you can afford to be a family physician
DESCRIPTION
You Can Afford to be a Family Physician. Mark A. Goedecker, M.D. York Hospital Family Medicine Residency Clinical Camp April 4, 2009. My Credentials. My wife and I are both family physicians We had >$300,000 (1997) in student loan debt combined Max credit card debt reached $47,000 - PowerPoint PPT PresentationTRANSCRIPT
You Can Afford to be a Family Physician
Mark A. Goedecker, M.D.York Hospital Family Medicine ResidencyClinical CampApril 4, 2009
My Credentials
My wife and I are both family physicians
We had >$300,000 (1997) in student loan debt combined
Max credit card debt reached $47,000
We had no money invested (as of 7/2000)
I finished residency in 2000 and my wife in 2002
How Are We Doing?
Our credit card debt has been eliminated
Our student loan
debt is at $120,000
We own a house
and two cars
We have $200,000
saved for retirement
after the stock
market collapse
And we are still having fun
“Luck is where preparation meets opportunity.”
What We Will Cover
How much will you owe?
What should you do with ALL of your money (once you have money)?
How much will you make and will this be enough?
What is the future of family medicine?
Student Loan Facts
Class of 2008– 87% of graduates had debt– Mean debt was $154,000– 56% of graduates had debt >$150,000
Can I Transfer to a Cheaper School?
In state residents pay $10,234 per year
I Don’t Have It As Bad As Some
Out of state residents pay $74,748 per year
$390,000 for 4 years
So How Much Will I Really Have to Pay Back?
Sample Repayment - $154,000 for 10 years
6.8% interest rate
Monthly payment of $1800
Total repayment of $212,000
But, it could be worse than this….
The Case of Pay Me Some Now or a Whole Lot Later
Student Loan Repayment
10 year repayment– Monthly payment
$1800– Total interest paid
$59,000– Total repayment
$212,000
30 year repayment– Monthly payment $1000– Total interest paid $207,000– Total repayment
$361,000
Difference in amount paid = $149,000
Original Loan Amount $154,000 at 6.8%
But many of you have it worse than this….
Worst Case (without college loans)
Max interest rate of 8.25% (Stafford Loans)
Amount Borrowed $250,000
30 year repayment
Total amount repaid $692,000 ($436,000 in interest)
10 year monthly payment would be $3100
But I can deduct the $436,000 in interest on my taxes, can’t I?
Student Loan Interest and Income Tax Deductibility
Up to $2500 of interest may be deducted yearly if you itemize deductions
Standard deduction is $6400 for single filer and $11,300 for joint filers
Student Loan Interest and Income Tax Deductibility
HOWEVER, there are income limits– Single filer – deduction is phased out between
$60,000 - $75,000 adjusted gross income– Joint filer – deduction is phased out between
$120,000 - $150,000– This is for 2009
What Can You Do Now
Find out:– How much you owe?– Whom you owe it to?– Who services your loans?– What types of loans you have?– Other sources to pay for tuition (more on this
later)– Become very good friends with your student
loan office employees (or Bill Gates)
What Should I Do With All of My Money Once I Start Working?
A. Buy a new car (or cars)
B. Take expensive vacations
C. Buy a new house
D. Invest all of your income in the stock market
“The chief cause of failure and unhappiness is trading what you
want most for what you want now”
Delayed Gratification
It’s OK to enjoy your salary
Avoid running up large credit card debt if possible (spend what you have but not more than that)
Temptation is to spend and not invest
Credit Card Debt
In 2008, the median credit card debt for graduating medical students was $5500
Only 37% of people pay their credit card balance off monthly (women are worse than men)
Average interest rates are around 12%
To Invest or Pay Off Debt?
Paying off consumer debt (credit cards, car loans, etc…) is an excellent investment due to:– Higher interest rates of credit cards (12%
currently)– Monthly capitalization– High amounts of credit card debt can affect
your credit rating– A good investment averages a rate of return
around 8%
Paying Yourself When You Have a Salary
When do you pay yourself any money for all of the hard work that you do?
