My Path to FI: Part 4, Residency
This is part 4 of my My Path to FI series of blog posts. If you haven’t read the first three posts in this series, you can check them out here. In this series of posts I try to tell my own story with money and my personal progress towards financial independence.
My last post was about my years in medical school, and in this post we move onto my years in residency training.
What is Residency?
In case you don’t know what residency is, it is the portion of training that comes after medical school on the road to becoming a physician. Contrary to what most people think, you really don’t learn how to be a doctor in medical school. In medical school you learn the language of medicine. During the first two years of a traditional curriculum you build a foundation in the basic sciences, including anatomy, physiology, biochemistry, microbiology, pathology, and pharmacology. The next two years consist of clinical rotations in various specialties including medicine, surgery, psychiatry, obstetrics and gynecology, and pediatrics. Newer curriculums try to promote early clinical exposure and more personalized rotations, but in the end all of the same basic information is covered. And you still don’t really know how to be a doctor, despite the MD degree.
Residency is where the rubber meets the road so to speak. If medical school teaches you the language of medicine, then residency teaches you how to apply that knowledge to practice medicine. It is essentially on the job training to be a doctor in the specialty that you choose. You are deep in the trenches learning the basics of your specialty, in my case neurosurgery. Residency training lasts anywhere from 3-7 years based on the specialty. Of course, I had to choose the only 7 year residency. After residency training is complete, many physicians choose to further sub-specialize in their field with 1-3 more years of fellowship training.
Is Residency Hard?
You’ve probably heard a lot of stories about how grueling residency training can be. Well, let me just say up front that pretty much all of them are true. Medicine has a deeply rooted culture of dedication and hard work. Residents are expected to put in extremely long hours and never complain, all the while taking care of patients and learning their craft. In fact, these trainees are called residents because historically many used to live at the hospital.
Just as I was starting my residency, a rule limiting resident work hours to 80 hours per week was put into place by the American College of Graduate Medical Education (ACGME). Prior to this there were no formal restrictions on how much residents could be put to work. Remember, hospitals are businesses, and from a business standpoint, residents are doctors working at an hourly rate not much higher than minimum wage. As a result, residents were on duty for excessive hours not only in the name of medical training, but also with a financial motive: cheap labor. The obvious problem with this is exhaustion from being overworked. This becomes unsafe for both the residents and patients. The goal of the 80 work week was to combat this trend and regulate how much residents were working. Other ACGME rules included shifts no longer than 30 hours (24 hours on call and 6 hours to wrap things up), and a mandatory day off every 2 weeks.
As I mentioned above, this was all brand new when I started my training. It took time for residency programs to adopt these changes. Some specialities could more easily conform to these new rules, but neurosurgery was not one of them for at least a few reasons.
First, neurosurgery is a very complex specialty and the stakes are extremely high. There’s a reason people say “well, it’s not brain surgery.” And there’s a reason it’s the longest residency. You need a huge volume of surgery and patient care, with exposure to the various pathologies we are responsible for, in order to become a competent neurosurgeon. My co-residents and I didn’t want to be restricted in our hours. We wanted to be in the hospital. We wanted to operate. We wanted to learn to become neurosurgeons. So we weren’t bending over backwards to try and limit our own work hours to 80 per week.
Second, it is much more difficult for surgical specialties to limit their work hours, especially surgical specialties that deal with emergencies like general surgery, orthopedic surgery, and neurosurgery. While some specialties, like emergency medicine, radiology, and anesthesiology, can function more like shift work, surgery is different. When you reach your hour limit, you can’t just leave a surgery and clock out. Likewise, if you have been working up a patient for an urgent/emergent surgery, you know that patient best and thus you are usually the best one to perform that surgery. After surgery you want to make sure your patients are ok, and if a complication happens, no one knows better than you what to do because you actually did the surgery. So we felt it was the right thing to be there for our patients, focusing on patient care and not a work hour restriction.
