I’d like to introduce a veterinarian who has been quite the adventurer! Her job as a military DVM has taken her across the globe, and she has even done a stint as a vet working in the UK. She’s had experience owning rental real estate, and she’s about to embark on a NEW adventure. Read how she has managed to become completely debt-free in the process!
1.Give us a little of your background and how you got started in veterinary medicine.
I wanted to be a vet since I was about 8. My dog had escaped and was picked up by animal control deceased. She had been hit by a car. Devastated, I declared that I would become a vet and save all the animals of the world! A bit dramatic, but hey, I was 8.
Thankfully, I excelled in math and science and the dramatic declaration became a concrete goal. I was accepted to vet school after 3 years of undergrad, but my university had a program that allowed my 1st year of vet school to count towards my senior electives for my AnSi Pre-Vet degree, so I was able to complete my studies in 7 years instead of 8.
2. What was your level of financial literacy prior to veterinary school? Were you price sensitive when pursuing veterinary medicine?
My parents have always been very frugal and did their best to instill that discipline in me. My dad made me open a mutual fund and save $50/month when I got my first job at 15. Then he made me open an IRA when I was 18 and contribute as much as I could. He advised me to convert that to a Roth IRA just after vet school graduation, so I barely paid any taxes on the conversion because technically, I was impoverished, having had no real income that year due to mostly being a student.
I don’t mind spending money, but I hate wasting it, so my spending has to be worthwhile to me. I don’t think I consciously thought about price when I selected my school. I just went to my in-state school as that seemed like it would be the best deal. I had full scholarships for my undergraduate degree, which did spill over into vet school because I hadn’t yet been awarded a degree the first year. I didn’t take out any loans until my 2nd year of vet school. I did apply to 2 schools, but only because it cost the same to apply to 2 as it did to 1!
3. Did your veterinary school provide personal finance education? If so, what did you think of the quality?
No. I don’t recall having any kind of personal (or business) finance training in school.
4. How much debt did you have upon graduating from veterinary school (if any)?
5. Describe your debt payback strategy and how you decided to use that strategy.
I graduated during a time when most of my loans were subsidized during school (Editor’s note: Direct Subsidized Loans became unavailable to graduate and professional students starting July 1, 2012). I knew I didn’t like being in debt and that the longer you were in debt, the more you actually pay overall, so I consolidated and took every option to reduce my interest rate as well as insisting on a 10-yr payoff plan. I signed up for automatic payments which reduced my interest rate, and then got another reduction in the rate for making the first 12 payments on time. I think my overall effective interest rate was about 1.75% after all the little 0.5% and 0.25% reductions for jumping through various hoops. All this said, I don’t think I really understood the veterinary salary/debt expectations.
6. How long did it take for you to pay off your student debt? What was your debt to income ratio during this time period?
I paid off my student loans in 6.5 years. Despite all the interest reductions and the lower overall debt, my first job only paid $36,000/yr (equine), so 1.4:1 debt to income ratio. Not terrible, but I didn’t truly realize how little $36K is until my loans came due after the 6 month grace period. $36K was more money than I’d ever seen in my life at that point.
My payment was only $550/mo, but I didn’t have that after taxes, putting a roof over my head and basic bills! I realized that I needed to do something differently. During school, I had considered joining the Army as my family has a long tradition of military service. I set that idea aside as my heart was set on equine practice.
After my rude financial awakening, I decided to go ahead and join the Army and make the best of it for my 3-year initial obligation. There was no loan repayment benefit for veterinarians at the time, but the salary combined with tax-free allowances for housing and subsistence allowed me the flexibility to make my loan payment comfortably. My income during my time in the active Army ranged from $56K-$94K, depending on location and length of time in service.
I deployed for a year and was able to save a significant portion of my annual income due to not having any expenses, additional hazardous duty pay, as well as not paying any taxes that year.
In 2007, after 5-years of paying on my student loans, the Army offered loan repayment to veterinarians. I signed up for it which reduced my loan by about $24K. They take taxes out of that, so I was left with about $6500. My loans were paid off in September of 2009.
After I left the Army in 2010, I went strictly ER. I had moonlighted at the local ER during my first assignment. We had on-call duties in my overseas assignment, and of course, treating MWDs (military working dogs) in Iraq, I gravitated to this area of practice. Also, the pay was considerably better in emergency medicine.
7. Why did you decide to pay off your mortgage early?
I bought my first house in 2003 when I joined the Army because at the time; it was cheaper to buy than to rent with pets. I also qualified for an FHA loan due to my low income, so my down payment was very low (4%). I also bought well under what I qualified for. I bought my 3-bed house on 2.5 acres for $79,000.
When I left my first duty station, I decided to keep the house as a rental property. My parents had rental properties for over 30 years, so they gave me a lot of advice on managing it and tax advantages. I hired a property manager and let someone else actually pay the mortgage. When I had extra money from deployments or a pay raise, I would put additional money towards the mortgage principal. It was just something I did to try to pay it off faster, but it wasn’t a defined goal for me.
I have stayed in the Reserves and there have been retention bonuses and deployment benefits that I’ve been able to use towards things like buying a house or paying down that first mortgage. My second and third houses were bought with my VA loan benefit, so no down payment needed. Those houses have now been sold. The second house, I took a small loss on after keeping it as a rental for a few years. The third house I made a very nice profit on the sale, but since it was my primary residence, I didn’t have to pay tax on the profit.
8. How long did it take?
I paid my first house off in 10 years.