Paying Yourself First
Take money directly from your pay check for investment or to pay off high-interest debt
Have the money removed before you get your 1st check and you will never know that it is missing
True or False
Physicians are bad with managing their finances
“There is little you can learn from doing nothing”
“Investing Like a Doctor”
Making risky investments – get rich quick schemesNot understanding the basics of financial managementThings that are not taught in medical school or residencyDelayed gratification
Don’t Wait to Invest
Dr. Early and Dr. Late
Dr. EarlyStarts investing at age 28
Invests $2000/year @ 10%
Stops investing at age 35
Contributes $14,000
Dr. LateStarts investing at 35
Invests $2000/year @ 10%
Stops investing at age 65
Contributes $60,000
Who Retires Better Off?
Dr. Early
$331,091
Dr. Late
$328,988
• Dr. Early invests $46,000 less but finishes with $2100 more• If Dr. Early had kept investing until age 65 he would have ended up with $660,079
Dr. Early and Dr. Late
0
50000
100000
150000
200000
250000
300000
350000
28 31 34 37 40 43 46 49 52 55 58 61 65
Early
Late
Lessons from Dr. Early and Dr. Late
Start investing money (or paying of debt) as soon as you have a salary
If You Read Nothing Else
The Wealthy Barber, David Chilton 1998
How Much Will I Make?(And Will It Be Enough?)
Data on Student Loan Debt and Career Choice
Most studies have shown that the amount that students owe in loans does not alter their career choice
“Ideally, students should choose a specialty independently of concern about educational debt and inequities in remuneration, on the basis of the knowledge they have gained from clinical experiences with comprehensive care”
Ruth-Marie Fincher, MD NEJM August 12, 2004
How Much Income is Enough?
What is your current monthly budget as a medical student?
How Much Income is Enough?
An income of $90,000 a year or more would put in the top 10% of household incomes in the United States
How Much Income is Enough?
My parents annual income:
$32,000
How Much Income is Enough?
Ben Roethlisberger’s Salary: $102 million
Raucous applause if you’re a Steelers fan
Other Food For Thought
Everyone Makes the Same Salary in Residency
Residents in primary care residencies may have more time to moonlight
Median Housestaff Stipends 2008
1st year resident $45,659
2nd year resident $47,257
3rd year resident $49,095
A Sample Resident Budget
Tax Brackets for 2008 Single Filers
$0-8350 10%$8351-33,950 15%$33,951-82,250 25%*$82,251-171,550 28%$171,551-372,950 33%Over $372,951 35%
*In your first 6 months of residency you will be in the 15% tax bracket unless you have another source of income
Tax Brackets 2008 for Joint Filers
$0-16,700 10%
$16,701-67,900 15%
$67,901-137,050 25%
$137,051-208,850 28%
$208,851-372,950 33%
Over $372,950 35%
Social Security and Medicare
Social Security 6.2% on all earnings up to $106,800 in 2009
Medicare 1.45% on all earnings
Sample Resident Budget
1st year resident $45,659
After taxes $30,750
After-tax pay= $2500 per month
This is 2 times the average medical student’s budget
Sample Resident Budget ($2500)
Investment (10%) $250
Housing $1000
Transportation $300
Remaining $950
(most student loans will be deferred in residency)
Sample Resident Budget
Remember that paying off credit cards can be a great way to invest the 10% of your salary
Average Residency Lengths
Family Medicine, Pediatrics, Internal Medicine – 3 years
Emergency Medicine – 3-4 years
Anesthesia – 4 years
OB/GYN – 4 years
General Surgery – 5 years
IM, Peds or Surgical subspecialty - 4-9 years
Remember the Lessons of Dr. Early and Dr. Late
If you do a three year residency, you will:– Graduate earlier than most– Begin paying student loans earlier (less
capitalized interest)– Begin investing larger amounts earlier (more
compounded interest)
“Duty makes us do things well, but love makes us do them
beautifully.”