Finally, remember what I said about the deep rooted culture of hard work and dedication in medicine? Neurosurgeons tend to take that to the Nth degree. It was unthinkable to ever ask to leave a surgery or go home because “your were over hours.” We never even considered that a possibility. It would be viewed as weakness or laziness, and none of us wanted to be perceived as weak or lazy. Over the last decade I believe that culture has changed across medicine, even in neurosurgery, but that has taken time.
As a result of these and other factors, 100+ hour weeks were not uncommon while I was in training. The benefit was that we received excellent training and became technically competent neurosurgeons. The negative was the amount of time we had to spend working and the unavoidable sacrifices we had to make. Some days, some weeks, some months, and even some years were admittedly very very hard. But I had to admit I really loved what I was learning and doing. And I can’t give enough credit to my wife. During these seven years she had to, in many ways, function as a single parent. It was her strength that really made everything possible.
Despite all of this going on, financial decisions still had to be made.
Finally a Salary
After having lived primarily on loans during the four years of medical school, I was super excited to be getting a paycheck again. And to be on salary, not an hourly wage, I felt like a grown up. It’s probably good that it wasn’t an hourly wage because with the hours I worked, it was pretty close to minimum wage. The average resident starting salary was right around $50,000 per year. If you figure we had about 2-3 weeks off a year, it breaks down to about $1,000 per week of pay, before taxes. If I worked an 80 hour week, that would be $12.50 per hour. A 100 hour week would be $10 per hour. So not much more than minimum wage. But at least we were getting paid.
Early Financial Mistakes
In retrospect, I feel like I made some financial mistakes early in residency. Here are two pretty big ones.
The first mistake was with my student loans. Altogether I think I had around $180,000 in student loan debt when I graduated from medical school. And that is with full tuition scholarships to both college and medical school! But remember, our family lived primarily on loans for 4 years during medical school and we had to take out another private loan for the expense of residency interviews all over the country. In all honesty, this huge number, which was more than the home we were living in cost, didn’t seem like real money. Conceptually, I knew one day we would have to pay it back, but that day seemed so far away that it never really sunk in what that would be like.
When you enter residency you have the option to put your student loans into deferment or forbearance. Deferment is better than forbearance. Deferment means you can put off paying your loans and no interest accrues. Forbearance means you can put off paying the loans, but interest accrues the entire time. Of course, you can also start paying them off if you so choose as well.
Guess what I picked? That’s right, deferment and forbearance. All of the loans I could defer, I did. And once that period ended I changed them to forbearance. All the other loans I put in forbearance from the start. So I never made any student loan payments during my training. I told myself that I would be making plenty of money when I’m done with training and could easily pay my loans then. It doesn’t matter if they are accruing interest, we’ll be fine. We need all the money we earn now. What was the end result. I finished my training with $220,000 in student loan debt. OUCH! Even though it felt like money was so tight then, I wish we would have found a way to just put a little money towards paying them off, at least the interest for the loans I had put in forbearance from the start.
The second big mistake I made was failing to make any contributions to my employer sponsored retirement account, my 403(b). During the whirlwind of orientation right before residency began, we had a meeting with human resources to go over our paychecks and benefits. I remember seeing that they would be deducting $53 (not sure where they got that amount, but I distinctly remember it) from my biweekly paychecks to contribute to my 403(b) account. I instantly decided to cancel it. I needed that $53 now for me and my family. I had no concept of retirement accounts at the time. I did not understand the employer match. I did not fully understand the power of compounding.
What a foolish mistake. I missed out on the best investment return there is, a 100% return with the employer match. I essentially left free money on the table and didn’t even realize it. Surely I could have found a way to budget enough so that we could have contributed up to the employer match. I also missed out on the power of compounding over time. Even if it wasn’t a large amount, at least that money could have been growing and compounding all these years.
Living Within Our Means
Despite these early mistakes, we also did some things right.
We continued to stay on a pretty tight budget. We really tried to live within our means.
We lived in the same house as medical school, renting it from my wife’s parents.
