This post is an interview with the blogger, The Debtist. I had originally heard her story on a Choose FI podcast episode, and I knew that I had to write a blog post about her story. I reached out to her and she was gracious enough to do this interview. Here’s her take on her career, her student loans, and what she envisions for her future.
1.Give us a little of your background and when/why you decided to pursue dentistry.
I was one of those kids who decided very early on what I wanted to be. I was also of the rare kind who stuck with the decision I made. My earliest recollection of me answering the “What do you want to be when you grow up?” question with “A dentist!” is way back in 3rd grade, when I was eight years old. It’s hard to say what caused me to veer towards dentistry. Maybe it had something to do with my infatuation with teeth (my parents say they have videos of me playing with fishes’ teeth when I was two years old and living in the Philippine Islands). I’d also assume it was fueled by my mom’s own desire to become a medical doctor, and her inability to do so due to the limited opportunities in the country we were from.
Of course, before I entered dentistry, I wanted to make sure it was a field that I wanted to be in. I volunteered a few months shadowing multiple dentists and then became a full-time dental assistant for a year and a half before I finally started dental school. There were many facets of the dental profession that secured my fate and convinced me that this is what I wanted to do. I found the artistic aspect in dentistry alluring. Towards the end of high school, I was very much into art and was on the fence between choosing art school or dental school. Luckily, I found that dentistry itself is a form of art in the sense that our work involves creating minute details, mimicking natural tooth structure, and sculpting and shaping teeth back to their functional forms. Working with my hands every day has been such a joy.
I also enjoy the social and humanitarian aspect. Part of the reason the medical field was appealing to me was because I wanted to help other people, whether that was getting them out of pain, preventing disease, or teaching them about oral healthcare. It has been very rewarding helping those who are most in need, especially communities that do not have access to healthcare on a regular basis. My best memories were made in the poorest of countries, working for free in the Philippines and Mexico, as well as rural areas in California.
On a personal level, dentistry gives one the freedom to create a lifestyle by design. You can choose to work for someone, with someone, or for yourself. The schedule can be as arduous or laid-back as you’d like. And you can embrace the parts of dentistry you love, and refer to other specialties the parts that do not interest you. Overall, I would consider being a dentist a true privilege.
2.What was your level of financial literacy prior to dental school? Were you price sensitive when pursuing dentistry?
Can I say “Absolutely zero”? I was a financial noob. I was twenty-three years old, and the only thing I knew about finance was how to swipe a credit card and how to pay it down a little at a time. However, even though I didn’t know much about finance, I would like to say that I was always debt averse. I chose to go to an undergrad that was close enough to commute to, even though my high-school counselors, friends, and family were pushing me to go to a more “prestigious” school that was farther away, and therefore would be more expensive. I worked three jobs while going to undergrad, and graduated in three years so that I would save on tuition. But at the same time, I went out with my friends, went shopping frequently, and planned many trips. I even took a $5,000 student loan in order to study abroad. So I guess in that sense, I would be what you would call an average American, one that is aware that money is important but as the same time, spends it excessively anyways.
I was price sensitive when pursuing dental school, applying to only 7 schools, when most of my colleagues were applying to 15 or more. I limited my applications because I had to pay for each one. I got into two dental schools right away, both private schools, one in Ohio and one in California. They cost about the same overall, so I chose the one in California, one hour away from my family.
The real proof that I knew nothing about finance lies in this one story. A few weeks into my first year of dental school at USC, I got a letter saying I got accepted into UCLA and that I was expected to start that Thursday should I choose to accept their offer. I was already settled in an apartment across USC, had paid for my first trimester’s tuition in full and had purchased the first year’s supplies. My mind was stuck in the short-run, considering the money I would lose by enrolling in the first trimester of USC and then switching to another school and paying for an over-lapping trimester. I was concerned about having to commute from farther away, since I already signed a one year lease with the current apartment complex. I didn’t want to start over and make new friends. So I denied the offer to go to UCLA, in exchange for convenience. That choice had a $150,000 price tag difference (without interest!).
(Editor’s note: You know- I could see myself making the same choice. Until you have a job and you understand what it’s like to pay back such a large loan, you don’t really understand the long term impact of your financial decisions. In hindsight, it seems like an obvious choice, but as they say, hindsight is always 20/20.)
3. Did your dental school provide any personal finance education? If so, what did you think of the quality?
Before we graduated from dental school, we were required to take a mandatory exit course regarding our student loan repayment options. The “course” was a one-hour session scheduled during our lunch break. We were required to sign-in on a piece of paper. Half of the class showed up late. Most complained. I think it did a majority of my colleagues a disservice. Most of us had loans north of $500,000, half a million dollars or more in debt. The course instructor made a generalized statement. If you have more than $400,000 in student debt, the student loan forgiveness program would be your best option. They made that statement without consideration for people’s personalities, life goals, or financial situations. It was a blanket statement that placed many of my colleagues on a path that is difficult to turn back from once you start that path.
