Beth Braverman

The death of a patient comes with many challenges for physicians, including a range of emotional and professional issues. Beyond those concerns, some physicians and their practices must also consider how to collect on any outstanding bill that might go unpaid after a patient’s death.

“When a patient passes away, obviously there is, unfortunately, a lot of paperwork and stress for families, and it’s a very difficult situation,” says Shikha Jain, MD, an oncologist and associate professor of medicine at the University of Illinois at Chicago. “Talking about finances in that moment can be difficult and uncomfortable, and one thing I’d recommend is that the physicians themselves not get involved.”

Instead, Dr. Jain said, someone in the billing department in the practice or the hospital should take a lead on dealing with any outstanding debts.

“That doctor-patient relationship is a very precious relationship, so you don’t want to mix that financial aspect of providing care with the doctor-patient relationship,” Dr. Jain said. “That’s one thing that’s really important.”

The best approach in such situations is for practices to have a standing policy in place that dictates how to handle bills once a patient has died.

In most cases, the executor of the patient’s will must inform all creditors, including doctors, that the decedent has died, but sometimes there’s a delay.
 

Hoping the doctor’s office writes it off

“Even though the person in charge of the estate is supposed to contact the doctor’s office and let them know when a patient has passed, that doesn’t always happen,” says Hope Wen, head of billing at practice management platform Soundry Health. “It can be very challenging to track down that information, and sometimes they’re just crossing their fingers hoping that the doctor’s office will just write off the balance, which they often do.”

Some offices use a service that compares accounts receivable lists to Social Security death files and state records to identify deaths more quickly. Some physicians might also use a debt collection agency or an attorney who has experience collecting decedent debts and dealing with executors and probate courts.

Once the practice becomes aware that a patient has died, it can no longer send communications to the name and address on file, although it can continue to go through the billing process with the insurer for any bills incurred up to the date of the death.

At that point, the estate becomes responsible for the debt, and all communication must go to the executor of the estate (in some states, this might be called a personal representative). The office can reach out to any contacts on file to see if they are able to identify the executor.

“You want to do that in a compassionate way,” says Jack Brown III, JD, MBA, president of Gulf Coast Collection Bureau. “You’ll tell them you’re sorry for their loss, but you’re wondering who is responsible for the estate. Once you’ve identified that person and gotten their letter of administration from the probate court or a power of attorney, then you can speak with that person as if they were the patient.”

The names of executors are also public record and are available through the probate court (sometimes called the surrogate court) in the county where the decedent lived.

“Even if there’s no will or no executive named, the court will appoint an administrator for the estate, which is usually a family member,” said Robert Bernstein, an estate lawyer in Parsippany, N.J. “Their information will be on file in the court.”
 

Insurance coverage

Typically, insurance will pay for treatment (after deductibles and copays) up until the date of the patient’s death. But, of course, it can take months for some insurance companies to make their final payments, allowing physicians to know exactly how much they’re owed by that estate. In such cases, it’s important for physicians to know the rules in the decedent’s state for how long they have to file a claim.

Most states require that claims occur within 6-9 months of the person’s death. However, in some states, claimants can continue to file for much longer if the estate has not yet paid out all of its assets.

“Sometimes there is real estate to sell or a business to wind down, and it can take years for the estate to distribute all of the assets,” Mr. Bernstein says. “If it’s a year later and they still haven’t distributed the assets, the physician can still file the claim and should be paid.”

In some cases, especially if the decedent received compassionate, quality care, their family will want to make good on any outstanding debts to the health care providers who took care of their loved ones in their final days. In other cases, especially when a family member has had a long illness, their assets have been depleted over time or were transferred to other family members so that there is little left in the estate itself when the patient dies.

Regardless of other circumstances, the estate alone is responsible for such payments, and family members, including spouses and children, typically have no liability. (Though rarely enforced, some states do have filial responsibility laws that could hold children responsible for their parents’ debts, including unpaid medical bills. In addition, states with community property laws might require a surviving spouse to cover their partner’s debt, even after death.)

The probate process varies from state to state, but in general, the probate system and the executor will gather all existing assets and then notify all creditors about how to submit a claim. Typically, the claim will need to include information about how much is owed and documentation, such as bills and an explanation of benefits to back up the claim. It should be borne in mind that even those who’ve passed away have privacy protections under the Health Insurance Portability and Accountability Act, so practices must be careful as to how much information they’re sharing through their claim.

Once the estate has received all the claims, the executor will follow a priority of claims, starting with secured creditors. Typically, medical bills, especially those incurred in the last 90 days of the decedent’s life, have priority in the probate process, Mr. Brown says.
 

How to minimize losses

In that case, the practice would write off the unpaid debt as a business loss. If there are not enough assets in the estate to pay all claims, the executor will follow a state schedule that apportions those assets that are available.

There are some steps that practices can take to protect themselves from incurring such losses. For example, before beginning treatment, practices might consider asking patients to name a guarantor, who will essentially promise to cover any outstanding debts that the patient incurs.

To be binding, the office will need a signature from both the patient and the guarantor. Some offices may also keep a patient credit card number on file with written authorization that they can use to pay bills that are past due, although this payment method would no longer be valid after a patient dies.

While it’s important for all physicians to document and verify the financial information for their patients, oncologists often must consider an additional layer of fiduciary responsibility when it comes to their patients. Ms. Wen suggests that oncology offices check in with insurance companies to determine whether a patient has exhausted their benefits.

“That can happen with cancer patients, depending on how long they’ve been receiving treatment and what type of treatment they’ve been getting,” she said. “Some of the clinical trials, insurance will pay for them, but they’re really expensive and can get toward that max. So knowing where they are with their insurance coverage is big.”

When time is of the essence, some patients will choose to go forward with a treatment before receiving insurance approval. In those cases, the office must have an additional conversation in which the costs of the treatment are discussed. The office should obtain written confirmation of who will pay if the insurer does not, Ms. Wen said. While it’s the patient’s responsibility to keep track of their insurance benefits, oncology practices and hospitals must also exercise due diligence in monitoring the benefits that are available.

“That’s part of their contract with insurance companies if they’re in network, helping patients understand their benefits,” Ms. Wen saids.

It’s also important for practices to keep clear, consistent records to make it easier to identify outstanding bills and the correct contact information for them. If bills had gone unpaid prior to a patient’s death and the office started legal action and received a judgment, that claim would typically go ahead of other creditors’ claims.

Dr. Jain says that some practices might also consider keeping a financial adviser or social worker on staff who can assist patients and their families with understanding their out-of-pocket costs for treatment.

“Financial toxicity in oncology and medical care is a very real problem,” she says. “At the beginning of the relationship, I recommend that my patients get set up with a financial specialist that can help them navigate that aspect, not only when a patient passes away but during the process of receiving treatment, so they’re not shocked by the bills.”

A version of this article first appeared on Medscape.com.

The death of a patient comes with many challenges for physicians, including a range of emotional and professional issues. Beyond those concerns, some physicians and their practices must also consider how to collect on any outstanding bill that might go unpaid after a patient’s death.

“When a patient passes away, obviously there is, unfortunately, a lot of paperwork and stress for families, and it’s a very difficult situation,” says Shikha Jain, MD, an oncologist and associate professor of medicine at the University of Illinois at Chicago. “Talking about finances in that moment can be difficult and uncomfortable, and one thing I’d recommend is that the physicians themselves not get involved.”

Instead, Dr. Jain said, someone in the billing department in the practice or the hospital should take a lead on dealing with any outstanding debts.

“That doctor-patient relationship is a very precious relationship, so you don’t want to mix that financial aspect of providing care with the doctor-patient relationship,” Dr. Jain said. “That’s one thing that’s really important.”

The best approach in such situations is for practices to have a standing policy in place that dictates how to handle bills once a patient has died.

In most cases, the executor of the patient’s will must inform all creditors, including doctors, that the decedent has died, but sometimes there’s a delay.
 

Hoping the doctor’s office writes it off

“Even though the person in charge of the estate is supposed to contact the doctor’s office and let them know when a patient has passed, that doesn’t always happen,” says Hope Wen, head of billing at practice management platform Soundry Health. “It can be very challenging to track down that information, and sometimes they’re just crossing their fingers hoping that the doctor’s office will just write off the balance, which they often do.”

Some offices use a service that compares accounts receivable lists to Social Security death files and state records to identify deaths more quickly. Some physicians might also use a debt collection agency or an attorney who has experience collecting decedent debts and dealing with executors and probate courts.

Once the practice becomes aware that a patient has died, it can no longer send communications to the name and address on file, although it can continue to go through the billing process with the insurer for any bills incurred up to the date of the death.

At that point, the estate becomes responsible for the debt, and all communication must go to the executor of the estate (in some states, this might be called a personal representative). The office can reach out to any contacts on file to see if they are able to identify the executor.

“You want to do that in a compassionate way,” says Jack Brown III, JD, MBA, president of Gulf Coast Collection Bureau. “You’ll tell them you’re sorry for their loss, but you’re wondering who is responsible for the estate. Once you’ve identified that person and gotten their letter of administration from the probate court or a power of attorney, then you can speak with that person as if they were the patient.”

The names of executors are also public record and are available through the probate court (sometimes called the surrogate court) in the county where the decedent lived.

“Even if there’s no will or no executive named, the court will appoint an administrator for the estate, which is usually a family member,” said Robert Bernstein, an estate lawyer in Parsippany, N.J. “Their information will be on file in the court.”
 

Insurance coverage

Typically, insurance will pay for treatment (after deductibles and copays) up until the date of the patient’s death. But, of course, it can take months for some insurance companies to make their final payments, allowing physicians to know exactly how much they’re owed by that estate. In such cases, it’s important for physicians to know the rules in the decedent’s state for how long they have to file a claim.

Most states require that claims occur within 6-9 months of the person’s death. However, in some states, claimants can continue to file for much longer if the estate has not yet paid out all of its assets.

“Sometimes there is real estate to sell or a business to wind down, and it can take years for the estate to distribute all of the assets,” Mr. Bernstein says. “If it’s a year later and they still haven’t distributed the assets, the physician can still file the claim and should be paid.”

In some cases, especially if the decedent received compassionate, quality care, their family will want to make good on any outstanding debts to the health care providers who took care of their loved ones in their final days. In other cases, especially when a family member has had a long illness, their assets have been depleted over time or were transferred to other family members so that there is little left in the estate itself when the patient dies.

Regardless of other circumstances, the estate alone is responsible for such payments, and family members, including spouses and children, typically have no liability. (Though rarely enforced, some states do have filial responsibility laws that could hold children responsible for their parents’ debts, including unpaid medical bills. In addition, states with community property laws might require a surviving spouse to cover their partner’s debt, even after death.)

The probate process varies from state to state, but in general, the probate system and the executor will gather all existing assets and then notify all creditors about how to submit a claim. Typically, the claim will need to include information about how much is owed and documentation, such as bills and an explanation of benefits to back up the claim. It should be borne in mind that even those who’ve passed away have privacy protections under the Health Insurance Portability and Accountability Act, so practices must be careful as to how much information they’re sharing through their claim.

Once the estate has received all the claims, the executor will follow a priority of claims, starting with secured creditors. Typically, medical bills, especially those incurred in the last 90 days of the decedent’s life, have priority in the probate process, Mr. Brown says.
 

How to minimize losses

In that case, the practice would write off the unpaid debt as a business loss. If there are not enough assets in the estate to pay all claims, the executor will follow a state schedule that apportions those assets that are available.

There are some steps that practices can take to protect themselves from incurring such losses. For example, before beginning treatment, practices might consider asking patients to name a guarantor, who will essentially promise to cover any outstanding debts that the patient incurs.

To be binding, the office will need a signature from both the patient and the guarantor. Some offices may also keep a patient credit card number on file with written authorization that they can use to pay bills that are past due, although this payment method would no longer be valid after a patient dies.

While it’s important for all physicians to document and verify the financial information for their patients, oncologists often must consider an additional layer of fiduciary responsibility when it comes to their patients. Ms. Wen suggests that oncology offices check in with insurance companies to determine whether a patient has exhausted their benefits.

“That can happen with cancer patients, depending on how long they’ve been receiving treatment and what type of treatment they’ve been getting,” she said. “Some of the clinical trials, insurance will pay for them, but they’re really expensive and can get toward that max. So knowing where they are with their insurance coverage is big.”

When time is of the essence, some patients will choose to go forward with a treatment before receiving insurance approval. In those cases, the office must have an additional conversation in which the costs of the treatment are discussed. The office should obtain written confirmation of who will pay if the insurer does not, Ms. Wen said. While it’s the patient’s responsibility to keep track of their insurance benefits, oncology practices and hospitals must also exercise due diligence in monitoring the benefits that are available.

“That’s part of their contract with insurance companies if they’re in network, helping patients understand their benefits,” Ms. Wen saids.

It’s also important for practices to keep clear, consistent records to make it easier to identify outstanding bills and the correct contact information for them. If bills had gone unpaid prior to a patient’s death and the office started legal action and received a judgment, that claim would typically go ahead of other creditors’ claims.

Dr. Jain says that some practices might also consider keeping a financial adviser or social worker on staff who can assist patients and their families with understanding their out-of-pocket costs for treatment.

“Financial toxicity in oncology and medical care is a very real problem,” she says. “At the beginning of the relationship, I recommend that my patients get set up with a financial specialist that can help them navigate that aspect, not only when a patient passes away but during the process of receiving treatment, so they’re not shocked by the bills.”

A version of this article first appeared on Medscape.com.

The death of a patient comes with many challenges for physicians, including a range of emotional and professional issues. Beyond those concerns, some physicians and their practices must also consider how to collect on any outstanding bill that might go unpaid after a patient’s death.

“When a patient passes away, obviously there is, unfortunately, a lot of paperwork and stress for families, and it’s a very difficult situation,” says Shikha Jain, MD, an oncologist and associate professor of medicine at the University of Illinois at Chicago. “Talking about finances in that moment can be difficult and uncomfortable, and one thing I’d recommend is that the physicians themselves not get involved.”

Instead, Dr. Jain said, someone in the billing department in the practice or the hospital should take a lead on dealing with any outstanding debts.

“That doctor-patient relationship is a very precious relationship, so you don’t want to mix that financial aspect of providing care with the doctor-patient relationship,” Dr. Jain said. “That’s one thing that’s really important.”

The best approach in such situations is for practices to have a standing policy in place that dictates how to handle bills once a patient has died.

In most cases, the executor of the patient’s will must inform all creditors, including doctors, that the decedent has died, but sometimes there’s a delay.
 

Hoping the doctor’s office writes it off

“Even though the person in charge of the estate is supposed to contact the doctor’s office and let them know when a patient has passed, that doesn’t always happen,” says Hope Wen, head of billing at practice management platform Soundry Health. “It can be very challenging to track down that information, and sometimes they’re just crossing their fingers hoping that the doctor’s office will just write off the balance, which they often do.”

Some offices use a service that compares accounts receivable lists to Social Security death files and state records to identify deaths more quickly. Some physicians might also use a debt collection agency or an attorney who has experience collecting decedent debts and dealing with executors and probate courts.

Once the practice becomes aware that a patient has died, it can no longer send communications to the name and address on file, although it can continue to go through the billing process with the insurer for any bills incurred up to the date of the death.

At that point, the estate becomes responsible for the debt, and all communication must go to the executor of the estate (in some states, this might be called a personal representative). The office can reach out to any contacts on file to see if they are able to identify the executor.

“You want to do that in a compassionate way,” says Jack Brown III, JD, MBA, president of Gulf Coast Collection Bureau. “You’ll tell them you’re sorry for their loss, but you’re wondering who is responsible for the estate. Once you’ve identified that person and gotten their letter of administration from the probate court or a power of attorney, then you can speak with that person as if they were the patient.”

The names of executors are also public record and are available through the probate court (sometimes called the surrogate court) in the county where the decedent lived.

“Even if there’s no will or no executive named, the court will appoint an administrator for the estate, which is usually a family member,” said Robert Bernstein, an estate lawyer in Parsippany, N.J. “Their information will be on file in the court.”
 

Insurance coverage

Typically, insurance will pay for treatment (after deductibles and copays) up until the date of the patient’s death. But, of course, it can take months for some insurance companies to make their final payments, allowing physicians to know exactly how much they’re owed by that estate. In such cases, it’s important for physicians to know the rules in the decedent’s state for how long they have to file a claim.

Most states require that claims occur within 6-9 months of the person’s death. However, in some states, claimants can continue to file for much longer if the estate has not yet paid out all of its assets.

“Sometimes there is real estate to sell or a business to wind down, and it can take years for the estate to distribute all of the assets,” Mr. Bernstein says. “If it’s a year later and they still haven’t distributed the assets, the physician can still file the claim and should be paid.”

In some cases, especially if the decedent received compassionate, quality care, their family will want to make good on any outstanding debts to the health care providers who took care of their loved ones in their final days. In other cases, especially when a family member has had a long illness, their assets have been depleted over time or were transferred to other family members so that there is little left in the estate itself when the patient dies.

