So You Want To Be A Broke Doctor?

in Financial Planning by

At around 6:00 p.m. every day, I look forward to getting that phone call, the one from my husband saying he’s on his way home from the hospital. Taking care of 7-month-old twins isn’t for the faint of heart but then again neither is being in the 4th year of a 5 year MPH/MD program.

Of course tonight, as it sometimes happens, I got a text instead of a phone call. “I’m going to assist in one more surgery then I’ll be home,” he said. He’s currently on an OB/GYN rotation and has loved every single minute of it. He comes home absolutely elated every day, so I know it’s important for me to be as agreeable as possible and encourage him when he wants to stay longer or do extra work.

So, I text back, “No prob! I will put the twins down.” I thought the little exclamation point I added to the text really helped cover up my disappointment. As if he read my mind, another text came through, “So sorry,” he said, “Kiss the babies for me. Remember, it’ll be worth it.”

Although “It’ll be worth it” is a common phrase medical school students and residents tell themselves during the 18th hour of their shift, an increase in medical school costs and a decline in physician reimbursements indicate that financially speaking, it might not be as worth it as many people perceive. Certainly the privilege of taking care of other people is worth it, but in order to pay back medical school loans, catch up on lost investment time, and keep up a particular image, doctors can easily find themselves… well, broke.

Medical School Costs

In the last decade, the cost of attending medical school has risen considerably. My own husband recently crossed the threshold of owing $300,000 since he added on an extra year to his education to receive a master’s degree in Public Health. He also attends an expensive private school and utilizes dependent loans for our two children. Thus his experience is not the norm. Still, as indicated in the chart below published by the Association of American Medical Colleges, most medical school students graduate with well over $150,000 in debt, and that figure slowly rises as each year passes.

cost of medical schoolWhile the cost to receive a medical education is high, many students and the population in general are under the assumption that the costs are justified given the high salary physicians typically receive. Yet, physician compensation has been on a sharp decline as well.

Physician Compensation

Never before has physician compensation been so hotly debated or under attack. Journalists have written article after article saying that physician pay needs to be cut in order to accommodate the Affordable Care Act. The thing is, physician compensation has already been cut over the last 10 years.

Think about it: not many people would continue to do the exact same work every day for less and less pay. If you’re an engineer and your boss said, “Over the next 10 years, we’re going to slowly decrease your pay incrementally. I hope you understand,” you would tell your boss to go take a hike.

However, because physicians devote up to 15 years of their lives to rigorously train for their professions, they aren’t exactly keen to stop being doctors and switch to engineering as an alternative just because their pay is being cut.

Below is an example of the change in physician reimbursement for some common surgical procedures.

physician compensationThe roots of this salary decline go back even further to the 90’s when managed care companies started transforming the face of medicine. HMOs gave patients less expensive healthcare, but they also restricted the free market and physicians, who began to see their patient base and income change.

HMOs gave physicians significant pressure to join so they didn’t lose their patients to another physician down the street. This started a history of third party managed medicine. Today, many hospitals are purchasing private practices, and insurance companies rarely increase disbursement rates. Also, physicians will be most affected by Affordable Care Act (ACA), which will highlight the physician shortage in our country and possibly change physician income yet again. Of course, we won’t know the long term effects of the ACA on the medical community for quite some time.

I’m not going to solve those problems in one article, and although I could write about insurance companies, lobbyists, Medicare, and the ACA until my fingers bleed, I instead want to focus on helping physicians and their families deal with the present issue of their finances and offer some guidance on how to deal with these seemingly daily changes in their future.

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It Comes Down To the Individual

I mention medical school costs and decreasing physician compensation because those are the issues that people highlight when they argue why physicians deserve the salaries they have in order to play financial catch-up. High pay certainly helps physicians to afford their loan payments and malpractice insurance costs; there’s no doubt about that. Yet, people rarely talk about why physicians are making loan payments for 30 years with those high salaries and why so many of them seem to lack the financial education that is integral to having a successful career and eventual retirement.

