GUEST POST: The First Deadly Sin of Residents & Fellows

[FPMD: This guest post is provided by Dave Denniston, the author behind a blog for physicians.  Dave has been a friend of the blog for as long as I can remember and was kind enough to have me on his blog as a guest.  While this article is written in a different style than my usual posts, I agree with the point Dave is making.  We have no financial relationship.]   

It had to happen. You’re young & nervous. Eyes as wide as saucers.

It’s the first day of residency.

Your stomach quivers with a mix of excitement & anticipation. You feel the pressure. The real world closing in on you. Less studying and more of a focus on patients. Only another three years until you are in practice.

I am committed to helping to guide you through this financial pressure cooker as best I can.

I’ve seen physicians and many residents make some mistakes that could really screw you over and significantly delay your retirement.

Let’s call them the 7 Deadly Sins. This guest post that FutureProof MD was kind enough to invite me to write about will focus on the biggest one that I believe drags down your financial future.

Are you ready? Let’s go!

Sin# 1: Not Buying Big Ticket Purchases in Cash

There was once a young man who was ashamed of the first car that he had. It was over 10 years old and had over 100,000 miles ridden on it.

His friends around him had sweet sports cars with engines that growled and purred.

His simply… gurgled and spluttered.

His car was dripping oil. The check engine light came on regularly. It needed tire changes and oil changes and spark plug changes and broke down regularly.

You see- the car he got- it was a hand-me-down. Yes, it was his grandfather’s car and he felt some shame in his game as he took his girlfriend around town.

Although, he does admit it made for a great make out vehicle since the windows fogged so easily. He lovingly called it ‘The Love Boat’ since it felt about as big as a tanker and was about as clunky.

Anyhow, I digress. This dull silver car somehow got him from point A to point B. They allowed him to make mistakes. What did he care if the paint got chipped or a minor dent happened? He’s just going to move on to the next one soon enough.

While he might bemoan his material possessions and shuffle his feet nervously as he hung around friends with better vehicles, he had one thing going for him.

He didn’t have put much money into it and his car was debt free.

He never had to make a car payment and was determined to keep it that way. His cash flow grew better and better and better as his income grew and grew and grew.

Of course, there were repairs and sometimes those bills sucked, but they never added up anywhere near what it would cost to buying a new car and he could use cash for those repairs.

A Picture of A Car Similar To ‘The Love Boat’ Where…. Well, We’ll Leave That For Another Lesson

A Picture of A Car Similar To ‘The Love Boat’ Where…. Well, We’ll Leave That For Another Lesson

This young man grew up and became…. Me.

I was blessed with learning a lesson early on. Pay for big ticket items in cash!

My friends, the physicians I see struggling and feeling like they are barely making it from paycheck to paycheck- it doesn’t matter whether they are physicians in practice or residents or fellows- EVERY single one of them has a car loan or a car lease.

When you pay for a car in cash, you are done.

When you pay for a $27,000 car with $5,000 down, you have a $22,000 loan.

Let’s say that you have a modest interest rate of 1% on this loan and you have to pay it back over 5 years.

That monthly payment would be close to $375 a month.

In comparison, you buy a car for $5,000. You invest the could-have-been car payment of $375/month and you end up with $25,503 in the bank and a car worth $1,000 for its spare parts.

As a resident or a fellow, imagine how that $25,503 compounds over time!

Earning our modest goal of 5% interest, the $25k becomes $32k a mere 10 years later.

Can you see the impact that this could have on your retirement?

Can you imagine how much more financial free it is to not have a car payment?

Final Thoughts

I get it. Used cars can be annoying. Those check engine lights gives both you and I headaches. Dealing with repairs and maintenance sucks.

As you become an attending physician and you’ve paid off your student loans and cash is flowing like a river, then buying a nice vehicle at 1% interest rate isn’t such a bad thing.

However, as you look around at your older colleagues- you’ll probably know their net worth by what they drive. If they drive a beautiful, shiny, sleek Tesla or BMW, they probably have a MUCH lower net worth than their penny-pinching peers.

Just watch and see how long they HAVE to work to have a comfortable retirement and support their Mercedes that has a $700/month payment… maybe you’ll think that this financial guy isn’t so crazy after all.

Don’t be afraid of the love boat! Jump on board and buy them things in CASH!

If you’ve enjoyed this guest post, make sure to check out all 7 Deadly Financial Sins of Residents & Fellows.


Dave Denniston, Chartered Financial Analyst (CFA), is an author and authority for physicians providing a voice and an advocate for all of the financial issues that doctors deal with.

You can find his latest blog post by clicking here.

Advisory services through Capital Advisory Group Advisory Services LLC and securities through United Planners Financial Services of America, a Limited Partnership. Member FINRA and SIPC. The Capital Advisory Group Advisory Services, LLC (CAG) and United Planners Financial Services are not affiliated.

The views expressed are those of the author and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation

Dave Denniston, CFA

Dave Denniston, Chartered Financial Analyst (CFA), is an author and authority for physicians providing a voice and an advocate for all of the financial issues that doctors deal with. He is the author of “5 Steps to Get out of Debt for Physicians”, “The Insurance Guide for Doctors”, “The Tax Reduction Prescription”, and his new book, “The Freedom Formula for Physicians”.  He’s glad to answer any questions about finances for physicians and the travails of residency.  

You can check out his latest podcast at  

You can also contact him at (800) 548-1820, at, or visit his website at to get a copy of "The Freedom Formula for Physicians."