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Normal Promotion Timeline and the Jobs/Achievements That Get You There
(Here are some Military Career Progression Slides from a career planning lecture I often give to accompany this post.)
The typical career progression for a Medical Corps officer if promoted on time (the first time they are in-zone) is:
- 5 years – selected for promotion to LCDR
- 6 years – promoted to LCDR
- 11 years – selected for promotion to CDR
- 12 years – promoted to CDR
- 17 years – selected for promotion to CAPT
- 18 years – promoted to CAPT
For example, I’m a 15 year CDR, so I’ll be in-zone in 2 years at year 17. If I’m selected the first time I’m in-zone, I’ll be promoted to CAPT in year 18.
There are 5 general career paths in the Navy that lead to promotion, and I firmly believe that all can lead to promotion to CAPT. They are:
- Academic
- Administrative
- Clinical
- Operational
- Research
One of my favorite things about the Navy is that you don’t have to stay within the same career path as you progress in your career. I have happily jumped around and managed to promote to LCDR and CDR on time. During my first tour at USNH Okinawa, I was largely clinical. After that I was academic but transitioned to more of an administrative role, culminating with my time as a Detailer at PERS. In my current role as Commander of a Joint Medical Group and Joint Task Force Surgeon, I’m both administrative and operational. My next tour will return me to an academic setting where I hope to score a major administrative role at the command but once again “be academic.”
As you progress down your chosen career path, one of the major determinants of whether you will promote is whether you get the jobs that will allow you to progress to the next rank. The following lists include many, but certainly not all, of the collateral duties, positions, and achievements you should strive for once you reach each rank. If you can get some of these positions and do well in them, it should allow you to break out on your FITREPs and increase the chances you will promote. Of note, in each rank appropriate list there are positions from all 5 general career paths.
LTs or LCDRs looking to promote should focus on achieving these milestones or positions:
- Getting board certified, which is pretty much a requirement to promote
- Completing a fellowship, but trying to avoid being a fellow in the years right before they are in zone so that the non-observed FITREPs you often get don’t hurt your chances at promotion
- Completing a deployment, but again trying to avoid doing it right before you are in zone due to the small competitive groups you often get on your FITREPs
- Assistant/Associate Residency Director
- Department Head (DH) is a small/medium military treatment facility (MTF)
- Assistant Professor at USUHS, which is very easy to get if you just apply. See my promo prep document for the info on how to do this.
- Publishing professional publications
- Research, preferably defense-related
- Departmental collateral duties
- Hospital committee member or chair
- Executive Committee of the Medical Staff (ECOMS) member
- Civilian leadership positions, like in your specialty society’s state chapter, for example
- Senior Medical Officer (SMO) or Medical Director in your department at a large MTF
CDRs looking to promote should focus on:
- Residency Director
- DH of your department in a large MTF
- Associate Professor at USUHS
- Director position (Director of Medical Services, Director of Clinical Support Services, etc.)
- Officer-in-Charge of a clinic
- Major committee chair
- ECOMS member, Vice-President/President-Elect, or President
- Senior operational leadership position
- Division Surgeon
- Group Surgeon
- Wing Surgeon
- Commander, Amphibious Task Force (CATF) Surgeon
- SMO on an amphibious platform
- Staff position at BUMED
- Specialty leader
- Deployment requiring an O-5 or higher
- Detailer
As a LT or LCDR, I was able to get board certified, complete a fellowship at the right time, deploy twice, become an Assistant Professor at USUHS, publish numerous publications, do some research, obtain numerous departmental collateral duties, chair a hospital committee and be an ECOMS member at USNH Okinawa, become a SMO in the Navy’s largest emergency department, be an Associate Director at a large MTF, and hold numerous civilian leadership positions.
As a CDR so far I have promoted to Associate Professor, been a major committee chair and member of ECOMS, and served a tour as a Detailer. Currently I’m a specialty leader and am deployed in a senior operational role that required a CDR or CAPT.