There’s an even more abstract problem that goes even deeper into the very fibers of who physicians are as a community. The perception of physicians needs to change, and very few people have taken note. Many are still harkening back to older times when physicians were very well paid, pillars of their communities, respected, fully trusted, and rarely sued. In an effort to be a part of that, doctors today – especially newly minted ones – try to buy the homes, cars, and clothes to go along with this outdated perception. And, when a physician breaks the mold and drives an old pick up truck into the parking lot (as one of my friends did), they get made fun of in the doctor’s lounge by other doctors. This is a small but true example of how many physicians feel pressure to project a certain image.

In order to combat this, physicians and their families have to adapt to a world that is changing. The worst thing we can do is stick our heads in the sand, intent on living life like physicians’ families before us. More importantly, in order to adapt, we have to know where we stand in the first place. That’s why establishing a baseline and doing a few diagnostic tests are so important in medicine and in financial matters.

Avoid the Broke Doctor Syndrome

So, if you’re reading this and you are a part of a medical family or any professional family that takes a tremendous amount of time and tuition expense to achieve, here’s how to avoid the broke doctor syndrome. Most importantly, it’s time to stop thinking about living like “like doctors” and instead start living like people who take home $150,000-$200,00 a year after all expenses are taken out. A handsome salary, no doubt, but not one that can afford a nice house, car, boat, and exotic vacation all at once.

While many physicians claim there was no time to learn about finance during medical school and more claim to not have the time now to devote to it, I’m here urging you now to make the time. If you’re too busy to devote time to learning more about finance on your own, work with a financial planner like one of the many at Personal Capital. There are many pitfalls to DIY investing if you don’t have the time, interest, or dedication to managing your money. Spend more time doing what you love to do and are an expert in doing.

The more physicians project the image of immense wealth, the more the public will be resentful and jealous of that (real or imagined) wealth. These perceptions do play a central role in the future of healthcare. After all, if doctors look like they have too much, what’s to stop the legislature from passing laws that reduce their incomes? Live within your means and avoid projecting wealth that you don’t have.

Making My Own Image

I’m endlessly proud of my husband. It’s hard to describe how grueling the last few years have been on our family. It’s a level of intensity that many people recognize on the outside but very few actually experience for themselves or second hand as medical school or physician spouses.

The thing is, I do want all of this to be worth it for my husband. He’s 30 years old, and as a somewhat late bloomer to medical school, he’ll be 36 when he is finally a full fledged doctor. That’s pretty late in life to start making a decent income, pay back what will by then be $400,000 worth of debt (since it’s actively accruing interest as I write this), raise two children, and eventually send those two children to college.

Unlike most doctors who utilize the entire repayment period of their loans, I do not intend to spend 30 years sending in those loan payments. If we can live on $50,000 a year or more during residency then we certainly can live like that for a few years post residency, taking all of the excess income and putting it towards our loan balance.

As it stands now, my husband has one more year of medical school then between 4-7 years of residency depending on which specialty he chooses and if he decides to do a fellowship. When he graduates, we hope he will be able to bring home at least $150,000 per year if not more. Keep in mind that he has not aggressively invested in the last five years because he’s had no income, so he will need to play “catch up” on his retirement funds in addition to paying off his loans. 

I estimate that if we are vigilant, do not enhance our lifestyle too much, and buy a modest home, we could pay off his $400,000 worth of loans in 10 years. As part of this goal, we will be looking at different incentives, like practicing rural medicine, in an effort to speed up the loan repayment process. If we make this repayment goal of 10 years, my husband will be around 46 or 47 years old, just in time for us to send our twins to college.

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Catherine Alford

Catherine Alford is an award winning personal finance writer who contributes to several online publications including The Huffington Post, top personal finance blogs, and her own site, She received a B.A. from The College of William and Mary and an M.A. from Virginia Tech. When she is not reading and writing, she is taking care of her young twins. Follow her on twitter @BudgetBlonde.


