Many students graduate pharmacy school with well over $100,000 in debt. With careful planning they can become a debt free pharmacist, but achieving financial freedom is no easy task. Here, a pharmacist with significant experience on this topic is interviewed so that insights may be gained.
Interview With: Timothy Ulbrich, Pharm.D.
Interview By: Timothy P. Gauthier, Pharm.D., BCPS-AQ ID
For most people, pursuing a career as a pharmacist means at least 6 years of college. During this time the student loan tab can easily ballon and many pharmacists now graduate with student loan debt exceeding $100,000. Some even have student loan debt exceeding $250,000!
In the face of substantial debt, pharmacists entering the job market are extremely fortunate. An article recently published by the Washington Post placed pharmacist ($125,857/year) as 5th among top paying jobs in the United States. Pharmacy Manger ($149,064/year) was placed at second.
So no problem, those loans will be paid back in no time, right? Well, not so fast.
Life after college comes with many other bills beyond student loans. There are housing, transportation, family and other major categories to which financial attention must be paid. As new major life challenges develop, many pharmacists struggle with striking a balance between their salary income as compared to their financial commitments.
The truth is that paying of student loan debt is very difficult. However, through obtaining reliable information and careful planning, the road to becoming a debt free pharmacist can be simplified.
In an effort to gain perspective on this topic and share ideas on how pharmacists can be financially responsible, I reached out to Dr. Ulbrich, who has a great deal of experience in this field. He agreed to an interview and the following is the result of our correspondence. It is intended that the following text will serve beneficial to those who find themselves challenged by the burden of pharmacy school loan debt and competing bills.
In 2002, I graduated from high school and was on my way to start pharmacy school at Ohio Northern University. At the time, I did not have a penny of debt.
In 2009, just 7 years later, I had obtained a doctorate degree, was married, and finished residency training. At this time, I was over $200,000 in debt.
‘It wasn’t even stupid debt,’ I rationalized in my mind. No credit card debt. No fancy cars. No extravagant toys. My wife, Jess, and I seemed to be living a normal, reasonable and responsible life.
In 2012, the humbling moment had arrived that I was broke.
The reality was sinking in… I had a great income, but did not own anything and owed a whole lot. At the time, I had a net worth of negative $225,000. I found myself confused. Why in the world was I broke and feeling like I was living paycheck to paycheck despite having a six-figure income?
Like many other pharmacy students, I once had dreams of a great income that would allow me to have financial flexibility and freedom. Being strapped with $200,000 in debt was far from flexible and free.
In 2015, just 6 years after finishing residency training, Jess and I hit submit on our very last payment of over $200,000 in non-mortgage debt. We finally had financial freedom, flexibility and peace of mind! The feeling of living paycheck to paycheck each month was finally gone.
Going through this journey of paying off $200K of debt resulted in me starting Your Financial Pharmacist. I quickly realized that many pharmacists were struggling with the same pain points I had just experienced. Therefore, in January 2016, I decided to start a movement to motivate, empower and inspire pharmacists to get out debt, maximize their income and create wealth.
2. Is there a financial planning question you get most frequently?
The most common question I get asked is “How am I supposed to balance all of these competing financial priorities at once?” This question is especially true for new pharmacy graduates that are facing the pressures of paying off six-figures of debt while also wanting to save for retirement, buy a home, pay for a wedding, and so on. This is overwhelming and all of the sudden many pharmacists find themselves living paycheck to paycheck because of all of these competing priorities.
From personal experience, I am a big fan of the power of laser focus when it comes to achieving financial goals (or any goal for that matter). Back in 2012, when the realization had come for my wife and I that we were broke, it is obvious now looking back that we were trying to do too many things at once and we were not doing any of them very well. We were trying to save for retirement, pay down debt, pay extra on the home, save for kids’ college and build an emergency fund; all at the same time.
When my wife and I finally decided to focus on one goal at a time, we made tremendous progress. We first built a small emergency fund. We then put all our effort and resources into paying off the student loans. By having such focus, we got more intentional about budgeting and were able to free up $2000 per month in our monthly budget to throw right at the principal balance remaining on the student loans. Since we got used to cutting expenses during this time of paying off debt, today we still have $2000 freed up per month in our budget to achieve other goals including paying off the house early, saving more for retirement, giving and saving for kids’ college.