All of this took a lot of work, but made it easy for my leadership to fight for and justify early promote (EP) FITREPs that allowed me to promote to LCDR and CDR on time. Will it work for CAPT? We’ll have to wait on that, but the more of these things you can achieve, the easier it will be for your leadership to do the same thing for you. You need competitive EPs to promote, and doing these things, giving your leadership the ammunition to justify EP FITREPs, is the path to getting them.
Promotion Board Changes
The following is from a PDF document created by RDML(s) Swap, Chief of the Medical Service Corps, and adapted for the Medical Corps with permission. Her unedited PDF is here:
Talking Points #33 AZ IZ Stamps
INTRODUCTION
Promotion boards are an integral part of how the Navy identifies the best and most qualified officers to lead in the future. Promotions are an expectation of future potential, not a reward for past performance. Every Medical Corps officer plays an important role in developing our next generation of leaders to include preparation for promotion boards. It is incumbent on our senior MC officers to understand the promotion selection process and be familiar with changes to the system, so appropriate mentoring can be performed.
BACKGROUND
ALNAV 050/15 released on 12 June 2015 outlines new talent management initiatives introduced by the Secretary of the Navy. New initiatives include changes in officer promotion processes to ensure the best and most fully qualified officers are promoted with consideration for current abilities and talents, rather than placement in a particular promotion zone. Therefore, beginning in January 2016, Above Zone (AZ) and Below Zone (BZ) stamps on officer records will no longer be used for records reviewed on promotion boards. These stamps were indicators on the Officer’s Summary Record (OSR) that highlighted the officer’s status within the zone.
KEY MESSAGES
- Beginning in January 2016, AZ and BZ stamps will no longer be placed on records reviewed in “the tank” (which is the promotion board room at PERS).
- AZ records will be reviewed with In Zone (IZ) records as conducted previously, minus the AZ stamp.
- A separate BZ review will still be conducted to review records warranting further consideration.
- Any BZ record selected for further review will be added to the crunch records reviewed in the tank. All BZ records identified for complete review will have no identifying BZ stamps and will be reviewed twice to ensureconsistent appearance among all of crunch records.
- Promotion zone eligibility will continue to be released via NAVADMIN in December of each year.
TALKING POINTS FOR MENTORSHIP SESSIONS
- Removal of the AZ/BZ stamps from the board view is to ensure the selection of the best and most qualified officer and that officers are promoted with consideration for current abilities and talents, rather than placement in a particular promotion zone.
- This initiative does not change the requirement for the OSRs to be stamped with “Letter to the Board”.
- It is still the officer’s prerogative on whether to submit a letter to the board.
- All officers should engage a mentor or senior leader to review their record prior to coming in zone, to identify issues/challenges that may require attention.
- If there are items in an officer’s record that need to be addressed/explained (regardless if BZ, IZ or AZ), it is recommended that a letter to the board be submitted addressing the issue.
- Officers who have previously failed to select may choose not to submit a letter to board if the record is in good order and has no items requiring attention.
HOW DOES THIS CHANGE THE GAME?
These are my comments now, and not RDML(s) Swap’s. First, I think this might make it a little easier to promote if you are AZ. Second, it also might make it easier to promote if you are BZ. In other words, don’t put off fixing your records just because you are BZ. Make sure you go to Joel Schofer’s Promo Prep and update your record if you are BZ, IZ, or AZ as soon as possible.
Highlights of BUMED Specialty Leader Business Meeting
I was recently selected to be the Emergency Medicine Specialty Leader, and earlier this week I attended the BUMED Business Meeting for Specialty Leaders and Program Directors. Below are the highlights I thought were of interest to a general Medical Corps audience:
- BUPERS is removing the AZ (above zone) and IZ (in zone) stamps on the Officer Summary Records (OSR) for all promotion boards starting with the upcoming FY17 promotion boards. Some feel that when officers are labelled “AZ” that board members assume that something must be wrong with them since they failed to select previously. This is being done to reduce the chance of that bias (if it even really exists). Obviously if you have been passed over for promotion and you have a ton of FITREPs at your current rank or the board members closely scrutinize your date of rank on the OSR, they will be able to figure out pretty easily that you are AZ, but without the stamp it will make it harder for them to do so.
