By Alaina Trivax, WCI Columnist
This past April, my husband and I celebrated reaching a net worth of $0. We are now “back to broke!” Brandon, my husband, is employed by a Physical Medicine and Rehabilitation private practice; I work as a middle school teacher, and I am the primary caregiver for our two young boys.
To some, this might seem like a silly occasion to celebrate. For folks not in the medical field or without significant student loans, this is a milestone that will be easily achieved in the first few years after entering the workforce. For us, though, it’s been a journey just to get back to being worthless. It’s been 11 years since Brandon earned his undergraduate degree and seven since he finished medical school. During that time, he completed a four-year residency program and a one-year fellowship. Now, 18 months into his attending career, we are finally back to broke.
Here’s our story.
Brandon and I met just after he graduated from medical school and got married a few years into his residency. I had grown up in a single-parent household where money was pretty tight, while Brandon’s family had a comfortable middle-to-upper-class lifestyle during his childhood. Our dual income during his residency and my early teaching career provided us with plenty of money, especially since it was just the two of us and our dog. I think Brandon felt pretty financially secure during those early years, too. We could easily afford the things we needed and enjoyed a comfortable lifestyle. We took advantage of our employer’s retirement matching programs, maintained an emergency savings fund, and kept our expenses in check. Still, we had plenty of money to spend on fun stuff like going out to dinner and taking vacations.
When we added up all the numbers, though, we were clearly in the red. Brandon’s student loan balance started at around $330,000; this, combined with my student loans and our mortgage, left us with a very, very negative net worth. Honestly, it was hard to even understand the significance and impact of this debt. At least our home was developing equity and could be considered a positive asset; our student loan burden, though, was more than 1.5x greater than our mortgage. And while we weren’t spending extravagantly, we weren’t really making progress in moving toward a more positive direction.
A year and a half into our marriage, Brandon moved out of state for a one-year fellowship program. The necessity of maintaining two households and the costs of having him travel between our home and his apartment each weekend forced us to get serious about our finances. During the first few months of his fellowship, the moving expenses and an unexpected basement flood left us spending more than we were bringing in. For the first time in his life, Brandon experienced what it was like not having enough money to pay all of the bills. It was incredibly distressing for both of us to know that we were committed to this fellowship and all of the associated costs, while not knowing how we’d afford to get through the year.
We began holding monthly meetings to review our income, expenses, and overall financial progress. At the time, we were using a spreadsheet-based system into which I imported and categorized all of our transactions for a given month. Thankfully, I could earn additional income tutoring on the side, and, between that and our savings, we made it through the year. We celebrated the end of his fellowship with the birth of our first son and began to transition into our new lives as a family of three.
We continued using that spreadsheet method for another six months or so, but eventually, the time required to maintain it became too much. We transitioned to a web-based program that automatically imported our bank account and credit card transactions. This program also came with some more advanced reporting options, including a graph of our still very, very negative net worth.
That brought our awareness to a new level. We began spending more intentionally, with the goal of knocking out Brandon’s student loans while still maximizing our retirement savings. In August 2021, after 10 months of this targeted effort, we reached a net worth of negative $100,000. A nice round number and a pretty big deal! We celebrated with a nice dinner out, ordering the chef’s menu at a local upscale Italian place. Brandon also got to enjoy the sommelier’s wine selections, but it was mocktails only for me as I was a few months pregnant with baby #2. Dinner knocked our net worth back down to a negative $100,400, but it was worth it. We had worked hard to make this financial progress, and it was nice to loosen up and celebrate!
Note: the red bar represents our debts and the blue bar represents our assets.
We welcomed our second baby boy in March 2022 and then achieved a net worth of $0–flat broke!–the following month. This was a huge milestone for us and such dramatic growth from just 22 months earlier. We continued the tradition of celebrating with a nice dinner out, enjoying the tasting menu at a different Italian place. (Perhaps we’re too predictable!) This meal was a bit more adventurous for us, featuring caviar and steak tartare along with some delicious pasta and fabulous wine. We spent some of the time reflecting on our hard work and talking about our future financial goals. Taking the time to celebrate our progress moving from a very, very negative net worth to simply having a big fat zero was pretty meaningful.
