This past weekend was a busy one in the Financial Panther household. My wife finally completed the last year of her dental residency and we had family come into town to celebrate the milestone. I even flew my mom in for the weekend (using points that I’ve accumulated over the past year, of course).
My wife’s graduation caps off eight years of post-college schooling. To break that down, that’s four years of dental school, one year of a general practice residency, and three years of her specialty dental residency. Combine that with the five years she took to complete her undergraduate education (she went the super-senior route in college), and that’s thirteen years of advanced schooling that my wife completed.
Thirteen years of schooling, including eight years of post-college schooling, is far longer than normal to be working on your education. And unlike medical residencies in which residents are paid a salary, dental residencies are generally unpaid. In fact, most dental residencies – like the one my wife just completed – make you pay tuition during residency! As a practical matter, what all this means is that my wife (who is now in her 30s) has never earned a real income and has been siphoning money to educate herself all of these years.
The next stage of our life will be an interesting one, as my wife is in the middle of buying a dental practice and hopefully will start to earn a real income one day. Things will change a lot in the amounts we can hopefully save (as well as the debts that we’ll be paying).
Today’s post, however, isn’t about my wife’s future income. It’s about what she gave up to do her residency. What we can conclude is that her residency wasn’t cheap. Some fairly simple math tells us that the three extra years she took to become a specialist cost her just about half-a-million dollars.
How Does A Dental Residency Cost $500,000?
So how exactly does a residency cost $500,000? It all comes down to two things that cost her money: (1) the direct costs she had to pay to do her residency; and (2) the indirect costs that came with pursuing her residency.
Let’s start with direct costs, which are easy to calculate. Most people are surprised to find out that dental residents not only aren’t paid a salary but are also required to pay tuition (crazy, I know!). My wife’s residency program wasn’t cheap either. I pulled up her tuition bills and this is what each year of her residency cost:
- First Year = $20,131
- Second Year = $24,162
- Third Year = $24,848
That’s $69,141 in total tuition we’ve paid over the last three years. Yikes! Luckily, due to our unique circumstances, we were able to cash flow her tuition via a combination of my wife’s savings and my own savings. Most people aren’t in that situation and will rely on taking out additional student loans to get them through their residency years. Still, even though we were able to avoid taking out extra student loans, that’s close to $70,000 over those three years that we could have saved away.
The direct costs are easy enough to see, but it’s the indirect costs that really make her residency an expensive venture. As any economist (or personal finance enthusiast) will tell you, choices don’t happen in a vacuum – if you do one thing, you have to think about what you could have done with that time and money instead. In this case, rather than doing her residency, my wife could have spent the past three years working as a general dentist.
This is what we call opportunity cost. At the outset, calculating opportunity cost isn’t easy. There are so many factors that come into play – stuff like what she could have made, what she could have made in the future by starting her career off sooner, money she could have made by investing during this time, and countless other things that go into this calculation. For simplicity’s sake (since it still gets the point across), we’ll just look at what she could have made during her residency years.
A general dentist can make a pretty solid salary. My wife also completed a GPR (general practice residency), which likely means that she would have commanded a higher salary as a general dentist. The median dental salary according to the Department of Bureau and Labor Statistics is about $158,000 per year. I don’t think it’s unreasonable to think that my wife could have averaged $140,000 to $150,000 per year as a general dentist.
Add three years of potential earnings, plus the close to $70,000 of tuition that we paid over those three years, and that’s somewhere around $500,000 that my wife either spent or didn’t make to complete her residency.
Oof, that is expensive.
Was It Worth It?
Well, this remains to be seen. Obviously, there’s one way to know if it was worth it. If becoming a specialist means that my wife makes more than it ultimately cost her to complete her residency, then it looks like she made the right choice by specializing.
In theory, her specialty should mean a higher lifetime income, so hopefully, from a purely monetary standpoint, we recoup the return on her investment over time. The one tough thing about dentistry is the lack of transparency when it comes to income. Unlike law or medicine, where salaries seem to be easier to figure out (especially true in law), most dentists are essentially running their own small business, which means that salaries are all over the place. What one dentist earns may be completely different from what another dentist earns doing the same thing.
Money aside though, we have to remember another thing.
Money Isn’t The Sole Reason We Do Things
One mistake I think a lot of personal finance people make is assuming that everything we do has to be dictated by a monetary return. Breaking things down by monetary return makes sense of course – money’s the main driver for a lot of the things we do, and it’s an easy way to quantify our activities.
Still, as much as we all like to break things down into dollars and cents here in the personal finance world, not everything can be broken down that cleanly. If the money you made was the only thing that mattered, none of us would be teachers or legal aid attorneys or anything that doesn’t pay us the most we can make. For most of us, there’s more that goes into a career than just what we earn.
My wife wanted to do her specialty, not because of the financial benefits, but because it’s something she wanted to do professionally. I don’t think either of us understood the real costs at the time, but honestly, even if we did understand the costs, my wife probably still would have pursued her residency. It’s a career goal she had, and it’s one that she’s now finally starting for real.
