Zach Loppnow is a 29-year-old veterinarian who works with horses. He lives with his wife in Minnesota. We asked him how he budgets.
What makes budgeting as a veterinarian different?
The starting salary for most veterinarians is $60,000 to $80,000 a year, Loppnow said.
"Which is not a bad salary, but far below what most other graduate school professionals get," Loppnow said.
Low salaries and graduate educations can combine to form high debt-to-income ratios that make it difficult to set aside money for anything other than necessities. Unlike other medical professions, who get paid by health insurance companies, veterinarians are dependent on the disposable income of their patients. (Learn how a 50/30/20 budget can help you afford the necessities.)
"As much as we want to believe that people take care of their pets, if the choice is between taking your kid to the hospital or taking your dog to the hospital, you're going to take your kid," Loppnow said.
Veterinarians often struggle during recessions as a result, Loppnow said.
What does it cost to become a veterinarian?
Aside from tuition, veterinarians must pay regularly to renew their licensing fees. In Minnesota, the renewal fee is $200 every two years.
Many vets also belong to professional associations, which collect dues. In addition, veterinarians are required to undergo continuing education to remain certified, Loppnow said.
"My practice takes care of my dues and continuing education and my relicensure, which is nice," Loppnow said. "My continuing education, up to a certain amount they'll reimburse. Anything beyond that is on my own dime. I haven't run into a situation where I need to go more than that yet, but that's certainly a possibility down the road."
What insurance do veterinarians have?
Loppnow's clinic pays for liability insurance and 80% of his health insurance policy. Loppnow bought his own disability and life insurance policies.
"I work in a profession where bodily injury is a very real danger," Loppnow said.
Working with horses, as Loppnow does, is particularly dangerous.
"These are creatures that can certainly cause some damage and set you back for some time, if not potentially kill you," he said. "So disability and life insurance for me was basically a no-brainer decision."
Loppnow wanted to protect his income with disability insurance in case he was injured. He also wanted to protect his wife and family with life insurance if he died.
"I wanted to make sure the people around me were protected just as much as I was," Loppnow said.
What tools do you use to budget?
Loppnow was part of a student group at the University of Minnesota called the Veterinary Business Management Association, which provided business education programming to veterinary students. The association provided a budgeting tool that helped Loppnow understand fixed costs like rent, utilities and insurance.
Since then, Loppnow has graduated to using a basic budgeting spreadsheet.
What debt do you have & how do you manage it?
"I was one of the fortunate ones coming out of school," Loppnow said. "I only had about $90,000 in debt. That put me on the lower end of student debt loads."
However, even with a relatively "low" debt load, Loppnow would not have been able to manage a standard 10-year repayment plan while making ends meet. So Loppnow is paying off his loans using an income-based repayment plan.
Under the plan, 10% of Loppnow's salary goes toward his student loans. That lowers what he owes every month.
Loppnow expects to pay off his student loan debt in about 14 years.
Aside from student loan debt, Loppnow and his wife are in the process of taking out a mortgage on a $250,000 house.
"That'll be a $1,400 a month payment, which doesn't represent a huge jump from the rent I'm currently paying, which is nice," Loppnow said.
Loppnow made sacrifices to get the mortgage.
"You're cutting back on going out and spending on fast food or nights out or entertainment," Loppnow said.
Loppnow and his wife put any extra money, like from their wedding, towards a savings fund for their house.
"It's a process of saving in little spots and then making sure when you get the chance to save big chunks, you take advantage of it," he said.
Loppnow has no other debt.
"We drive used cars that we paid cash for as personal vehicles because we didn't want to take on an auto loan," Loppnow said.
Are you a spender or a saver?
"When it comes to small things, probably a spender," Loppnow said.
For bigger purchases, Loppnow waits a long time to make a decision to make sure he's getting the best value.
Last year, Loppnow got a bonus for his work at the clinic.
"And the question was, do I put that toward my loans or do I try to save that for a house or something else that could potentially come up down the road?" Loppnow said.
Loppnow ultimately decided to save it, even though his recently opened online savings account earns a lower interest rate (2%) than what he owes on his student loans (about 6%). But he wanted to have an emergency savings fund with at least three months rent.
Who influenced the way you think about money?
"A lot of influence was from my parents, who had always been good at budgeting and planning for purchases," Loppnow said. "I grew up on a farm so money was always a consideration. They really instilled in me a strong belief in planning for things and making sure that I'm not overspending."
Money news + money moves = The Easy Money Newsletter. Sign up today.
Image: Phillip Blackowl