Conferences are a regular part of training during residency. Every once in a while there would be Morbidity and Mortality (M&M) presentations. These would be cases where there was either a poor outcome or an issue with a patient’s medical management. Usually the case is presented in a standard way, starting with a history (or story) of the patient’s presenting symptoms, followed by the physical exam and any laboratory results or data. Finally, there would be an assessment of what may have been going on with the patient and a plan for the management of the patient’s problems. Usually there were things to be learned from the case, and this was discussed toward the end of the presentation. Needless to say no one ever wanted to a part of an M&M as your mistakes would be displayed for everyone to see. Thankfully I wasn’t involved in any as a resident, but I did hear about a case that I think we can learn a few things from, especially if analyzed through the lens of a personal finance microscope. I present to you my first-ever Financial M&M case.
History of Present Illness (HPI)
The patient is a 36 year old male who presented to our clinic on 5/30/2014 with complaints of palpitations, nausea, and dizziness. The patient reports that his symptoms started while he was reviewing his bank accounts online. His symptoms were mild at first, but suddenly worsened when he began checking his student loan balances. He is currently a senior resident physician who took out loans to pay for medical school. During his time as a resident, the patient applied for student loan forbearance during each of the four years of his residency training. He is set to graduate in about one month and decided to finally look at his loans. The patient did not have any symptoms of chest pain, shortness of breath, or abdominal pain.
Past medical history: None
Past surgical history: None
Social history: Does not smoke or use illicit drugs, reports social alcohol use
Temperature: 98.6 F Blood Pressure (BP): 120/80 Heart Rate (HR): 110 bpm Respirations: 22 Saturation: 100% room air
General appearance: Appears well but seems nervous, no acute distress
HEENT (Head, Eyes, Ears, Nose, Throat): Head atraumatic, pupils equal and responsive to light, extraocular (eye) movements intact, throat with no erythema (redness) or edema (swelling)
Heart: Tachycardic (fast rate), no murmurs or gallops (abnormal heart sounds)
Lungs: Slightly hyperventilating, lungs clear with no wheezing or crackles (abnormal lung sounds)
Abdomen: Soft, non-tender, non-distended (not painful or swollen/bloated)
Skin: No rashes
Neurologic: Awake and alert, no focal neurologic deficits (moves everything normally), gait normal (walks normally)
Laboratory Results and Data
Savings account: $1,000
Checking account: $500
Money Market Roth IRA: $200
Credit card balance: $5,000
Car payments: $0
Student Loans: $300,000
Employer 401k: unknown
Given the patient’s clinical history, physical examination, and laboratory results, he is most likely suffering from an anxiety reaction as a result of the realization of his current financial situation. In addition, it is likely that the patient has an overall poor understanding of personal finance and planning in general. While he does have some savings for unexpected expenses, his liabilities far outweigh his assets. Although the patient’s financial situation appears bleak, he will at least see a substantial jump in his salary when he starts his new job in two months.
In regards to the patient’s anxiety, he was advised to put on his big boy pants, take a chill pill, and own up to his financial situation. Although his net worth is -$303,300 based on his known assets and liabilities, he does have the advantage of becoming a high-earner in the next few months. In terms of the patient’s lack of financial knowledge, it was advised that he teach himself. Medical curriculum does not cover financial education, so he must take it upon himself to learn some of the basics. He was told to read a book, any book really, about the subject. It was also recommended that he look into the process of rolling over his current 401k savings to his new employer’s plan. Finally, he was told to not take on any more consumer debt, save what he can, and to just make to graduation. He will follow up in our clinic in about one month.
Follow-Up Visit – 7/4/2014
The patient did not show up for his clinic appointment. We received a message saying he was “getting married” and that he would have to re-schedule for the following month. At this point the overall prognosis seems poor. It is possible the patient will be lost to follow up (not keep appointments).
Follow-Up Visit – 8/1/2014
The patient was seen in clinic as scheduled. He reports that he did read a financial book titled Personal Finance For Dummies. After finishing, he noticed a strong interest in the subject that he thought he would never have. This interest lead him to seek out further knowledge on his own. He spent a lot of time on a website called The White Coat Investor, which in turn led him to other online resources. In the month since graduation, the patient has analyzed all of his finances, examined his budget, and established a preliminary plan to pay off his debts. He has also started the process of rolling over his old 401k into his new one and was delighted to learn that he had saved an additional $17,000 during residency without even realizing it. Overall the patient appears more relaxed and confident in his demeanor. The next follow-up appointment will be scheduled for six months.