Regardless of other circumstances, the estate alone is responsible for such payments, and family members, including spouses and children, typically have no liability. (Though rarely enforced, some states do have filial responsibility laws that could hold children responsible for their parents’ debts, including unpaid medical bills. In addition, states with community property laws might require a surviving spouse to cover their partner’s debt, even after death.)

The probate process varies from state to state, but in general, the probate system and the executor will gather all existing assets and then notify all creditors about how to submit a claim. Typically, the claim will need to include information about how much is owed and documentation, such as bills and an explanation of benefits to back up the claim. It should be borne in mind that even those who’ve passed away have privacy protections under the Health Insurance Portability and Accountability Act, so practices must be careful as to how much information they’re sharing through their claim.

Once the estate has received all the claims, the executor will follow a priority of claims, starting with secured creditors. Typically, medical bills, especially those incurred in the last 90 days of the decedent’s life, have priority in the probate process, Mr. Brown says.
 

How to minimize losses

In that case, the practice would write off the unpaid debt as a business loss. If there are not enough assets in the estate to pay all claims, the executor will follow a state schedule that apportions those assets that are available.

There are some steps that practices can take to protect themselves from incurring such losses. For example, before beginning treatment, practices might consider asking patients to name a guarantor, who will essentially promise to cover any outstanding debts that the patient incurs.

To be binding, the office will need a signature from both the patient and the guarantor. Some offices may also keep a patient credit card number on file with written authorization that they can use to pay bills that are past due, although this payment method would no longer be valid after a patient dies.

While it’s important for all physicians to document and verify the financial information for their patients, oncologists often must consider an additional layer of fiduciary responsibility when it comes to their patients. Ms. Wen suggests that oncology offices check in with insurance companies to determine whether a patient has exhausted their benefits.

“That can happen with cancer patients, depending on how long they’ve been receiving treatment and what type of treatment they’ve been getting,” she said. “Some of the clinical trials, insurance will pay for them, but they’re really expensive and can get toward that max. So knowing where they are with their insurance coverage is big.”

When time is of the essence, some patients will choose to go forward with a treatment before receiving insurance approval. In those cases, the office must have an additional conversation in which the costs of the treatment are discussed. The office should obtain written confirmation of who will pay if the insurer does not, Ms. Wen said. While it’s the patient’s responsibility to keep track of their insurance benefits, oncology practices and hospitals must also exercise due diligence in monitoring the benefits that are available.

“That’s part of their contract with insurance companies if they’re in network, helping patients understand their benefits,” Ms. Wen saids.

It’s also important for practices to keep clear, consistent records to make it easier to identify outstanding bills and the correct contact information for them. If bills had gone unpaid prior to a patient’s death and the office started legal action and received a judgment, that claim would typically go ahead of other creditors’ claims.

Dr. Jain says that some practices might also consider keeping a financial adviser or social worker on staff who can assist patients and their families with understanding their out-of-pocket costs for treatment.

“Financial toxicity in oncology and medical care is a very real problem,” she says. “At the beginning of the relationship, I recommend that my patients get set up with a financial specialist that can help them navigate that aspect, not only when a patient passes away but during the process of receiving treatment, so they’re not shocked by the bills.”

A version of this article first appeared on Medscape.com.

Plenty of perks come along with earning a physician’s salary, but a low tax rate isn’t among them. Medscape’s Physicians and Taxes Report 2023 shows that last year, doctors paid an average of nearly $100,000 in state and federal taxes, and three-quarters of them thought that they were paying too much to Uncle Sam. In most cases, it’s impossible to eliminate that tax bill, but physicians told us they have found ways to minimize it.

“The percentage you have to pay in taxes escalates as you earn more money, and most doctors are at the maximum rate,” says Paul Joseph, a certified public accountant and founder of Joseph & Joseph Tax & Payroll in Williamston, Mich. “So every dollar you can deduct from your income is worth more.”

Here’s a look at the seven top tax breaks physician respondents claimed in our tax report, so you can ensure you’re making the most of the tax strategies available to you. To claim most of these options, you’ll need to itemize your deductions when filing your taxes.
 

Contribute to charity

Claimed by 70% of physicians in 2022.

Who’s eligible: Anyone.

How it works: If you itemize your taxes, you can deduct the value of cash, securities, or property donations to 501(c)(3) organizations. You’ll need a receipt from the charity and a third-party appraisal for any property donations worth more than $5,000.

Pro tip: Donating stocks that have appreciated in value can deliver additional tax benefits: You get to write off both the value of the contribution and avoid capital gains taxes that you’d face for selling the security.
 

Contribute to a pre-tax 401(k) account

Claimed by 60% of physicians in 2022.

Who’s eligible: Those who work for a company that sponsors a 401(k) plan.

How it works: Contributions to a 401(k) or 403(b) account come directly out of your paycheck, pre-tax, and grow tax-free until you withdraw them in retirement. Many companies offer a match on contributions. In 2023, you can contribute up to $22,500 ($30,000 if you’re age 50 or older) to a 401(k) account.

Pro tip: If you’re maxing out your 401(k) account, you can stash money in other tax-advantaged accounts such as a health savings account (if you have a high-deductible health plan) or an individual retirement account (IRA). Although employees with access to a 401(k) may not get the pre-tax advantage of the IRA contributions, the money will grow tax-free through retirement, and you may have access to additional investment options unavailable in your workplace plan.

“You want to maximize your retirement contributions,” says Mark Steber, the chief tax information officer for Jackson Hewitt Tax Services. “If you’re not taking full advantage of them, you’re probably leaving some tax dollars on the table.”

If you’re self-employed and don’t have access to a workplace plan, there are several options for tax-advantaged retirement savings, including a SEP IRA and a solo 401(k).
 

Deduct interest on a home mortgage

Claimed by 52% of physicians.

Who’s eligible: Most homeowners who have a mortgage.

How it works: Homeowners can deduct the interest paid on the first $750,000 of their mortgage. (Those who have had the same mortgage since before December 16, 2007, can deduct interest on the first $1 million of their loan.)

Pro tip: If you purchased a home this year and bought points to reduce the rate, you may be able to deduct the cost of those points on your taxes.

Physicians might also be eligible for other home-related tax benefits, such as for green home improvements under the Inflation Reduction Act or for home equity loans used to improve the value of your home.
 

Write off eligible business expenses

Claimed by 46% of physicians.

Who’s eligible: Physicians who own all or a portion of their practice, as well as those who work as consultants or contractors paid with a 1099.

How it works: Doctors who run their business using an LLC or S corporation can itemize the deductions on their Schedule C. There are dozens of deductions that might qualify, including for office space and supplies, medical equipment, uniforms, staff wages and benefits, and state and local tax payments. Physicians who work as consultants can deduct home office expenses, travel costs, and the price of supplies purchased for the job.

“For business expenses, you want to make sure that you’re tracking those expenses on an ongoing basis, rather than trying to reconstruct something at the end of the year from 8 months ago,” Mr. Joseph says. “You want to have a system in place that’s calculating those expenses every single day.”

Pro tip: The Tax Cuts and Jobs Act of 2017 also allows owners of pass-through businesses to deduct up to 20% of their business income.

“Not all physicians will qualify for that, because they are in a service-based business and many of them make too much money, but it’s always a good idea to look at whether that’s something they’re eligible for and make sure that they claim it,” says Eric Bronnenkant, head of tax at New York–based investment company Betterment.
 

Contribute to a 529 college savings plan

Claimed by 27% of physicians.

Who’s eligible: Those who live in the 37 states that offer a credit or deduction for 529 plan contributions.

How it works: The rules and amounts that qualify vary significantly by state. Most states offer benefits for contributions to in-state accounts only, whereas others offer a tax break for contributions to any 529 account.

Although there is no federal income tax benefit for contributions to a 529 plan, the money grows tax-free until tapped for qualified education expenses, which include both private primary and high school tuition and college costs. Starting in 2024, up to $35,000 in unused funds can roll over into a Roth IRA for the beneficiary.

“It’s not just about the immediate deduction with a 529 account,” says Brian Copeland, partner and director of financial planning with Hightower Wealth Advisors in St. Louis. “It’s not saving you a lot on day one; it’s more about as that account grows, you don’t have to pay taxes on it along the way, so you’re sheltering it from taxes for the 18 years you’re saving for your kids’ college.”

Pro tip: Even if you live in a state without a state income tax or without a tax break for 529 contributions, opening an account can be a smart financial move. Because you don’t need to choose an in-state plan for the tax breaks, look for one that offers low fees and investment options that you like.
 

Sell investments at a loss

Claimed by 22% of physicians.

Who’s eligible: Anyone who has sold stocks, mutual funds, or other investments at a loss.

How it works: After selling a security that has lost value, you can deduct the value of that loss on your taxes to offset capital gains in the same year. If you have more losses than gains, you can use the losses to offset up to $3,000 in ordinary income per year. If you have more than $3,000 in losses, you can carry those losses forward to offset future income or capital gains.

Pro tip: In years with a lot of market volatility, such as this one, there’s potential to engage in “tax loss harvesting” in which you intentionally sell securities that have lost value to realize the losses for the tax benefits. Keep in mind that if you sell a security at a loss, you cannot repurchase the same security within 30 days – the IRS sees that as a “wash sale,” which does not qualify for a capital loss for tax purposes.
 

Contribute to a backdoor Roth IRA

Claimed by 20% of physicians.

Who’s eligible: Anyone who wishes to contribute to a Roth IRA but is not allowed to do so because their income is too high.

How it works: High earners typically don’t qualify for contributions to a Roth IRA, in which contributions go in after taxes but grow tax-free and distributions in retirement are also tax-free. But there are no income requirements for making after-tax contributions to a traditional and then converting it to a Roth IRA.

There are, however, complex tax rules for those who also have a traditional IRA that’s funded with pre-tax dollars. If that’s the case, work with a tax pro or financial advisor to determine whether a backdoor Roth conversion is the most tax-efficient approach for your situation.

Pro tip: A growing number of workplace retirement plans now include an option for Roth contributions. There are no income limits on a Roth 401(k), so contributing to that type of an account could be a smart route for taxpayers for whom a backdoor conversion doesn’t make sense.
 

A version of this article appeared on Medscape.com.

Plenty of perks come along with earning a physician’s salary, but a low tax rate isn’t among them. Medscape’s Physicians and Taxes Report 2023 shows that last year, doctors paid an average of nearly $100,000 in state and federal taxes, and three-quarters of them thought that they were paying too much to Uncle Sam. In most cases, it’s impossible to eliminate that tax bill, but physicians told us they have found ways to minimize it.

“The percentage you have to pay in taxes escalates as you earn more money, and most doctors are at the maximum rate,” says Paul Joseph, a certified public accountant and founder of Joseph & Joseph Tax & Payroll in Williamston, Mich. “So every dollar you can deduct from your income is worth more.”

Here’s a look at the seven top tax breaks physician respondents claimed in our tax report, so you can ensure you’re making the most of the tax strategies available to you. To claim most of these options, you’ll need to itemize your deductions when filing your taxes.
 

Contribute to charity

Claimed by 70% of physicians in 2022.

Who’s eligible: Anyone.

How it works: If you itemize your taxes, you can deduct the value of cash, securities, or property donations to 501(c)(3) organizations. You’ll need a receipt from the charity and a third-party appraisal for any property donations worth more than $5,000.

Pro tip: Donating stocks that have appreciated in value can deliver additional tax benefits: You get to write off both the value of the contribution and avoid capital gains taxes that you’d face for selling the security.
 

Contribute to a pre-tax 401(k) account

Claimed by 60% of physicians in 2022.

Who’s eligible: Those who work for a company that sponsors a 401(k) plan.

How it works: Contributions to a 401(k) or 403(b) account come directly out of your paycheck, pre-tax, and grow tax-free until you withdraw them in retirement. Many companies offer a match on contributions. In 2023, you can contribute up to $22,500 ($30,000 if you’re age 50 or older) to a 401(k) account.

Pro tip: If you’re maxing out your 401(k) account, you can stash money in other tax-advantaged accounts such as a health savings account (if you have a high-deductible health plan) or an individual retirement account (IRA). Although employees with access to a 401(k) may not get the pre-tax advantage of the IRA contributions, the money will grow tax-free through retirement, and you may have access to additional investment options unavailable in your workplace plan.

“You want to maximize your retirement contributions,” says Mark Steber, the chief tax information officer for Jackson Hewitt Tax Services. “If you’re not taking full advantage of them, you’re probably leaving some tax dollars on the table.”

If you’re self-employed and don’t have access to a workplace plan, there are several options for tax-advantaged retirement savings, including a SEP IRA and a solo 401(k).
 

Deduct interest on a home mortgage

Claimed by 52% of physicians.

Who’s eligible: Most homeowners who have a mortgage.

How it works: Homeowners can deduct the interest paid on the first $750,000 of their mortgage. (Those who have had the same mortgage since before December 16, 2007, can deduct interest on the first $1 million of their loan.)

Pro tip: If you purchased a home this year and bought points to reduce the rate, you may be able to deduct the cost of those points on your taxes.

Physicians might also be eligible for other home-related tax benefits, such as for green home improvements under the Inflation Reduction Act or for home equity loans used to improve the value of your home.
 

Write off eligible business expenses

Claimed by 46% of physicians.

Who’s eligible: Physicians who own all or a portion of their practice, as well as those who work as consultants or contractors paid with a 1099.

How it works: Doctors who run their business using an LLC or S corporation can itemize the deductions on their Schedule C. There are dozens of deductions that might qualify, including for office space and supplies, medical equipment, uniforms, staff wages and benefits, and state and local tax payments. Physicians who work as consultants can deduct home office expenses, travel costs, and the price of supplies purchased for the job.

“For business expenses, you want to make sure that you’re tracking those expenses on an ongoing basis, rather than trying to reconstruct something at the end of the year from 8 months ago,” Mr. Joseph says. “You want to have a system in place that’s calculating those expenses every single day.”

Pro tip: The Tax Cuts and Jobs Act of 2017 also allows owners of pass-through businesses to deduct up to 20% of their business income.

“Not all physicians will qualify for that, because they are in a service-based business and many of them make too much money, but it’s always a good idea to look at whether that’s something they’re eligible for and make sure that they claim it,” says Eric Bronnenkant, head of tax at New York–based investment company Betterment.
 

Contribute to a 529 college savings plan

Claimed by 27% of physicians.

Who’s eligible: Those who live in the 37 states that offer a credit or deduction for 529 plan contributions.

How it works: The rules and amounts that qualify vary significantly by state. Most states offer benefits for contributions to in-state accounts only, whereas others offer a tax break for contributions to any 529 account.

Although there is no federal income tax benefit for contributions to a 529 plan, the money grows tax-free until tapped for qualified education expenses, which include both private primary and high school tuition and college costs. Starting in 2024, up to $35,000 in unused funds can roll over into a Roth IRA for the beneficiary.

“It’s not just about the immediate deduction with a 529 account,” says Brian Copeland, partner and director of financial planning with Hightower Wealth Advisors in St. Louis. “It’s not saving you a lot on day one; it’s more about as that account grows, you don’t have to pay taxes on it along the way, so you’re sheltering it from taxes for the 18 years you’re saving for your kids’ college.”

Pro tip: Even if you live in a state without a state income tax or without a tax break for 529 contributions, opening an account can be a smart financial move. Because you don’t need to choose an in-state plan for the tax breaks, look for one that offers low fees and investment options that you like.
 

Sell investments at a loss

Claimed by 22% of physicians.

Who’s eligible: Anyone who has sold stocks, mutual funds, or other investments at a loss.

How it works: After selling a security that has lost value, you can deduct the value of that loss on your taxes to offset capital gains in the same year. If you have more losses than gains, you can use the losses to offset up to $3,000 in ordinary income per year. If you have more than $3,000 in losses, you can carry those losses forward to offset future income or capital gains.

Pro tip: In years with a lot of market volatility, such as this one, there’s potential to engage in “tax loss harvesting” in which you intentionally sell securities that have lost value to realize the losses for the tax benefits. Keep in mind that if you sell a security at a loss, you cannot repurchase the same security within 30 days – the IRS sees that as a “wash sale,” which does not qualify for a capital loss for tax purposes.
 

Contribute to a backdoor Roth IRA

Claimed by 20% of physicians.

Who’s eligible: Anyone who wishes to contribute to a Roth IRA but is not allowed to do so because their income is too high.

How it works: High earners typically don’t qualify for contributions to a Roth IRA, in which contributions go in after taxes but grow tax-free and distributions in retirement are also tax-free. But there are no income requirements for making after-tax contributions to a traditional and then converting it to a Roth IRA.

There are, however, complex tax rules for those who also have a traditional IRA that’s funded with pre-tax dollars. If that’s the case, work with a tax pro or financial advisor to determine whether a backdoor Roth conversion is the most tax-efficient approach for your situation.

Pro tip: A growing number of workplace retirement plans now include an option for Roth contributions. There are no income limits on a Roth 401(k), so contributing to that type of an account could be a smart route for taxpayers for whom a backdoor conversion doesn’t make sense.
 