  1. Natalie @ Financegirl

    Very insightful, Cat! Honestly, I don’t think it’s the salary or debt that makes it harder for doctor’s. I think it’s the perception and expectation that they’re supposed to be rich. In The Millionaire Next Door, Thomas Stanley talks about this (how doctor’s live large and are broke). I do think your specialty has an effect on your income. Obviously, if you overspend, no matter how much you make, you’re in trouble. That said, my brother is an ophthalmologist, so he should be making over $200,000 right out of his residency next year (only with the expectation that that salary will grow – and fast). Compare that to law school, where the cost of education is somewhat similar but the job prospects and pay are dismal in comparison ($60k – $100k starting out, at best).

    • Catherine Alford

      Thank you Natalie. Yes, your brother picked an excellent specialty with a great lifestyle. I assume your parents taught you great lessons from what you’ve said on your blog, so hopefully he has great financial sense like you do!

    • Andrew Chai

      My nephew just graduated from Boston College Law school and he has about $180k in student debt. He will make mid six figures his first year out. Compare this to your brother who went to 4 years of med school and then four more years (at least) of residency at a resident’s salary. That puts him behind at least 4 years at $80-100k/year. Of course, during that time the lawyer’s salary will also increase. Personally, it took me 14 years to become a cardiologist. I was 36 by the time I had a job as an attending physician. I had student loans close to $200k. I would do it all over again. The satisfaction I get from my job is all worth it. I agree with the author of this article…..don’t live above your means. No not fall into the doctor trap. I am now 52 and have paid off my student loans. I do not buy anything that I can not pay for in cash. I save the maximum amount possible for our retirement and our kids college fund. Other doctors I know can not say this. Cat, your husband is lucky to have a spouse like you. It takes a team effort to get out of debt and you are way ahead of the game and he should thank the lord that he married a smart, responsible woman like you. I do the same since without my wife’s fiscal responsibility, it would not be possible. Good luck to you and your family.

      • Financial Samurai

        Hi Dr. Chai, I think it is wonderful that you would do it over again and have great satisfaction from your job!

        Has the pay been able to hold steady in your field? Or does it not really matter? I’ve got a lot of people complaining to me about the system.

        • Andrew Chai

          Physician compensation has been declining for years. What physician’s lack is organization and political clout. The AMA does little for the independent physician’s cause. The decreasing compensation as well as the increased regulation is the reason you are seeing more and more physicians becoming employed by hospital systems. For example, electronic medical records is very expensive and almost unobtainable for most small independent physician groups. Also, while reimbursements are going down for physicians, the cost of running a practice is increasing. You are probably witnessing the end of the private practice physician in the next decade or two. However, this is not all a bad thing. Alignment of physicians with health systems can improve efficiencies and quality of care by becoming integrated partners with a common goal. No matter what, physicians will be fairly well compensated financially but probably will see a decline in their autonomy which may have a bigger negative effect on job satisfaction.

          • Financial Samurai

            Got it Doc. The autonomy is what I’ve really found to be the most valuable and desirable commodity during my quest for financial independence. If you have time, I’d love to hear your perspectives on an article I wrote on my site entitled, “Bankers, Techies, Doctors: You’ll Never Be Rich Working For Someone Else.” Could you tell me if the doctor’s compensation chart is inline or now sadly way too high? thx

  2. Financial Samurai


    When do you think there will be a turning point when less people start going to med school than the year before given income is declining and tuition is rising? Or has this happened already?

    I think applications to law school is down like 35% in the past 10 years or something crazy largely due to the economics.

    I’ve changed my tune on tuition debt over the years b/c I’ve experienced mortgage debt. Once your husband starts making the hopefully $150-200K a year after tax + your income, I think you won’t see it as, as big of a burden. $400,000 is still huge no doubt, but I guess we get used to it b/c mortgages are often that size or greater in coastal cities.

    Good luck to us on college education tuition!