Follow-Up Visit – 2/1/2015
The patient continues to progress nicely. He reports that he was able to pay off his credit card debt and establish an emergency fund. Also, the patient states that he has plans to “live like a resident” and pay off his student loans within five years. He was able to successfully roll over his old 401k funds into his new plan and intends to manage his own finances, including his investments, rather than hire an advisor or planner. At this point the patient no longer needs scheduled follow-up appointments in our clinic. He can return as needed. He was also advised to continue with his financial self-education and to think about sharing his experiences with others.
Discussion and Learning Points
Although the outlook seemed bleak for the patient, things turned out well in the end. I should know… I am the patient.
Shocking! I bet you didn’t see that plot twist coming! 🙂
I’m not sure what motivated me to take a look at my finances when I did. Maybe it’s because I’m a procrastinator and work better with an impending deadline. Or maybe I decided to finally be an adult and face my situation head on. Whatever the reason, I’m glad I had my financial epiphany during residency and not a few years later. I was able to hit the ground running, put my increased income to good use, and not fall into the trap of buying a lot of “stuff” as a new attending. Even though things turned out okay for me, there are few things that we can learn from my case. Below are some learning points that can be taken away from my personal experiences.
It helps to know what you’re doing
A lot of my missteps resulted from my overall lack of financial knowledge. In my opinion, one of the most important first steps in taking control of your finances is to educate yourself. You don’t need to read a bunch of books and become an “expert” in personal finance. Heck, my first book was a Dummies book (although it was quite useful and high-yield). Rather, you want to establish a foundation of knowledge so that you can come up with a basic financial plan. Without one, you’re kind of just wandering around without any real direction. In my case, let’s look at that random Money Market Roth IRA. What’s up with that? I didn’t really know what I was thinking when I opened that account back in 2012. I certainly didn’t have a plan in place let alone know how to invest the money. But I had heard that Roths were good for you, so I decided to get one. I went online, opened an account with one of the “big banks”, and selected a money market account (with a whopping 0.05% APY) as my investment. As of today, the value of said account is $200.70. Adjusting for inflation, I actually lost money as $200.70 in today’s dollars would be worth about $192 back in 2012. Since I didn’t know much about investing at the time, it would have been better to put that money toward my credit card balance instead.
I had the beginnings of an emergency fund but didn’t know it
Looking at my numbers, I had about $1,000 in a savings account. While not much, it could have been enough to cover unplanned expenses and keep me from taking on more debt. For example, my car needed maintenance during residency, but rather than tap my stash of cash I charged the repairs to my credit card instead. At this point in my financial career, I thought that money in your savings account was never to be withdrawn. I didn’t know that there could be different types of savings. For instance, long term savings such as those in retirement accounts should be left untouched. Short term savings, such as an emergency fund or “car expense fund”, can be used if the need arises. What I should have done was to use my savings to avoid charging my car expenses on a credit card with 15% interest, then gradually rebuild the cash account over time.
Paying yourself first works
As it turns out, I actually was saving some money for retirement, I just didn’t know how much. Therein lies the beauty of automatic savings. The number I really cared about was the amount of money that was deposited into my checking account, not how much was being withheld. My lifestyle adjusted to my paycheck, I was forced to “make do” with what I had, and I ended up with $17k in retirement savings by the end of residency. Unfortunately, that was the extent of my success with saving for retirement. I didn’t know what percentage of my pay was being withheld, nor did I every think about upping that percentage with time. I did not look into whether there was any sort of match with my 401k. Looking back, I should have paid more attention to those little details because if there was some sort of match, I missed out on free money.
Figure Out Your Student Loan Options
Student loans can be complicated, so much so that it can be a topic for an entire post on its own. My strategy of sweeping them under the rug and applying for forbearance was probably not the greatest. In retrospect, I should have looked into some of the income driven repayment plans available to me at the time. I graduated before the introduction of REPAYE, and my loans weren’t eligible for the PAYE plan, so the IBR (income-based repayment) plan would have been my best option. Payments would be capped at 15% of my discretionary income, and at least I would have been making some interest payments rather than none.
Live Well Below Your Means as an Attending
Living below your means is good advice for anyone, but especially true for new attendings with a lot of student loan debt. Residents experience a significant jump in salary once they become a full-fledged doctor and therefore have the ability to pay off student loans aggressively. The key is to not fall into the trap of lifestyle inflation. After all, it doesn’t help to have $10k of income a month if you’re spending $9k of it.
If you’ve made it this far, thanks for reading! That was a long post. It was interesting looking back on my financial experiences as a resident. There were a lot of “what were you thinking?” moments. Although I did have a few missteps along the way, I was fortunate enough to not make any catastrophic financial mistakes. In the end, I learned a lot going through my own financial M&M. Hopefully you were able to learn a few things, too.