- After paying off her student loans, physician assistant Kristin Burton began helping her colleagues with money.
- She says that most medical professionals are not taught three important financial concepts.
- The biggest is the debt-to-income ratio, the amount of debt you have compared to your income.
After finishing graduate school, 30-year-old physician assistant Kristin Burton was shocked to learn she owed a total of $161,000 in student loans.
“The first step for me was to cry a little bit,” Burton tells Insider. “And then I realized that I needed to make a plan.” Burton took on as many extra shifts as she could while she lived off her husband’s salary. She used 100% of her six-figure PA income to aggressively pay off her student loans in just 16 months, according to records reviewed by Insider.
During the pandemic, he continued to work extra shifts and paid off his mortgage and became completely debt free. Burton now advises his colleagues on personal finance through his business, Strive With Kristin, where more than 1,000 medical professionals have enrolled in his courses and purchased his e-books.
Burton says most medical professionals aren’t taught three personal finance basics that could drastically change your financial outlook after you graduate from college.
1. Debt-to-income ratio
Debt-to-income ratio is a metric used by many lenders to compare the debt you owe to your income. A good debt-to-income ratio is 36% or less, however, Burton says that most medical professionals graduate from many years of study with a debt-to-income ratio of 300% to 400%.
“The No. 1 problem is massive student loan debt, bigger than most people’s mortgage payments,” says Burton. “If you look at the average student loan debt for a PA, it’s over $100,000 just for the PA school, and that doesn’t even count the bachelor’s degree.”
2. Compound interest
Compound interest accumulates when previously earned interest is added to the principal balance you initially borrowed or invested. It can work against you in the context of debt, but it can work for you if you’re investing money.
Burton says, “Because so many of us are in school until we’re at least 30, we miss out on our best investing years where other people can invest even much smaller amounts of money and see great progress.”
Other professionals entering the workforce fresh out of college at age 21 or 22 have a time-in-market advantage. In the eight or nine years that other professionals put away contributions to 401(k)s or other investments, their money grows at a faster rate because of
compound interest
. Adds Burton: “Being able to start investing at 22 or 18 is a huge benefit, and one that a lot of us really miss out on.”
3. Slow lifestyle
Lifestyle change occurs when you start splurging on more luxury items as you earn more money, getting used to a higher standard of living in the process. Burton says medical professionals new to the workforce try to “keep up with the Joneses” and splurge on luxury items they can’t afford.
“In the medical world, there tends to be a culture that your lifestyle has to be viewed a certain way,” Burton explains. “For example, a new personal assistant who is likely to have a multi-digit negative result
net worth
They’ll feel like they need to have the same car, the same house, the same everything as a PA that’s been making six figures for the last 10 years.”