Today, Jeff Anzalone is a successful periodontist in northeast Louisiana with a seven-figure net worth. But right out of his last residency, his net worth was six figures — in the negative. After spending nine years in dental school and then residencies, he had about a quarter of a million dollars in student debt.
Anzalone spent the next six years paying it back, learning plenty along the way. His experience and successes even inspired him to begin a personal finance site, Debt Free Doctor, to help others with similar student loan struggles.
Read on to hear Anzalone’s story and his most successful strategies for paying off medical school debt.
Dealing with student debt as a broke, jobless new doctor
“[My student debt] never did bother me. … I had been promised a good job, so I knew I could pay it back,” he said, referring to an invitation he’d received to become a partner in a dental group in his hometown.
“I thought, ‘All doctors are wealthy,’” he said, figuring that since other doctors deal with the same debt, there wasn’t anything to worry about.
But days before his graduation, bad news flipped Anzalone’s financial world upside down: The dental group decided not to bring him on as a partner.
In seconds, he plunged from a setup for success into a sea of unknowns. He and his wife, who’d just had their first child, were worse than broke: Between student debt and a new mortgage, they were $435,000 in the hole.
“I had a pile of student loan debt, a 2-month-old, no patients and no clue how to run a practice,” he said. It was a terrifying place to be.
Turning it around: Paying off debt and building a successful practice
Anzalone found a new arrangement sharing an office space with an experienced endodontist, and founded his own practice. He went from having no work to being able to establish and build a business of his own. As his practice grew, so did his income.
After dealing with the stress of student debt and having no way to repay it, the Anzalones were feeling motivated to wipe those student loans out.
“My mindset shifted,” Anzalone said. “I’d been preoccupied with all the things I could get, and I switched to being more focused on getting rid of my student loans as fast as I could.”
The Debt Free Doctor’s 5 tips to pay off medical school debt
Anzalone focused on building his practice (and income) while getting serious about knocking out his student debt. With intense effort, his $250,000 in student loans was gone within six years.
After paying off the student debt, the mortgage was next, and the Anzalones were completely debt-free within 11 years after Jeff started his practice.
Here’s his advice to anyone who wants to get their medical degree, then get out of debt as quickly as possible.
1. Limit borrowing
Anzalone acknowledges that one of the best strategies to get out of student debt is to never get into it in the first place. Looking back, his biggest regret was borrowing so much for dental school.
Students should look for ways to pay for medical school besides just taking out student loans. “I should have definitely been more proactive with my student debt, looked into scholarships and grants, and applied for those to really limit the amount that I had to borrow,” Anzalone said.
Even after graduating, you still might have options. Repayment assistance and student loan forgiveness programs for doctors can be another smart way to deal with student debt, Anzalone added.
2. Consider refinancing medical school debt
During his first year of repaying student loans, Anzalone decided to refinance this debt to get a lower rate. Most of his student loan rates were in the 5% to 7% range, and just the interest charges on a $250,000 balance would have been well over $1,000 per month.
After refinancing student loans, Anzalone’s new rates were more in the neighborhood of 3%, cutting his interest charges by about half. This freed up more money that he could then turn around and use to pay off his student loans even faster.
If you’re interested in refinancing your student debt, you can use our student loan refinancing calculator to see how much of a difference this move could make. Be careful to look at the pros and cons of refinancing, especially if you have federal loans.
3. Keep living expenses in check
Frugal living was a huge part of the Anzalones’ get-out-of-debt strategy.
“We just decided not to borrow any more money, always pay cash for everything and live within our means,” he said. “Compared to the other doctors in our area, our standard of living is lower — but I wouldn’t change it.”
While starting a medical career can mean finally earning the larger paychecks you’ve been looking forward to, don’t let that change the way you live, Anzalone advised.
“If you will just buckle down for three to five years after you get out of school, continue living like that, and take all your money and throw it at your loans — you’ll be so far ahead of the game.”
4. Pay extra on student loans every month
For the “throw money at your loans” side of the strategy, Anzalone decided to follow the debt snowball strategy.
“I bought a whiteboard and listed all my loans, from [the loan with the smallest balance] to biggest,” he said. “Then I targeted the smallest and threw everything I could at it each month.”
With an affordable lifestyle already in place and a decent income as a doctor, Anzalone began making large extra payments on his student debt. These started as $1,000 to $2,000 each month, and later were as high as $7,000.
5. Balance student debt repayment with other goals
Lastly, don’t let student debt eclipse all other financial goals. While getting out of debt can have big payoffs, it’s important to balance this against working toward other important financial achievements, too.
For the first year after founding his practice, for instance, Anzalone focused on saving up a 20% down payment for his home so that he could refinance his interest-only mortgage into a traditional home loan.
And even after this goal was met, he made it a point to continue to invest while paying off debt.
“It would have been faster if I’d had taken the Dave Ramsey route by stopping all investing until paying off consumer debt,” Anzalone acknowledged. But he wanted to make sure he was also building wealth and saving for retirement, too. “This way, I wouldn’t miss out much with compound interest.”
Looking back, Anzalone sees that there were two paths he could have gone down — and it’s the same choice facing most dental and medical school graduates.
“Once you go down the path of borrowing for everything, you’re going to be so far behind you’ll never be able to retire,” he warned.
After choosing the other path, Anzalone feels it was all worth it. “Once you don’t have debt, you can section everything out and enjoy yourself while also saving as you go.”
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
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Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
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