- There is a POSSIBILITY that they change the promotions in the future so that the top 10% of officers selected for promotion get to put the new rank on first. Currently the order your promote is based on your lineal number and seniority. In other words, the officers who have been passed over most get to put the new rank on first. They MAY switch to a system where merit determines who promotes sooner rather than seniority.
- DMHRSi is something that very few Medical Corps officers like, but you should realize that the data you put into it is clearly used by BUMED to make decisions that impact manning and measure your productivity. You should do what you can to correctly reflect your workload in DMHRSi.
- The rollout of the new electronic medical record is slated to begin in the Pacific northwest in 2016, but it MIGHT be pushed to the right into 2017. The total rollout is scheduled over a 5 year period.
- The career intermission program is being expanded. You can use it to take up to 3 years off, essentially hitting the pause button on your career. You retain 1/15th of your basic pay and your benefits, like TRICARE, and will owe a 2 for 1 time to the Navy upon your return. For example, if you take 2 years off, you’ll owe 4 years when you return to active duty. When you return, your lineal number and promotion cycle is reset so that you don’t lose any time and you jump back into a year group that you can compete with for promotion. There is info on the program here, OPNAV 1330.2B – Navy Career Intermission Program Guidelines or at this website.
- The conference approval process is arduous and painful, but it MIGHT be getting easier. For now it will remain the same and require multiple forms. If you are going to something that is a “course” and not a “conference” then your Specialty Leader can see if BUMED legal will exempt the course from the approval process. The POC in that office says that courses have been exempted successfully, and once they are exempted then all officers can use that exemption if their command is willing to pay for the course. Here is the conference approval webpage. You should always check here for the latest information.
4th Step to Financial Freedom – Contribute Maximally to Your Tax-Favored Retirement Accounts
The benefits of tax-favored retirement plans like the Thrift Savings Plan or an Individual Retirement Account (IRA) are too great to ignore, and over the span of your career sheltering your investment earnings from the taxman will benefit you tremendously. For example, assume that you make a $4,000 annual contribution for 45 years and earn an 8% annual return. Here is how much you would have if you invested in a taxable investment account versus a tax-deferred account:
- Taxable investment total – $604,407
- Tax-deferred investment total – $1,669,670
As you can see, the power of keeping your investment returns and not paying taxes on them can lead to huge differences in the amount of investment growth you will experience.
The primary tax-favored investment account that is available to us is the Thrift Savings Plan (TSP). If possible, you should always contribute the maximum amount each year, which is $18,000/year in 2015 and 2016 ($24,000/year if you are over 50). You may be able to contribute more if you are deployed in a combat zone. See this TSP Annual Limit on Elective Deferrals PDF to read about the details.
After you fill your TSP, open an IRA and, again, contribute the maximum amount each year. The contribution limits for 2015 and 2016 are $5,500/year ($6,500/year if you are over 50).
For both the TSP and IRA you’ll face the decision of whether to contribute to a Roth or traditional version. Roth contributions are taxed now, meaning you make after tax contributions and future withdrawals are tax free. Traditional contributions are taxed when you withdraw, meaning you make pre-tax contributions now and pay taxes later. For younger or military people, the Roth is usually more advantageous because your tax rate is lower than it will be in the future, but there are many on-line calculators to help you decide which option is best for you, including:
https://www.tsp.gov/PlanningTools/Calculators/contributionComparison.html
http://www.bankrate.com/calculators/retirement/roth-traditional-ira-calculator.aspx
Here is a great comparison chart from Vanguard:
https://investor.vanguard.com/ira/roth-vs-traditional-ira
The Roth IRA does require an adjusted gross income of less than $117,000/year (single) or $184,000/year (married) in 2016 to fully contribute, but there is a way around this called a “backdoor” Roth IRA. For a tutorial on how to do this, go to:
http://whitecoatinvestor.com/backdoor-roth-ira-tutorial/
If you moonlight as an independent contractor (you’ll know because you will be paid with a Form 1099), you will have other tax-favored options available to you, including a SEP-IRA or Solo 401k. In these accounts you can often contribute a lot more money. For a full discussion of them see:
http://whitecoatinvestor.com/sep-ira-vs-solo-401k/
The bottom line is that to maximize your net worth you need to maximize your contributions to all tax-favored retirement accounts you have available to you. Hiding your investment earnings from the taxman will allow you to accumulate a lot more for retirement.