A version of this article appeared on Medscape.com.

Plenty of perks come along with earning a physician’s salary, but a low tax rate isn’t among them. Medscape’s Physicians and Taxes Report 2023 shows that last year, doctors paid an average of nearly $100,000 in state and federal taxes, and three-quarters of them thought that they were paying too much to Uncle Sam. In most cases, it’s impossible to eliminate that tax bill, but physicians told us they have found ways to minimize it.

“The percentage you have to pay in taxes escalates as you earn more money, and most doctors are at the maximum rate,” says Paul Joseph, a certified public accountant and founder of Joseph & Joseph Tax & Payroll in Williamston, Mich. “So every dollar you can deduct from your income is worth more.”

Here’s a look at the seven top tax breaks physician respondents claimed in our tax report, so you can ensure you’re making the most of the tax strategies available to you. To claim most of these options, you’ll need to itemize your deductions when filing your taxes.
 

Contribute to charity

Claimed by 70% of physicians in 2022.

Who’s eligible: Anyone.

How it works: If you itemize your taxes, you can deduct the value of cash, securities, or property donations to 501(c)(3) organizations. You’ll need a receipt from the charity and a third-party appraisal for any property donations worth more than $5,000.

Pro tip: Donating stocks that have appreciated in value can deliver additional tax benefits: You get to write off both the value of the contribution and avoid capital gains taxes that you’d face for selling the security.
 

Contribute to a pre-tax 401(k) account

Claimed by 60% of physicians in 2022.

Who’s eligible: Those who work for a company that sponsors a 401(k) plan.

How it works: Contributions to a 401(k) or 403(b) account come directly out of your paycheck, pre-tax, and grow tax-free until you withdraw them in retirement. Many companies offer a match on contributions. In 2023, you can contribute up to $22,500 ($30,000 if you’re age 50 or older) to a 401(k) account.

Pro tip: If you’re maxing out your 401(k) account, you can stash money in other tax-advantaged accounts such as a health savings account (if you have a high-deductible health plan) or an individual retirement account (IRA). Although employees with access to a 401(k) may not get the pre-tax advantage of the IRA contributions, the money will grow tax-free through retirement, and you may have access to additional investment options unavailable in your workplace plan.

“You want to maximize your retirement contributions,” says Mark Steber, the chief tax information officer for Jackson Hewitt Tax Services. “If you’re not taking full advantage of them, you’re probably leaving some tax dollars on the table.”

If you’re self-employed and don’t have access to a workplace plan, there are several options for tax-advantaged retirement savings, including a SEP IRA and a solo 401(k).
 

Deduct interest on a home mortgage

Claimed by 52% of physicians.

Who’s eligible: Most homeowners who have a mortgage.

How it works: Homeowners can deduct the interest paid on the first $750,000 of their mortgage. (Those who have had the same mortgage since before December 16, 2007, can deduct interest on the first $1 million of their loan.)

Pro tip: If you purchased a home this year and bought points to reduce the rate, you may be able to deduct the cost of those points on your taxes.

Physicians might also be eligible for other home-related tax benefits, such as for green home improvements under the Inflation Reduction Act or for home equity loans used to improve the value of your home.
 

Write off eligible business expenses

Claimed by 46% of physicians.

Who’s eligible: Physicians who own all or a portion of their practice, as well as those who work as consultants or contractors paid with a 1099.

How it works: Doctors who run their business using an LLC or S corporation can itemize the deductions on their Schedule C. There are dozens of deductions that might qualify, including for office space and supplies, medical equipment, uniforms, staff wages and benefits, and state and local tax payments. Physicians who work as consultants can deduct home office expenses, travel costs, and the price of supplies purchased for the job.

“For business expenses, you want to make sure that you’re tracking those expenses on an ongoing basis, rather than trying to reconstruct something at the end of the year from 8 months ago,” Mr. Joseph says. “You want to have a system in place that’s calculating those expenses every single day.”

Pro tip: The Tax Cuts and Jobs Act of 2017 also allows owners of pass-through businesses to deduct up to 20% of their business income.

“Not all physicians will qualify for that, because they are in a service-based business and many of them make too much money, but it’s always a good idea to look at whether that’s something they’re eligible for and make sure that they claim it,” says Eric Bronnenkant, head of tax at New York–based investment company Betterment.
 

Contribute to a 529 college savings plan

Claimed by 27% of physicians.

Who’s eligible: Those who live in the 37 states that offer a credit or deduction for 529 plan contributions.

How it works: The rules and amounts that qualify vary significantly by state. Most states offer benefits for contributions to in-state accounts only, whereas others offer a tax break for contributions to any 529 account.

Although there is no federal income tax benefit for contributions to a 529 plan, the money grows tax-free until tapped for qualified education expenses, which include both private primary and high school tuition and college costs. Starting in 2024, up to $35,000 in unused funds can roll over into a Roth IRA for the beneficiary.

“It’s not just about the immediate deduction with a 529 account,” says Brian Copeland, partner and director of financial planning with Hightower Wealth Advisors in St. Louis. “It’s not saving you a lot on day one; it’s more about as that account grows, you don’t have to pay taxes on it along the way, so you’re sheltering it from taxes for the 18 years you’re saving for your kids’ college.”

Pro tip: Even if you live in a state without a state income tax or without a tax break for 529 contributions, opening an account can be a smart financial move. Because you don’t need to choose an in-state plan for the tax breaks, look for one that offers low fees and investment options that you like.
 

Sell investments at a loss

Claimed by 22% of physicians.

Who’s eligible: Anyone who has sold stocks, mutual funds, or other investments at a loss.

How it works: After selling a security that has lost value, you can deduct the value of that loss on your taxes to offset capital gains in the same year. If you have more losses than gains, you can use the losses to offset up to $3,000 in ordinary income per year. If you have more than $3,000 in losses, you can carry those losses forward to offset future income or capital gains.

Pro tip: In years with a lot of market volatility, such as this one, there’s potential to engage in “tax loss harvesting” in which you intentionally sell securities that have lost value to realize the losses for the tax benefits. Keep in mind that if you sell a security at a loss, you cannot repurchase the same security within 30 days – the IRS sees that as a “wash sale,” which does not qualify for a capital loss for tax purposes.
 

Contribute to a backdoor Roth IRA

Claimed by 20% of physicians.

Who’s eligible: Anyone who wishes to contribute to a Roth IRA but is not allowed to do so because their income is too high.

How it works: High earners typically don’t qualify for contributions to a Roth IRA, in which contributions go in after taxes but grow tax-free and distributions in retirement are also tax-free. But there are no income requirements for making after-tax contributions to a traditional and then converting it to a Roth IRA.

There are, however, complex tax rules for those who also have a traditional IRA that’s funded with pre-tax dollars. If that’s the case, work with a tax pro or financial advisor to determine whether a backdoor Roth conversion is the most tax-efficient approach for your situation.

Pro tip: A growing number of workplace retirement plans now include an option for Roth contributions. There are no income limits on a Roth 401(k), so contributing to that type of an account could be a smart route for taxpayers for whom a backdoor conversion doesn’t make sense.
 

A version of this article appeared on Medscape.com.

Earning a huge salary was never a top priority for Sarah Ramer, MD, a nephrologist at the James J. Peters Veterans Affairs Medical Center in New York. That was obvious even when she was still a medical student, since she opted for an extra academic year to get a masters degree in clinical research methods.

After doing a combined internal medicine/pediatric residency, Dr. Ramer completed two fellowships, one in adult nephrology and one in palliative care.

“Every extra year that you spend in training is another year you’re not making a salary as an attending, so by doing 7 years in residency and a fellowship, I was not building my net worth the way some physicians do,” she says.

When Dr. Ramer, now 41, was ready to enter the job market in 2019, she had two offers on the table – one at a large, urban, research-intense medical center that included some clinical work combined with research and that paid $105,000, and one as a clinical nephrologist at a smaller suburban medical center with a $230,000 salary and a $20,000 performance bonus.

She took the first job, because she liked the idea of being ensured of having time to perform research, and she hoped to qualify for a career development grant from the National Institutes of Health.

Over the next few months, Dr. Ramer was diagnosed with cancer and the pandemic began ravaging the country. She considered taking a leave of absence from her job, but since she had only recently started at the job, taking a medical leave would mean she’d get only 50% of her salary, which would have left her with just over $50,000 to cover her mortgage, student loans, and other expenses.

“Financially, it would have been disastrous for me to go on leave at that time,” she says. “Things happen, but that’s something I didn’t consider when I decided to take a very low-paying job.”

Dr. Ramer has completed cancer treatment and has moved on to her current role at the VA medical center, where she is earning less than she would have made at the suburban medical center but more than twice as much as she did at the urban research hospital.
 

Lifestyle trade-offs

While Dr. Ramer’s salary is nearly four times that of the average American worker, it’s only about 60% of what the average physician earns. That works for Dr. Ramer, who has never put much value in material possessions. She has lived in the same working-class New Jersey neighborhood for more than a decade and drives a 2010 Hyundai Elantra.

“I need a new kitchen and new bathrooms in my apartment,” she says. “I’m still working on that. I have a good cushion, but I need to build up my emergency fund before I start spending money on home renovations.”

Such trade-offs are common among physicians who’ve chosen to work in a rural area, at a Medicaid practice, or in public health. But physicians who find themselves on the lower end of the pay scale say that there are rewards and benefits to opting for less lucrative career trajectories.

For Sean Kissel, MD, 30, a family physician in northern Utah, it’s about the lifestyle afforded by his role, which has earned him between $190,000 and $230,000 over the past few years. “I have no on-call shifts,” he says. “So, when I’m done, I’m done. I don’t have to work weekends or holidays, and I have dinner with my kids every night.”

According to the 2022 Medscape physician compensation report, physicians earned an average of $339,000 annually last year. Primary care physicians took home an average of $260,000, compared with $368,000 for specialists. The disparity in physician income was even greater when broken down by specialty. Plastic surgeons earned the most ($576,000), and public health and preventive medicine physicians earned the least ($243,000).

Still, that study found that physician salaries were up across every specialty, ranging from a 1% increase for critical care physicians to a 13% jump for otolaryngologists.
 

Scaling back

While private-pay physicians tend to make more than peers who work in community or government health clinics, they may have to work longer hours or face pressure to see more patients, which can decrease the quality of care they provide.

A recent study, published in JAMA Health Forum, found that most health systems base physician pay on the number of patients seen. That’s the case for more than 80% of primary care physicians and more than 90% of specialists, according to the study.

Given that landscape, a growing number of physicians are opting for a “lifestyle” practice – accepting lower compensation in order to see a limited number of patients or work only a few days per week, says Stu Schaff, the founder and lead adviser of Contract Medicine, a consulting firm that helps physicians understand, evaluate, and negotiate their employment contracts. Mr. Schaff concedes that most of the doctors who fall into this category are winding down their careers or have a high-earning spouse with a salary that offsets their lower income.

Other physicians move into administrative roles within a hospital or health center. Such positions typically involve seeing fewer patients and may pay less, but they also have more traditional hours, which can be appealing, Mr. Schaff says.

“Those folks might still do patient care 1 or 2 days a week, or even less,” he says. “They’re still physicians. They’re still using their physician expertise, but they’re not practicing at the same level or generating the same level of income as they might in a full-time clinical position.”
 

Cost of living matters

Dr. Kissel says that while he may take home less than the typical physician, he still makes enough to comfortably cover his expenses, including his student loan payments. Still, when new acquaintances learn he’s a physician, they often assume he’s earning much more.

“People assume most of us make mid-$300,000’s or low $400,000’s, and that’s true for some family doctors, but not for all,” he notes. “I like what I do. I’m in a good place, and we are happy with our life.”

Plus, Dr. Kissel may benefit from living in Utah, where the lower cost of living may allow him to stretch his salary further. Although salaries are typically higher in the most expensive states in the United States, compared with states that have a lower cost of living, those higher salaries aren’t always enough to make up the difference.

A recent WalletHub analysis found that New York, California, and Massachusetts were among the states with the lowest average annual wage when adjusted for the cost of living, while South Dakota, Indiana, and Wisconsin had the highest average wage after the adjustment.

“Even if a physician is in a lower-paying specialty or location, they’re still well-paid relative to the average U.S. citizen,” Mr. Schaff says. “When we talk about specialties that pay less, we’re still talking – if you’re full-time – about a six-figure income.”
 

Location, location, location

To combat a provider shortage, rural health centers have been increasing the pay doctors receive. Nevertheless, many physicians are opting not to live in a community where they have no connection.

“I think there has to be a tie to the community for a physician to want to be here,” says Scott Crouch, chief executive officer at Ozarks Community Health Center, Bolivar, Missouri. “NHSC [National Health Service Corps] can help some, but it’s not the draw it once was.”

Physicians and dentists who interview at the Ozarks Community Health Center often like the facilities and the area but don’t want to live in a rustic locale. “Most medical schools are in bigger cities,” Mr. Crouch says. “So it’s hard to get them into a rural environment.”

In some cases, physicians opt to go the community health route but choose to work in a city, even if it means they’re going to earn less. That was the case for Kevin King, MD, 33, a general pediatrician at St. John’s Community Health Center, Los Angeles. Dr. King knew he wanted to work in a community health center after completing a residency at a Medicaid clinic.
 

A rewarding career

“I find my work very rewarding,” Dr. King says. “Working in Medicaid can be difficult, and there are many barriers to care. It’s a lot more work to get things done, but the rewards come from the patients.”

That said, Dr. King adds he wouldn’t have been able to take this job without access to a loan forgiveness program that helps him manage his student-loan debt. “Without that, I’d probably have to find work in a private-pay population, making more money,” he says. “Loan forgiveness allowed me to choose this career path.”

Dr. King says he earns between $150,000 and $200,000 annually. That’s significantly less than the $243,000 median pediatrician salary in Los Angeles, according to Salary.com. Still, Dr. King says he wouldn’t trade his job for a more lucrative one.

“In medicine, there are so many different career paths you can take after residency training,” he says. “Finding one that brings you joy in what you do every day is more valuable than any amount of money.”

A version of this article first appeared on Medscape.com.

Earning a huge salary was never a top priority for Sarah Ramer, MD, a nephrologist at the James J. Peters Veterans Affairs Medical Center in New York. That was obvious even when she was still a medical student, since she opted for an extra academic year to get a masters degree in clinical research methods.

After doing a combined internal medicine/pediatric residency, Dr. Ramer completed two fellowships, one in adult nephrology and one in palliative care.

“Every extra year that you spend in training is another year you’re not making a salary as an attending, so by doing 7 years in residency and a fellowship, I was not building my net worth the way some physicians do,” she says.

When Dr. Ramer, now 41, was ready to enter the job market in 2019, she had two offers on the table – one at a large, urban, research-intense medical center that included some clinical work combined with research and that paid $105,000, and one as a clinical nephrologist at a smaller suburban medical center with a $230,000 salary and a $20,000 performance bonus.

She took the first job, because she liked the idea of being ensured of having time to perform research, and she hoped to qualify for a career development grant from the National Institutes of Health.

Over the next few months, Dr. Ramer was diagnosed with cancer and the pandemic began ravaging the country. She considered taking a leave of absence from her job, but since she had only recently started at the job, taking a medical leave would mean she’d get only 50% of her salary, which would have left her with just over $50,000 to cover her mortgage, student loans, and other expenses.

“Financially, it would have been disastrous for me to go on leave at that time,” she says. “Things happen, but that’s something I didn’t consider when I decided to take a very low-paying job.”

Dr. Ramer has completed cancer treatment and has moved on to her current role at the VA medical center, where she is earning less than she would have made at the suburban medical center but more than twice as much as she did at the urban research hospital.
 

Lifestyle trade-offs

While Dr. Ramer’s salary is nearly four times that of the average American worker, it’s only about 60% of what the average physician earns. That works for Dr. Ramer, who has never put much value in material possessions. She has lived in the same working-class New Jersey neighborhood for more than a decade and drives a 2010 Hyundai Elantra.

“I need a new kitchen and new bathrooms in my apartment,” she says. “I’m still working on that. I have a good cushion, but I need to build up my emergency fund before I start spending money on home renovations.”

Such trade-offs are common among physicians who’ve chosen to work in a rural area, at a Medicaid practice, or in public health. But physicians who find themselves on the lower end of the pay scale say that there are rewards and benefits to opting for less lucrative career trajectories.

For Sean Kissel, MD, 30, a family physician in northern Utah, it’s about the lifestyle afforded by his role, which has earned him between $190,000 and $230,000 over the past few years. “I have no on-call shifts,” he says. “So, when I’m done, I’m done. I don’t have to work weekends or holidays, and I have dinner with my kids every night.”

According to the 2022 Medscape physician compensation report, physicians earned an average of $339,000 annually last year. Primary care physicians took home an average of $260,000, compared with $368,000 for specialists. The disparity in physician income was even greater when broken down by specialty. Plastic surgeons earned the most ($576,000), and public health and preventive medicine physicians earned the least ($243,000).