Mean Salaries (in thousands of $)
Peds 159
FM 172 (120-275)
IM 176
Psych 189
OB/GYN 255
ER 240
Gen Surg 321
ENT 362
Anesthesia 336
Derm 315
GI 379
Cards 392
Radiology 401
Uro 387
Ortho 439
Hospitalist 181Merritt Hawkins 2008 Review of Physician and CRNA Recruiting Incentives
Mean Before Tax Income of Family Physicians 2009
$150,000 (after taxes $99,000)
Monthly take home income of approximately $8250
This is 3.3 times the income of an intern (6 times that of a medical student)
Sample Family Physician Budget($8250)
Investment (10%) $825
Housing($250,000) $2000
Transportation($25,000) $400
Student loans($154,000) $1800
Remaining $3225
Assuming 10 year student loan payoff (if you change to a 30 year payoff then remaining will be $4025)
Real Life Example
My wife’s practice:– Inpatient, outpatient, and nursing home (no
obstetrics)– Leaves house at 8 AM and is home by 5 PM– Takes one weekend call per month and two
weekday calls per month– She has every Tuesday off– Income was $211,000 in 2007– In 2008 she took two months maternity leave
and income was still $160,000
Other Sources to Pay for Loans
Pennsylvania Loan Repayment Program
Primary Care and dental
3 years - $41.6K
4 years - $64K
6 years - $114K
Stop by the table in the exhibit hall for more information
Other Sources to Pay for Loans
Loan repayment through your job
State and Federal loan repayment
National Health Service Corps
Military Service
Other Sources to Pay for Loans
The State and Federal Repayment, Loan and Scholarship Data Base – http://services.aamc.org/fed_loan_pub/index.c
fm?fuseaction=public.welcome&CFID=6076304&CFTOKEN=43cd64a-8238d20e-fe06-4ebb-b0ec-24eac66475c8
The Future
Why Is Family Medicine Needed
“Areas of the US with more primary-care physicians have better health”
“Areas with higher ratios of primary-care physicians to population had much lower total health-care costs than other areas”
Barbara Starfield
The Primary Solution
Why Is Family Medicine Needed
“Adults who reported having a primary-care physician rather than a specialist as their regular source of care had lower subsequent five-year mortality rates, regardless of their initial health or various demographic characteristics”
Barbara Starfield The Primary Solution
The Future - Now
National job searches for family doctors have increased 196% from 2004/05 to 2007/08
The average offer made to family doctors is $172,000 which is up 8% from the previous year
Merritt, Hawkins & Associates 2007 Review of Physician Recruitment Incentives
"Demand for family physicians is through the roof and there are not enough of them to go around"
Mark Smith
President of Merritt, Hawkins & Associates
June 19, 2008
http://www.reuters.com/article/pressRelease/idUS127348+19-Jun-2008+PRN20080619
The Future
Shortages of primary care physicians due to decreasing numbers of students choosing this careerSubsequent increases in income, loan repayment, and other incentives (especially for new physicians)Increase in the demand for family physicians due to breadth of training (employers get more for their money)
The Past (and Possibly Family Medicine’s Future)
Radiologists’ average recruiting salaries in 1997 were $189,000
As of 2007-2008, the average recruiting salary was $401,000 (112% increase)
Large increase in salary was related to supply and demand
FAQs
The Nurse Practitioner/ Physician Assistant Question
The Wal Mart and Target
“Quick Clinic” Question
The Obama
Question
Healthcare Reform
The goal of healthcare reform is:– To get the right care– In the right place– At the right time– To the right people
“Other things or people can stop you temporarily. You’re the only one who can do it permanently.”
My Contact Information
Mark Goedecker, MDAssistant Program Director and Medical
Student Clerkship DirectorYork Hospital Family Medicine Residency
1001 South George StreetYork, PA 17405
Office 717-851-5643Email [email protected]
Facts About Family Medicine
FACTS About Family Medicine– http://www.aafp.org/x530.xml
Merritt Hawkins and Associates 2008 Review of Physician and CRNA Recruiting Incentives– http://www.merritthawkins.com/pdf/mha-2008-i
ncentive-survey.pdf
Websites On Financial Well-being
AAMC First–http://www.aamc.org/programs/first/
MD2 Financial Planning for Medical Students and Residents– http://www.aamc.org/students/financing/md2/p
hase2/start.htm