We continued to drive the 2003 Chevrolet Impala we had purchased with the sale of our two previous cars before moving to Minnesota. We were blessed to receive a 10+ year old Chevrolet Suburban from my wife’s parents. That allowed me to stop driving the beat up old minivan a friend had given me after finishing his orthopedics residency and I donated it to charity.
We tried to minimize all of our fixed expenses.
I automated payments of our bills to save time in managing our finances while I was so busy in training. I still do that today.
Our faith plays a very strong role in our lives and we donated 10% of our gross income in tithes, and donated above this amount to further help those in need. We still do that today.
This left only our variable expenses, such as gas for the vehicles, groceries, clothing, and entertainment/miscellaneous. We tried different ways to stay within our budget for these variable items. We found the best way was to just use cash. For most of my residency, each week my wife would withdraw $200 in cash from our bank account and that is how much she would have to spend for all of these variable expenses. If we spent more on groceries that week, then we had less money to spend on any fun activities, and vice versa.
To save money we would often buy clothes for our kids at second hand stores (we rarely purchased any new clothes for ourselves and really tried to stretch things out). My wife learned to cut my hair and our kids’ hair. When our friends would graduate from their programs and move away, they would often give us hand me down furniture or other items, like bikes for our kids, that we graciously accepted. We continued to find very cheap or free activities to do with our kids for fun.
While we didn’t have much in the way of luxury, all of our basic needs were comfortably met and we were happy.
Can’t Keep Up With All the Dr. Jones’s
I’m sure you have heard the phrase “keeping up with Jones’s” which basically means we are trying to match the lifestyle of those around us, or project a certain elevated lifestyle. I believe most of us are guilty of this to at least some degree at different times in our lives.
During my residency training we had a large number of friends who were also resident physicians in training. Technically we were “all in the same boat.” However, oftentimes it didn’t look or feel that way. We couldn’t help but notice that some residents and their families were driving some pretty nice cars, or living in bigger and more luxurious homes, or were taking some pretty amazing vacations. If we all made about the same amount of money, then how was this possible?
Over time I learned that there were at least a few ways people were paying for some of these things. We learned that some of the residents were moonlighting (I’ll talk about this below). We also found out that some of our friends were getting financial help from parents or other family members. And some were just going into debt looking forward to that big anticipated paycheck in the future when they thought they’d be able to pay it off. And there are still likely other ways people were paying for these things that I am still not even aware of.
As we saw this happening around us, we came to the conclusion that we just can’t compare ourselves to others. We had no idea what the financial situations of those around us were, even if they had the same salary we did. Plus, why are we comparing ourselves to others or worrying about it anyway? I think it is our natural tendency to try to “keep up withe the Jones’s.” But it is one of the primary behaviors that keeps up from achieving our financial goals, and consequently it keeps us from things more important than money in our lives.
These experiences taught us that we can’t base our spending on what others appear to be doing because we just don’t know the whole story. Nor is it our place to pass judgement. These lessons continue to serve us well today.
Earning Extra Income
During residency many residents moonlight for extra money. Their MD degree allows them to take weekend shifts covering smaller emergency departments and urgent care centers in the area. The pay is actually pretty good, especially compared to the regular resident hourly rate. A lot of my friends were making $80-100 per hour on the weekends, working a couple of 12 hour shifts. In order to moonlight, your residency program had to allow you to do it. Unfortunately, in neurosurgery this was not permitted, which in retrospect was probably a good thing since we were working so much already. One of my neurosurgery senior residents was able to cover some neurosurgery shifts at another local hospital, but that opportunity ultimately went away.
I was pretty bummed that I wasn’t able to earn extra money by moonlighting, especially when so many of my friends in other specialties were. But as I’ve learned in the past, opportunities tend to present themselves to those who are already seeking them out.
Although I was unable to moonlight in local emergency departments like many of my friends, an opportunity finally came for me to earn extra money during my residency research year. One year of my 7 year residency was spent outside the hospital doing neurosurgery related research. This was a much easier schedule that allowed me to get a side job teaching Advanced Cardiac Life Support (ACLS) to other physicians, nurses, and EMTs. I’ve talked a little about this job in some of my other posts. It was the first time I realized the earning power of my M.D. degree. I was paid $80 per hour. It was the most I had ever earned. Others teachers were doing the same job I was, but were paid less without that credential.