Our next big goal is to pay off Brandon’s medical school loans. We’re on track to knock those out in the next three years, and we are already planning how we’ll celebrate. We’re going big for this one! Once they’re paid off, we plan to set aside the money that we were spending on student loans and spend a little recklessly. (Though, is it really reckless if we’re planning it?) Brandon is thinking he’ll spend the money to get fitted for custom golf clubs and would like to take a golf trip to break them in. I’m planning to update my closet with the help of a personal stylist; my current wardrobe revolves around keeping up with a toddler, and I’m beyond excited to find a new sense of style.
After that, we’re looking forward to some lifestyle updates that will be celebrations on their own. We hope to move into a larger home in the next five years or so. I wish I could say we’ll miss our combination office/gym/playroom/family room, but it’ll be nice to spread out a little more. Eventually, we’d like to buy an ATV to play around on when we’re visiting my mom’s farm up north. We’re hoping to start taking our kids on annual vacations abroad as they grow, as well.
The White Coat Investor has a few suggestions of other financial milestones that are worth celebrating. We plan to keep tracking our progress toward certain targets, including reaching a net worth of $500,000 and $1 million and achieving a retirement portfolio balance of the same amounts. It’s wild to even imagine hitting those numbers, so we’re not sure how we’ll celebrate those just yet. Any suggestions?
How long did it take you to get back to broke after medical school? What did it feel like once you hit that $0 net worth? What did you do to celebrate? Comment below!
I have to say, with assets of ~500k and a (upper?) middle class lifestyle with occasional splurges for $400 meals the repeated happy exclamation of “now we’re broke” comes off as irritating and a little disingenuous. A more thankful and even ambitious tone of celebrating being on the way to true wealth would be more relatable.
We’ve worked hard to get here and add pretty proud to have made it to a net worth of zero.
I think I understand your point, though, too. Your perspective reminds me of my reaction to an expression I’ve heard used to describe those with a negative net worth from student loans, a mortgage, etc.—that “the guy begging on the corner has more money.” If a person has such assets, they likely also have a pretty decent cash flow, and that comparison strikes me as incredibly inappropriate and unaware. That’s certainly true in our case. We do have significant debt, but our income also grants us the ability to pay it down while still having some flexibility for other expenses in our life. Having grown up in a low income household, that’s certainly something I’ll never take for granted.
It’s a common expression we use around here. #backtobroke
But you’re right that I’d rather have a net worth of -$50K and an income of $400K than a net worth of $100K and an income of $40K.
Yeah, the writer should get another degree in English because the words she uses are foreign to me. She was always broke…
What a sour and pointless comment.
I didn’t find this post to be disingenuous at all. Who am I to tell someone how she should feel about her financial journey? I wish the author the best with her young family but I’d think twice about that ATV. I would think that in your husband’s line of work he sees a fair number of injuries caused by those.
Good point about the ATV! I bet he does see the results of accidents on those. We’re looking at a side-by-side utility/off road vehicle for driving through the woods and some light farm work. My mom has a lot of property “up north” and we love to explore the land. We’re thinking something with doors, roll bars, and seatbelts, especially with the kids around! I took a few tumbles off four-wheelers while growing up (thankfully always with a helmet on!)—they can be dangerous.
I don’t get what is up with paying off low interest student loan debt early. I am at 3% – I have a couple properties cash flowing and appreciating and maximizing retirement accounts. Then again my wife and I combined make close to 1 mil a year. But I digress- if I had not refinanced several times sure pay it off quick now what’s the point.
Do you finance your car? Your dishwasher? Your gum? At what point is the hassle no longer worth the potential arbitrage between what you can borrow at and what you can invest at?
