Updated: Feb 23
PA Debt Series, Episode #1
We all realize there is a national problem with student loans. In order to become a healthcare professional, 85% of students are required to take out student loans. Whether it be federal loans or private loans, it is a huge burden and directly affects the lives of PAs after graduation and beyond.
PA 4 Finance realizes this problem and the fact PAs are not equipped with appropriate knowledge to deal with large of debt. Additionally, nowhere in traditional PA education and training are we taught basic financial principles:
· How to manage our new six figure income
· Choose appropriate retirement or investment options
· Decide how much disability or life insurance we need
· Understand how taxation needs to be dealt with
· Pay off debt and limit future debt accumulation
Finding ways to motivate PAs to live without being constantly constrained by debt is the hard part. Living a life without needing to work 50-60 hours per week and pick up extra shifts just to keep up with expensive lifestyles is essential for improved career productivity and fulfillment. Truth be known, many PAs have been able to successfully balance work and life while appropriately while managing their debt and income.
Today begins the PA Debt Series. PA 4 Finance wants to show all those current and future PAs out there who are strapped with student loans there is a way. Many PAs have been able to accomplish this goal. YOU CAN DO IT! ________________________________________________________________________________________________________
Episode #1, Andrew Baker, PA-C, MBA
Andrew is a full-time PA working at West Ohio Dermatology. He has been a PA for 10 years and graduated from The University of Findlay with honors. He was the PASS President and received multiple scholarships throughout his time attending The University of Findlay PA Program.
He started his career working in Reconstructive Plastic Surgery at an academic medical center. From there he moved into Emergency Medicine. He moved his way into leadership and was the Lead Advanced Practice Clinician (APC) and oversaw 10 other providers (PAs, NPs, Physicians). During this time, Andrew obtained his CAQ-EM. While still working in the ER, Andrew had the opportunity to get back into doing procedures and took a 1-2 day per week position doing standard skin cancer excisions at a Dermatology clinic. This has since transitioned into his full-time position doing both Medical and Surgical Dermatology. His favorite part of being a PA is to make a positive difference in his patients life. Also, working 2-3 days per week doing office based skin cancer surgery is his favorite part of his job.
May 2012, Student loan debt: $100,000
Motivation to Pay off Student Loans
In 2012, the licensure and credentialing process was much more cumbersome than it is today. After graduation, Andrew had to wait nearly four months to start a job he signed a contract prior to graduation. During this time, Andrew and his wife were expecting their first child to be born. It became apparent during undergraduate and PA school, at no point were business or personal finance education provided. “The only plan I had to pay off my student loans was to pay it back slowly over 25 years”.
Neither of Andrew’s parents went to college and he was determined to find a better way to pay off his student loans and provide for his family. He read books, listened to podcast, attended lectures and met with a “financial advisor”. Although the “financial advisor” did provide some useful information, he had a a very unpleasant experience working with them. He was pressured to purchase more and more life insurance and disability insurance at every visit. “I was always asked when I was going to become a doctor despite numerous conversations about my career choice”. Later, Andrew realized this “Financial Advisor” was an insurance salesman and only got paid when his clients purchased insurance plans.
This catalyzed a new desire to become financially literate. The first goal: pay off student loans!
Paying Off Student Loans
Starting income: $68,000
Starting hours/week: 40
“Starting out is the toughest part”. Andrew believes that without prior knowledge about income and debt management, getting started on the right track was the most challenging aspect of student loan repayment. For the first time in his life, Andrew began a budget. He read Dave Ramsey’s, Total Money Makeover, which describes the “Debt Snowball”. This suggest paying off the smallest debt first then wrapping those monthly payments onto the next smallest debt, ect.
After a few months of seeing actionable results, Andrew realized it was going to take 6-7 years based on his current income. Working more hours was going to be the only way to increase his debt payments. Working more hours at his current employer, taking on-call responsibilities, rounding on weekends and adding nursing home coverage all occurred in the next 12 months.
During this same time, there were no large purchases or vacations. Andrew drove a 1992 Chevy, lived in a small duplex apartment and cut down on all necessary spending. “I remember my wife asking when we were going to get a new car like all our friends”. Fast forward another 12 months and Andrew paid off his student loans, car debt and credit cards!
Ending Salary: $152,000
Ending hours/week: 60+
Advice for Students and Practicing PAs
Getting starting is the hardest part. Once you get into a rhythm, things get much easier. Start out with a budget. Utilize free apps, such as Mint or Every dollar. It is eye opening to see how much money is being spend on nonessential items and how simple it is to cut down on spending, with fairly minimal effort.
Lastly, develop a plan! A financial plan is ABSOLUTELY necessary to achieve your goals. Basic ways to begin planning:
· Talk to PAs who have more experience managing income, debt and investing
· Listen to podcasts
· Utilize Free Financial Resources
Look for the PA Debt Series, Episode #2 with Meredith Mohr next week!
Check out the PA 4 Finance website for more information about becoming financially literate, growing wealth and making the most out of your