Should You Send a Letter to the Promotion Board?
Assuming you are at least in zone or above zone, the answer is yes if:
- You are above-zone and wish to be considered for promotion. You will be considered whether you send a letter or not, but you should always send a letter to demonstrate interest in getting promoted when you are above zone. In general, you should try to get letters of recommendation from the most senior members who know you well enough to discuss your contributions to the Navy and why you should get promoted. For example, it is probably better to get a letter from an O6 who knows you well than to get a letter from an O8 who does not. Your specialty leader is always a solid choice as a letter writer if you are unsure who to get one from.
- You are reporting to a new command before the FITREP cycle and your Commanding Officer is willing to write a positive letter about your contributions to your new command.
- You have issues in your record or career that require explanation or amplifying information. For example, you want to tell the promotion board how promotion to the next rank will allow you to do something you can’t do at your present rank, like screen for XO. If there are any gaps in your military service or any new information not on your FITREPs, these may need explanation as well.
- You have to make corrections/additions to your record (like missing or illegible FITREPs, awards, academic or professional achievements, etc.) but you either don’t have time to update them the standard way or your have tried without success.
THINGS TO REMEMBER
There are a few things to keep in mind:
- After the board is finished, anything you sent is discarded. You cannot permanently update your record by sending documentation to the board.
- By law, a letter to the board must be considered. In other words, if you don’t want the board to discuss a topic, don’t mention it in a letter. If there is adverse information in your record, sending a letter discussing it may help if you have amplifying information to add. Then again, if it is something they might not have noticed, sending a letter discussing it ensures that they will notice it!
- Your Commanding Officer usually should not write a letter if he/she has done a FITREP on you, as his/her opinion should be reflected in the FITREP.
- They are usually not recommended if you are in-zone unless there is a reason to send a letter listed above. Do not send one just for the fun of it.
- Keep the length of letters to a minimum – one page or less – as boards have to read everything that is sent to them.
- Do not send copies of publications.
- Only the service member can send the letter on his/her behalf. In other words, if you have a letter from an admiral, you need to send it to the board. Don’t have the admiral’s aide send it because it will just get shredded and will not be briefed to the board.
- Your letter must arrive no later than the day before (2359) the board convenes.
HOW DO I WRITE/SEND THE LETTER?
Here are a Sample Letter to a Promotion Board and Promotion Board Correspondence FAQs. Also, see the following website:
http://www.public.navy.mil/BUPERS-NPC/BOARDS/ACTIVEDUTYOFFICER/Pages/default.aspx
How to Get on a Promotion Board
The promotion boards for FY17 are rapidly approaching, so I wanted to briefly discuss who makes up the promotion boards and how to get on one.
COMPOSITION OF THE BOARDS
The promotion boards consist of five voting members, and at least three of them are required to have board experience. Someone is designated the senior member or board president. In addition, there is always a line officer on medical corps boards, and this is one reason you can’t use medical abbreviations on your FITREPs without explaining what they mean. That line officer could be the one briefing your record and he/she may not know what AHLTA, STEMI, DM, or CVA mean. The remainder of the board will be filled by a diverse group of officers. There will always be at least one woman on the board and one minority, although the same person could meet both of these requirements. In addition, there will be a geographic dispersion including at least one member from outside the continental US (OCONUS).
The board recorders are the officers who review your record for a week before the board members arrive and the board convenes. There will be a head recorder as well as assistant recorders and they will all be from CONUS. In other words, you cannot serve as a board recorder if you are stationed OCONUS because it just costs too much money for travel.
HOW DO I GET ON A PROMOTION BOARD?