9. If you have a significant other/spouse, what role did they play while paying off debt?
No. I’m single and have done this all on my own.
10. Did you have any challenges while paying back your debt?
I was in the military, so my life was often not my own. That was something I agreed to, in exchange for the benefits I received. I got deployed, missed my family, haven’t been able to maintain relationships. All this to ensure that I was able to be financially secure. But we just get on with it, don’t we?
11. What are some financial mistakes that you’ve made?
I shouldn’t have bought the second house. I knew I was only going to be in the area for a year as I was leaving the active military, but I bought anyway thinking I could keep it as a rental in a military community. There was a first-time homebuyer tax credit available.
By that time, I had been stationed in Japan for 3 years, so I qualified under the law’s definition of first-time homebuyer in that you could not have owned your primary residence for the past 3 years. I was renting in Japan, so I fit the requirements. And, because I was military, I didn’t have to pay it back when I moved out due to orders into the Reserves several states away. I had a hard time with property managers and that property sat vacant for over a year two separate times. I finally sold it just to get it off my back. But really, I never should have bought it in the first place.
12. What is your financial advice for other veterinarians?
This is someone else’s quote, but it really resonates. “ Live like no one else will, so that you can live like no one else can.” (Editor’s note: this is a Dave Ramsey quote). Be frugal. Do without things. It’s really not that hard. But most people aren’t willing to really do what it takes to cut their expenses and really devote their efforts to paying off debt. This includes kids. Have them if you want them, and yes it will be an additional expense, but there are ways to raise and provide for kids that don’t cost as much as people think it has to. Think, hand-me-downs, thrift stores, etc. There’s no shame in that if you’re trying to create a financially secure future. It’s a choice.
Stop worrying about what everyone else has or thinks. Don’t by brand new cars. Don’t always have the newest phone, etc. Don’t buy things on credit if you don’t have to, or learn to manipulate the 0% interest offers available so that you use credit to your advantage.
Also, start investing early. The younger the better. I have accounts that have been open since I was 16. I’m 42 now. Even if I could only save a little, the compound interest on those first few dollars I saved is worth so much more than a dollar I invest now. No matter what you can save, save something and start as soon as possible.
13. What are your plans now that you’re debt-free?
I am just finishing up a little adventure/experiment of living and working in the UK for the last couple of years. It’s been fun, but I took a 40% pay cut and there are some international finance laws that severely restricted my ability to continue contributing to my investments. So, I am moving back to TX in December 2019. I gave my tenants notice and will move back into my first home where I only have to pay utilities, property tax, and insurance.
I am starting my own relief business focusing on emergency and critical care. I have reached a point in my life where I want to be in control of my time and money, so I’m making the move to relief. I want to find the balance between working enough to enjoy my life, while continuing to save enough for retirement, and minimizing things that cause me stress. My goal is to make my first million. This is much easier to do when you don’t owe anybody anything.
14. Feel free to add any other information that people may find helpful!
I realize that my story and debt levels pale in comparison to some of the crushing debt that my younger colleagues are facing. My heart hurts for some of the stories I’ve heard.
You may have to make hard choices. Join the military, move to a different place with lower cost of living, delay starting a family, temporarily take a job you might not like. These are all very hard choices, but ultimately each and every one of us are where we are because of the choices we make along with a little bit of luck (some good, some bad). Try to make good choices! And keep doing the best you can!
Another remarkable story about how a veterinarian has achieved her debt-free status! Here are some key points from her debt-free journey:
- Your childhood and upbringing have a BIG impact on your financial habits. A common thread that you’ll notice is that those who have reached debt-free status have typically come from families who are debt-averse and lived frugally. In this case, her father also helped her learn about investing at an early age and the ropes of real estate investing. We can’t control the family that we were born into, but if you’re a parent, you can always aim to set your children up for financial success by teaching them these basic financial principles.
- Investing. Speaking of investing, note that this DVM did not pay off debt at the expense of investing. She started early as a teenager, and she made sure to keep investing as a priority. She also diversified her investments by going into real estate. Real estate investing requires its own learning curve, but as mentioned before, she was able to enlist the help of family members who had been there and done that. She also acknowledges that her real estate investment choices have not always been perfect.
- Making hard choices. As motivated as she was to pay off her debt, she came to her “rude financial awakening” when she realized that a $36,000 salary (I am still amazed at this number….it’s too low!) wasn’t going to get her very far. She made the choice to join the military, and this provided her the financial means to pursue her financial goals. This could have played out in a number of different ways, but ultimately, she made the decision that was right for her.
- Where are my single people?? She did this completely solo!
- Financial freedom: This is the siren call of debt-freedom….you have created the ultimate cash flow situation where you no longer have any debt obligations and you can better spend your money the way YOU want to spend it! In this case, she is intentionally using her money as a tool to build a life where she is more in control of both her time AND money.
- Generational differences: She acknowledges the tough time that recent graduates are having with student loan debt. I hope that the leaders in the veterinary community are taking note of how stories like these will be harder to come by for recent graduates as their debt to income ratios have skyrocketed. Remember that your debt burden does not define you as a human being, and there are still ways to find financial freedom and financial independence while paying back six-figure debt!
Thank you to the reader who submitted her story….I am truly excited to see what the future has in store for her as she continues to find adventure in being her own boss.
I hope that this story inspires you to take action. What are you doing today to ensure your financial success?
Are you interested in submitting your own Vet Success story? Contact me at firstname.lastname@example.org.