12 strategies to bust veterinary debt


For many veterinarians, student debt is unavoidable-but multiplying debt doesn't have to be. Use these sensible tips to stop adding to your liabilities and start building your financial security for a brighter future.

For the past two decades, studies, reports, columns and presentations have all raised the same discouraging topic over and over again: the impact of student debt on the solvency and security of individual veterinarians and on the stability and financial health of our profession. It's a topic that's not likely to go away.

The cost of a veterinary education has always been high in proportion to anticipated income. Today indebtedness of $150,000 to $250,000 is not uncommon. Now imagine the debt load faced by a husband-wife veterinary couple! Debt payments often exceed mortgage payments that would buy a heck of a nice home.


Compound that debt load with the compensation reality for associate veterinarians. They often receive similar or less pay than individuals with a four-year bachelor's degree. And as more and more veterinarians want to become practice owners, their amount of debt—even 10 to 15 years after graduation—makes it difficult to take the step from associate to owner.

Unless we are willing to reinvent our educational models, it's unlikely that educational costs associated with veterinary medicine will decline. The fact that our veterinary programs are at capacity, and will only get worse, makes salary increases even less likely.

Where do we go from here?

The reality is that anyone entering the profession should expect a high debt load with little chance of a proportionally higher salary. As the rappers Macklemore and Ryan Lewis say, "If I'd done it for the money, I would have been a [fill in the blank]." Few veterinarians, if any, entered the profession anticipating they would get rich. But historically, a veterinary degree and a couple years' experience assured us of an upper-middle-class income and the ability to provide for our families while developing a degree of financial security.

Though some creative programs have been established to help with veterinary student debt, there is nothing that can be done after the fact to reduce the cost of education once it has been incurred. Lowering the burden from the outset will necessitate some radical changes in the veterinary educational process: Eliminating a four-year pre-professional curriculum. Offering a year-round curriculum to reduce the number of years a student has to spend in school. Looking at how other countries have significantly reduced pre-professional years from three years to two. We might even make it easier for students to proceed at their own pace, perhaps allowing them to take a year off to earn money for educational expenses.

Regardless of the educational system, veterinarians have to change. We must commit to becoming more aware of business and financial issues. There should be mandatory CE in financial matters, just as there is in controlled drug laws, USDA/APHIS work and other areas of the profession. I don't propose that veterinarians become certified financial planners, but they must learn the basics of financial management and wealth accumulation. Most important, they must learn to reduce or avoid future debt.

Avoiding quicksand

The following steps were adopted from a number of respected writers, including Renee Sylvestre-Williams at Forbes.com and A.J. Smith at Credit.com, and they offer a great starting point for avoiding additional debt and achieving financial security:

1. Stay current on all of your existing debts. Pay attention to your own finances. Avoiding a bad situation will only make it worse. Make payments on time to avoid penalties and added interest that will compound your debt.

2. Make sure you start paying yourself forward. Money experts recommend that we save 5 percent to 10 percent of our salary in a tax-deferred account. Easy? Not at all, but it should be a goal. Start small and do the best you can consistently.

3. Spend less than you make. And live like you earn less money than you actually do.

4. Make every effort to pay cash. Doing so can help you stick to a monthly budget, only spending what you have on hand. Plus the cost of credit is high.

5. Set goals for saving. Regardless of the amount, a targeted savings plan with a goal in mind is more likely to be adhered to. Vacation travel, a child's education or even a new car are all stimuli to save on a planned schedule.

6. Practice deferred gratification. You have invested years and a virtual fortune in pursuit of your dream. Nobody is suggesting that you wear ashes and sack cloth, but slow down on the spending. Is buying the latest smartphone the best use of your money? How big of a TV screen do you really need? Why not drive your old car as long as possible? Also, budget a set amount every month to spend on entertainment, clothes, vacations and so on.

7. Don't accumulate credit card or finance debt. Ideally, don't use a credit card at all, but at the very least, pay the entire balance off every month. Consider a card that pays you for using it. Some credit card companies reimburse you 2 to 5 percent of every dollar spent.

8. Make financial education part of your CE. Read at least one financial-focused publication every month. Attend a financial seminar quarterly. Many financial advisors and investment companies offer free seminars and newsletters. Watch an investment-focused television program at least every month.

9. Grow your branches. If you attend medical symposia, read journals and consult with experts, consider that financial CE is no less important.

10. Learn what you do not know. The recent VPI/Veterinary Economics Financial Health Study results revealed that as many as 40 percent of veterinarians don't fully understand their finances, and one in four admitted they are clueless when it comes to finances and investments. Identify and interview a financial advisor who works for you. Ask friends, employers and other professionals whom they work with. Start learning the basics. In his book Outliers: The Story of Success (Back Bay Books, 2011), Malcolm Gladwell says that to become an expert in any venture requires an estimated 10,000 hours of effort and practice. It doesn't matter if we are talking athletics, music or finances. We don't have 10,000 hours to spare. That's why you need to identify advisors who have invested the time. It is their job to know and to help you understand.

11. Invest in experiences rather than things. Studies demonstrate that buying a new item is only fleetingly rewarding. Experiences, on the other hand, can be enjoyed, relived and shared. The shine may never wear off.

12. Count on the support of family and friends. This comes from my old friend Don Dooley. If you are married, make every effort to stay married. Divorce carries incalculable emotional costs, and the financial ramifications can be crippling.

Is there any assurance in life that you will be rich? No. Wealth depends on a number of factors, including where you start, good fortune, the choices you make and the choices you have already made. Some people have a huge head start in life. Born on third base, they believe they have hit a triple. Maybe you start off with a bunt! The point is to get on base.

Dr. Michael Paul, @mikepauldvm on Twitter, is a nationally known speaker and columnist and the principal of Magpie Veterinary Consulting. He lives in Anguilla in the British West Indies.

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