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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

Escheat
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

Contracts
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

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Embezzlement
Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

The VIX
Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016

The War on Cash
Issue #408, March 07, 2016

Precious Metals: Don’t Jump in Yet
Issue #407, February 29, 2016

The Bear is Growling
Issue #406, February 22, 2016

The Importance of Showing Respect
Issue #405, February 15, 2016

The 80-20 Rule of Thumb Pareto Principle
Issue #404, February 08, 2016

Some Tips on Commercial Real Estate
Issue #403, February 01, 2016

Economic Outlook for 2016
Issue #402, January 25, 2016

Selling Short: Part II of II
Issue #401, January 18, 2016

Short-Selling. Part I. How it Works
Issue #400, January 11, 2016

Who Can You Trust, and How to Spot a Con Man
Issue #399, January 04, 2016

Outlook for 2016: Part II of II
Issue #398, December 28, 2015

My Outlook for 2016, Part I of II
Issue #397, December 21, 2015

Want to Live a Long Time?
Issue #396, December 14, 2015

Some Tips on Retirement
Issue #395, December 04, 2015

Negative Interest Rates
Issue #394, November 30, 2015

What if the US Dollar Breaks to New Highs
Issue #393, November 23, 2015

How to Decrease Student Debt by 25%
Issue #392, November 16, 2015

The Importance of Buying Life Insurance when you are Young
Issue #391, November 09, 2015

Barron’s Conference, Part II of II
Issue #390, November 02, 2015

THE PHYSICIAN INVESTOR NEWSLETTER

HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
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.   
     
                                                                    RMD
    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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