Whether it’s poor diet, lack of exercise or having stress, many of your patients exhibit poor health habits. They may not mean to make themselves unhealthy, but it’s often hard to do the right things.
The same goes for your financial health. There are many habits that may be making you financially unhealthy, ones that are difficult to change. Here are the most common bad habits that you should address to put you on a path to fiscal wellness.
You neglect to consider your student loan repayment options
You may be able to refinance your student loans to extend the loan term, lower your monthly payment and/or reduce the interest rate paid.
But doing so means you need to take the time to review the options available. There are multiple private lenders that provide choices and tailored options, and you can compare interest rates.
In addition, there are several government programs that offer repayment assistance for doctors and other health care professionals.
You are scared of or ignore your credit score
How many ailments do your patients come in with that could have been treated more effectively if only they would have been discovered sooner?
The same goes for your financial health. An important way to assess your financial health is by knowing your credit score.
Your credit score informs lenders and other interested parties of your credit risk. It is based on a number of factors, including how much debt you have relative to your income, and whether you’ve paid past debts on time.
There are major financial consequences to having a low credit score. Therefore it’s better to know that information and take steps to fix it rather than just hope everything is fine.
Take the hypothetical example of a new physician starting a practice. They have student loan debt they need to refinance, plus they want to buy a new home and vehicle now they have regular income.
- Has $150,000 in student loan debt they want to extend to a 20-year repayment term.
- Wants to obtain a $325,000 mortgage on a home with a 30-year fixed loan.
- Is looking to borrow $45,000 over 60 months for a new car.
In one scenario, the physician has fairly good credit. Their loan rates, therefore, will be:
- 75 percent for the student loan
- 50 percent for the mortgage
- 50 percent for the auto loan
In another scenario, the physician has a lower credit score and will therefore be charged a higher rate of interest because they are considered a higher credit risk. The rates in this case would be:
- 5 percent for the student loan
- 5 percent for the mortgage
- 8 percent for the auto loan
Here is a comparison of the monthly payments between the lower and higher interest rates:
- The student loan repayment amount would be $890 a month with the lower rate and $1,118 a month with the higher rate. Over the life of the loan, the physician would pay total interest of $63,440 under the lower rate and $118,400 under the higher one.
- The monthly mortgage principal and interest payment — which doesn’t include property taxes, insurance, and other costs — would be just over $1,500 with the lower 3.75 rate. The higher rate would increase your monthly principal and interest payment by $240 to $1,740.
The monthly auto loan payment would be $730 with the lower rate and $811 with the higher rate. Over the life of the loan, the total interest paid would be $3,660 with the lower rate and $8,663 with the higher rate.
So because of a lower credit score, this physician’s debt payments would be $550 more per month than if he or she had a better credit score.
You deal with stress by overspending
The life of a medical professional breeds stress. Long hours. Delivering bad news to patients and their families. Sometimes your best efforts fall short. You have to deal with patients who don’t adhere to their treatment plan, then blame you when their health worsens. There are the never-ending regulatory changes, continuing education requirements, and conflicts with insurance companies.
How you cope with the stresses of the job can cost you money and keep you in debt. Some medical professionals gamble. Others drink. Many indulge themselves and buy high-dollar items or experiences on impulse.
You need ways to unwind and escape the rigors of your profession. But don’t let them add to your stress by causing financial burdens. Exercise, socialize with friends and families, and take advantage of inexpensive activities within your community. Budget for bother stress relievers like meals out, vacations, and hobbies, then stick to that budget.
You spend on autopilot
The combination of a busy career and a significant income causes many medical professionals to spend money whenever and however the mood strikes. This includes:
- Failing to make and stick to a budget
- Neglecting to comparison shop for the best rates on insurance, loans, and other important financial commitments
- Trying to keep up with others by buying the latest technology, the fanciest cars and homes, and going on the most exotic vacations
- Buying items on impulse or with the attitude that “I deserve this”
- Using a credit card for rewards and cash back but only paying back the minimum balance and thus racking up large interest charges
Just like your patient’s one cheeseburger for lunch doesn’t seem like a big deal to him, your expenditures and debt accumulation may not seem like much at the time and in relation to your overall income.
But just like a cheeseburger everyday combined with a sedentary lifestyle could eventually cause problems for your patient, so too will overspending add up to a financial mess for you in the long run.
Ready to make some changes? If so, this checklist is for you:
2019 Physician Finance Checklist: 10 Simple Steps for New Doctors