Additionally, the personal finance education came too late. I think we should be receiving personal finance advice prior to signing up for dental school. It’d be great to integrate personal finance education into a high-school curriculum as a mandatory year-long course. And I’m not referring to investing money. I am referring to simple, basic budgeting strategies and money management. I’m talking about the power of compounding interest, and how to project loan repayments. I’m talking about how to avoid consumer debt. If you think about it, we have 18-year-olds not old enough to drink, but old enough to tie their futures down with thousands of dollars in student debt. It’s a little unsettling.
(Editor’s note: I think it’s VERY unsettling! I completely agree that blanket statements can be made without consideration of the individual or their own personal situations and tendencies. It would be much more helpful to focus on basic financial literacy, encourage students to keep their debt burden as low as possible, then discuss different methods of repayment instead of assuming that everyone should repay their loans the same way.)
4. How much debt did you have upon graduating from dental school?
I graduated from dental school with a total of $538,000 of principle student debt with $36,000 in interest, adding up to a total of $574,000 in student debt.
5. What is your debt to income ratio (total student loan debt divided by household income)?
Our household income is $240,000 and currently, after a year and a half of paying down my loans aggressively, we have $494,000 of debt left. So roughly, that comes out to 2:1.
6. Describe your debt payback strategy and how you decided to use that strategy.
Our debt payback strategy can be described as follows: As Aggressive As Possible.
With a loan this large, most people would say that the most optimized strategy is to choose a loan forgiveness program of some sort. In which case, you would want to pay as little as possible. The reason is because you want the government to dismiss as much of the debt as you can. If you are paying more than the minimum payment, you will be reducing the amount of the loan that would be forgiven. Despite the fact that you will have to pay the taxes on the amount that is forgiven at the end of the twenty or twenty five years, the argument is that within those twenty-five years, you can invest the rest of the money and get a better return.
I would whole-heartedly agree that the most financially optimized payment plan is to do a student loan forgiveness program. But I also believe that our lives should not be dictated by money alone and the world does not exist in black and white, but rather, a range of grays. The best path is not as clear-cut as the best financial strategy. The best path is the path that leaves you with a life well lived. My husband and I are not searching for a life filled with luxuries. We are not even looking to live a life of convenience. We are looking for a life filled with purpose, a life we can be proud of. I think people should be searching for a life of happiness, no?
Ultimately, we want to be free. The psychological weight of watching a half a million dollars of debt rise to over a million dollars in debt can be quite heavy. Then having that weight hang over you for twenty to twenty-five years will undoubtedly cause me stress. Additionally, twenty-five years is a long time. As much as I would like to think that all students would be grand-fathered into the program if ever a change in governmental policy occurs, a clause that states as much currently does not exist. There is no guarantee. The rising tuition and the ever-increasing number of students taking out student loans is unsustainable. I am interested to see how this will change in the years to come.
If a person chooses to pay back the student debt in its entirety, then the best path is the most aggressive path possible. Why? Because you want to avoid accruing interest. The bigger payments you make towards the loans, the more of the principle amount you pay down every month, meaning the less interest accrues over time. Our strategy does not involve much. We know that the 10 year plan requires us to pay $6000 a month. We chose $6,500 as the number we can comfortably commit to each month. If we have extra money (after all of our needs and wants are met), we funnel it towards the loans. There have been a few months where we’ve paid down more than the $6,500 minimum that we set for ourselves.
7. Do you feel like your student loan debt is preventing you from reaching other financial goals (having a proper emergency fund, saving for retirement, buying a home, etc)?
Absolutely not. We are NOT living a life of restriction at all. Alternatively, I think I would feel more like a caged bird if I had chosen the loan forgiveness path, stuck with a debt that I no longer want. I know deep down that if we went with the loan forgiveness path, the student loan debt would be preventing me from living a happy life.
I understand that our freedom partially comes from the privilege of having a two-income-earning household. But I also think it comes from our lifestyle choices as well. We live a more minimalist lifestyle. We choose to spend money on stuff that matters to us most, and we ignore the rest. In doing so, we have been able to accomplish many of our life goals and create our ideal lifestyle.
Over the past year and a half of paying down loans and being newly-weds, we were able to maintain an emergency fund. We also recently purchased our first property in Orange County, California! Our dream is to open a family business in the future, so we purchased a live-work loft where the first floor is commercially zoned for business and the second floor is an industrial loft-like living space. We have been able to do this because we chose to co-house with someone, thus allowing us to save for a down payment. Additionally, we kept our roommate when we bought the loft, to help us save up again for our future dream store.
We travel frequently. This year alone, we went to Mexico City, San Francisco, Canada, Oregon (twice!), and we are leaving in December for a two and a half week trip to Australia and New Zealand. People ask how we are able to do this on top of everything else, and it’s because we travel-hack our way to get on these trips, rather than spend tons of money. We never upgrade to first-class or spend on expensive hotels, but rather take a back seat and rent via AirBNB.
