I realized that I have yet to write a post dedicated to my financial mistakes. They are peppered throughout various other posts, but I thought I would go ahead and put them all in one place. Because who doesn’t like to re-live their mistakes and wallow in regret????

Actually, this post is dedicated to all of those veterinary students and young people out there. I had the pleasure of speaking with a few students at the latest AVMA Economic Summit, and I absolutely loved their enthusiasm and fire for this profession. Understandably, they were not receptive to the usual doom and gloom when it comes to student loans and other less than exciting topics that come up after graduation.

This is in line with some findings by the AAVMC (Association of American Veterinary Medical Colleges), which were presented at the conference. According to their latest survey of veterinary school applicants, the cost of attendance isn’t a top concern until after they were already admitted. This was really surprising because I thought that the increased costs associated with a veterinary degree would be a much greater concern to aspiring veterinary students. I’m sure that there is a segment of the population that decided not to pursue vet med due to cost alone, but it’s clear that there are many more that are very willing to fill that coveted spot, no matter the cost. The 7% increase in veterinary school applications compared to the previous year proves this point.

I can hardly blame them, because I was in their shoes at one point. On an intellectual level, I knew that I was going to graduate with a large loan burden. But my focus was more on how I was going to start my career and start living a life past being a student. Adulthood was going to be so exciting, precisely because I wasn’t sure how it was all going to pan out. Up until that point, I was following a script of getting good grades, following a career path, and graduating with a DVM. After that, the world was my oyster.

So I try hard not to be a Debbie Downer. I don’t want to be that adult in the Peanuts comics who is continually “wah wah-ing” to deaf ears. I want to be real without being depressing, which can be difficult when some real events are, in actuality, depressing. But that doesn’t mean we can’t find a silver lining, which is what I try to do in this blog.

So for any of you young people out there….this post is for you. Here are my financial mistakes, and these are not meant to depress you. These are meant to be positive learning experiences, and they don’t require that you do a ton of work on your end. Just take one of my mistakes and try not to repeat it. If you want to be a rock star, try to avoid all five of them. Your future self will thank you.

FINANCIAL MISTAKE #1: THINKING THAT LOAN MONEY WAS MONOPOLY MONEY

Sorry that I have to mention student loans right off the bat, because you’re probably sick and tired of it, but I swear, this is really important.

All I knew back then was that I was awarded a huge amount of money in the form of loans with almost no effort. Tuition and fees would be deducted with this pot of money. Then I was awarded a check for the leftover amount. I had no idea that you could actually decline some of this loan money until about halfway through vet school.

Interest rates were really low in the late 90’s/early 2000’s, so I was repeatedly told that student loan debt was “good debt.” We still had access to subsidized loans. I patted myself on the back for not initially spending all of that borrowed money, and eventually I caught on that I didn’t have to accept the full amount offered to me. From that point, I declined a certain percentage of what they were offering because I found that I was able to live off of less. I was also earning money through my school and summer jobs, so at least I was doing something right in trying to reduce my educational costs.

What I regret was treating borrowed money like Monopoly money. It wasn’t real at that point, and the low interest rates made it even less of an issue in my mind. It became much more real as graduation was approaching and I had that dreaded exit interview (at which point I started treating my student loans like a mortgage- you can read about that here).

Takeaway points: Just because you are qualified to borrow “x” amount of money, do not feel obligated to borrow “x” amount of money. Or if you find out you’ve borrowed too much, give some of it back (you have up to 120 days from the disbursement date to do so) or simply decline taking the full amount and go for a percentage you can live off of! It is ridiculously easy to borrow money. Just look at the student loan industry, the housing industry, and the credit card industry. Make it a competition with yourself and your peers to see how low can you go with your borrowing. You will be so very glad that you minimized your loans once you’re done with school.

If you need more resources on how to reduce your student loans, check out the VIN Student Debt website.