This one is simple as you just have to e-mail your Detailer and ask. Keep in mind, though, that the demand to be on a board far outnumbers the spots that exist. When I was a Detailer I had a folder in my Outlook e-mail where I put everyone who wanted to be on a board, and there were between 50-100 names in there. During the 15 months I served at PERS, I only had to contribute about 10 names for a board. With the requirements related to board composition that we discussed above, opportunities may only be present for officers meeting these requirements.
Specialty Leader vs Detailer – What’s the Difference?
Many Medical Corps officers don’t understand the difference between their Specialty Leader and their Detailer. After you read this post, this won’t be a problem.
DIFFERENCE #1 – WHO THEY WORK FOR
A Specialty Leader works for Navy Medicine (BUMED), the Surgeon General, and the Medical Corps Chief while a Detailer works for Navy Personnel Command (NPC or PERS). NPC/PERS is a line command, while BUMED is obviously medical. This difference is probably not of significance to the average Naval physician, but it can make a difference at times because these two commands (and people) will look at things from a different perspective.
For example, lets say you are one of two subspecialists at NH Camp Lejeune and you have a fairly light clinical load. You decide you want to leave early to get to your next command, Naval Medical Center Portsmouth (NMCP), because they are actually down one provider in your specialty due to the illness of another member of your community. Your Specialty Leader will probably endorse this early move because it makes sense. You are underemployed at Lejeune and there is a need at NMCP.
Your Detailer, however, will look at it differently. First, you haven’t served your full tour, so moving you early will require a waiver that may be denied by PERS. This largely has to do with money and PCS rules and has nothing to do with your specialty or the needs of the Navy. I’m not saying that Detailers don’t care about the needs of the Navy because they do, but they are constrained by the rules of PERS while a Specialty Leader is not.
DIFFERENCE #2 – WHAT THEY DO
A Specialty Leader serves as a liaison between you, BUMED, and your specialty as a whole. He or she also coordinates deployments, although the control they have over this was lessened by the return to platform-based deployments (deployments determined by what billet you are in or what unit/platform you are assigned to rather than whose turn it is to deploy). They also serve as a consultant both to you and your Detailer when it comes to career management and PCS moves.
A Detailer is your advocate to help you advance in your career, prepare for promotion boards by improving your officer service record, and negotiate orders for your next PCS. They will often speak with both you and your Specialty Leader while trying to balance your needs with the needs of the Navy. They also are the final approval authority for extension requests and actually write your PCS orders.
DIFFERENCE #3 – WHAT THEY DON’T DO
Specialty Leaders do not write orders. Many physicians think that the Specialty Leader is the one who decides what orders they get and where they PCS, but the reality is that Specialty Leaders can’t write orders. Only Detailers can, therefore it is the Detailer who makes the final decision in nearly all cases. If there is a good Specialty Leader-Detailer relationship, most of the time both are in agreement and there is no controversy, but about 5% of the time there is at least some level of disagreement that has to be worked out.
Detailers can write your orders to a command, but they do not influence who gets command-level leadership positions. For example, you may want to go to Jacksonville to be the Department Head of your specialty’s department. A Detailer can write you orders to Jacksonville, but which physician the command picks to be Department Head is up to them, not the Detailer (or the Specialty Leader).
Specialty Leaders will often talk to commands, but Detailers usually do not. The Detailer is SUPPOSED to talk to three people – you, the Specialty Leaders, and the Placement Officers. The Placement Officers are officers at PERS who represent the commands. You can think of them as the detailers for commands. They make sure that commands aren’t taking gapped billets, that the providers sent to the command meet the requirements of the billet they are entering, and weigh in on other issues like extension requests.
I say that a Detailer is SUPPOSED to talk to three people and USUALLY does not talk to commands, but the reality is that commands frequently call the Detailer instead of talking to their Placement Officers. This often happens because the Director at a command knows the Detailer but doesn’t know the Placement Officer. In addition, the Detailer is usually a physician (3 of 4 Medical Corps Detailers are physicians, the 4th is a MSC officer) and the Placement Officer is always a MSC officer. Physicians like talking to other physicians.
Finally, Specialty Leaders do not alter your officer service record. In fact, unless you send it to them, they can’t even see it or your FITREPs. Detailers, on the other hand, can see just about everything and can update/change some things, mostly additional qualification designators or AQDs.