Still, that study found that physician salaries were up across every specialty, ranging from a 1% increase for critical care physicians to a 13% jump for otolaryngologists.
 

Scaling back

While private-pay physicians tend to make more than peers who work in community or government health clinics, they may have to work longer hours or face pressure to see more patients, which can decrease the quality of care they provide.

A recent study, published in JAMA Health Forum, found that most health systems base physician pay on the number of patients seen. That’s the case for more than 80% of primary care physicians and more than 90% of specialists, according to the study.

Given that landscape, a growing number of physicians are opting for a “lifestyle” practice – accepting lower compensation in order to see a limited number of patients or work only a few days per week, says Stu Schaff, the founder and lead adviser of Contract Medicine, a consulting firm that helps physicians understand, evaluate, and negotiate their employment contracts. Mr. Schaff concedes that most of the doctors who fall into this category are winding down their careers or have a high-earning spouse with a salary that offsets their lower income.

Other physicians move into administrative roles within a hospital or health center. Such positions typically involve seeing fewer patients and may pay less, but they also have more traditional hours, which can be appealing, Mr. Schaff says.

“Those folks might still do patient care 1 or 2 days a week, or even less,” he says. “They’re still physicians. They’re still using their physician expertise, but they’re not practicing at the same level or generating the same level of income as they might in a full-time clinical position.”
 

Cost of living matters

Dr. Kissel says that while he may take home less than the typical physician, he still makes enough to comfortably cover his expenses, including his student loan payments. Still, when new acquaintances learn he’s a physician, they often assume he’s earning much more.

“People assume most of us make mid-$300,000’s or low $400,000’s, and that’s true for some family doctors, but not for all,” he notes. “I like what I do. I’m in a good place, and we are happy with our life.”

Plus, Dr. Kissel may benefit from living in Utah, where the lower cost of living may allow him to stretch his salary further. Although salaries are typically higher in the most expensive states in the United States, compared with states that have a lower cost of living, those higher salaries aren’t always enough to make up the difference.

A recent WalletHub analysis found that New York, California, and Massachusetts were among the states with the lowest average annual wage when adjusted for the cost of living, while South Dakota, Indiana, and Wisconsin had the highest average wage after the adjustment.

“Even if a physician is in a lower-paying specialty or location, they’re still well-paid relative to the average U.S. citizen,” Mr. Schaff says. “When we talk about specialties that pay less, we’re still talking – if you’re full-time – about a six-figure income.”
 

Location, location, location

To combat a provider shortage, rural health centers have been increasing the pay doctors receive. Nevertheless, many physicians are opting not to live in a community where they have no connection.

“I think there has to be a tie to the community for a physician to want to be here,” says Scott Crouch, chief executive officer at Ozarks Community Health Center, Bolivar, Missouri. “NHSC [National Health Service Corps] can help some, but it’s not the draw it once was.”

Physicians and dentists who interview at the Ozarks Community Health Center often like the facilities and the area but don’t want to live in a rustic locale. “Most medical schools are in bigger cities,” Mr. Crouch says. “So it’s hard to get them into a rural environment.”

In some cases, physicians opt to go the community health route but choose to work in a city, even if it means they’re going to earn less. That was the case for Kevin King, MD, 33, a general pediatrician at St. John’s Community Health Center, Los Angeles. Dr. King knew he wanted to work in a community health center after completing a residency at a Medicaid clinic.
 

A rewarding career

“I find my work very rewarding,” Dr. King says. “Working in Medicaid can be difficult, and there are many barriers to care. It’s a lot more work to get things done, but the rewards come from the patients.”

That said, Dr. King adds he wouldn’t have been able to take this job without access to a loan forgiveness program that helps him manage his student-loan debt. “Without that, I’d probably have to find work in a private-pay population, making more money,” he says. “Loan forgiveness allowed me to choose this career path.”

Dr. King says he earns between $150,000 and $200,000 annually. That’s significantly less than the $243,000 median pediatrician salary in Los Angeles, according to Salary.com. Still, Dr. King says he wouldn’t trade his job for a more lucrative one.

“In medicine, there are so many different career paths you can take after residency training,” he says. “Finding one that brings you joy in what you do every day is more valuable than any amount of money.”

A version of this article first appeared on Medscape.com.

Earning a huge salary was never a top priority for Sarah Ramer, MD, a nephrologist at the James J. Peters Veterans Affairs Medical Center in New York. That was obvious even when she was still a medical student, since she opted for an extra academic year to get a masters degree in clinical research methods.

After doing a combined internal medicine/pediatric residency, Dr. Ramer completed two fellowships, one in adult nephrology and one in palliative care.

“Every extra year that you spend in training is another year you’re not making a salary as an attending, so by doing 7 years in residency and a fellowship, I was not building my net worth the way some physicians do,” she says.

When Dr. Ramer, now 41, was ready to enter the job market in 2019, she had two offers on the table – one at a large, urban, research-intense medical center that included some clinical work combined with research and that paid $105,000, and one as a clinical nephrologist at a smaller suburban medical center with a $230,000 salary and a $20,000 performance bonus.

She took the first job, because she liked the idea of being ensured of having time to perform research, and she hoped to qualify for a career development grant from the National Institutes of Health.

Over the next few months, Dr. Ramer was diagnosed with cancer and the pandemic began ravaging the country. She considered taking a leave of absence from her job, but since she had only recently started at the job, taking a medical leave would mean she’d get only 50% of her salary, which would have left her with just over $50,000 to cover her mortgage, student loans, and other expenses.

“Financially, it would have been disastrous for me to go on leave at that time,” she says. “Things happen, but that’s something I didn’t consider when I decided to take a very low-paying job.”

Dr. Ramer has completed cancer treatment and has moved on to her current role at the VA medical center, where she is earning less than she would have made at the suburban medical center but more than twice as much as she did at the urban research hospital.
 

Lifestyle trade-offs

While Dr. Ramer’s salary is nearly four times that of the average American worker, it’s only about 60% of what the average physician earns. That works for Dr. Ramer, who has never put much value in material possessions. She has lived in the same working-class New Jersey neighborhood for more than a decade and drives a 2010 Hyundai Elantra.

“I need a new kitchen and new bathrooms in my apartment,” she says. “I’m still working on that. I have a good cushion, but I need to build up my emergency fund before I start spending money on home renovations.”

Such trade-offs are common among physicians who’ve chosen to work in a rural area, at a Medicaid practice, or in public health. But physicians who find themselves on the lower end of the pay scale say that there are rewards and benefits to opting for less lucrative career trajectories.

For Sean Kissel, MD, 30, a family physician in northern Utah, it’s about the lifestyle afforded by his role, which has earned him between $190,000 and $230,000 over the past few years. “I have no on-call shifts,” he says. “So, when I’m done, I’m done. I don’t have to work weekends or holidays, and I have dinner with my kids every night.”

According to the 2022 Medscape physician compensation report, physicians earned an average of $339,000 annually last year. Primary care physicians took home an average of $260,000, compared with $368,000 for specialists. The disparity in physician income was even greater when broken down by specialty. Plastic surgeons earned the most ($576,000), and public health and preventive medicine physicians earned the least ($243,000).

Still, that study found that physician salaries were up across every specialty, ranging from a 1% increase for critical care physicians to a 13% jump for otolaryngologists.
 

Scaling back

While private-pay physicians tend to make more than peers who work in community or government health clinics, they may have to work longer hours or face pressure to see more patients, which can decrease the quality of care they provide.

A recent study, published in JAMA Health Forum, found that most health systems base physician pay on the number of patients seen. That’s the case for more than 80% of primary care physicians and more than 90% of specialists, according to the study.

Given that landscape, a growing number of physicians are opting for a “lifestyle” practice – accepting lower compensation in order to see a limited number of patients or work only a few days per week, says Stu Schaff, the founder and lead adviser of Contract Medicine, a consulting firm that helps physicians understand, evaluate, and negotiate their employment contracts. Mr. Schaff concedes that most of the doctors who fall into this category are winding down their careers or have a high-earning spouse with a salary that offsets their lower income.

Other physicians move into administrative roles within a hospital or health center. Such positions typically involve seeing fewer patients and may pay less, but they also have more traditional hours, which can be appealing, Mr. Schaff says.

“Those folks might still do patient care 1 or 2 days a week, or even less,” he says. “They’re still physicians. They’re still using their physician expertise, but they’re not practicing at the same level or generating the same level of income as they might in a full-time clinical position.”
 

Cost of living matters

Dr. Kissel says that while he may take home less than the typical physician, he still makes enough to comfortably cover his expenses, including his student loan payments. Still, when new acquaintances learn he’s a physician, they often assume he’s earning much more.

“People assume most of us make mid-$300,000’s or low $400,000’s, and that’s true for some family doctors, but not for all,” he notes. “I like what I do. I’m in a good place, and we are happy with our life.”

Plus, Dr. Kissel may benefit from living in Utah, where the lower cost of living may allow him to stretch his salary further. Although salaries are typically higher in the most expensive states in the United States, compared with states that have a lower cost of living, those higher salaries aren’t always enough to make up the difference.

A recent WalletHub analysis found that New York, California, and Massachusetts were among the states with the lowest average annual wage when adjusted for the cost of living, while South Dakota, Indiana, and Wisconsin had the highest average wage after the adjustment.

“Even if a physician is in a lower-paying specialty or location, they’re still well-paid relative to the average U.S. citizen,” Mr. Schaff says. “When we talk about specialties that pay less, we’re still talking – if you’re full-time – about a six-figure income.”
 

Location, location, location

To combat a provider shortage, rural health centers have been increasing the pay doctors receive. Nevertheless, many physicians are opting not to live in a community where they have no connection.

“I think there has to be a tie to the community for a physician to want to be here,” says Scott Crouch, chief executive officer at Ozarks Community Health Center, Bolivar, Missouri. “NHSC [National Health Service Corps] can help some, but it’s not the draw it once was.”

Physicians and dentists who interview at the Ozarks Community Health Center often like the facilities and the area but don’t want to live in a rustic locale. “Most medical schools are in bigger cities,” Mr. Crouch says. “So it’s hard to get them into a rural environment.”

In some cases, physicians opt to go the community health route but choose to work in a city, even if it means they’re going to earn less. That was the case for Kevin King, MD, 33, a general pediatrician at St. John’s Community Health Center, Los Angeles. Dr. King knew he wanted to work in a community health center after completing a residency at a Medicaid clinic.
 

A rewarding career

“I find my work very rewarding,” Dr. King says. “Working in Medicaid can be difficult, and there are many barriers to care. It’s a lot more work to get things done, but the rewards come from the patients.”

That said, Dr. King adds he wouldn’t have been able to take this job without access to a loan forgiveness program that helps him manage his student-loan debt. “Without that, I’d probably have to find work in a private-pay population, making more money,” he says. “Loan forgiveness allowed me to choose this career path.”

Dr. King says he earns between $150,000 and $200,000 annually. That’s significantly less than the $243,000 median pediatrician salary in Los Angeles, according to Salary.com. Still, Dr. King says he wouldn’t trade his job for a more lucrative one.

“In medicine, there are so many different career paths you can take after residency training,” he says. “Finding one that brings you joy in what you do every day is more valuable than any amount of money.”

A version of this article first appeared on Medscape.com.

After more than a decade of moving because of medical school, residencies, and international fellowships, Abhi Kole, MD, PhD, is ready to put down roots. But he’s learning that buying a house in today’s housing market is easier said than done.

In the past 6 months, Dr. Kole, an internist at Grady Hospital in Atlanta, put in offers on three houses. None resulted in a purchase. Dr. Kole says he’s learned how to be more competitive with each subsequent offer, starting out with a bid significantly above the asking price and waiving his right to an appraisal or financing contingencies.

The experience has been surprising and disappointing.

“I knew the market was bad when I started looking and that home prices had gone up,” Dr. Kole says. “What I didn’t realize was that it would still be so hard for me. I have a good job, no debt, and great credit.”

Another frustration for Dr. Kole: He’s been approved for a physician’s loan (a type of mortgage that requires a lower down payment and does not count student loans in debt-to-income calculations) from a national bank, but sellers seem to prefer buyers who work with local lenders. Dr. Kole has been willing to waive the appraisal and mortgage contingency on the right home, but he draws the line at waiving the inspection, a trend that some other buyers in his area are going along with.

“With each house, I learn more about how this works and what amount of risk I can safely assume,” Dr. Kobe says. “There are certain things I definitely wouldn’t give up.”

Dr. Kole’s experience mirrors that of millions of other would-be homebuyers navigating a strong seller’s market.

“Potential homebuyers are really facing a triple threat right now,” says Clare Losey, an assistant research economist with the Texas Real Estate Research Center. “There’s high home appreciation, high mortgage rates, and low inventory of homes for sale.”

It’s still possible to find — and buy — your dream home, even in today’s market with all its challenges. Here are some important steps that can help you.
 

1. Do not low ball.

There may be some cases in which you can save money by making an offer significantly below the asking price on a property. However, with most housing areas across the country experiencing a seller’s market, you run the risk of offending the buyer or being dismissed as not having a serious offer.

In today’s market, a better strategy is to go in with close to your best and final offer from the start, realtors say. It can help to waive the appraisal or financing contingency as well, although it’s important to understand the risk associated with doing so. Last month, the average home sold for 103% of the list price, according to data compiled from Statista.
 

2. Get credit ready.

The better your credit, the easier time you’ll have getting a mortgage — and the lower the rate you’ll pay for the loan. The average first-time homebuyer has a credit score of 746, according to a recent paper by Fannie Mae. If you know you’re going to buy a home in the next few months, you can improve your credit by making sure to pay all your bills on time and by avoiding taking on any new debt.

This is also a good opportunity to check your credit report (get all three reports for free from AnnualCreditReport.com) to see whether there are any mistakes or other problems that you’ll need to clear up before applying for a loan. Also, take a look at your credit-utilization ratio (the amount of credit you use compared to the amount available to you). Experts recommend keeping this number below 30%.
 

3. Prepare to move quickly.

Among homes that closed in March, the average number of days on the market (the amount of time between listing and closing) was just 38 days, according to Realtor.com. In busy markets, homes are moving even faster, realtors say, with sellers commonly accepting offers within days of listing their house for sale.

“It’s crazy,” says Sarah Scattini, president of the Reno/Sparks Association of Realtors. “The market is moving extremely fast here. If you list your home, your sale is pending within 5 days.”

In addition to moving quickly to make your initial offer, do the same if a buyer counters with a negotiation. A speedy response will show the buyer that you’re very interested — and to beat out any other bidders who may have also received a counteroffer.
 

4. Shop around for mortgages.

Especially for first-time homebuyers, the process will go much more smoothly if you’ve got a team of professionals to help you. Look for a realtor and a mortgage lender who have experience working with first-time homebuyers and with physicians, if possible.

Since mortgage rates can vary wildly, you’ll want to shop around a bit before settling on a lender. Get quotes from a local lender, an online lender, and, potentially, a credit union or a mortgage broker to get a sense of the types of mortgages and rates available to you.

“With multiple offers on every single listing, you really want to align yourself with a great realtor who can negotiate for you on your behalf and navigate you through this very tricky market,” says Ms. Scattini.

For both your realtor and your lender, you’ll want to know up front how they get paid and how they calculate their fees. Typically, the real estate agents for buyers and sellers split a 6% commission on home sales, meaning that your realtor will likely take home 3% of the purchase price.
 

5. Get preapproved.

Once you’ve settled on a lender, getting preapproved for a mortgage can make your offer more appealing to potential buyers. Preapproval is an in-depth process in which lenders pull your credit and look at other financial factors, such as your income and assets, to tell you ahead of time how much you could borrow under their standards and how much that might cost you.

These days, a large number of buyers are coming in with a cash offer, which in former times was considered very appealing to sellers. However, preapproval helps equalize buyers, and as one seller noted, “I don’t care if it’s cash or mortgage, as long as I get the money.”

If, like most homebuyers, you need a mortgage to finance the purchase, having preapproval can provide some assurance to sellers that your offer won’t fall through because you can’t qualify for the mortgage you expected. Once you’ve received preapproval, don’t open any new credit accounts. If your credit score goes down, the amount you can borrow could decline as well.
 

6. Firm up your budget.

While the preapproval process will tell you how much a lender thinks you can afford, it typically makes sense to come up with your own budget as well. That’s because banks and other mortgage lenders may approve you for much more than you want or are able to pay for a home.

You’ll want to factor in future costs of homeowners as well as any other (current or future) expenses for which the lender may not have accounted. For example, if you’re planning to have children soon, you may want to lower your budget to factor in the cost of childcare.

Knowing your budget ahead of time, and looking only at houses that fall within it, will prevent you from falling in love with a house that you really can’t afford.
 

7. Stick with it.

Buying a house in today’s market is no easy task. The first part of the process requires simply looking at multiple houses to get a sense of how far your budget will go and whether there are homes that meet your requirements.

If you’re sure that purchasing a home is the best financial move for you, don’t give up. Instead, consider whether you can make adjustments that could widen your pool of potential homes. That may mean changing your budget, moving a little further out geographically, or opting for a house that needs a little more work than you expected.

