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The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016


By Robert M. Doroghazi, M.D., F.A.C.C.

How to Decrease Student Debt by 25%

Issue #392, November 16, 2015

    The Federal Reserve issued a report saying that the biggest driver of the increase in tuition, and thus student debt, is the government guarantee of student loans. Companies capture a subsidy by raising prices. Universities capture the government subsidy by raising tuition, which the students fund by more borrowing: a classic positive feedback loop. Since the government began guaranteeing student loans in 1965, tuition has risen three times as fast as inflation. Dormitory prices have increased only twice as fast as inflation, probably because of competition from private apartments (see more below).
    The process of applying for Residency positions is totally out of control, and I believe contributes—at least—5-10% to the total debt load. Students now submit 50 or even 100 applications. Some take a desultory, nuclear blast approach, and apply to every program in the country. This necessitates 10 or 15 trips to interview, with thousands of dollars of travel expenses (and time away from studies). The various departments spend tens of thousands or more to review and interview the applicants. Someone in Academia needs to take the lead to bring sanity to the process.
    But these factors are beyond the student’s direct control. What I want to discuss are what the student can do to decrease debt, namely 1) make more money, and especially, 2) spend less.
    Dr. Joseph Alpert, Editor-in-chief of the American Journal of Medicine, and I had a full-page editorial in the September 22, 2014 issue of Barron’s entitled “Come Down from the Ivory Tower”. We noted that an increasing percentage of matriculates to medical school have never held a real job in the real world. Because of this cloistered, artificial existence, they have no idea what most people must do to make a living. 
    But as it relates to this discussion, they have never earned a penny. For an indebted student (for anyone), by definition, every penny earned is a penny that they don’t need to borrow. And, when you earn money, you have more respect for it. Sometimes when I buy things, I don’t think of how long it took me as a practicing cardiologist to earn it, but rather how long I had to work for Mr. Graham in high school, or how long I had to shovel slag at Granite City Steel while in college. It does provide useful perspective.
    But even more important is thrift. Never forget—thrift creates wealth, debt destroys wealth. Just $2.74 per day, the cost of a Starbuck’s coffee, x 365 days per year = $1,000.
By spending $2.74 per day less for the 8 years of college and med school,
then add in the interest,
a graduating med student can decrease their debt load by 10%.
    I believe students, Residents and Fellows live too high on the hog. In fact, a study from almost 2 decades ago showed that medical students were willing to take on more debt rather than compromise their life style. Ex: I see no justification for an indebted medical student or House Officer driving a new car.
    Another place to save money is on rent. There are now companies that focus on providing luxury apartments to college students. To me, that’s mindboggling: “luxury” apartments for college students! It’s standard advice to pay at most 20% of your income on rent (or on a mortgage). A reasonable income for someone of college age would be $30K per year. This equates to a rent of $500/month. For a physician-in-training making $50K per year, this is about $830 per month. My point: if you can’t find an apartment that you think is nice enough for the money you have, you can either spend more than you should, or have an attitude adjustment and accept that it is too expensive.
    If you are in debt, never forget that every penny you spend must be paid back, with interest, for the next 10 or 20 years.   
    These are from physicians-in-training about last week’s newsletter regarding the purchase of term life insurance when you are young, when rates are cheap.
    “My spouse is in a high-paying subspecialty, so we don’t need as much insurance as often recommended for physicians. That said, I do have enough in place.
    The big one, that a lot of young physicians take for granted, and you’ve written about before, is high quality disability insurance. Many people avoid it because of the high premiums, but it would be monumentally worse if something happens”.
    Another Resident physician says:
    “We welcomed baby #1 in September, so the newsletter is very timely. This kicked me to get things in gear”.
    This is from a contemporary of mine about the same newsletter.
    “Bob, your newsletter came 20 years too late for me. I had some term life insurance, but an insurance salesman/friend talked me into buying whole life. When I later found out the commissions he made, I’m still mad”.
    RMD comment: In the first 5 or 6 years of a whole life policy, 80-85% of the premiums go to fees and commissions. That is not a misprint: 80-85%. You don’t even get a quarter on every dollar you send in. Now you can see why the insurance agent always recommends whole life first. Term should be 98-99% of your life insurance needs.
    There was a piece on Financial Post on 11/6/15 by Garry Marr entitled “Want to destroy your wealth? Here are 10 of the best ways to go about it”. He of course talks about debt, credit cards, consolidation loans, not making enough and not saving enough. He then puts divorce at the top of the list.
    RMD comment: Someone told me a long time ago that the easiest way to get rich is to keep your first job, your first home, and your first wife. Chapter 23 in the 2nd edition of The Physician’s Guide to Investing: A Practical Approach to Building Wealth is “Divorce: Beware of Gold-Diggers”. I note that divorce will cut your net worth by more than half. 
    Some ideas for a Christmas present.
    1) Goose down pillows. You will never put your head on anything else again (see Feathers: The Evolution of a Natural Miracle. Hanson, Basic Books, 2011).
    2) Winter is Coming: Why Vladimir Putin and Enemies of the Free World Must be Stopped (Public Affairs). Garry Kasparov was the World Chess Champion for 20 years. If he were running for President of the US, I would vote for him. Unfortunately, his warnings on Putin are gaining as much credence as Churchill’s warnings on Hitler.
    3) Avoid The Road to Character (Brooks, Random House).
    4) Avoid gift cards. A good percentage are never redeemed, so the money is wasted. Some also have time limits, so can expire. Give cash: it may not be original, but there will never be complaints.
    5) For $25, including postage, I can send you an autographed copy of The Physician’s Guide to Investing.
    6) Also for $25, including postage, I will send you an autographed copy of The Alien’s Secret. Aliens have changed our history in ways you could never imagine. Some quotes:
    “An Ong-gong man of questionable veracity, one of those mostly honest people, yet just slick and sleazy enough so you weren’t quite sure if what he was saying was real or BS—like many televangelists.”
    “Talking to him was more painful that a meticulously planned and flawlessly executed brow-beating by your mother-in-law at Thanksgiving dinner”.
    “Einstein was a Tralarian. No human was that smart. So was Galileo. Maybe the Church was right to be suspicious of him.”   

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