WHY SHOULD I CARE ABOUT ANY OF THIS?
Because you must actively manage your career to get what you want. This means you should talk with both your Specialty Leader and Detailer 9-18 months ahead of your projected rotation date (PRD). You should discuss your short and long-term goals, whether you want to PCS or extend, whether you are planning a Naval career or want to resign or retire, your family situation, and your medical situation if applicable.
Most importantly, though, is to be honest with both your Detailer and Specialty Leader. Most Specialty Leaders get along well with the Detailer, so if there is any disagreement between the three of you make sure that you keep things professional and respectful at all times. It’s a small Navy and, to be honest, it will be readily apparent if you are playing one off against the other.
Who’s On Your List?
In my opinion, every Naval physician needs to have a list of people. On this list are the people who you absolutely, positively will not mess with. When you talk to them, you show them the utmost respect. When they ask you for something, you give it to them better and faster than you ever give anyone anything. These are the people who have determined your career path to this point and are likely to continue to steer if for the near future.
Who’s on your list? If you don’t know, you should think about this as soon as you can. You might think it is silly, but I’d actually make a list. Just to show you I’m serious, I’ll share my list:
- Current Emergency Medicine (EM) Specialty Leader
- Prior Deputy Commander of NMC Portsmouth
- Prior EM Specialty Leader
- Current Director of Medical Services at NMC San Diego
- Prior EM Specialty Leader and Deputy Medical Corps Chief
Why are they on my list? They are Emergency Physicians like me, and they are the most senior and potentially influential people in my career. They are the people who are senior to me, well thought of in my specialty, and get phone calls or in person inquiries when I apply for a leadership position. For example, one of the people on this list thought of me when the Detailer job became available and endorsed me for it.
Who’s not on my list? There are no admirals on my list. As a CDR, it is rare that I’m on the radar of an admiral. Some of them know who I am, and some of them could have a major impact on my career path, but it is unlikely that they’ll take a huge interest in my career until I’m a CAPT and qualify for major leadership positions working directly for them. If an admiral wants to know about Joel Schofer, they’ll probably call one of the CAPTs on my list and ask them about me.
Who should be on your list? The people you should consider putting on your list include:
- Your Specialty Leader and prior Specialty Leader
- Your Detailer
- Influential people in your specialty who are 1-2 ranks senior to you
- Whoever is currently in the job(s) you want
Undoubtedly there are other people you should consider, but this list is a good start.
Once you create the list, here are the things you need to keep in mind. Always treat these people with the utmost of respect. You should always treat everyone with respect, but these people get special attention. Never get into an argument with them. I’m not saying you have be a “yes man” (or woman) and agree with everything that they say, but any disagreement needs to be collegial and respectful. You want to prevent them from getting mad at you, if at all possible. When they ask you for something or they give you a task, it immediately rises to the top of your to-do list. In addition, you never give them anything but your best, maximal effort.
The Navy is a large organization that can appear impersonal, but people run it. The people on your list are the ones who are going to determine your future and whether you get want you want or not. If I were you, this is one list I’d put some thought into and actually make.
How to Manage Your PRD and Not Get Stuck with a Hotfill
(This is a re-post of one of my first blog posts. Since it was back in the beginning when the blog didn’t get much traffic, I wanted to repost it because I think it is one of the most important posts on the site:)
There are many important dates in your Navy career. One of the most important and neglected dates, though, is your projected rotation date or PRD. Your PRD is the month and year that your current orders will expire and you are scheduled to rotate to a new command. If you don’t manage your PRD and pay close attention to it, you can find yourself with few career options and in a situation you never thought you’d be in. With that in mind, here are my tips for managing your PRD.