That said, while the pace of price increases will likely moderate, it’s unlikely prices will go down significantly in the future.

“We might see home price appreciation subside to levels close to 10% to 15% [from 20% last year] or even just 5% to 10%,” Ms. Losey says. “When you do the math, home prices just can’t continue to go up 20% year over year.”

Dr. Kobe is planning to keep looking for his home for at least the next several months.

“Prices are still going up, but we are hearing that the inventory will increase over the summer,” he says. “I’m still out looking for the right house, and I’m ready to make an offer.”

A version of this article first appeared on Medscape.com.

After more than a decade of moving because of medical school, residencies, and international fellowships, Abhi Kole, MD, PhD, is ready to put down roots. But he’s learning that buying a house in today’s housing market is easier said than done.

In the past 6 months, Dr. Kole, an internist at Grady Hospital in Atlanta, put in offers on three houses. None resulted in a purchase. Dr. Kole says he’s learned how to be more competitive with each subsequent offer, starting out with a bid significantly above the asking price and waiving his right to an appraisal or financing contingencies.

The experience has been surprising and disappointing.

“I knew the market was bad when I started looking and that home prices had gone up,” Dr. Kole says. “What I didn’t realize was that it would still be so hard for me. I have a good job, no debt, and great credit.”

Another frustration for Dr. Kole: He’s been approved for a physician’s loan (a type of mortgage that requires a lower down payment and does not count student loans in debt-to-income calculations) from a national bank, but sellers seem to prefer buyers who work with local lenders. Dr. Kole has been willing to waive the appraisal and mortgage contingency on the right home, but he draws the line at waiving the inspection, a trend that some other buyers in his area are going along with.

“With each house, I learn more about how this works and what amount of risk I can safely assume,” Dr. Kobe says. “There are certain things I definitely wouldn’t give up.”

Dr. Kole’s experience mirrors that of millions of other would-be homebuyers navigating a strong seller’s market.

“Potential homebuyers are really facing a triple threat right now,” says Clare Losey, an assistant research economist with the Texas Real Estate Research Center. “There’s high home appreciation, high mortgage rates, and low inventory of homes for sale.”

It’s still possible to find — and buy — your dream home, even in today’s market with all its challenges. Here are some important steps that can help you.
 

1. Do not low ball.

There may be some cases in which you can save money by making an offer significantly below the asking price on a property. However, with most housing areas across the country experiencing a seller’s market, you run the risk of offending the buyer or being dismissed as not having a serious offer.

In today’s market, a better strategy is to go in with close to your best and final offer from the start, realtors say. It can help to waive the appraisal or financing contingency as well, although it’s important to understand the risk associated with doing so. Last month, the average home sold for 103% of the list price, according to data compiled from Statista.
 

2. Get credit ready.

The better your credit, the easier time you’ll have getting a mortgage — and the lower the rate you’ll pay for the loan. The average first-time homebuyer has a credit score of 746, according to a recent paper by Fannie Mae. If you know you’re going to buy a home in the next few months, you can improve your credit by making sure to pay all your bills on time and by avoiding taking on any new debt.

This is also a good opportunity to check your credit report (get all three reports for free from AnnualCreditReport.com) to see whether there are any mistakes or other problems that you’ll need to clear up before applying for a loan. Also, take a look at your credit-utilization ratio (the amount of credit you use compared to the amount available to you). Experts recommend keeping this number below 30%.
 

3. Prepare to move quickly.

Among homes that closed in March, the average number of days on the market (the amount of time between listing and closing) was just 38 days, according to Realtor.com. In busy markets, homes are moving even faster, realtors say, with sellers commonly accepting offers within days of listing their house for sale.

“It’s crazy,” says Sarah Scattini, president of the Reno/Sparks Association of Realtors. “The market is moving extremely fast here. If you list your home, your sale is pending within 5 days.”

In addition to moving quickly to make your initial offer, do the same if a buyer counters with a negotiation. A speedy response will show the buyer that you’re very interested — and to beat out any other bidders who may have also received a counteroffer.
 

4. Shop around for mortgages.

Especially for first-time homebuyers, the process will go much more smoothly if you’ve got a team of professionals to help you. Look for a realtor and a mortgage lender who have experience working with first-time homebuyers and with physicians, if possible.

Since mortgage rates can vary wildly, you’ll want to shop around a bit before settling on a lender. Get quotes from a local lender, an online lender, and, potentially, a credit union or a mortgage broker to get a sense of the types of mortgages and rates available to you.

“With multiple offers on every single listing, you really want to align yourself with a great realtor who can negotiate for you on your behalf and navigate you through this very tricky market,” says Ms. Scattini.

For both your realtor and your lender, you’ll want to know up front how they get paid and how they calculate their fees. Typically, the real estate agents for buyers and sellers split a 6% commission on home sales, meaning that your realtor will likely take home 3% of the purchase price.
 

5. Get preapproved.

Once you’ve settled on a lender, getting preapproved for a mortgage can make your offer more appealing to potential buyers. Preapproval is an in-depth process in which lenders pull your credit and look at other financial factors, such as your income and assets, to tell you ahead of time how much you could borrow under their standards and how much that might cost you.

These days, a large number of buyers are coming in with a cash offer, which in former times was considered very appealing to sellers. However, preapproval helps equalize buyers, and as one seller noted, “I don’t care if it’s cash or mortgage, as long as I get the money.”

If, like most homebuyers, you need a mortgage to finance the purchase, having preapproval can provide some assurance to sellers that your offer won’t fall through because you can’t qualify for the mortgage you expected. Once you’ve received preapproval, don’t open any new credit accounts. If your credit score goes down, the amount you can borrow could decline as well.
 

6. Firm up your budget.

While the preapproval process will tell you how much a lender thinks you can afford, it typically makes sense to come up with your own budget as well. That’s because banks and other mortgage lenders may approve you for much more than you want or are able to pay for a home.

You’ll want to factor in future costs of homeowners as well as any other (current or future) expenses for which the lender may not have accounted. For example, if you’re planning to have children soon, you may want to lower your budget to factor in the cost of childcare.

Knowing your budget ahead of time, and looking only at houses that fall within it, will prevent you from falling in love with a house that you really can’t afford.
 

7. Stick with it.

Buying a house in today’s market is no easy task. The first part of the process requires simply looking at multiple houses to get a sense of how far your budget will go and whether there are homes that meet your requirements.

If you’re sure that purchasing a home is the best financial move for you, don’t give up. Instead, consider whether you can make adjustments that could widen your pool of potential homes. That may mean changing your budget, moving a little further out geographically, or opting for a house that needs a little more work than you expected.

That said, while the pace of price increases will likely moderate, it’s unlikely prices will go down significantly in the future.

“We might see home price appreciation subside to levels close to 10% to 15% [from 20% last year] or even just 5% to 10%,” Ms. Losey says. “When you do the math, home prices just can’t continue to go up 20% year over year.”

Dr. Kobe is planning to keep looking for his home for at least the next several months.

“Prices are still going up, but we are hearing that the inventory will increase over the summer,” he says. “I’m still out looking for the right house, and I’m ready to make an offer.”

A version of this article first appeared on Medscape.com.

After more than a decade of moving because of medical school, residencies, and international fellowships, Abhi Kole, MD, PhD, is ready to put down roots. But he’s learning that buying a house in today’s housing market is easier said than done.

In the past 6 months, Dr. Kole, an internist at Grady Hospital in Atlanta, put in offers on three houses. None resulted in a purchase. Dr. Kole says he’s learned how to be more competitive with each subsequent offer, starting out with a bid significantly above the asking price and waiving his right to an appraisal or financing contingencies.

The experience has been surprising and disappointing.

“I knew the market was bad when I started looking and that home prices had gone up,” Dr. Kole says. “What I didn’t realize was that it would still be so hard for me. I have a good job, no debt, and great credit.”

Another frustration for Dr. Kole: He’s been approved for a physician’s loan (a type of mortgage that requires a lower down payment and does not count student loans in debt-to-income calculations) from a national bank, but sellers seem to prefer buyers who work with local lenders. Dr. Kole has been willing to waive the appraisal and mortgage contingency on the right home, but he draws the line at waiving the inspection, a trend that some other buyers in his area are going along with.

“With each house, I learn more about how this works and what amount of risk I can safely assume,” Dr. Kobe says. “There are certain things I definitely wouldn’t give up.”

Dr. Kole’s experience mirrors that of millions of other would-be homebuyers navigating a strong seller’s market.

“Potential homebuyers are really facing a triple threat right now,” says Clare Losey, an assistant research economist with the Texas Real Estate Research Center. “There’s high home appreciation, high mortgage rates, and low inventory of homes for sale.”

It’s still possible to find — and buy — your dream home, even in today’s market with all its challenges. Here are some important steps that can help you.
 

1. Do not low ball.

There may be some cases in which you can save money by making an offer significantly below the asking price on a property. However, with most housing areas across the country experiencing a seller’s market, you run the risk of offending the buyer or being dismissed as not having a serious offer.

In today’s market, a better strategy is to go in with close to your best and final offer from the start, realtors say. It can help to waive the appraisal or financing contingency as well, although it’s important to understand the risk associated with doing so. Last month, the average home sold for 103% of the list price, according to data compiled from Statista.
 

2. Get credit ready.

The better your credit, the easier time you’ll have getting a mortgage — and the lower the rate you’ll pay for the loan. The average first-time homebuyer has a credit score of 746, according to a recent paper by Fannie Mae. If you know you’re going to buy a home in the next few months, you can improve your credit by making sure to pay all your bills on time and by avoiding taking on any new debt.

This is also a good opportunity to check your credit report (get all three reports for free from AnnualCreditReport.com) to see whether there are any mistakes or other problems that you’ll need to clear up before applying for a loan. Also, take a look at your credit-utilization ratio (the amount of credit you use compared to the amount available to you). Experts recommend keeping this number below 30%.
 

3. Prepare to move quickly.

Among homes that closed in March, the average number of days on the market (the amount of time between listing and closing) was just 38 days, according to Realtor.com. In busy markets, homes are moving even faster, realtors say, with sellers commonly accepting offers within days of listing their house for sale.

“It’s crazy,” says Sarah Scattini, president of the Reno/Sparks Association of Realtors. “The market is moving extremely fast here. If you list your home, your sale is pending within 5 days.”

In addition to moving quickly to make your initial offer, do the same if a buyer counters with a negotiation. A speedy response will show the buyer that you’re very interested — and to beat out any other bidders who may have also received a counteroffer.
 

4. Shop around for mortgages.

Especially for first-time homebuyers, the process will go much more smoothly if you’ve got a team of professionals to help you. Look for a realtor and a mortgage lender who have experience working with first-time homebuyers and with physicians, if possible.

Since mortgage rates can vary wildly, you’ll want to shop around a bit before settling on a lender. Get quotes from a local lender, an online lender, and, potentially, a credit union or a mortgage broker to get a sense of the types of mortgages and rates available to you.

“With multiple offers on every single listing, you really want to align yourself with a great realtor who can negotiate for you on your behalf and navigate you through this very tricky market,” says Ms. Scattini.

For both your realtor and your lender, you’ll want to know up front how they get paid and how they calculate their fees. Typically, the real estate agents for buyers and sellers split a 6% commission on home sales, meaning that your realtor will likely take home 3% of the purchase price.
 

5. Get preapproved.

Once you’ve settled on a lender, getting preapproved for a mortgage can make your offer more appealing to potential buyers. Preapproval is an in-depth process in which lenders pull your credit and look at other financial factors, such as your income and assets, to tell you ahead of time how much you could borrow under their standards and how much that might cost you.

These days, a large number of buyers are coming in with a cash offer, which in former times was considered very appealing to sellers. However, preapproval helps equalize buyers, and as one seller noted, “I don’t care if it’s cash or mortgage, as long as I get the money.”

If, like most homebuyers, you need a mortgage to finance the purchase, having preapproval can provide some assurance to sellers that your offer won’t fall through because you can’t qualify for the mortgage you expected. Once you’ve received preapproval, don’t open any new credit accounts. If your credit score goes down, the amount you can borrow could decline as well.
 

6. Firm up your budget.

While the preapproval process will tell you how much a lender thinks you can afford, it typically makes sense to come up with your own budget as well. That’s because banks and other mortgage lenders may approve you for much more than you want or are able to pay for a home.

You’ll want to factor in future costs of homeowners as well as any other (current or future) expenses for which the lender may not have accounted. For example, if you’re planning to have children soon, you may want to lower your budget to factor in the cost of childcare.

Knowing your budget ahead of time, and looking only at houses that fall within it, will prevent you from falling in love with a house that you really can’t afford.
 

7. Stick with it.

Buying a house in today’s market is no easy task. The first part of the process requires simply looking at multiple houses to get a sense of how far your budget will go and whether there are homes that meet your requirements.

If you’re sure that purchasing a home is the best financial move for you, don’t give up. Instead, consider whether you can make adjustments that could widen your pool of potential homes. That may mean changing your budget, moving a little further out geographically, or opting for a house that needs a little more work than you expected.

That said, while the pace of price increases will likely moderate, it’s unlikely prices will go down significantly in the future.

“We might see home price appreciation subside to levels close to 10% to 15% [from 20% last year] or even just 5% to 10%,” Ms. Losey says. “When you do the math, home prices just can’t continue to go up 20% year over year.”

Dr. Kobe is planning to keep looking for his home for at least the next several months.

“Prices are still going up, but we are hearing that the inventory will increase over the summer,” he says. “I’m still out looking for the right house, and I’m ready to make an offer.”

A version of this article first appeared on Medscape.com.

As the COVID-19 crisis pandemic continues, many physicians are not only battling the medical challenges it has wrought but they’re also dealing with its financial ramifications at home.

“Some of our physician clients have seen their income decrease by as much as 50%,” says Joel Greenwald, MD, CEO of Greenwald Wealth Management in St. Louis Park, Minnesota. “Many physicians had previously figured that whatever financial obligations they had wouldn’t be a problem because whatever amount they were making would continue, and if there were a decline it would be gradual.” However, assumption is now creating financial strain for many doctors.

Vikram Tarugu, MD, a gastroenterologist and CEO of Detox of South Florida in Okeechobee, Florida, says he has watched his budget for years, but has become even more careful with his spending in the past few months.

“It has helped me a lot to adjust to the new normal when it comes to the financial side of things,” Dr. Tarugu said. “Patients aren’t coming in as much as they used to, so my income has really been affected.”

Primary care physicians have seen a 55% decrease in revenue and a 20%-30% decrease in patient volume as a result of COVID-19. The impact has been even more severe for specialists. Even for physicians whose practices remain busy and whose family members haven’t lost their jobs or income, broader concerns about the economy may be reason enough for physicians to adopt cost-cutting measures.

In Medscape’s Physician Compensation Report 2020, we asked physicians to share their best cost-cutting tips. Many illustrate the lengths to which physicians are going to conserve money.  

Here’s a look at some of the advice they shared, along with guidance from experts on how to make it work for you:
 

1. Create a written budget, even if you think it’s pointless.

Physicians said their most important piece of advice includes the following: “Use a formal budget to track progress,” “write out a budget,” “plan intermittent/large expenses in advance,” “Make sure all expenses are paid before you spend on leisure.”

Nearly 7 in 10 physicians say they have a budget for personal expenses, yet only one-quarter of those who do have a formal, written budget. Writing out a spending plan is key to being intentional about your spending, making sure that you’re living within your means, and identifying areas in which you may be able to cut back.

“Financial planning is all about cash flow, and everybody should know the amount of money coming in, how much is going out, and the difference between the two,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “That’s important in good times, but it’s even more important now when we see physicians taking pay cuts.”

Many physicians have found that budget apps or software programs are easier to work with than anticipated; some even walk you through the process of creating a budget. To get the most out of the apps, you’ll need to check them regularly and make changes based on their data.

“Sometimes there’s this false belief that just by signing up, you are automatically going to be better at budgeting,” says Scott Snider, CFP, a certified financial planner and partner with Mellen Money Management in Ponte Vedra Beach, Florida. “Basically, these apps are a great way to identify problem areas of spending. We have a tendency as humans to underestimate how much we spend on things like Starbucks, dining out, and Amazon shopping.”

One of the doctors’ tips that requires the most willpower is to “pay all expenses before spending on leisure.” That’s because we live in an instant gratification world, and want everything right away, Ms. Guerich said.

“I also think there’s an element of ‘keeping up with the Joneses’ and pressure associated with this profession,” she said. “The stereotype is that physicians are high-income earners so ‘We should be able to do that’ or ‘Mom and dad are doctors, so they can afford it.’ “

Creating and then revisiting your budget progress on a monthly or quarterly basis can give you a feeling of accomplishment and keep you motivated to stay with it.  

Keep in mind that budgeting is a continual process rather than a singular event, and you’ll likely adjust it over time as your income and goals change. 
 

2. Save more as you earn more.

Respondents to our Physician Compensation Report gave the following recommendations: “Pay yourself first,” “I put half of my bonus into an investment account no matter how much it is,” “I allocate extra money and put it into a savings account.”