At a certain level of wealth it’s not about the interest rate any more.
And that all ignores risk, of course. Paying off a 3% debt provides a risk-free 3% return. Taking that money and putting it into stocks or real estate is likely to provide a higher return, but there is a small chance of it not doing so. Nobody ever goes bankrupt without debt.
Depends on your risk tolerance white coat investor. But yes I think its a low risk to take your money and put it elsewhere and pay the minimum on your student loan @ 3%. My parents may not think the same way. You are correct I financed my cars as well. I am OK with debt at this point. Now if I lost my job or something I’d regret that although I still believe in my specialty I would be a-ok. It would bother me to pay full price on a high ticket item if I can get a low interest rate and deploy my money elsewhere. Idk what do you think?
@Jason – thanks lolll
I dunno. Is it working? Are you rich?
The reason I ask is that I hear this argument a lot, but I don’t hear it very often from wealthy folks. The same drive that leads wealthy folks to save and invest also seems to lead them to pay off debt.
I’m not being critical. I also carried debt at times when I didn’t necessarily have to because the mathematical argument was so compelling. But in the end, that really made minimal contribution to what actually built my wealth. And I think my situation is more common than the opposite.
PainMD – Nice humble brag there!
Words I never thought I’d say to anyone: “I’m so happy for you that your net worth is $0.00”
Seriously, congratulations on reaching this milestone.
Thank you!
MSW remember this is a forum for eventually high income folk to remind us not to end up still broke when we near retirement because we never thought it was important to pay off those student loans and we had $400 meals every week and sent our kids to private school and got new cars every year and maybe divorced a couple spouses instead of paying attention to and celebrating making progress on things like this.
With an HPSP scholarship (and the lower college and med school tuitions of the 1980s) my only loans were maxing out the GSL as an undergrad at my dad’s request and maxing it out the first year of medical school before I got my HPSP scholarship. Dad helped pay back some of the college loans. Spouse was USUHS and apparently, now I’m going to go ask him, never had any college loans. I guess as soon as I was out of residency (When the interest started accruing; there were deferrals throughout med school and residency) I started paying off my under $20,000 of student loans, and made a big payment when I left the country for Germany since the loan processing company had demonstrated its incompetence and back then it wasn’t easy to take care of things from overseas. So 1 year out of residency, end of residency for spouse. However we were already saving so we might have been at zero the prior year.
Now working on getting back to zero owed on mortgages again after moving from cheap rural living to a house in a big town, 2/3 the size but one and a half times the price. (And only 1% as far away from our new grandson.)
Congratulations to the OP. We all start somewhere and you guys are doing great so far!
Alaina,
First, congrats! Second, what web-based system do you use for tracking expenses and other financials?
Thanks,
David
Thank you! I’ve been using YNAB (You Need a Budget) for almost two years now. I do break one of the “YNAB rules,” though, and plan ahead for all of our income in a given month, rather than just allocating the money we have at that moment. I’ve used Mint and a manual spreadsheet in the past, but YNAB works better for our current needs. I’m able to categorize expenses quickly and easily monitor spending across different categories as the month goes on.
Nicely done! Keep us posted on the journey. Celebrate those milestones shamelessly, you earned it.
Congrats!! We recently hit the same milestone, also in metro Detroit.
If you’re looking for a recommendation for a personal stylist, my wife would be happy to share her experience.
Thank you, and congrats to you, as well!
Oh, yes! I’d love to hear more about her experience.
Impressive. I’m curious how you were able to build 333k in assets at the point he finished fellowship. While the numbers are big, you had 506k debts and 333k assets so roughly 175k delta including both your debts and a mortgage? I think this is an enviable spot to start in. Unfortunately many carry a very average debt of 200k in loans and 1-400k or more in other debt such as a mortgage (unless of course you follow WCI and live like a resident (: ) . Congratulations to you both and good luck building your net worth!
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