 Welcome back to the channel, everybody. For those of you who are new around here, my name is Michael, aka Dr. Cellini, and I'm a board certified diagnostic and interventional radiologist in New Jersey. Today we were going to devote the entire video talking about all mistakes that young doctors make. And I just wanted to touch on a few, maybe like three, maybe four, maybe five. We'll see how the video goes. But I think it's important that we bring these mistakes to light. And hopefully you don't make the same mistakes that a lot of my fellow Dr. colleagues have made, especially in their early career. So let's go ahead and get into it. Hey, what's up? Hey, hold on. Let me finish this video real quick. Two seconds. Okay. Now this first one may not come as a shock to you because I harp on it a lot on my channel. And that is the number one mistake that doctors make when they just finish medical school residency or even fellowship training is that they don't have a plan for those dreadful student loans. The reason I harp on this topic so much on my channel is because it's arguably the most important topic and a lot of people don't really spend time learning about it, which is a huge mistake. Student loans are essentially of the utmost importance when you finish residency and start your career as an attending. The reason they are so important at this time is because this is the time where everything changes. Your income based repayment plan may balloon based off of your new larger salary and or you may have been actually deferring your loan payments until you have a higher salary job or a real paycheck. And you may be thinking to yourself, Michael, why do some people defer their loans in residency? Well, I thought the same thing too when I was thinking about this, but it actually does happen. And here's why. The main reason is essentially to be able to survive as a resident. And I say that kind of ingest, but it's partly true because think about living in a very large city like New York City, San Francisco, LA, et cetera. Any large city where the cost of living is very high when you only make around $50,000, the taxes are usually higher in these cities as well cuts into your bottom line. And sometimes you can't really afford to just survive or even afford your next meal. So what do you do in this circumstance? Well, you defer your loans and you let that interest accrue year after year and you're hit with a huge sum of debt when you finish residency training. Unfortunately, this is the system we are raised in and some of us have no choice. Now I didn't defer my loans for the reason I just talked about. I didn't want to accrue even more interest than I already have. And I would give that advice to anybody, just do whatever it takes, get a part-time job, anything, just don't defer your loans. It makes your life way worse going forward. So just try to pay it off or at least participate in some public service loan forgiveness program. But hey, it's an option. And sometimes people defer loans, regardless of the circumstance. The whole point of this conversation is that you need to have a plan in place before you finish residency and you need to do research before you finish residency so that when you finally finish residency, you have all your ducks in a row and you have nothing to worry about. For example, will you be participating in a public service loan forgiveness program? Do you plan on working for an academic or non-profit hospital doing Ford or will you refinance your loans like I did? And all the more reasons to focus on this before you finish medical school and residency is because you need to pay attention to the current economic climate as you never know when those interest rates are going to go up like they currently are. Or to add on a little further, will you be using an income-driven repayment plan like PAYE, pay or repay? And if you've never heard of these acronyms, well, you're the one I'm talking about and you need to open a book or go on a website and start doing some research. The second mistake I see young doctors mating a lot is mating unwise purchases based off the promises of their future money. Now I can't tell you how many times in medical school and residency I saw colleagues by designer bags go on extensive lavish trips because you just put it on a credit card. Who cares? You'll have a good job doing Ford. You'll be making the big bucks one day. Who cares? Right? Wrong. That's very wrong. I think Dave Ramsey would blow an aneurysm if you heard someone talking like that. Somebody ought to smack you. That's stupid. The most common thing we see as physicians is buying a brand new fancy, fancy car as soon as you finish residency because heck, you deserved it. Right. And I know what you're going to say. Wait, Michael, didn't you buy a fancy car when you finished residency? And the answer is, yeah, sort of. Let me explain. For one, my car was not new. It was used. Secondly, let's not forget that I moved to New York City from North Carolina. And when I did that, I sold my car that year and I did nothing with that money except leaving in my account and I used that money to pay for my new car or my used car. Plus I had a little extra on the top and that's how I got my car. I didn't go out and buy a 60, 70, $80,000 car and take out a full loan for that car because that's ridiculous and you're doing yourself like a thousand dollar loan payment a month before you even know what you're doing with your student loans before you even have your job. It's just setting yourself up for disaster. Back when I was at University of Georgia, I remember seeing the college football players that were planning on signing for the NFL going forward and a lot of their agents would buy them like 80, $100,000 cars as like an advance and sometimes some of these players would get injured and have career ending injuries and they wouldn't make it to the NFL. And then they're stuck with this $100,000 car. They have to make either a payment sign, sell it or get rid of it somehow. I don't know, but you see what I mean. The whole thing is you're planning on your future, but you never know what the future holds. So always try to plan on the safe side of things. Don't overextend yourself before you actually get the paycheck. And the third mistake I see these physicians make is not getting disability insurance. Now we just kind of touched on a career ending injury and imagine going through all this training 14 years in my case and then you have one career ending injury and you can no longer practice and you have all this student debt looming over your head and you can't pay it off. This is where disability insurance comes in handy and I know if you're a current resident you hear a lot of people talking about this topic and you probably have like no idea why they're talking about it, but it's very important, especially in residency and here's why. The main reason is that a lot of hospitals and residency programs have connections and deals with current insurance companies on getting disability insurance. Also you're usually a young healthy person in residency and they don't make you go through the whole song and dance of getting physical exams, blood tests, all this other crap. They just give you disability insurance. No questions asked before you develop any complications or chronic illnesses or whatever. The other reason is because it is very cheap in residency to get a nice supplemental