Dr. Greenwald said, “I have a rule that every client needs to be saving 20% of their gross income toward retirement, including whatever the employer is putting in.”

Putting a portion of every paycheck into savings is key to making progress toward financial goals. Start by building an emergency fund with at least 3-6 months’ worth of expenses in it and making sure you’re saving at least enough for retirement to get any potential employer match.

Mr. Snider suggests increasing the percentage you save every time you get a raise.

“The thought behind that strategy is that when a doctor receives a pay raise – even if it’s just a cost-of-living raise of 3% – an extra 1% saved doesn’t reduce their take-home pay year-over-year,” he says. “In fact, they still take home more money, and they save more money. Win-win.”
 

3. Focus on paying down your debt.

Physicians told us how they were working to pay down debt with the following recommendations:  “Accelerate debt reduction,” “I make additional principal payment to our home mortgage,” “We are aggressively attacking our remaining student loans.”

Reducing or eliminating debt is key to increasing cash flow, which can make it easier to meet all of your other financial goals. One-quarter of physicians have credit card debt, which typically carries interest rates higher than other types of debt, making it far more expensive. Focus on paying off such high-interest debt first, before moving on to other types of debt such as auto loans, student loans, or a mortgage.

“Credit card debt and any unsecured debt should be paid before anything else,” Mr. Snider says. “Getting rid of those high interest rates should be a priority. And that type of debt has less flexible terms than student debt.”
 

4. Great opportunity to take advantage of record-low interest rates.

Physicians said that, to save money, they are recommending the following: “Consolidating student debt into our mortgage,” “Accelerating payments of the principle on our mortgage,” “Making sure we have an affordable mortgage.”

With interest rates at an all-time low, even those who’ve recently refinanced might see significant savings by refinancing again. Given the associated fees, it typically makes sense to refinance if you can reduce your mortgage rate by at least a point, and you’re planning to stay in the home for at least 5 years.

“Depending on how much lower your rate is, refinancing can make a big difference in your monthly payments,” Ms. Guerich said. “For physicians who might need an emergency reserve but don’t have cash on hand, a HELOC [Home Equity Line of Credit] is a great way to accomplish that.”
 

5. Be wary of credit cards dangers; use cards wisely.

Physician respondents recommended the following:  “Use 0% interest offers on credit cards,” “Only have one card and pay it off every month,” “Never carry over balance.”

Nearly 80% of physicians have three or more credit cards, with 18% reporting that they have seven or more. When used wisely, credit cards can be an important tool for managing finances. Many credit cards come with tools that can help with budgeting, and credit cards rewards and perks can offer real value to users. That said, rewards typically are not valuable enough to offset the cost of interest on balances (or the associated damage to your credit score) that aren’t paid off each month.

“If you’re paying a high rate on credit card balances that carry over every month, regardless of your income, that could be a symptom that you may be spending more than you should,” says Dan Keady, a CFP and chief financial planning strategist at financial services firm TIAA.

6. Give less to Uncle Sam: Keep it for yourself.

Physicians said that they do the following: “Maximize tax-free/deferred savings (401k, HSA, etc.),” “Give to charity to reduce tax,” “Use pre-tax dollars for childcare and healthcare.”

Not only does saving in workplace retirement accounts help you build your nest egg, but it also reduces the amount that you have to pay in taxes in a given year. Physicians should also take advantage of other ways to reduce their income for tax purposes, such as saving money in a health savings account or flexible savings account.

The 401(k) or 403(b) contribution limit for this year is $19,500 ($26,000) for those age 50 years and older. Self-employed physicians can save even more money via a Simplified Employee Pension (SEP) IRA, says Ms. Guerich said. They can save up to 25% of compensation, up to $57,000 in 2020.
 

7. Automate everything and spare yourself the headache.

Physicians said the following: “Designate money from your paycheck directly to tax deferred and taxable accounts automatically,” “Use automatic payment for credit card balance monthly,” “Automate your savings.”

You probably already automate your 401(k) contributions, but you can also automate bill payments, emergency savings contributions and other financial tasks. For busy physicians, this can make it easier to stick to your financial plan and achieve your goals.

“The older you get, the busier you get, said Mr. Snider says. “Automation can definitely help with that. But make sure you are checking in quarterly to make sure that everything is still in line with your plan. The problem with automation is when you forget about it completely and just let everything sit there.”
 

8. Save separately for big purchases.

Sometimes it’s the big major expenses that can start to derail a budget. Physicians told us the following tactics for large purchases:  “We buy affordable cars and take budget vacations,” “I buy used cars,” “We save in advance for new cars and only buy cars with cash.”

The decision of which car to purchase or where to go on a family vacation is a personal one, and some physicians take great enjoyment and pride in driving a luxury vehicle or traveling to exotic locales. The key, experts say, is to factor the cost of that car into the rest of your budget, and make sure that it’s not preventing you from achieving other financial goals.

“I don’t like to judge or tell clients how they should spend their money,” said Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “Some people like cars, we have clients that have two planes, others want a second house or like to travel. Each person has their own interest where they may spend more relative to other people, but as long as they are meeting their savings targets, I encourage them to spend their money and enjoy what they enjoy most, guilt free.”

Mr. Snider suggests setting up a savings account separate from emergency or retirement accounts to set aside money if you have a goal for a large future purchase, such as a boat or a second home.

“That way, the funds don’t get commingled, and it’s explicitly clear whether or not the doctor is on target,” he says. “It also prevents them from treating their emergency savings account as an ATM machine.”
 

9. Start saving for college when the kids are little.  

Respondents said the following: “We are buying less to save for the kids’ college education,” “We set up direct deposit into college and retirement savings plans,” “We have a 529 account for college savings.”

Helping pay for their children’s college education is an important financial goal for many physicians. The earlier that you start saving, the less you’ll have to save overall, thanks to compound interest. State 529 accounts are often a good place to start, especially if your state offers a tax incentive for doing so.

Mr. Snider recommends that physicians start small, with an initial investment of $1,000 per month and $100 per month contributions. Assuming a 7% rate of return and 17 years’ worth of savings, this would generate just over $42,000. (Note, current typical rates of return are less than 7%).

“Ideally, as other goals are accomplished and personal debt gets paid off, the doctor is ramping up their savings to have at least 50% of college expenses covered from their 529 college savings,” he says.
 

10. Watch out for the temptation of impulse purchases.

Physicians said the following: “Avoid impulse purchases,” “Avoid impulse shopping, make a list for the store and stick to it,” “Wait to buy things on sale.”

Nothing wrecks a budget like an impulse buy. More than half (54%) of U.S. shoppers have admitted to spending $100 or more on an impulse purchase. And 20% of shoppers have spent at least $1,000 on an impulse buy. Avoid buyers’ remorse by waiting a few days to make large purchase decisions or by limiting your unplanned spending to a certain dollar amount within your budget.

Online shopping may be a particular temptation. Dr. Tarugu, the Florida gastroenterologist, has focused on reducing those impulse buys as well, deleting all online shopping apps from his and his family’s phones.

“You won’t notice how much you have ordered online until it arrives at your doorstep,” he said. “It’s really important to keep it at bay.”

Mr. Keady, the TIAA chief planning strategist, recommended this tactic: Calculate the number of patients (or hours) you’d need to see in order to earn the cash required to make the purchase.

“Then, in a mindful way, figure out the amount of value derived from the purchase,” he said.
 

A version of this article originally appeared on Medscape.com.

As the COVID-19 crisis pandemic continues, many physicians are not only battling the medical challenges it has wrought but they’re also dealing with its financial ramifications at home.

“Some of our physician clients have seen their income decrease by as much as 50%,” says Joel Greenwald, MD, CEO of Greenwald Wealth Management in St. Louis Park, Minnesota. “Many physicians had previously figured that whatever financial obligations they had wouldn’t be a problem because whatever amount they were making would continue, and if there were a decline it would be gradual.” However, assumption is now creating financial strain for many doctors.

Vikram Tarugu, MD, a gastroenterologist and CEO of Detox of South Florida in Okeechobee, Florida, says he has watched his budget for years, but has become even more careful with his spending in the past few months.

“It has helped me a lot to adjust to the new normal when it comes to the financial side of things,” Dr. Tarugu said. “Patients aren’t coming in as much as they used to, so my income has really been affected.”

Primary care physicians have seen a 55% decrease in revenue and a 20%-30% decrease in patient volume as a result of COVID-19. The impact has been even more severe for specialists. Even for physicians whose practices remain busy and whose family members haven’t lost their jobs or income, broader concerns about the economy may be reason enough for physicians to adopt cost-cutting measures.

In Medscape’s Physician Compensation Report 2020, we asked physicians to share their best cost-cutting tips. Many illustrate the lengths to which physicians are going to conserve money.  

Here’s a look at some of the advice they shared, along with guidance from experts on how to make it work for you:
 

1. Create a written budget, even if you think it’s pointless.

Physicians said their most important piece of advice includes the following: “Use a formal budget to track progress,” “write out a budget,” “plan intermittent/large expenses in advance,” “Make sure all expenses are paid before you spend on leisure.”

Nearly 7 in 10 physicians say they have a budget for personal expenses, yet only one-quarter of those who do have a formal, written budget. Writing out a spending plan is key to being intentional about your spending, making sure that you’re living within your means, and identifying areas in which you may be able to cut back.

“Financial planning is all about cash flow, and everybody should know the amount of money coming in, how much is going out, and the difference between the two,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “That’s important in good times, but it’s even more important now when we see physicians taking pay cuts.”

Many physicians have found that budget apps or software programs are easier to work with than anticipated; some even walk you through the process of creating a budget. To get the most out of the apps, you’ll need to check them regularly and make changes based on their data.

“Sometimes there’s this false belief that just by signing up, you are automatically going to be better at budgeting,” says Scott Snider, CFP, a certified financial planner and partner with Mellen Money Management in Ponte Vedra Beach, Florida. “Basically, these apps are a great way to identify problem areas of spending. We have a tendency as humans to underestimate how much we spend on things like Starbucks, dining out, and Amazon shopping.”

One of the doctors’ tips that requires the most willpower is to “pay all expenses before spending on leisure.” That’s because we live in an instant gratification world, and want everything right away, Ms. Guerich said.

“I also think there’s an element of ‘keeping up with the Joneses’ and pressure associated with this profession,” she said. “The stereotype is that physicians are high-income earners so ‘We should be able to do that’ or ‘Mom and dad are doctors, so they can afford it.’ “

Creating and then revisiting your budget progress on a monthly or quarterly basis can give you a feeling of accomplishment and keep you motivated to stay with it.  

Keep in mind that budgeting is a continual process rather than a singular event, and you’ll likely adjust it over time as your income and goals change. 
 

2. Save more as you earn more.

Respondents to our Physician Compensation Report gave the following recommendations: “Pay yourself first,” “I put half of my bonus into an investment account no matter how much it is,” “I allocate extra money and put it into a savings account.”

Dr. Greenwald said, “I have a rule that every client needs to be saving 20% of their gross income toward retirement, including whatever the employer is putting in.”

Putting a portion of every paycheck into savings is key to making progress toward financial goals. Start by building an emergency fund with at least 3-6 months’ worth of expenses in it and making sure you’re saving at least enough for retirement to get any potential employer match.

Mr. Snider suggests increasing the percentage you save every time you get a raise.

“The thought behind that strategy is that when a doctor receives a pay raise – even if it’s just a cost-of-living raise of 3% – an extra 1% saved doesn’t reduce their take-home pay year-over-year,” he says. “In fact, they still take home more money, and they save more money. Win-win.”
 

3. Focus on paying down your debt.

Physicians told us how they were working to pay down debt with the following recommendations:  “Accelerate debt reduction,” “I make additional principal payment to our home mortgage,” “We are aggressively attacking our remaining student loans.”

Reducing or eliminating debt is key to increasing cash flow, which can make it easier to meet all of your other financial goals. One-quarter of physicians have credit card debt, which typically carries interest rates higher than other types of debt, making it far more expensive. Focus on paying off such high-interest debt first, before moving on to other types of debt such as auto loans, student loans, or a mortgage.

“Credit card debt and any unsecured debt should be paid before anything else,” Mr. Snider says. “Getting rid of those high interest rates should be a priority. And that type of debt has less flexible terms than student debt.”
 

4. Great opportunity to take advantage of record-low interest rates.

Physicians said that, to save money, they are recommending the following: “Consolidating student debt into our mortgage,” “Accelerating payments of the principle on our mortgage,” “Making sure we have an affordable mortgage.”

With interest rates at an all-time low, even those who’ve recently refinanced might see significant savings by refinancing again. Given the associated fees, it typically makes sense to refinance if you can reduce your mortgage rate by at least a point, and you’re planning to stay in the home for at least 5 years.

“Depending on how much lower your rate is, refinancing can make a big difference in your monthly payments,” Ms. Guerich said. “For physicians who might need an emergency reserve but don’t have cash on hand, a HELOC [Home Equity Line of Credit] is a great way to accomplish that.”
 

5. Be wary of credit cards dangers; use cards wisely.

Physician respondents recommended the following:  “Use 0% interest offers on credit cards,” “Only have one card and pay it off every month,” “Never carry over balance.”

Nearly 80% of physicians have three or more credit cards, with 18% reporting that they have seven or more. When used wisely, credit cards can be an important tool for managing finances. Many credit cards come with tools that can help with budgeting, and credit cards rewards and perks can offer real value to users. That said, rewards typically are not valuable enough to offset the cost of interest on balances (or the associated damage to your credit score) that aren’t paid off each month.

“If you’re paying a high rate on credit card balances that carry over every month, regardless of your income, that could be a symptom that you may be spending more than you should,” says Dan Keady, a CFP and chief financial planning strategist at financial services firm TIAA.

6. Give less to Uncle Sam: Keep it for yourself.

Physicians said that they do the following: “Maximize tax-free/deferred savings (401k, HSA, etc.),” “Give to charity to reduce tax,” “Use pre-tax dollars for childcare and healthcare.”

Not only does saving in workplace retirement accounts help you build your nest egg, but it also reduces the amount that you have to pay in taxes in a given year. Physicians should also take advantage of other ways to reduce their income for tax purposes, such as saving money in a health savings account or flexible savings account.

The 401(k) or 403(b) contribution limit for this year is $19,500 ($26,000) for those age 50 years and older. Self-employed physicians can save even more money via a Simplified Employee Pension (SEP) IRA, says Ms. Guerich said. They can save up to 25% of compensation, up to $57,000 in 2020.
 

7. Automate everything and spare yourself the headache.

Physicians said the following: “Designate money from your paycheck directly to tax deferred and taxable accounts automatically,” “Use automatic payment for credit card balance monthly,” “Automate your savings.”

You probably already automate your 401(k) contributions, but you can also automate bill payments, emergency savings contributions and other financial tasks. For busy physicians, this can make it easier to stick to your financial plan and achieve your goals.

“The older you get, the busier you get, said Mr. Snider says. “Automation can definitely help with that. But make sure you are checking in quarterly to make sure that everything is still in line with your plan. The problem with automation is when you forget about it completely and just let everything sit there.”
 

8. Save separately for big purchases.

Sometimes it’s the big major expenses that can start to derail a budget. Physicians told us the following tactics for large purchases:  “We buy affordable cars and take budget vacations,” “I buy used cars,” “We save in advance for new cars and only buy cars with cash.”

The decision of which car to purchase or where to go on a family vacation is a personal one, and some physicians take great enjoyment and pride in driving a luxury vehicle or traveling to exotic locales. The key, experts say, is to factor the cost of that car into the rest of your budget, and make sure that it’s not preventing you from achieving other financial goals.

“I don’t like to judge or tell clients how they should spend their money,” said Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “Some people like cars, we have clients that have two planes, others want a second house or like to travel. Each person has their own interest where they may spend more relative to other people, but as long as they are meeting their savings targets, I encourage them to spend their money and enjoy what they enjoy most, guilt free.”

Mr. Snider suggests setting up a savings account separate from emergency or retirement accounts to set aside money if you have a goal for a large future purchase, such as a boat or a second home.

“That way, the funds don’t get commingled, and it’s explicitly clear whether or not the doctor is on target,” he says. “It also prevents them from treating their emergency savings account as an ATM machine.”
 

9. Start saving for college when the kids are little.  

Respondents said the following: “We are buying less to save for the kids’ college education,” “We set up direct deposit into college and retirement savings plans,” “We have a 529 account for college savings.”

Helping pay for their children’s college education is an important financial goal for many physicians. The earlier that you start saving, the less you’ll have to save overall, thanks to compound interest. State 529 accounts are often a good place to start, especially if your state offers a tax incentive for doing so.

Mr. Snider recommends that physicians start small, with an initial investment of $1,000 per month and $100 per month contributions. Assuming a 7% rate of return and 17 years’ worth of savings, this would generate just over $42,000. (Note, current typical rates of return are less than 7%).