If you are looking for a step-wise plan to guide you in prioritizing your financial decisions, I would recommend checking out the 7 Baby Steps by Dave Ramsey.
3. Are there one or two big financial mistakes pharmacy students should note to avoid?
There are two common financial mistakes I see new graduates make. The first one is lifestyle creep. It is easy to quickly escalate a lifestyle and the expenses that come along with that lifestyle when you go from being a student making nothing to making over $100,000 per year. This, of course, is problematic when significant student loan debt is staring you in the face.
There is great opportunity to achieve long-term financial success if you can avoid lifestyle creep. If you can discipline yourself to live off 50-70% or so of your income and throw the rest at debt and achieving other goals, great progress will be made towards achieving financial freedom.
The second common mistake I see new graduates make is minimizing the significance of their student loan debt. For some, there is a tendency to pretend like it does not exist. This of course relates to the first point of lifestyle creep, because the more of an emotional reaction you have to your student debt, the more likely you are to try and tame any lifestyle creep that can happen. Despite what your peers may think, six-figures of student loan debt should not be taken lightly. The faster you can get out of debt, the more peace you will have and the faster you will be able to achieve other financial goals.
What happens when you get out debt? Pretty awesome stuff. This past year, I created the Pharmacist Guide to $1 Million that highlights how taking a step-wise approach to managing your finances can result in a net worth of $1 Million in a relatively short period of time. If you are looking for some motivation, make sure to check this out!
4. What can pharmacy residents, pharmacy fellows and other new pharmacists do to position themselves for long-term financial success?
In my opinion, there are 5 main steps to take in order to build a strong financial foundation. A good financial advisor can help you navigate each of these further.
- Developing a plan (a.k.a. budget). While the most difficult thing to do, developing and staying disciplined with a monthly budget will be the key to achieving your financial goals. This will put purpose to your spending.
- Having a debt repayment plan. This includes putting a specific date on paper for when you want to pay off your debt so that you can figure out how much you need to carve out of your paycheck each month to meet that goal.
- Building an emergency fund of 3-6 months of expenses.
- Getting the proper insurance coverage. Beyond the typical home, auto and health insurance, this at minimum should include professional liability insurance. Additionally, if you have family that depends upon your income, you should have a term-life and disability insurance policy in place.
- Investing for financial independence. Ideally, this includes saving 15-20% of your income in tax-advantaged retirement vehicles (e.g., 401(k), Roth IRA). This should be balanced appropriately with saving for an emergency, paying off debt, and purchasing a home (see step-wise plan referenced above).
5. Which resources do you recommend for pharmacists to utilize to help with managing their finances?
I recommend that you subscribe to a daily financial news article (e.g., Investopedia) and commit to reading at least 1 personal finance book in 2017 that will get you thinking more about this topic. Here are three of my favorite personal finance books to get you started:
Of course in addition you are invited to follow the Your Financial Pharmacist blog.
Closing thoughts: there is a better way!
If you are in the weeds of paying off debt, feeling like you will never get those loans off your back or frustrated with the fact that you are feeling financially pinched despite making a great income, I am here to encourage you that it can be done and is worth the hard work to get it done!
With rising student loan debts and relatively stagnant incomes, pharmacists today are facing an unprecedented financial situation that pharmacists in the recent past did not have to deal with. More than ever, you, as a pharmacy professional, have to take control of your personal finances or it will take control of you.
I would like to express my utmost gratitude to Dr. Ulbrich for taking time out of his busy schedule to complete this interview and provide valuable perspective on this important topic.
ABOUT THE INTERVIEWEE
Timothy Ulbrich, Pharm.D. is an associate professor of pharmacy practice and associate dean at Northeast Ohio Medical University (NEOMED) College of Pharmacy. He received his Doctor of Pharmacy degree from Ohio Northern University and completed postgraduate residency training at The Ohio State University.
After working hard to pay off $200,000 in debt since graduating from pharmacy school, he is on a mission to empower pharmacists and pharmacy students to take control of their personal finances. He is the author of the popular personal finance blog Your Financial Pharmacist that is designed specifically for pharmacists and pharmacy students.
He is also the co-author of the newly released book Seven Figure Pharmacist: How to Maximize Your Income, Eliminate Debt and Create Wealth.
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