insurance and a lot of the programs you are currently in and residency already have a disability insurance. I think it pays like 60% of your salary usually, but it's nice to have a supplemental insurance just in case it hits the fan. Plus a lot of these insurance companies have special stipulations and they know you're going to be a doctor and get a better paycheck going forward. So they have certain stipulations where you can adjust your disability payment or the amount of disability you want as soon as you hit attending hood, especially in my field and a lot of other surgeons use their hands for pretty much everything. Without them we cannot do our job, which means we cannot get paid for our job, which means we did all of this for nothing. I personally have a six month emergency fund set up because if absolute hits the fan, I know that I can cover my life for six months. I calculated every single monthly expense I have and multiplied it by six and I set that money aside in a high interest account and it just sits there and it's for dire times. It's all about planning for your future, disability, emergency fund, everything I'm talking about is planning for your future to make sure you're set up for success. The fourth mistake I see a lot of doctors make is that they aren't using retirement accounts to build their wealth. Now it's obvious that in residency and those of us in medicine have virtually zero personal finance education, which is very odd considering we are amongst the highest earners in the United States, but that's all the more reason why you should take it upon yourself and learn it by yourself. And part of that financial education is planning for your retirement. Your 20s are actually the best time to start planning for your retirement because it allows plenty of time for that money to grow throughout your lifetime. One of the biggest things you can do in residency to save for retirement is open a Roth IRA. Now I'm willing to bet a lot of you all have never even heard of a Roth IRA, so I'll explain a little bit for you right now. A Roth IRA is a post-tax retirement account. That's it. Next topic. You use money that you've already worked for, that you've already been taxed on, and you put it in a retirement account. You can invest that money in whatever you want. Stocks, bonds, Tesla, whatever you want. In a Roth IRA is post-tax money like I mentioned and that is completely different from the 401k or a traditional IRA which uses pre-tax money. So the difference is come retirement, a Roth IRA, you've already paid taxes on it and you will not be taxed when you pull out that lump sum for retirement. For a traditional IRA and 401k, you will be taxed upon pulling those funds out for retirement because you haven't paid taxes on it yet. Makes sense, right? The reason a Roth IRA is so important in residency is because it has an income limit for people that can use it. And the one advantage of making a smaller salary in residency is that you can contribute to the Roth IRA. There's actually a cap on the income for people who can invest in a Roth IRA. So like for me, I can't invest in a Roth IRA sort of. In 2022, the IRS is capping the annual individual income at $129,000 or if you're married filing jointly, the cap is $214,000. So if your annual income falls below these two thresholds, you can contribute $6,000 per year to your Roth IRA. Now I know that doesn't really sound like much but trust me, compound interest is your friend and this is why it's so important to get started earlier rather than later. Now, did I take part in a Roth IRA in residency? No. Why did I not take part in a Roth IRA in residency? Well, I'm stupid. So you should not be like me. But mostly it's because I didn't have any extra income and I definitely didn't have $6,000 laying around extra that I could contribute to a Roth IRA. The reason I'm telling you this is because it's much easier said than done. But it's still very important. Now even though I am above those income limits I mentioned prior, I can still contribute to a Roth IRA but I have to use the backdoor Roth IRA technique in which I basically open a traditional IRA and I transfer those funds to a Roth IRA and it's called a backdoor Roth IRA. But we're not going to talk about that today. The point of this whole thing is to start saving for retirement early and use all these tools at your disposal because they will help you so much. The fifth and final mistake I see a lot of physician colleagues make in residency or as a young doctor is buying a house. You know at first glance starting residency after medical school, you just want to get that house with your wife, maybe a dog. It may sound like a good idea and it might be but a lot of the times it's just not. And obviously I have nothing to get home buying because as I mentioned many times I've bought a lot of homes in my day but I never bought one while I was in training. And this whole topic is not because I don't think home buying is good in residency. I think home buying for the wrong reason is not good in residency. Many people in residency buy homes because they think they will have a lower payment per month versus renting. And a lot of the times that's just not true. If you're doing it because you think you can get a lower break on your monthly mortgage versus renting, you may not be factoring all the other expenses into the equation such as property tax, closing costs, transaction fees, appraisals, inspections, etc etc. And let's not forget about those costly repairs. What if your roof starts leaking and you have to replace the whole roof for like $10,000? Well your whole year maybe two years worth of difference in income paying mortgages versus rent is completely null and void. All this stuff can very quickly add up and make your mortgage plus expenses way higher than it would have been if you just rented an apartment. I also think this decision varies widely depending on the city you're in because the housing market is different in every single city. But I will say after working like a daughter in residency the last thing I wanted to do was come home and have to worry about repairing my house. Residency is hard enough as it is and a lot can be said for just keeping everything simple in your daily life outside of work. And again I think building equity while you're in residency especially if you are in a long residency is not a bad idea but you have to be owning a home for the right reasons not just because the monthly payment is lower than rent. So that officially concludes five common mistakes I see physicians made in their youth or their early physician hood. Hopefully you all learned something and hopefully by watching this you won't make some of those mistakes. I mean you're already ahead of the game having just watched this video. It's basically get disability insurance and open a Roth IRA. That's it. As physicians we have the ability to set ourselves up for financial freedom and financial success but you have to stay on track and avoid as many mistakes as humanly possible. You're always going to be making mistakes along the way but the goal is to minimize those mistakes. So that officially concludes this video. Make sure you smash the like and subscribe button and follow me on Instagram and TikTok if you don't already. Leave a comment below and if you have a question leave a comment below as well and maybe I'll answer it. As always I'll see you all on the next one. Bye!