The next few years are going to be an exciting ride as my wife moves from student to full-fledged small business owner. We’re in (hopefully) the final stages of my wife’s purchase of a practice. And I think that, over our lifetime, we make back everything it cost for my wife to get to where she is now. An effective cost of $500,000 to specialize and get through her residency certainly isn’t cheap! But we’ll see how things turn out.
Update (2/5/21)
It’s been almost three years since I wrote this post and at this point, my wife has been a dental specialist and has owned her own practice for almost three years. Since that time, we’ve had a baby, my wife hired another specialist to work with her, and I quit my job as a lawyer to also work for myself as a writer and blogger.
So how have things turned out? So far, the choice to specialize has worked out well. We’re making money, we’re saving money, and we’re still doing whatever we can to reach financial independence sooner, rather than later.
I’ve had people email me after finding this post asking whether specializing is worth the direct and indirect costs. In my opinion, yes. This is especially true if you’re at all interested in owning your own practice, which I think most dentists should consider.
Ultimately, life seems short – and maybe it is. But it’s also long too. I used this post to look at opportunity cost from a monetary standpoint. But there’s an opportunity cost in opting not to go for something you want to do also. If specializing is something you think will make you happy and you have a good reason to do it, then I would probably go for it.
As for how to think about your finances, stick to the basics. Spend less than you earn. Save as much as you can afford to. Stay humble. Work hard. It’s really that simple if you’re someone that found this post.
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Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $250 if you complete a direct deposit.
- DCU. Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $100 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a savings account that gives you 6.17% interest on your first $1,000.
- Novo Bank. Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. It’s the business checking account I currently use for this blog.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $10 for opening an account.
- Personal Capital. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
ouch! 500k is a lot of steam. i agree with you about it not being all about the money, though. you would still be in a corporate office if that were the case and my lawyer buddy would still be defending rotten insurance companies and having his soul rotted from the inside out. i’ll bet you feel like kings and queens in your house once all cash flows the other direction to the black side of the ledger. congrat’s.
Heck yeah – I’ve got a feeling things will be looking pretty good for us soon!
Congratulations to you two! I totally agree that not everything we do is about money, life is more about having dreams and working towards achieving them. Money/ job are just means to achieve them. And that’s the whole point of being financially independent right, that we get to do what we want to do.
I do generally appreciate the hard work and time people in the medical line. I and my wife are working on a similar plan, she wants to pursue her PhD and i want her to work towards her dream, lets see if it all works out!
Thanks Ashish! Exactly right. Opportunity cost is a tough thing to calculate. You can put the money figure down, then figure out what you need to break even. But really, only you can decide when you’ve broken even.
Congratulations to your wife! Can we expect to follow her own blog on the process of setting up and running a business? I’d be a loyal reader; im in the same boat myself!
That’s awesome you’re starting your own business. My wife would never do a blog – not her style at all, but I’ll be chronicling things as we go through them here on this blog. It’ll be an interesting process for sure.
I think we forget about opportunity costs with so many financial decisions. Sure, the car “only” costs $30,000, but area you losing $30,000 of investing opportunity that could grow and compound over a lifetime by buying that car? Then again, enhanced earning power can rapidly make up for those costs in your wife’s case, especially if you guys have the frugal habits in place to make sure you’re saving and investing a ton. Congrats on making it to the end of what sounds like a long journey!!
Thanks Laurie! Hopefully it pays off, but even if not, I think we’ll be fine!
I have been contemplating this very subject recently with my desire to go back and get my MBA Financial Management. We are 100% debt free, and enjoy being able to essentially invest our entire salaries into the market, and save for our starter home. What keeps stopping me from doing it is that I don’t want to sign up for +$50,000 of debt and dig back out of it. It wouldn’t be the most difficult thing in the world, but we are so close to some of our original personal finance goals, that going back to get the degree would be a little selfish on my part. Maybe in a couple more years when our original goals are completed, we will revisit the idea again. It will all work out perfectly if my company just agrees to foot the bill;)
Great article and thanks for sharing!
Thanks Sean! Anyway to cash flow the degree? If so, that’s one solution. I’d probably not want to go back into debt either after digging out of it.
I’m really happy for you both and congratulations to your wife for her hard work! This is a topic that I’ve struggled with for a long time. Especially for financial bloggers that grew up poor, I think it is more difficult to make that shift to seeing money as more than a safety blanket. I think I’ve had at least 5 different “careers or specialties” and that has cost me a bit. If you can truly specialize and you’re happy doing that, then I think you can grow your income substantially. Best of luck. It will be fun to follow along as you guys add some gasoline to the FIRE you’ve built so far.
Thanks Jim! We’re still early in our FIRE journey, but the future is bright.
Congrats to your wife, that is an amazing accomplishment! I love how you mentioned that people in this FIRE community get too wrapped up in money. Sometimes you do things simply because you want to do it even if it means spending more money. Investing in yourself is huge! Good luck on purchasing the practice. Being a small business owner myself, its a whole LOT of work, but it is worth every second.
