The Big Financial Mistake I (almost) Made After Medical School Graduation
By #LifeofaMedStudent
It’s May of 2013, and I’ve finally graduated from medical school. I’ve got the M.D. after my name, I’ve matched into a residency spot with a high-income future in anesthesia, and I’m feeling on top of the world. It’s been a long 4 years of studying tireless, long days in clinical rotations, and then months spent on the road trying to match into my residency of choice. But it’s now over, and it’s time to treat myself. It is time to finally ACT and LOOK like a doctor, right? So what do I do…. nearly make one of the biggest financial mistakes of my life.
Let’s back-track a bit. In 2013, I had approximately $190,000 in student loan debt at the end of medical school. I’d luckily made it through undergrad without any debt, and compared to many other students – I actually felt pretty good about an end result of less than $200,000. I’d just signed a contract worth a big-time $49,000 for my transitional year. Suddenly, I could imagine the literally thousands of dollars I would be receiving each month.
What did I know about money? Next to nothing. Invest in the company retirement plan? Eh, I’ll worry about that after residency. Roth IRA? Never heard of it. I had a serious girlfriend but was “single” for tax and budget purposes. I was smart enough to buy a disability policy and create a basic budget – though that only lead to the realization I’d have about $1000 per month in purely discretionary spending.
So back to May 2013 and just days after graduation – where do I head to finally give myself that much-deserved gratification of 4 years of medical school?
THE BMW DEALERSHIP!
I was finally a doctor and every doctor needs their BMW! Of course, I couldn’t afford to buy, but on a resident’s salary, you can probably find your way into a luxury lease. So I picked out the most beautiful 2013 BMW 335xi (2-door coupe, all-wheel drive, with the upgraded engine for that year), in silver with black leather, all wood trim, with of course performance and luxury package upgrades.
It’d be several thousand dollars down payment (hey, no problem I still have access to loans for the rest the month), and then about $450/month for the next 3 years. BMW even had a special program for new graduates… If I acted fast, they would knock off $1000 dollars if I showed proof of my medical school diploma. The total would be about $17,000 for the 3-year lease. My “dream” car didn’t actually exist anywhere nearby, so better yet – I’d have it built in Germany and shipped to the US just for me.
I signed on the line…. and waited.
About 3 weeks later, I received the worst news. BMW was already shifting its production to the all-new 2014 4-series (which would replace the 3-series 2-door coupes, essentially giving them their own number). My car would not be built. I would have to wait and re-sign for a 4-series or lease something available now. I decided to wait, but when the 4-series was unveiled a few months later my dream car got much more expensive. Even for a lease, I was priced out. And just like that, my BMW dreams were over…..
A funny thing happened in those following months…
My life changed. My girlfriend became a very serious, live-in girlfriend. Suddenly, I needed that $500/month I almost spent hastily on a new car for something much more valuable… an engagement ring and a wedding! And that’s almost exactly where it went… we had a great wedding and my wife has a beautiful wedding set I could have never afforded with $17,000 tied up in leasing a BMW. I’m much more proud of that than I ever would have been a car… no matter how awesome that 335xi would have been.
As for automobiles… I ended up later that year paying $9000 cash for a 2004 Ford Sport Trac. It would serve me well for three years with minimal maintenance.
Eventually, I traded in the Sport Trac (and received nearly $6000 credit) toward a newer Jeep Grand Cherokee for my wife just before we had our daughter. I now drive her old 2004 Honda Accord, with now 220,000 miles and counting. It’s a far cry from the BMW 3-series I signed for, but hey – it is a coupe!
The Lesson to share…
As you graduate undergraduate school, medical school, or even residency – you’ll feel the want to treat yourself. That’s normal! But my lesson is simple, never underestimate how your life can change. The money you are about to spend now, very easily could be needed for something even more important later. Medical school and residency are points of major life transformation for many of us, and it is important to remember this when making financial choices!
I may not have the BMW I dreamed of, but from that unanswered prayer (and avoided financial pain) I’ve ended up with something much greater. And for that, I’m incredibly thankful!
Have an exciting medical story to tell or some advice to give? A unique background or path into medicine? Want to share your own post or experience with our followers?
#LifeofaMedStudent welcomes posts from our readers! Have your VOICE heard to all those in medical training! Contribute to #LifeofaMedStudent!
To save money on study products, check out our “Medical Student Discounts” page. 20% or more off your favorite education resources!
Featured Sponsor:
Pattern
Pattern specializes in helping doctors acquire true own-occupation disability insurance and term life insurance. True own-occupation disability insurance is a product that insures a physician’s full salary post-tax, should they acquire a disability that affects their ability to perform the specific duties of their specialty. There are only 6 insurance companies (out of 30+) that provide true own-occupation disability insurance.
When a physician requests quotes with Pattern, we submit quote forms to all 6 of these companies and assemble the policy options into a simple presentation. The doctor then reviews their quote options with one of our unbiased agents during a 20-30 minute online meeting. This turn-key process saves doctors countless hours of filling out forms, talking to multiple agents, and sending documents back and forth. We do not receive company-specific incentives, allowing us to remain truly unbiased and provide a truly educational role as doctors shop for disability insurance. Request a quote today!
Check out the other great companies that help sponsor our page here: #LifeofaMedStudent Recommended Sponsors
That’s so awesome that it fell apart on you! Not at the time, but looking back, what a blessing! I love stories like that.
It’s a great story and a great lesson, and I’m very happy with the outcome today! Thanks for reading!
Great lesson. Just keep it up. I almost always have the oldest car in my practice ( including my staff ), never keep cars less than 150,000 miles .
Between the savings on reduced excise taxes, sales taxes,insurance payments and the IRS mileage deductions I have received over 20 years of practice, the returns on my savings can buy a new car every year
aww like entering your life to be a doctor-delayed gratification
Rule #1 When in doubt get the Honda.
Rule #2 There isn’t any place you can go 160 mph anyway.
Congrats on dodging that bullet.
Buying a luxurious toy can be fun. It is a lot more enjoyable later when you can actually afford to pay with cash and not crimp your style. If you have a $1M or more in investable assets you can buy most any new car you like. Before that it will likely delay your arrive to financial freedom/financial independence.
Fortunately it is easy for me since I’m apparently not a “car guy.” I’m content with my 2012 Ford. I do spend a lot of money on other things though. Just be sure your spending is consistent with or less than the amount reasonable for your net worth (not based on income – as the dealership may tell you it should be).