We have many meaningful relationships and we keep in touch with our loved ones. However, whereas most people’s gatherings include dining out, getting drinks, paying for movies, et cetera, our relationships are built on boardgame nights, cooking dinners at home, visiting the local pool, and simply getting together to chat.
Remember that our debt to income ratio is 2:1. You can easily see just from the numbers that we funnel our money towards things that bring us the most joy. We focused our efforts on mastering our budget and creating a lifestyle by design.
8. How long do you predict that it will take to pay off your debt?
We originally hoped to pay it off in ten years. At the current rate, we are expecting to pay it off in 9.7 years total. We are also considering re-financing at some point in the future, which may bring our total down to 8 years or less. I think if we encounter any unforeseen hiccups in our path, I would still be very happy with ten years, knowing that we are doing something most people wouldn’t even dare to dream of.
9. If you have a significant other/spouse, what role are they playing while paying off debt?
I could not do this alone, and I admit that whole heartedly. This would be very difficult to achieve for single new grads unless they are willing to move back home with their parents to save on housing costs, or increase their work days to 5-6 days a week. I am not saying it’s not possible, but I am saying that having a significant other makes it much easier.
Mr. Debtist plays a huge role in helping me get rid of my debt. Essentially, a hundred percent of my income goes towards debt repayment, and we live off of his income. Sometimes, he contributes a little to the loans as well, when we have extra on hand. We both grew up in single-income households, so we thought to ourselves, “If our parents could do it (while raising children!), why can’t we?” I think he is the sole reason I am so motivated to pay off my student debt. When I was graduating from school, we were also planning to get married. I knew that I was bringing this anchor into our relationship, and it is not fair to keep it around when he did nothing to accrue the debt. He has spent his adulthood trying to avoid debt and save money, so it isn’t fair to tie him down just because of the career I chose to pursue. Everyone out there needs a really solid “why” when it comes to tackling debt or pursuing financial independence. It will keep you grounded and give you strength in your decision.
10. Are you having any challenges while paying off your debt?
Currently, no. I think the most detrimental thing we can do is to paint this picture of deprivation or having less when we choose to live without, and in most cases when you pay back a loan this large at a fast rate, you will have to choose to live without some things. What people forget is that choosing to live without makes space for other things that you value more. I want to be a symbol for people in similar situations and to show the world that paying off student debt does not have to be a life of misery overcome with difficulty. You just need to create a plan. Prepare for the curve balls life may throw your way. Have the bigger picture in your mind. When you have the right mindset, it can be possible and if you want it enough, accomplishing this will be the best feeling.
11. What are some financial mistakes that you’ve made?
There are so many! This could be a novel in and of itself. I’ve already mentioned my biggest financial mistake, which was denying a dental school that would have saved me over a hundred thousand dollars. Aside from choosing the wrong school, I would say that a majority of my financial mistakes were due to a lifestyle filled with excess consumption. Part of the allure of the American Dream is the constant drive for more. More stuff, more experiences, more accolades, more social status symbols, all of which are bought. So while I made some good decisions (living at home for undergrad, working three jobs while going to school, cooking a majority of my meals at home), my everyday was filled with moments of unnecessary spending. Happy hour with friends, dining out with my boyfriend, using tuition money to travel, extravagant gifts for the holidays, shopping sprees on the weekends, yoga studio memberships, you name it. And while this may seem like “little” spending, that’s the exact thinking that will get most Americans stuck on the hamster wheel. Little things add up over time, and a collection of unnecessary spending can be equivalent to digging yourself a financial grave, which is essentially what I did.
12. What is your financial advice for others that have very high student loan debt?
Before going to school, ensure that the career you are pursuing is something you want to do, especially if you are going to take out a lot of money to accomplish it. You have to want it even if it means you will not make a single penny for your work for a while. If you have already taken out a large amount of student debt, look at all your options right when you get out of school. Time is of the essence and you don’t want to go down a path that would be very costly to change. More importantly, don’t consider your options solely from a financial perspective. Think of the life you want to lead, and choose the path that would give you the most happiness, not the one that would make you richest. Money only goes so far.
I had written an entire post about my thoughts on The Debtist, and her interview really drives home many of the points that I made in that post. She eloquently explains her situation and her thought process regarding her repayment strategy.
When dealing with personal finance, it’s so easy to just look at the numbers. But as I try to make clear in my blog, it’s so much more than just the numbers. Yes, you need the numbers to work, and that’s the first step when it comes to having any sort of financial plan. But it’s what you DO with these numbers that makes personal finance personal.
Her relationship to money, and how she thinks about money, is driving her to pursue a path that is not frequently taken by many others who find themselves in similar situations. I am sure that there are other health professionals with a comparable debt to income ratio (taking into account household income), but they have chosen a different repayment path. And that’s okay- there is no right or wrong answer here. The point is that you choose the path that makes the most sense to you. I hope that this story allows you to see that it is still possible to pay off debt and live the life that you want; the two are not mutually exclusive.
Has anyone else decided to aggressively pay back their loans and forgo the forgiveness option? Comment below!