FINANCIAL MISTAKE #2: NOT UNDERSTANDING RETIREMENT PLANS

I am so embarrassed to say that I voluntarily contributed $0 through an employer-sponsored retirement plan the entire time I was working. I had access to 3 different employer plans, and I have exactly one employer retirement plan that has a balance greater than zero. It must have been taken out of my paycheck automatically, because I don’t remember opting in. The account balance is small, and I shudder to think how large it could have been had I only known the perks of using this benefit.

I distinctly remember my first boss telling me about “employer matching” and “vesting.” (If you’re curious as to what this means, check out this article.) This was all alien-speak to me at the time. He tried to explain it to me, but I didn’t have the basic financial knowledge to understand what he was talking about. All I knew was that I had $120,000 of student loans weighing on me, and there was no way I was going to have money taken out of my paycheck for retirement. I mean, retirement was decades down the road and it made zero sense why I should pay any attention to it as a new graduate. I had a life to live and debt to pay back! This was not the right time for retirement planning!

If only I could teleport back in time and knock some sense into that younger version of myself, I totally would.

My post about why you should think about retirement is written to a younger version of myself. Provided that the retirement plan offered through work was decent, I could have benefited from a nice tax break. I missed out on some really spectacular gains since the Great Recession. I also missed out on the magic of compounding.

Takeaway points: If your workplace offers a retirement plan, be grateful. There are places that don’t. If they offer a match, then contribute enough to get the match, at the very minimum. Ignoring this perk is leaving money on the table. And if you’re anything like me, you don’t like the idea of leaving money on the table. Rather than think that retirement funds are robbing you of cash right now, think of it as paying yourself in the future. I was completely in the first mindset for a very long time.

FINANCIAL MISTAKE #3: THINKING THAT INVESTING WAS NOT FOR ME

As an independent woman, I ended up following a pretty traditional trajectory. I made the choice to stay home after having kids. I also deferred all that “investing/money stuff” to my  husband. He seemed knowledgeable about the subject, and since investing was outside my comfort zone, I gladly let him handle it all.

Thankfully, he made good choices by sticking with mostly index funds and some well performing stocks. But as I began to learn more about investing, there were definitely some gaps in his knowledge base. We are working on these gaps together to build an optimal portfolio.

So why would it have benefited me to learn about investing? Because learning how money works and how to make it work for you is crucial to your financial success, no matter if you’re married or not, employed or not. And responsible money management is empowering to anyone and everyone.

Takeaway points: Your first brush with investing is probably with your retirement account, whether it be through your employer or an IRA. Learn why you’d want to invest, pick a strategy, then stick with that strategy. It’s not rocket science, but it will take some time to learn the language. It’s okay. I’m guessing you’re pretty smart and a quick learner. You got this.

FINANCIAL MISTAKE #4: NOT HAVING A SPENDING PLAN

I tracked expenses for quite a number of years, and while it provided a good baseline of understanding where our money went, it wasn’t enough. Creating a spending plan (aka a budget) is taking it to the next level. Rather than documenting your expenses and wondering why your expenses seem to climb for no good reason, a spending plan puts you in the driver’s seat and gives you the power to direct your money where you want it to go.

Want a super easy spending plan? Save 20% of your take-home pay right off the bat and live off of everything else. Want to reach financial independence quicker and have more flexibility with your career path? Bump this savings rate higher. Here’s a story of a fellow vet who is on her way to FIRE (financial independence, retire early).

Takeaway points: Understand where your money is going, then create a spending plan if you’re serious about getting your financial house in order. At the very least, pay yourself first and stash money away as soon as that paycheck hits your bank account- you can do this via an automatic withdrawal into a savings account of your choice. The whole premise of the book “The Automatic Millionaire” by David Bach is that you pay yourself first.

FINANCIAL MISTAKE #5: WHOLE LIFE INSURANCE

This seems to be a common theme among physicians. Mr. RLDVM was sold a whole life policy while he was a resident. Then he was sold another one shortly after becoming an attending. I didn’t understand how it all worked, but I trusted that this agent was looking out for our behalf.

However, when he began to call (harass?) Mr. RLDVM repeatedly to add on to his policy, I started to get suspicious. I kept questioning why we were paying such a large sum of money every year to this policy that I didn’t even fully understand.