“Ideally, as other goals are accomplished and personal debt gets paid off, the doctor is ramping up their savings to have at least 50% of college expenses covered from their 529 college savings,” he says.
 

10. Watch out for the temptation of impulse purchases.

Physicians said the following: “Avoid impulse purchases,” “Avoid impulse shopping, make a list for the store and stick to it,” “Wait to buy things on sale.”

Nothing wrecks a budget like an impulse buy. More than half (54%) of U.S. shoppers have admitted to spending $100 or more on an impulse purchase. And 20% of shoppers have spent at least $1,000 on an impulse buy. Avoid buyers’ remorse by waiting a few days to make large purchase decisions or by limiting your unplanned spending to a certain dollar amount within your budget.

Online shopping may be a particular temptation. Dr. Tarugu, the Florida gastroenterologist, has focused on reducing those impulse buys as well, deleting all online shopping apps from his and his family’s phones.

“You won’t notice how much you have ordered online until it arrives at your doorstep,” he said. “It’s really important to keep it at bay.”

Mr. Keady, the TIAA chief planning strategist, recommended this tactic: Calculate the number of patients (or hours) you’d need to see in order to earn the cash required to make the purchase.

“Then, in a mindful way, figure out the amount of value derived from the purchase,” he said.
 

A version of this article originally appeared on Medscape.com.

As the COVID-19 crisis pandemic continues, many physicians are not only battling the medical challenges it has wrought but they’re also dealing with its financial ramifications at home.

“Some of our physician clients have seen their income decrease by as much as 50%,” says Joel Greenwald, MD, CEO of Greenwald Wealth Management in St. Louis Park, Minnesota. “Many physicians had previously figured that whatever financial obligations they had wouldn’t be a problem because whatever amount they were making would continue, and if there were a decline it would be gradual.” However, assumption is now creating financial strain for many doctors.

Vikram Tarugu, MD, a gastroenterologist and CEO of Detox of South Florida in Okeechobee, Florida, says he has watched his budget for years, but has become even more careful with his spending in the past few months.

“It has helped me a lot to adjust to the new normal when it comes to the financial side of things,” Dr. Tarugu said. “Patients aren’t coming in as much as they used to, so my income has really been affected.”

Primary care physicians have seen a 55% decrease in revenue and a 20%-30% decrease in patient volume as a result of COVID-19. The impact has been even more severe for specialists. Even for physicians whose practices remain busy and whose family members haven’t lost their jobs or income, broader concerns about the economy may be reason enough for physicians to adopt cost-cutting measures.

In Medscape’s Physician Compensation Report 2020, we asked physicians to share their best cost-cutting tips. Many illustrate the lengths to which physicians are going to conserve money.  

Here’s a look at some of the advice they shared, along with guidance from experts on how to make it work for you:
 

1. Create a written budget, even if you think it’s pointless.

Physicians said their most important piece of advice includes the following: “Use a formal budget to track progress,” “write out a budget,” “plan intermittent/large expenses in advance,” “Make sure all expenses are paid before you spend on leisure.”

Nearly 7 in 10 physicians say they have a budget for personal expenses, yet only one-quarter of those who do have a formal, written budget. Writing out a spending plan is key to being intentional about your spending, making sure that you’re living within your means, and identifying areas in which you may be able to cut back.

“Financial planning is all about cash flow, and everybody should know the amount of money coming in, how much is going out, and the difference between the two,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “That’s important in good times, but it’s even more important now when we see physicians taking pay cuts.”

Many physicians have found that budget apps or software programs are easier to work with than anticipated; some even walk you through the process of creating a budget. To get the most out of the apps, you’ll need to check them regularly and make changes based on their data.

“Sometimes there’s this false belief that just by signing up, you are automatically going to be better at budgeting,” says Scott Snider, CFP, a certified financial planner and partner with Mellen Money Management in Ponte Vedra Beach, Florida. “Basically, these apps are a great way to identify problem areas of spending. We have a tendency as humans to underestimate how much we spend on things like Starbucks, dining out, and Amazon shopping.”

One of the doctors’ tips that requires the most willpower is to “pay all expenses before spending on leisure.” That’s because we live in an instant gratification world, and want everything right away, Ms. Guerich said.

“I also think there’s an element of ‘keeping up with the Joneses’ and pressure associated with this profession,” she said. “The stereotype is that physicians are high-income earners so ‘We should be able to do that’ or ‘Mom and dad are doctors, so they can afford it.’ “

Creating and then revisiting your budget progress on a monthly or quarterly basis can give you a feeling of accomplishment and keep you motivated to stay with it.  

Keep in mind that budgeting is a continual process rather than a singular event, and you’ll likely adjust it over time as your income and goals change. 
 

2. Save more as you earn more.

Respondents to our Physician Compensation Report gave the following recommendations: “Pay yourself first,” “I put half of my bonus into an investment account no matter how much it is,” “I allocate extra money and put it into a savings account.”

Dr. Greenwald said, “I have a rule that every client needs to be saving 20% of their gross income toward retirement, including whatever the employer is putting in.”

Putting a portion of every paycheck into savings is key to making progress toward financial goals. Start by building an emergency fund with at least 3-6 months’ worth of expenses in it and making sure you’re saving at least enough for retirement to get any potential employer match.

Mr. Snider suggests increasing the percentage you save every time you get a raise.

“The thought behind that strategy is that when a doctor receives a pay raise – even if it’s just a cost-of-living raise of 3% – an extra 1% saved doesn’t reduce their take-home pay year-over-year,” he says. “In fact, they still take home more money, and they save more money. Win-win.”
 

3. Focus on paying down your debt.

Physicians told us how they were working to pay down debt with the following recommendations:  “Accelerate debt reduction,” “I make additional principal payment to our home mortgage,” “We are aggressively attacking our remaining student loans.”

Reducing or eliminating debt is key to increasing cash flow, which can make it easier to meet all of your other financial goals. One-quarter of physicians have credit card debt, which typically carries interest rates higher than other types of debt, making it far more expensive. Focus on paying off such high-interest debt first, before moving on to other types of debt such as auto loans, student loans, or a mortgage.

“Credit card debt and any unsecured debt should be paid before anything else,” Mr. Snider says. “Getting rid of those high interest rates should be a priority. And that type of debt has less flexible terms than student debt.”
 

4. Great opportunity to take advantage of record-low interest rates.

Physicians said that, to save money, they are recommending the following: “Consolidating student debt into our mortgage,” “Accelerating payments of the principle on our mortgage,” “Making sure we have an affordable mortgage.”

With interest rates at an all-time low, even those who’ve recently refinanced might see significant savings by refinancing again. Given the associated fees, it typically makes sense to refinance if you can reduce your mortgage rate by at least a point, and you’re planning to stay in the home for at least 5 years.

“Depending on how much lower your rate is, refinancing can make a big difference in your monthly payments,” Ms. Guerich said. “For physicians who might need an emergency reserve but don’t have cash on hand, a HELOC [Home Equity Line of Credit] is a great way to accomplish that.”
 

5. Be wary of credit cards dangers; use cards wisely.

Physician respondents recommended the following:  “Use 0% interest offers on credit cards,” “Only have one card and pay it off every month,” “Never carry over balance.”

Nearly 80% of physicians have three or more credit cards, with 18% reporting that they have seven or more. When used wisely, credit cards can be an important tool for managing finances. Many credit cards come with tools that can help with budgeting, and credit cards rewards and perks can offer real value to users. That said, rewards typically are not valuable enough to offset the cost of interest on balances (or the associated damage to your credit score) that aren’t paid off each month.

“If you’re paying a high rate on credit card balances that carry over every month, regardless of your income, that could be a symptom that you may be spending more than you should,” says Dan Keady, a CFP and chief financial planning strategist at financial services firm TIAA.

6. Give less to Uncle Sam: Keep it for yourself.

Physicians said that they do the following: “Maximize tax-free/deferred savings (401k, HSA, etc.),” “Give to charity to reduce tax,” “Use pre-tax dollars for childcare and healthcare.”

Not only does saving in workplace retirement accounts help you build your nest egg, but it also reduces the amount that you have to pay in taxes in a given year. Physicians should also take advantage of other ways to reduce their income for tax purposes, such as saving money in a health savings account or flexible savings account.

The 401(k) or 403(b) contribution limit for this year is $19,500 ($26,000) for those age 50 years and older. Self-employed physicians can save even more money via a Simplified Employee Pension (SEP) IRA, says Ms. Guerich said. They can save up to 25% of compensation, up to $57,000 in 2020.
 

7. Automate everything and spare yourself the headache.

Physicians said the following: “Designate money from your paycheck directly to tax deferred and taxable accounts automatically,” “Use automatic payment for credit card balance monthly,” “Automate your savings.”

You probably already automate your 401(k) contributions, but you can also automate bill payments, emergency savings contributions and other financial tasks. For busy physicians, this can make it easier to stick to your financial plan and achieve your goals.

“The older you get, the busier you get, said Mr. Snider says. “Automation can definitely help with that. But make sure you are checking in quarterly to make sure that everything is still in line with your plan. The problem with automation is when you forget about it completely and just let everything sit there.”
 

8. Save separately for big purchases.

Sometimes it’s the big major expenses that can start to derail a budget. Physicians told us the following tactics for large purchases:  “We buy affordable cars and take budget vacations,” “I buy used cars,” “We save in advance for new cars and only buy cars with cash.”

The decision of which car to purchase or where to go on a family vacation is a personal one, and some physicians take great enjoyment and pride in driving a luxury vehicle or traveling to exotic locales. The key, experts say, is to factor the cost of that car into the rest of your budget, and make sure that it’s not preventing you from achieving other financial goals.

“I don’t like to judge or tell clients how they should spend their money,” said Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “Some people like cars, we have clients that have two planes, others want a second house or like to travel. Each person has their own interest where they may spend more relative to other people, but as long as they are meeting their savings targets, I encourage them to spend their money and enjoy what they enjoy most, guilt free.”

Mr. Snider suggests setting up a savings account separate from emergency or retirement accounts to set aside money if you have a goal for a large future purchase, such as a boat or a second home.

“That way, the funds don’t get commingled, and it’s explicitly clear whether or not the doctor is on target,” he says. “It also prevents them from treating their emergency savings account as an ATM machine.”
 

9. Start saving for college when the kids are little.  

Respondents said the following: “We are buying less to save for the kids’ college education,” “We set up direct deposit into college and retirement savings plans,” “We have a 529 account for college savings.”

Helping pay for their children’s college education is an important financial goal for many physicians. The earlier that you start saving, the less you’ll have to save overall, thanks to compound interest. State 529 accounts are often a good place to start, especially if your state offers a tax incentive for doing so.

Mr. Snider recommends that physicians start small, with an initial investment of $1,000 per month and $100 per month contributions. Assuming a 7% rate of return and 17 years’ worth of savings, this would generate just over $42,000. (Note, current typical rates of return are less than 7%).

“Ideally, as other goals are accomplished and personal debt gets paid off, the doctor is ramping up their savings to have at least 50% of college expenses covered from their 529 college savings,” he says.
 

10. Watch out for the temptation of impulse purchases.

Physicians said the following: “Avoid impulse purchases,” “Avoid impulse shopping, make a list for the store and stick to it,” “Wait to buy things on sale.”

Nothing wrecks a budget like an impulse buy. More than half (54%) of U.S. shoppers have admitted to spending $100 or more on an impulse purchase. And 20% of shoppers have spent at least $1,000 on an impulse buy. Avoid buyers’ remorse by waiting a few days to make large purchase decisions or by limiting your unplanned spending to a certain dollar amount within your budget.

Online shopping may be a particular temptation. Dr. Tarugu, the Florida gastroenterologist, has focused on reducing those impulse buys as well, deleting all online shopping apps from his and his family’s phones.

“You won’t notice how much you have ordered online until it arrives at your doorstep,” he said. “It’s really important to keep it at bay.”

Mr. Keady, the TIAA chief planning strategist, recommended this tactic: Calculate the number of patients (or hours) you’d need to see in order to earn the cash required to make the purchase.

“Then, in a mindful way, figure out the amount of value derived from the purchase,” he said.
 

A version of this article originally appeared on Medscape.com.

Even before Atlanta had an official shelter-in-place order, patients at the private plastic surgery practice of Nicholas Jones, MD, began canceling and rescheduled planned procedures.

After a few weeks, Dr. Jones, aged 40 years, stopped seeing patients entirely, but as a self-employed independent contractor, that means he’d lost most of his income. Dr. Jones still makes some money via a wound care job at a local nursing home, but he’s concerned that job may also be eliminated.

“I’m not hurting yet,” he said. “But I’m preparing for the worst possible scenario.”

In preparation, he and his fiancé have cut back on extraneous expenses like Uber Eats, magazine subscriptions, and streaming music services. Even though he has a 6-month emergency fund, Jones has reached out to utility companies, mortgage lenders, and student loan servicers to find out about any programs they offer to people who’ve suffered financially from the coronavirus crisis.

He’s also considered traveling to one of the COVID-19 epicenters – he has family in New Orleans and Chicago – to work in a hospital there. Jones has trauma experience and is double-boarded in general and plastic surgery.

“I could provide relief to those in need and also float through this troubled time with some financial relief,” he said.

Whereas much of the world’s attention has been on physicians who are on the front line and working around the clock in hospitals to help COVID-19 patients, thousands of other physicians are experiencing the opposite phenomenon – a slowdown or even stoppage of work (and income) altogether.

Many practices are temporarily closing to meet social distancing requirements, and some may end up closed for months, leaving doctors without a source of income. Even among those practices that remain open, the number of patients has declined as people avoid going to the office unless they absolutely have to.

At the same time, doctors in two-income households may have a spouse experiencing a job loss or income decline. Nearly 10 million Americans applied for unemployment benefits in the last 2 weeks of March, the largest number on record.

Still, while there’s uncertainty around how long the coronavirus crisis will last, experts agree that at some point America will return to a “new normal” and business operations will begin to reopen. For physicians experiencing a reduction in income who, like Jones, have an emergency fund with a few months’ worth of expenses, now’s the time to tap into it. (Or if you still have income, now’s the time to focus on growing that emergency fund to give yourself an even bigger safety net.)

If you’re among the more than half of Americans with less than 6 months of expenses saved for a rainy day, here’s how to stay afloat in the near term:
 

Cut back on expenses

Some household spending has naturally tapered off for many families because social distancing restrictions reduce spending on eating out, travel, and other leisure activities. But this is also an opportunity to look for other ways to reduce spending. Look through your credit card bills to see whether there are recurring payments you can cut, such as a payment to a gym that’s temporarily closed or a monthly subscription box that you don’t need.

Some gyms are not allowing membership termination right now, but it pays to ask. If a service you’re not using won’t facilitate the cancellation, call your credit card company to dispute and stop the charges, and report them to the Better Business Bureau.

You should also stop contributing to nonemergency savings accounts such as your retirement fund or your children’s college funds.

“A lot of people are hesitant to stop their automatic savings if they’ve been maxing out their 401(k) contribution or 529 accounts,” says Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “But if you’re thinking long term, the reality is that missing a couple of months won’t make or break a plan. Cutting back on the amount you’re saving in the short term will increase your cash flow and is a good way to make ends meet.”
 

Take advantage of regulatory changes

Although many physicians won’t qualify for direct payments via the Coronavirus Aid Relief and Economic Security (CARES) Act (the $1,200 payments to individuals start phasing out once income hits $75,000 and disappear entirely for those making more than $99,000), there are other provisions in the stimulus bill that may help physicians. The bill, for example, boosts state unemployment payments by $600 per week for the next 4 months, meaning qualified workers could receive an average of nearly $1,000 per week, depending on their state, and there are new provisions providing unemployment payments to self-employed and contract workers.

The CARES Act also includes a break for federal student loan holders. Under that rule, you can skip your payments through September without incurring additional interest. Physicians in the loan forgiveness program will still get credit for payments skipped during this program.

Separately, the IRS has extended the tax deadline from April 15 to July 15, which means not only do you not have to file your taxes until then, you also don’t have to pay any taxes you owe until mid-July. The deadline for first quarter estimated tax payments has also moved to July 15. (If you’re expecting a refund, however, you should file ASAP, since the IRS will typically issue those within a few weeks of receiving your returns.)
 

Tap your home equity – if you’re planning to stay put

If you have good credit and still have some income, you might consider refinancing your home mortgage or opening a home equity line of credit. Interest rates have fallen recently amid economic turbulence, so if you haven’t refinanced recently you may be able to shave your monthly payment. If you need cash, a cash-out refinance, home equity line of credit, or a reverse mortgage (available if you’re over age 62) are among the lowest-cost ways to borrow.

“With interest rates so low, there can be a lot of benefit to refinancing and leveraging your house, especially if you’re planning to stay there,” says Jamie Hopkins, a director at the Carson Group. “The challenge is if you’re planning to move in the next few years. There’s a real risk that the housing market could go down in the next couple of years, and if you’re planning to sell, there’s a risk that you might not get back what you borrowed.”
 

