THE STUDENT LOAN CRISIS. PART 3 OF 7 PARTS. by Michael Rosenblatt, DPM (no login) Reprinted from Podiatry Online, the Emagazine. To get your copy in your mailbox, request one from Alan Sherman, DPM Email: asherman@podiatryonline.com =================================== SKINFLINT PHILOSOPHY 3rd of 7 parts PRACTICE LOCATION: If you are starting out in practice, and considering opening "cold," you should select your location carefully. Managed care is very entrenched in large cities. Some like Silicon Valley are extremely expensive. Here in San Jose, the average price of a home (over $525,000) is so expensive that even orthopedists working for local HMO's can't afford to buy one. The very fact that I can afford to live here attests to the fact that some of my recommendations and logic might "work." Smaller communities would be better, even semi-rural. They might be safer to raise families, and homes definitely cost a lot less. In Klamath Falls, OR it is possible to buy a very respectable home for under 60,000, and it won't be in a bad neighborhood. In Medford OR, you can buy a very nice home for even less. Look to purchase a practice. There is nothing like a regular income supply, even if it is smaller than you wish. This can provide immediate stability and at least allow you to plan better. There are many doctors retiring from practice now. Some I admit are threatened by managed care, but many are not. If you have some forefoot surgical skills, look for a surgical center certified practice. They have income from two sources, not just one. There are some excellent practice brokers who can arrange financing through the SBA, even if you have nothing at all, which you probably don't. Many podiatrists with excellent practices are getting "nervous" about some podiatry schools possibly closing and the supply of buyers shrinking. You may have more power to reduce their asking price than you think. I have more ideas on this, but I can't get everything into a single article. FRIENDS AND FAMILY: What do you tell your friends and family? Why not the truth. Most people have a mortgage of say, up to 200,000 dollars to pay. You might have a mortgage (if you could purchase a home) AND a huge school debt. Tell them how much it is. The public needs to understand the reality of managed care and devaluation of doctors. This is not time for false pride. I know that some might say that letting people know this might "threaten" the image that you are a successful, and thus a "good doctor." Perhaps. But the fact is that an enormous school loan will threaten almost ANY starting income. That's the point you need to stress, as well as government and private cutbacks on fees. Tell them that the numbers enrolling in medical schools is drastically decreased. Ask them who they expect to take care of them when they retire? GIFTS AND HOLIDAYS: This is the most stressful (financially and otherwise) for the Skinflints. Christmas is a disaster. Remember that this was supposed to be a Christian Holiday celebrating a holy event, not a money marathon. Prices decrease drastically in January. Why not give each other cards over the actual Christmas, and purchase some simple presents (only things your family needs) in JANUARY? No family present should be any discretionary object. Clothing is the best gift for the skinflint to their family. This is touchy here. I recommend used clothing if possible. It can cost very much less than new clothing. I know a young woman whose father owned a very successful oil and gas business. Starting from the time she was an early teen her parents never shopped for her in "full price" stores. She still goes to thrift stores. She prefers the merchandise. If people can be your real friends, they will have to learn to understand that you cannot give them fancy presents, if at all. That will usually mean that they won't give you fancy presents either, which is understandable. But typically most of those are wasteful for them as well, and often they are sitting alone and unused in your closet or garage after a few weeks. Instead, make fancy cards on your computer and printer. Include information about your family and friends (be brief). MONITOR YOUR PROGRESS: A few months of living the Skinflint lifestyle will probably allow you to increase your student loan payment by as much as $300-400/month! It is amazing how much discretionary spending reduces your ability to save for your future. Have family meetings with your kids. I have always believed in telling your kids the WHOLE truth. Tell them how much you owe, how much you make, and what you live on. Make them a part of your family. Ask for their suggestions and when they have good ones, USE them. Compliment and thank them for their efforts. Tell them you understand how severely this affects their social life. It does yours also. Absolute honesty is the best policy to family, friends and acquaintances. Some may respond by bring you charity. Accept it gracefully. I did. My daughter's crib was donated by another podiatrist. There is real dignity in facing your obligations squarely and publicly. YOUR MOST IMPORTANT ASSET, YOUR SPOUSE: Nobody is more valuable or more important to you than your spouse. The purpose and the REAL strength of family is a close working relationship with your spouse. Nobody cares as much as they do about you and your life. Yvonne has always been a very good saver. She always has excellent practical ideas. I wouldn't be retired now without her. If your wife or husband is a spender, I'd recommend a credit counselor (they're usually free). Your church may have a counseling program that you two could attend. Often clergy have to live on a restricted income as well, so they should understand. In order to work this program, you must have the full cooperation of your spouse. NEXT ISSUE: YOUR SOCIAL LIFE, WHO'S TO BLAME AND WHAT DO YOU DO ABOUT IT?