It wasn’t until much, much later that I realized that this guy was selling us a product with practically no knowledge as to whether this product was even appropriate for us. He never inquired about the rest of our financial picture, other than knowing our income. He had no idea that we still had student loans, or that there were other financial obligations that needed our attention, like having an emergency fund.

Now, I’m not saying he’s evil or had bad intentions. He’s just a guy trying to make a living. And I’m willing to bet that he really believed in his products. But just because you really believe in a product doesn’t make it an inherently good product for that customer. When it comes to the world of finance, it can get messy and confusing for those of us not familiar with the industry. Personal finance is personal, and not every financial product out there is going to be ideal for our personal situation.

Takeaway points:  Whole life insurance is generally not a great product for most people (the White Coat Investor has plenty to say about this topic if you want to go down that rabbit hole), but most definitely consider term life insurance if you have other people depending on your income. Anytime you get advice about your finances and you have to pay for either a product or service, make sure that the person is up front with how they are getting compensated. You want to minimize conflicts of interest in these sorts of interactions.

CONCLUSION

The silver lining from mistakes? You learn from them and get to tell other people about them.

You’ll make mistakes…you’re only human, after all.  Your life shouldn’t be about trying to avoid every mistake out there, but rather, be observant and understand that when you do make a mistake, try to fix it and move on with your life. If you come away from reading this with just one nugget of knowledge, then I consider this post a success. So do me a favor and choose just one thing that you learned, and use that knowledge to better your financial health and wellness. I am so excited about your contributions to this field in the future, and I hope that you can achieve everything and more while being financially healthy!

Want to share your financial mistakes for that vet student or early grad? Comment below!

4 Comments

  1. xrayvsn on October 28, 2018 at 12:13 am

    I too treated student loans like monopoly money (great analogy) and always took the maximum offered every year. I basically had the mentality that this loan money was actual income even though I didn’t do anything to earn it. I graduated in 1997 and the loans I got had much higher interest rates than subsequent years to make matters worse.

    I also pushed everything to my future self by deferring and forbearance which added so much more interest to my principal (and was often compounded, becoming principal itself).

    I also played the credit card roulette balance transfer game which was easier to do in the 90’s. Could get away with 0% interest on balance transfers with no or minimal fees unlike today.

    Luckily in residency I got to take part in a pension plan during training which I vested in. After staying on only 2 yrs as an attending, the total amount was not huge, but still should provide $13k/yr when I hit retirement age. The fact that it is a pension which is rare these days makes it more valuable in my eyes to provide a base floor along with social security.

    Never got suckered with whole life insurance, thankfully.

    • Financial Wellness DVM on October 28, 2018 at 6:49 am

      So awesome that you will have income from a pension. I feel like that’s a unicorn finding these days!

  2. The Vetducator on May 20, 2019 at 10:05 am

    Reading White Coat Investor, I am surprised physicians are targeted for whole life policies when veterinarians are not. Maybe we don’t make enough to entice the insurance agents?.
    In my first job, we had to contribute to a pension plan, which was good because it forced me to save. They added a 403b and I wish I had contributed fully to that. Now we have a different pension plan and are maxing out the optional 403b and 457.
    In reading the American Pre-Vet Med Association’s Facebook group, it sounds like a lot of people are considering the cost of school and advising that applicants highly prioritize the least expensive school, with which I agree. You can get a good education at any of the vet schools, I feel. So at least that concept seems to be being embraced by this generation of incoming vet students, because *I* surely never even heard of or considered the variable of the cost of school! Of course it was also much lower then.

    • RLDVM on May 20, 2019 at 10:31 pm

      I agree that costs are becoming a normal part of the conversation when it comes to deciding whether or not to pursue any professional school. Relying on forgiveness plans and saying that it’s “good” debt doesn’t cut it anymore.

      Great job maxing out your retirement accounts. Pensions seem so rare these days- so lucky you!

      And yes- I didn’t realize how aggressively physicians were being sold whole life policies until I started following WCI. One of the “perks” of being a physician, I guess.

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