White Coat to Riches???

Well Friday was the first day I wore a gown in a long time. Calm down with the conspiracy theories! It was my graduation! Yep, the big MD. Not a whole lot has changed in the three days since I've been a doctor. Well, I guess I have been asked my opinion about the reality of Gray's Anatomy a lot more. (It's only a tad bit more realistic that General Hospital)

And graduation sure came at a good time! Other than being a requirement so I could start internship, graduation made me a little money and a lot of Hallmark cards! How much money you ask? Well, I wouldn't have had enough money to pay my rent had it not been for some of my gifts which I quickly cashed on Friday! Plus, another little gift I received today helped me buy some toiletries and Diet Pepsi! Yes, you can tell that I am not only a doctor, but a rich one. Okay, half of that is not true.

I had more money when I was an undergraduate! People don't seem to understand that you don't get a Porsche and a paid AMEX card during medical school orientation. You sure as hell don't get them during medical school either. You don't even get them when you graduate. (rich daddy stories will be ignored for illustrative purposes) It's a long road to having some cash in your pocket.

For the primary care (family practice, internal medicine, pediatrics) specialties and their income equivalents the decision to go to medical school likely will never pay off financially. If you compared an average income for a person with a college degree compared to the Average Primary Care doctor (APC), you'd see that they never break even. Let's set the average college degree income at $40k, the length of medical school training plus residency (for primary care without further specialty training) at seven years, and the average indebtedness of United States Allopathic Medical School (MD) graduates at $125k.

Starting to see the picture? At the point the medical student graduates he's $265k behind his friend who jumped the academic ship after college ($40k X 4 = 160k; 160k + 125k). After three more years of residency, the APC doctor is still roughly the same amount behind because at the roughly $40k/year residents are compensated most cannot afford to start repaying their students loans.

Now you're probably thinking, "Wait! But the MD is going to make a lot of money and he/she will win in the end!." Well, er, maybe. The APC doctor makes around $140k/year. Their first years out of residency though they are likely to start around $80k. It appears to take 3-5 years for most doctors to A) grow their practices enough and/or B) reach partner in a group practice and/or C) learn how to actually make money as a doctor -- to reach this "average" level.

Even if we leave the average bachelor's degree at $40k/year he/she stays financially ahead until the doctor attains his average level of income when we finally see an apparent break even point. I said apparent because we forgot about the power of compounded interest! By the time the income balance appears to even out, the "lowly" college graduate has had the ability to contribute to a 401(k) or other savings vehicle for around 11 years! (We also assumed the physician repaid their student loans ASAP)

See illustration of this at:

http://www.fool.com/money/401k/401k01.htm

The APC doctor will have a chance to chase this investment by making the much larger contributions he/she will be able to make into savings, assuming they have the willpower! The expected lifestyle of a physician is much different than that of the typical average college graduate and making those larger savings contributions can hurt.

...oh well, I just wanted to illustrate, similar to the way it was explained to me, that medicine is not the way to get rich! I didn't go into medicine for the money and I'm not suggesting many of my colleagues did either. Yeah, we're going to have a nice lifestyle, but even at the epilogue of medical school training we're still a ways off!

(And if you're still perturbed by this idea remember that we assumed the average college graduate received no raises and also did not account for the greater number of hours worked by medical students and physicians to achieve the stated incomes. The average medical student works (at education related activities including studying) about 80hr/wk. The average resident works 80hr/wk. The APC works 50-60 hr/wk.)