    • Catherine Alford

      I often think of it like a mortgage too, Sam, just with worse interest rates. It is a big number, but I don’t feel overly stressed about it because I know we’ll be able to handle it and can live with less. As far as when enrollment dates will drop for med school, it’s hard to say if that will ever happen. There are so many people who want to go to medical school. There are Caribbean medical school accepting American students by the thousands and new medical schools opening up in the U.S. It’s still a career many, many people want to have. I think most people are just hoping for more loan forgiveness options in the future for sure though.

  3. The White Coat Investor

    Better personal finance and investing habits will help many doctors make up for increasing medical school costs, worsening loan terms, decreasing income (at least after-inflation), and increasing government regulation. I’ve been trying to help doctors to develop those at The White Coat Investor ( for the last 3 years, with some significant success.

    I absolutely agree with the article’s premise though- that docs need to spend some time learning about money and business.

    • Catherine Alford

      Hi! I definitely know your blog. I have been subscribed to your newsletter for over a year. Great work!

  4. Holly Johnson

    Cat, I like the idea of practicing rural medicine. You’ll probably end up with a much lower cost of living if you go that route anyway, and that just means more money to throw towards those student loans.

    • Catherine Alford

      Absolutely. We’re going to look at all options. Some employers can offer money towards loans as bonuses too so we’ll be taking in all the options!

  5. Jillian @ Hi! It's Jilly

    Such a well-written article! They really do need business and financial planning classes at med school. How are you supposed to run a practice if you don’t have any business training?! And, I know many of my husband’s classmates took out the max loans each semester because they didn’t know any better. We took out the smallest amount we possibly could and did just fine, and we have three kids…Triplets–multiples mamas unite! 😉

    • Catherine Alford

      Thanks Jillian for the kind words and support. Wow, triples – every twin mom thinks YOU’RE amazing!

  6. Ryan

    As a recent graduate, current resident, I can sympathize with your situation. I just wanted to point out that if your husband has federal loans, he can work towards getting his loan debt forgiven via the Public Service Loan Forgiveness program. In fact, if he matches at a qualifying residency program, his years in residency could count towards the 10 years required to reach forgiveness. If he’s 400k in the hole, using income based repayment during residency and working at a PSLF qualifying institution and getting forgiven could effectively net a 300k+ bonus….

    • Catherine Alford

      Thanks Ryan – we are absolutely going to look into that!

  7. Rena H

    Hi Cat, if you want to pay back your loans in 10 years and want to work in rural/underserved area, consider the federal public loan forgiveness program which forgives left over debt after 10 years of payments. Definitely start paying it during residency when your salary is low because through income based repayments, it’s 15% of your income. Look into National Health Corp and state based loan repayments because I’m a physician in San Francisco and still qualifies for these programs. There is a light at the end of the tunnel!

    • Catherine Alford

      Thanks Rena. We have learned about IBR and will definitely be doing that.

  8. Holly S

    Thanks for a great article Catherine. My son is a high school senior, so we’re deep in the college application/scholarship searching process and he insists he wants to go pre-med. I hate to rain on his dreams or discourage him but I really worry about the financial hole he will start out in. I plan on showing him your post just to make sure he has the knowledge to make informed choices.

  9. Tim

    Thank you for your blog. It took me 15 years to pay off my student loans. I have two who have gone through college, and two more entering in the next 3 years. With the increased demands on physicians, decreased reimbursement and a litiginous and entitled society, the quality of life I expected to have by now has not materialized. My take home pay is good, and I am on the personality end of being a miser. I think I will be ok when I retire. But when I get there, in about 15 years, I fear that I will not be happy. I am missing too much in life now. I wish you well in your pursuits. The good days still outweigh the bad ones. Most patients are still nice and respectful. It just isn’t as fun as it used to be…

  10. Physician Dispensing

    I think doctors could capture more revenue from their practices, but they need to pay more attention to the business opportunities available to them. I’ve talked with many doctors over the years and the ones that do not like change or trying new things are the ones that typically complain about their situation. Doctors need to be more proactive and seek out programs that can financially help their practice.


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