Thanks Mrs. Wow! She’ll be joining the ranks of female business owners like you. The dental world has a pretty low number of female practice owners, so it’ll be nice that she can break through and hopefully set an example for the future.
That was a great read and definitely hit home. I am a physician and had a massive opportunity cost when after finishing 2 years of surgery residency I decided to switch and go into radiology. I ended up losing a year (didnt get credit for it) and that was a significant opportunity cost. I wrote about it in my “I’ve made ever mistake in the book” series. I used the starting year salary of an attending as the opportunity cost which is a lot lower than the true opportunity cost which is you lost a year of your final salary (which is typically much higher than first starting out)
Thanks! Definitely expensive for you to make that switch, but money can’t be the only reason we do everything. If it worked for you and you didn’t go broke doing it or ruin your future, I think you made the right choice for you!
Congratulations to your wife! That’s amazing she’s already buying her first practice. Huge step! My wife has contemplated residency but the time and money (more debt!) always weighs heavily. Ultimately, your wife made the best decision by specializing in what she’s passionate about. Not only do I believe will she recoup the costs, but I also believe she will be likely to practice longer in a specialty she enjoys. Looking forward to learning more about starting your own business together.
Thanks Doc! It’ll be an interesting ride – we’re still figuring things out as we go along and we definitely won’t be doing everything right. If you ever have questions about residency, let me know. Happy to share what we’ve learned along the way.
Damn, you’re wife is a machine. Everyone must be proud, especially herself.
I’m still floored that dentists in the US don’t make money until 30!
With 13 years is an insane amount time and effort to reach her ultimate goal; I would honestly like to hear more about it.
Your wife is definitely delayed gratification personified.
(? I’ll go back to lurking now.)
Definitely proud of her for sure! Her situation is unique because she chose to specialize. A general dentist can start dental school at 22, graduate at 26, and start working right then. It’s when you want to become an orthodontist, oral surgeon, endodontist, periodontist, etc that it starts tacking on years and no pay (except for oral surgeon, they basically just do a regular, medical residency).
Seems like this is a topic worth discussing more, because it’s true, it is unique to literally not earn any legitimate income until you’re over 30.
And no need to lurk in the shadows – there’s plenty of room for everyone!
Wow, had no idea this was so expensive!
This weekend we attended the graduation of one of our cousin. Graduating from 4-year regular college. Now will be going in to 4-year dental school. Then specialization ….oof. I’m going to send this post out.
Make sure they know what they’re getting into! Dentistry is still a good medical career (much better than vet or chiropractor, which essentially cannot earn enough to pay back their student loans. Starting out 300k to 500k in the hole with student loans is a daunting task.
Go Ms. FP! I did the opportunity cost analysis when I decided to go from a paralegal to pursuing my JD. I don’t remember the exact projections, but it was basically a wash unless I made equity partner. For me, the deciding factor was that I wanted to practice law (I’ll wait while you finish laughing at me). Four years into practice, still a few years away from finishing the climb out of that law school debt (this is now my top priority), and I can still say that I feel that I made the right choice. Best wishes that Ms. FP’s journey is as rewarding as mine has been, although hopefully with a few less bumps.
It’s crazy the opportunity cost to do a residency program. I plan to retire earlier than most from dentistry. Because of this I do not want to do a residency because I don’t want to make my time as a dentist more valuable. The more valuable it is, the more tempted I am to continue working, the more tempting it is to work longer hours. I want to build an automated business and work to have associates doing the brunt of the dentistry in my practice, not myself. When you specialize you almost force yourself to work longer because your time in the chair is more valuable. Thanks for the article! I wrote a similar article on my blog about whether or not to start investing while a medical/dental student and if you do, what kind of investing should you do.
I’ve been learning so much about the business of dentistry over the past few months and listening to a ton of podcast (dentistry uncensored, dentalpreneur). It’s really interesting that you can basically do that, basically run dental offices but not necessarily have to do all the work yourself. I’ll definitely be checking out your blog. I always like hearing from dentists, since it’s a totally different medical field compared to physicians, pharmacists, vets, etc. Dental is basically the only medical field left where people run their own businesses.
Congrats! I agree that we should always follow our passion. Everything in our life is not about money! Yes we need money but not all the time money can be used. The more we follow our passion the more money that will attract.
Nice article. My fiance is in a similar situation right now. I’m interested to talk to you to know about your experiences and knowledge. Is there an email address to communicate?
You can email me at kevin@financialpanther.com
Hi Kevin,
I am wondering what is your standpoint and your wife’s now after about 2 years since the article was posted. I am in the middle of making a big decision regarding such predicament and I would love to learn your insight! Thanks in advance.
Hey Daniel. We’re very happy with it. My wife’s been out two years now and we’re very comfortable.
My thought – if you can specialize, I think you should do it. I listen to a lot of Dental Town podcast and Dr. Farran seems to think the same thing generally.