I should have saved the $13k.
Like I said before, none of these financial mistakes were catastrophic. I’m glad I found financial literacy somewhat early in my career. I encourage you all to look up resources on my Recommended Resources tab and other good resources and become financially literate. That’s the best way to avoid financial mistakes. If you just hire a “money guy” to take care of it for you, you will likely be making many mistakes. If I can do it, I promise you can. I’m here to help as well. Contact if you have any questions.
-Debt Free DDS
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