By Josh Lantz, CRPC®
CIO, MD Financial
Every physician needs a debt plan whether they are a younger physician with a lot of student loan debt or an attending physician with mortgages. Managing debt is often a neglected area of physicians’ finances, but fortunately there are many options to address this critical need.
A debt plan can include finding ways to pay off a loan efficiently, but it can also mean finding and comparing the most cost effective mortgages for a new home purchase. We often help our physicians compare different home mortgage options.
Student Loans
Student loans are frequently the largest emotional drain on younger physicians’ minds. Many of our clients don’t even know which financial institutions hold their loans, or how to navigate the process of loan forgiveness or refinancing. We help with everything.
Which options to pursue can depend on many different factors. Everyone’s situation is unique. We’ve found for some physicians that doing an income driven plan and pairing it with public service loan forgiveness is a great option, while for others this strategy won’t work. In addition, there are loan forgiveness programs that aren’t reliant on income driven plans such as income-based repayment, and many physicians are unfamiliar with these programs.
When loan forgiveness isn’t a good option, we frequently help our physicians with the process of choosing a lender to refinance their loans. This process can help save thousands of dollars over time. We help decide amongst the different terms our clients can choose from, along with where to find the most cost effective rates.
Credit Cards
For various reasons some physicians have accumulated high credit card balances. Besides possibly hurting their credit score, credit cards often come with higher interest rates ranging from 9-28%.
There are lines of credit available uniquely for physicians that can be used to pay down their credit cards at a lower rate. The difference in interest paid can help physicians in this situation save thousands. Other options also exist for paying off or reducing credit card debt, and we’ll help find the best option for you.
Home Loans
While we aren’t a lender we do coordinate with various lenders to help you find the best rates. For physicians with existing loans, that might mean running an analysis to see if there’s opportunity to refinance.
For physicians looking to buy a property we often introduce them to lenders that can provide physician mortgages. These are special mortgages with no Private Mortgage Insurance (PMI) and lower down payments. We also look at traditional mortgages to see what options are best for each physician’s unique situation.
Our Process
When it comes to managing our clients’ debts, here’s the approach we take:
1. We talk to you about your current strategy. Many of our clients want to pay off their debt as soon as possible, even when holding the loans longer is better financially. We always say, “Emotions trump the numbers”. We can provide you the most financially savvy strategy, but that doesn’t always mean it is the best strategy for your values. If you can’t sleep at night, it’s not a good strategy. We work with you to find a plan that you’re comfortable with.
2. We help you find the data. We know where the government keeps your official student loan records, so we can assist you in gathering that information as well as your mortgage and credit card data.
3. We consolidate the data onto one page. This makes it easier to review everything and decide if any action is needed.
4. We provide you a written plan of our suggested strategies. For our physicians with student loans this often includes a plan comparing public service loan forgiveness to refinancing.
5. We help you coordinate the implementation of these various strategies to achieve your debt reduction goals.
Josh works diligently with all our teams to coordinate the services we provide for our clients. He wants to make sure all our clients have sound, fiscally responsible financial plans and feel more comfortable about their future. When not working, Josh enjoys skiing, mountain biking, MMA and riding his Yamaha motorcycle. He can be reached at Josh@mdfinancialadvisors.com.