Should You Pay Off Your Debt First?

Is there a better option than to pay your debt first?

Ever since we started teaching at medical centers and universities we have received all kinds of questions pertaining to the dilemma of carrying so much student loan debt. With the average doctor coming out of medical school with a hundred or more than $200k in education loans, it’s no surprise which financial area is the greatest burden.

The big question that comes up from those doctors who are just getting started is, “what should my strategy be?” Doctors would ask if they should pay it all off first, make the minimum required payment amount or somewhere in-between.

debtThe answer you should expect to hear from a professional who specializes in working with doctors is it depends on your financial plan, goals and objectives. If the goal is to grow your wealth efficiently so that you have the most available at retirement or to be used for most other purposes then the likely answer is NO. You should NOT pay off all of your loans first.

Initial objections to this are, “but my interest rates are really high and I’m not likely to get a high enough return somewhere else,” or “I’ll have more to save and invest once I’m done paying off my loans so I can make it up then.”

These are really good points but the problem is that the math doesn’t necessarily line up with the logic. The best thing you can do is have your advisor model it out for you. If you do xyz, how will that look in the future? With reasonable assumptions for inflation, taxes, health care, life events, growth rates etc, your advisor should be able to make a projection of what life would look like either way.

This is the kind of management information that makes these kind of financial questions easier to navigate rather than just going off of your gut or what someone else is suggesting. You’d be much better off by having the facts to back it up to see what the real difference is.

With the hundreds of doctors we’ve consulted with who fall into the camp of “trying to do the right thing with their debt,” they’ve been able to see that there’s more than one way to approach this. Most of the time it makes more sense to follow the 50/30/20 rule we’ve shared in other podcasts.

There is a bright side to the debt that has been accumulated. You know what it is. Having a career with a significant, predictable income is rarely able to be duplicated in many other professions. This earning power is very valuable and instead of being all negative Nancy about it, take it for what it is, an investment for you and your family.

Now it’s just a matter of finding the best way to manage it.

As you may have found across the financial industry, the best place to get financial advice is from a fee only financial planner and investment advisor. We agree which is why we are one. Talk with your advisor, run the calculations or contact us and we’d be happy to help you run the numbers.

There’s no reason why you have to make the decision without having clarify. After all that’s what we are here for.


doctors life podcast

The Doctor’s Life Podcast Episode 042- Pay off Student Loans First or Save?

Do you pay off student loans first or is it better to come up with a plan?

Should you pay off student loans first or should you start saving? What’s the right way to pay off student loans?

Justin Nabity is back in The Doctor’s Life Podcast studio to answer these confusing questions, and you might be surprised. All episodes of The Doctor’s Life Podcast are available here, iTunes, Android, and on SoundCloud. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


doctors life podcast

The Doctor’s Life Podcast Episode 022- Easy Student Loan Options

Easy student loan options. It’s what you dream about…especially when you’re looking at that mountain of debt after med school.

Justin Nabity is in The Doctor’s Life Podcast studios with some student loan options that will make it easier on you regardless of how long you’ve had the debt. All episodes of The Doctor’s Life Podcast are available here, iTunes, Android, and on SoundCloud. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


doctors life podcast

The Doctor’s Life Podcast Episode 011- Attacking Student Loan Debt

Student loan debt. Ugh. We’ve all been there before. Just wondering how to make this whole mountain of debt disappear.

Nick Schneider is back on The Doctor’s Life Podcast with some tips on how to attack your student loan debt to make it go away as soon as possible. All episodes of The Doctor’s Life Podcast are available here, iTunes, and on SoundCloud. If you have an Android device, you can download a podcast player (I recommend Podcast Addict), and it will pull from iTunes. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


The Big Economic Mystery of 2015

If the economy is healthy, why are retail sales so poor?

Provided by Justin Nabity

Retail sales have been flat or negative for four out of the past five months. Even though households are saving an average of $50 a month on gasoline compared to a year ago, that savings has not inspired consumers to increase their spending.1

Commerce Department data released last week showed no retail sales growth in April; even core retail sales (which exclude car and gasoline purchases) rose only 0.2%. Retail purchases fell 0.2% in Q1, representing the first quarterly dip since 2012. Through April, they were up just 0.9% annually.2,3

What is holding the consumer back? If economists could pinpoint this on a single factor, there would be no mystery here. Significant clues have emerged, however.

Continue reading…


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Rings in hands

Talking About Money Before & After You Marry

No married couple should suffer from financial infidelity. If you hide debt, income or assets from your spouse, it can lead to a fight and possibly even an impasse in your relationship.

Communication & transparency are essential when it comes to money. That truth should be recognized by every couple tying the knot, or even just cohabitating. Yes, financial matters can prove hard to discuss – but if you can’t talk about them together, that’s already a serious problem.

Continue reading…