Communicate early with your bank or landlord

If you don’t have the income to refinance, and you think you’re going to run into trouble making your housing payment, you should let your bank or landlord know as soon as possible. The CARES Act allows homeowners with federally backed mortgages to obtain a 180-day postponement of mortgage payments because of COVID-19 financial hardship, with the potential to extend for another 180 days. It also bans eviction by landlords with federal mortgages for 120 days.

Even if you don’t have a federally backed mortgage, you should still get in touch with your lender. Many mortgage servicers have their own forbearance programs for borrowers who can prove a temporary financial hardship. (Some banks are also waiving fees on early withdrawals on CDs and giving cardholders a reprieve on credit card payments.) Commercial landlords are also working with struggling tenants, so you may also be able to get some relief on your office lease as well.

“All of the lenders are setting up helplines for people affected,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “The best thing you can do is contact them right away if you think that you’re going to have a problem vs. just letting the bills go.”
 

Consider retirement account withdrawals

Standard personal finance advice holds that you should exhaust all other options before pulling money out of your retirement account because of the high penalties for early withdrawals and because money removed from retirement accounts is no longer compounding over time.

Still, the CARES act has provisions making it less financially onerous to pull money from your retirement accounts. Under the new law, you can take a distribution of up to $100,000 from your IRA or 401(k) without having to pay the 10% early withdrawal penalty. You’ll owe ordinary income taxes on the withdrawal, but you have 3 years to pay them or to return the money to your retirement account.

“That’s a great relief provision, especially for higher-income physicians who might have a higher 401(k) balance,” said Jamie Hopkins.
 

Be smart about credit cards

Although using credit cards that you can’t pay off every month is typically an expensive way to access money, getting a new card with a low or zero percent introductory rate is a short-term strategy to consider when you’ve exhausted other options. If you have good credit, you may be able to qualify for a credit card with a 0% introductory interest rate on new transactions. Pay close attention to the fine print, including the cap on the balance you can carry without interest and whether you’ll be required to make minimum payments.

The average 0% credit card offer is for 11 months, but there are some cards that can extend the offer for up to a year-and-a-half. If you choose to use this strategy, you’ll need a plan to pay off the entire balance before the introductory period ends. If there’s a balance remaining once the rate resets, you may end up owing deferred interest on it.

The financial ramifications of the coronavirus can feel overwhelming, but it’s important not to panic. While it remains unclear how long the current crisis will last, making some smart money moves to preserve your cash in the meantime can help you stay afloat.

A version of this article originally appeared on Medscape.com.

Even before Atlanta had an official shelter-in-place order, patients at the private plastic surgery practice of Nicholas Jones, MD, began canceling and rescheduled planned procedures.

After a few weeks, Dr. Jones, aged 40 years, stopped seeing patients entirely, but as a self-employed independent contractor, that means he’d lost most of his income. Dr. Jones still makes some money via a wound care job at a local nursing home, but he’s concerned that job may also be eliminated.

“I’m not hurting yet,” he said. “But I’m preparing for the worst possible scenario.”

In preparation, he and his fiancé have cut back on extraneous expenses like Uber Eats, magazine subscriptions, and streaming music services. Even though he has a 6-month emergency fund, Jones has reached out to utility companies, mortgage lenders, and student loan servicers to find out about any programs they offer to people who’ve suffered financially from the coronavirus crisis.

He’s also considered traveling to one of the COVID-19 epicenters – he has family in New Orleans and Chicago – to work in a hospital there. Jones has trauma experience and is double-boarded in general and plastic surgery.

“I could provide relief to those in need and also float through this troubled time with some financial relief,” he said.

Whereas much of the world’s attention has been on physicians who are on the front line and working around the clock in hospitals to help COVID-19 patients, thousands of other physicians are experiencing the opposite phenomenon – a slowdown or even stoppage of work (and income) altogether.

Many practices are temporarily closing to meet social distancing requirements, and some may end up closed for months, leaving doctors without a source of income. Even among those practices that remain open, the number of patients has declined as people avoid going to the office unless they absolutely have to.

At the same time, doctors in two-income households may have a spouse experiencing a job loss or income decline. Nearly 10 million Americans applied for unemployment benefits in the last 2 weeks of March, the largest number on record.

Still, while there’s uncertainty around how long the coronavirus crisis will last, experts agree that at some point America will return to a “new normal” and business operations will begin to reopen. For physicians experiencing a reduction in income who, like Jones, have an emergency fund with a few months’ worth of expenses, now’s the time to tap into it. (Or if you still have income, now’s the time to focus on growing that emergency fund to give yourself an even bigger safety net.)

If you’re among the more than half of Americans with less than 6 months of expenses saved for a rainy day, here’s how to stay afloat in the near term:
 

Cut back on expenses

Some household spending has naturally tapered off for many families because social distancing restrictions reduce spending on eating out, travel, and other leisure activities. But this is also an opportunity to look for other ways to reduce spending. Look through your credit card bills to see whether there are recurring payments you can cut, such as a payment to a gym that’s temporarily closed or a monthly subscription box that you don’t need.

Some gyms are not allowing membership termination right now, but it pays to ask. If a service you’re not using won’t facilitate the cancellation, call your credit card company to dispute and stop the charges, and report them to the Better Business Bureau.

You should also stop contributing to nonemergency savings accounts such as your retirement fund or your children’s college funds.

“A lot of people are hesitant to stop their automatic savings if they’ve been maxing out their 401(k) contribution or 529 accounts,” says Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “But if you’re thinking long term, the reality is that missing a couple of months won’t make or break a plan. Cutting back on the amount you’re saving in the short term will increase your cash flow and is a good way to make ends meet.”
 

Take advantage of regulatory changes

Although many physicians won’t qualify for direct payments via the Coronavirus Aid Relief and Economic Security (CARES) Act (the $1,200 payments to individuals start phasing out once income hits $75,000 and disappear entirely for those making more than $99,000), there are other provisions in the stimulus bill that may help physicians. The bill, for example, boosts state unemployment payments by $600 per week for the next 4 months, meaning qualified workers could receive an average of nearly $1,000 per week, depending on their state, and there are new provisions providing unemployment payments to self-employed and contract workers.

The CARES Act also includes a break for federal student loan holders. Under that rule, you can skip your payments through September without incurring additional interest. Physicians in the loan forgiveness program will still get credit for payments skipped during this program.

Separately, the IRS has extended the tax deadline from April 15 to July 15, which means not only do you not have to file your taxes until then, you also don’t have to pay any taxes you owe until mid-July. The deadline for first quarter estimated tax payments has also moved to July 15. (If you’re expecting a refund, however, you should file ASAP, since the IRS will typically issue those within a few weeks of receiving your returns.)
 

Tap your home equity – if you’re planning to stay put

If you have good credit and still have some income, you might consider refinancing your home mortgage or opening a home equity line of credit. Interest rates have fallen recently amid economic turbulence, so if you haven’t refinanced recently you may be able to shave your monthly payment. If you need cash, a cash-out refinance, home equity line of credit, or a reverse mortgage (available if you’re over age 62) are among the lowest-cost ways to borrow.

“With interest rates so low, there can be a lot of benefit to refinancing and leveraging your house, especially if you’re planning to stay there,” says Jamie Hopkins, a director at the Carson Group. “The challenge is if you’re planning to move in the next few years. There’s a real risk that the housing market could go down in the next couple of years, and if you’re planning to sell, there’s a risk that you might not get back what you borrowed.”
 

Communicate early with your bank or landlord

If you don’t have the income to refinance, and you think you’re going to run into trouble making your housing payment, you should let your bank or landlord know as soon as possible. The CARES Act allows homeowners with federally backed mortgages to obtain a 180-day postponement of mortgage payments because of COVID-19 financial hardship, with the potential to extend for another 180 days. It also bans eviction by landlords with federal mortgages for 120 days.

Even if you don’t have a federally backed mortgage, you should still get in touch with your lender. Many mortgage servicers have their own forbearance programs for borrowers who can prove a temporary financial hardship. (Some banks are also waiving fees on early withdrawals on CDs and giving cardholders a reprieve on credit card payments.) Commercial landlords are also working with struggling tenants, so you may also be able to get some relief on your office lease as well.

“All of the lenders are setting up helplines for people affected,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “The best thing you can do is contact them right away if you think that you’re going to have a problem vs. just letting the bills go.”
 

Consider retirement account withdrawals

Standard personal finance advice holds that you should exhaust all other options before pulling money out of your retirement account because of the high penalties for early withdrawals and because money removed from retirement accounts is no longer compounding over time.

Still, the CARES act has provisions making it less financially onerous to pull money from your retirement accounts. Under the new law, you can take a distribution of up to $100,000 from your IRA or 401(k) without having to pay the 10% early withdrawal penalty. You’ll owe ordinary income taxes on the withdrawal, but you have 3 years to pay them or to return the money to your retirement account.

“That’s a great relief provision, especially for higher-income physicians who might have a higher 401(k) balance,” said Jamie Hopkins.
 

Be smart about credit cards

Although using credit cards that you can’t pay off every month is typically an expensive way to access money, getting a new card with a low or zero percent introductory rate is a short-term strategy to consider when you’ve exhausted other options. If you have good credit, you may be able to qualify for a credit card with a 0% introductory interest rate on new transactions. Pay close attention to the fine print, including the cap on the balance you can carry without interest and whether you’ll be required to make minimum payments.

The average 0% credit card offer is for 11 months, but there are some cards that can extend the offer for up to a year-and-a-half. If you choose to use this strategy, you’ll need a plan to pay off the entire balance before the introductory period ends. If there’s a balance remaining once the rate resets, you may end up owing deferred interest on it.

The financial ramifications of the coronavirus can feel overwhelming, but it’s important not to panic. While it remains unclear how long the current crisis will last, making some smart money moves to preserve your cash in the meantime can help you stay afloat.

A version of this article originally appeared on Medscape.com.

Even before Atlanta had an official shelter-in-place order, patients at the private plastic surgery practice of Nicholas Jones, MD, began canceling and rescheduled planned procedures.

After a few weeks, Dr. Jones, aged 40 years, stopped seeing patients entirely, but as a self-employed independent contractor, that means he’d lost most of his income. Dr. Jones still makes some money via a wound care job at a local nursing home, but he’s concerned that job may also be eliminated.

“I’m not hurting yet,” he said. “But I’m preparing for the worst possible scenario.”

In preparation, he and his fiancé have cut back on extraneous expenses like Uber Eats, magazine subscriptions, and streaming music services. Even though he has a 6-month emergency fund, Jones has reached out to utility companies, mortgage lenders, and student loan servicers to find out about any programs they offer to people who’ve suffered financially from the coronavirus crisis.

He’s also considered traveling to one of the COVID-19 epicenters – he has family in New Orleans and Chicago – to work in a hospital there. Jones has trauma experience and is double-boarded in general and plastic surgery.

“I could provide relief to those in need and also float through this troubled time with some financial relief,” he said.

Whereas much of the world’s attention has been on physicians who are on the front line and working around the clock in hospitals to help COVID-19 patients, thousands of other physicians are experiencing the opposite phenomenon – a slowdown or even stoppage of work (and income) altogether.

Many practices are temporarily closing to meet social distancing requirements, and some may end up closed for months, leaving doctors without a source of income. Even among those practices that remain open, the number of patients has declined as people avoid going to the office unless they absolutely have to.

At the same time, doctors in two-income households may have a spouse experiencing a job loss or income decline. Nearly 10 million Americans applied for unemployment benefits in the last 2 weeks of March, the largest number on record.

Still, while there’s uncertainty around how long the coronavirus crisis will last, experts agree that at some point America will return to a “new normal” and business operations will begin to reopen. For physicians experiencing a reduction in income who, like Jones, have an emergency fund with a few months’ worth of expenses, now’s the time to tap into it. (Or if you still have income, now’s the time to focus on growing that emergency fund to give yourself an even bigger safety net.)

If you’re among the more than half of Americans with less than 6 months of expenses saved for a rainy day, here’s how to stay afloat in the near term:
 

Cut back on expenses

Some household spending has naturally tapered off for many families because social distancing restrictions reduce spending on eating out, travel, and other leisure activities. But this is also an opportunity to look for other ways to reduce spending. Look through your credit card bills to see whether there are recurring payments you can cut, such as a payment to a gym that’s temporarily closed or a monthly subscription box that you don’t need.

Some gyms are not allowing membership termination right now, but it pays to ask. If a service you’re not using won’t facilitate the cancellation, call your credit card company to dispute and stop the charges, and report them to the Better Business Bureau.

You should also stop contributing to nonemergency savings accounts such as your retirement fund or your children’s college funds.

“A lot of people are hesitant to stop their automatic savings if they’ve been maxing out their 401(k) contribution or 529 accounts,” says Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “But if you’re thinking long term, the reality is that missing a couple of months won’t make or break a plan. Cutting back on the amount you’re saving in the short term will increase your cash flow and is a good way to make ends meet.”
 

Take advantage of regulatory changes

Although many physicians won’t qualify for direct payments via the Coronavirus Aid Relief and Economic Security (CARES) Act (the $1,200 payments to individuals start phasing out once income hits $75,000 and disappear entirely for those making more than $99,000), there are other provisions in the stimulus bill that may help physicians. The bill, for example, boosts state unemployment payments by $600 per week for the next 4 months, meaning qualified workers could receive an average of nearly $1,000 per week, depending on their state, and there are new provisions providing unemployment payments to self-employed and contract workers.

The CARES Act also includes a break for federal student loan holders. Under that rule, you can skip your payments through September without incurring additional interest. Physicians in the loan forgiveness program will still get credit for payments skipped during this program.

Separately, the IRS has extended the tax deadline from April 15 to July 15, which means not only do you not have to file your taxes until then, you also don’t have to pay any taxes you owe until mid-July. The deadline for first quarter estimated tax payments has also moved to July 15. (If you’re expecting a refund, however, you should file ASAP, since the IRS will typically issue those within a few weeks of receiving your returns.)
 

Tap your home equity – if you’re planning to stay put

If you have good credit and still have some income, you might consider refinancing your home mortgage or opening a home equity line of credit. Interest rates have fallen recently amid economic turbulence, so if you haven’t refinanced recently you may be able to shave your monthly payment. If you need cash, a cash-out refinance, home equity line of credit, or a reverse mortgage (available if you’re over age 62) are among the lowest-cost ways to borrow.

“With interest rates so low, there can be a lot of benefit to refinancing and leveraging your house, especially if you’re planning to stay there,” says Jamie Hopkins, a director at the Carson Group. “The challenge is if you’re planning to move in the next few years. There’s a real risk that the housing market could go down in the next couple of years, and if you’re planning to sell, there’s a risk that you might not get back what you borrowed.”
 

Communicate early with your bank or landlord

If you don’t have the income to refinance, and you think you’re going to run into trouble making your housing payment, you should let your bank or landlord know as soon as possible. The CARES Act allows homeowners with federally backed mortgages to obtain a 180-day postponement of mortgage payments because of COVID-19 financial hardship, with the potential to extend for another 180 days. It also bans eviction by landlords with federal mortgages for 120 days.

Even if you don’t have a federally backed mortgage, you should still get in touch with your lender. Many mortgage servicers have their own forbearance programs for borrowers who can prove a temporary financial hardship. (Some banks are also waiving fees on early withdrawals on CDs and giving cardholders a reprieve on credit card payments.) Commercial landlords are also working with struggling tenants, so you may also be able to get some relief on your office lease as well.

“All of the lenders are setting up helplines for people affected,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “The best thing you can do is contact them right away if you think that you’re going to have a problem vs. just letting the bills go.”
 

Consider retirement account withdrawals

Standard personal finance advice holds that you should exhaust all other options before pulling money out of your retirement account because of the high penalties for early withdrawals and because money removed from retirement accounts is no longer compounding over time.

Still, the CARES act has provisions making it less financially onerous to pull money from your retirement accounts. Under the new law, you can take a distribution of up to $100,000 from your IRA or 401(k) without having to pay the 10% early withdrawal penalty. You’ll owe ordinary income taxes on the withdrawal, but you have 3 years to pay them or to return the money to your retirement account.

“That’s a great relief provision, especially for higher-income physicians who might have a higher 401(k) balance,” said Jamie Hopkins.
 

Be smart about credit cards

Although using credit cards that you can’t pay off every month is typically an expensive way to access money, getting a new card with a low or zero percent introductory rate is a short-term strategy to consider when you’ve exhausted other options. If you have good credit, you may be able to qualify for a credit card with a 0% introductory interest rate on new transactions. Pay close attention to the fine print, including the cap on the balance you can carry without interest and whether you’ll be required to make minimum payments.

The average 0% credit card offer is for 11 months, but there are some cards that can extend the offer for up to a year-and-a-half. If you choose to use this strategy, you’ll need a plan to pay off the entire balance before the introductory period ends. If there’s a balance remaining once the rate resets, you may end up owing deferred interest on it.

The financial ramifications of the coronavirus can feel overwhelming, but it’s important not to panic. While it remains unclear how long the current crisis will last, making some smart money moves to preserve your cash in the meantime can help you stay afloat.

A version of this article originally appeared on Medscape.com.