Even though I wasn’t working in the hospital that year, I still worked very hard. I took classes in the graduate school and earned a certificate in clinical and translational research. I started my own randomized controlled drug trial in neurosurgery. And in my “spare time” I taught enough ACLS classes to double my normal resident salary. As has always been the case for me, hard work paid off.
Choosing the Road Less Traveled
As I was nearing the last few years of my residency, it was time to start making plans for the future. My initial plans were to do a complex spine deformity fellowship, get a job at a major academic medical center, and then do the surgeries and research necessary to become a “big name” in the world of spine surgery. I was developing the academic pedigree to accomplish this and it seemed like the next logical step. It was what everyone expected me to do. Through one of my mentors an interview was arranged at one of the top fellowship programs, which was really more of a formality, because in the small world of academic neurosurgery, if someone refers you and puts in the good word, then you pretty much have the spot.
As I was preparing for that interview, for some reason I just never had a good feeling about it. In the meantime I had visited one of my friends who had recently moved to Eau Claire, WI from another job that had not worked out for him. I learned about the kind of life he had as a neurosurgeon, that he was able to spend time with his family and have a life outside of neurosurgery, but still use his skills to help many people. My eyes were opened to another possible path. I did a lot of soul searching and asked myself what I really wanted out of life.
When I was completely honest with myself, I wanted a life that was a balance of spending my most meaningful time with my family, serving in my church, and being the best neurosurgeon I could be. However, I realized the path I was heading down would be much more heavily weighted towards neurosurgery.
I wanted neurosurgery to be a part of my life, not my WHOLE life. I believe that many of the people in my field are consumed by neurosurgery. If you ask them, most of them will tell you they have a “balanced life” but oftentimes I think this is just lip service. From my observations, most don’t. This is even more difficult in an academic job because you not only have to maintain your surgical practice, but also produce meaningful research. This is extremely difficult to do. Usually the demands of the surgical practice eat into the designated research time and either the research suffers or you have to use your own free time to do that research, which unavoidably takes away from your family and other important things in your life. It is rare to find the truly successful and balanced surgeon/scientist, and nearly impossible to be a successful and well balanced surgeon/scientist/husband/father.
After deep thought, discussion with my wife, deep introspection, prayer, and contemplation, I changed my course. To the great surprise of pretty much everyone around me, as well as some criticism, I cancelled my fellowship interviews and chose to begin going down a different path. I interviewed at the job in Eau Claire where I knew I could have a more balanced life and signed the contract more than 2 years before my residency graduation. While I knew I would never become that “big name” in the world of spine surgery, I knew it was the right decision for me and my family. It would allow me to not only work for the Mayo Clinic and help many people with my skills as a community neurosurgeon, but also be there for my family and pursue other meaningful endeavors in my life.
I ultimately chose the road less traveled by pursuing what was most important to me and not simply doing what everyone else expected. I am so thankful that I stopped to evaluate what I really wanted to do. It is a decision I have never regretted.
Conclusion
I hope this helps you get to know me a little better. I hope you can learn from some of the things I did right, and some of the things I did I wrong. Here are some take home points from my residency years:
- Learn to live within your means. This is an important skill that will benefit you no matter your financial situation, even later in life when you have more money.
- Make every effort to contribute to your retirement plans early, even if it is a small amount, and capture the power of compound interest over time.
- Don’t compare yourself to others, because you never know their true financial situation; just focus on yourself and what you can do to improve.
- At some point we must all ask ourselves what really matters most to us, and then evaluate if we are living our lives in pursuit of those things. If you aren’t, then don’t wait any longer and make a change. Start living your most meaningful and fulfilling life today.
Thanks for reading. I hope you are doing well in your progress towards reaching FI. If you have any questions or comments that might help other readers, please list them below. In the meantime, keep working towards Freedom Through FI!
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