First, know when it is because many physicians don’t know their PRD. If you are in this crowd, the easiest way to find your PRD is to login to BUPERS On-Line and look at block 14 of your Officer Data Card:
The other way to find your PRD is to contact your detailer because they can look it up in the detailing system. Many physicians don’t know their detailer, so here is a link to a page with “Contact Us” in the middle. That link will take you to your detailer’s contact info, but note that it is CAC protected:
http://www.npc.navy.mil/bupers-npc/officer/Detailing/rlstaffcorps/medical/Pages/default.aspx
Once you know your PRD, the easiest way to manage it is with whatever calendar you use (an app, web calendar like Google Calendar, Outlook, a date book, etc.). Place reminders in your calendar to correspond with these time frames:
13-18 MONTHS BEFORE YOUR PRD – This is when you should start thinking about your next career move. Although the normal time period to request an extension (find a template here) at your current command is 9-12 months before your PRD, many physicians request an extension during this time period if they are sure they want to extend. This is also a great time to talk to the operational detailer about operational billets you might have interest in or the senior detailer about what I’ll call “alternative billets” like those at DHA/BUMED, BUPERS, global health engagement billets, NAVMEDWEST, NAVMEDEAST, etc. If you act on your PRD in this timeframe, you’ll be well ahead of the game.
9-12 MONTHS BEFORE YOUR PRD – This is the traditional detailing window where you contact your detailer and specialty leader to negotiate your next career move. This is when physicians normally submit an extension request as well as explore potential billets for their next set of orders. The one caveat is that the availability of billets is often contingent on the results of the Graduate Medical Education Selection Board or GMESB. Since these results are not finalized until January, people with summer PRDs will find that they may have to wait beyond this time period to find out what billets are available and get orders.
6-8 MONTHS BEFORE YOUR PRD – This is when the list of billets that are actually available will solidify and most physicians will get orders. If you want to extend at your current command and you haven’t submitted an extension request yet, you should do that ASAP.
1-5 MONTHS BEFORE YOUR PRD – Many physicians will get into this period without orders. If it is because you were waiting on the results of the GMESB, you are probably fine. If you are in this period for another reason, you should get nervous. The truth is that unanticipated things always happen. Commanding Officers don’t endorse extension requests. Unanticipated openings cause a detailer and specialty leader to have a “hotfill” billet. When things like this happen, a detailer goes looking for officers close to their PRD to fill the need. If you are in this window without orders, you are low lying fruit for filling these needs. And just so you know, most of these “hotfills” are not in Rota or San Diego.
AT YOUR PRD OR BEYOND – Physicians let their PRDs pass all the time. Sometimes it is because they submit an extension request that never gets approved because it gets lost somewhere in the process. Other times they don’t know when their PRD is. Realistically, there is often no consequence if your PRD “expires,” although some commands will pick up on this fact and get your attention by threatening to take away your computer access. The biggest threat, though, is the aforementioned “hotfills” that inevitably show up. If your PRD is expired, you are going to rise to the top of the list when the detailer goes looking for people to fill that need. Have fun wherever that “hotfill” is.
THE BOTTOM LINE – Know when your PRD is and manage it according to the above timeline. This will give you the maximum chance of getting what you want and reduce the chance that you are selected for a “hotfill” you don’t want.
3rd Step to Financial Freedom – Debt Management
“Annual income, twenty pounds; annual expenditure, nineteen pounds; result, happiness. Annual income, twenty pounds; annual expenditure, twenty-one pounds; result, misery.” – Wilkins Micawber in David Copperfield
Debt has a bad reputation. It is prevalent, no one wants it, and everyone who has it wants to get rid of it. Everyone wants to be debt free.
There is, however, another way to look at debt. Debt is a financial tool to meet your personal and financial goals. For example, according to the Association of American Medical Colleges the median level of medical student debt was $180,000 in 2014. While we’d all agree that this level of debt is high, when necessary it has allowed most of us to meet our personal goal of becoming a physician.
Dealing with Debt Wisely
Banks and financial institutions see physicians as low-risk and are willing to loan us a lot of money, which can be good or bad. You can probably get a loan to buy a $100,000 luxury car, and while this might be fun, it is probably not wise. The same thing goes for a jumbo mortgage.
Every time you are considering a loan, you should ask yourself if what you are about to purchase is worth it. Will that fancy car or extra large house truly bring you happiness? Or does it just bring a ton of overhead, increased expenses, and four extra rooms you’ll need to buy furniture for.
The book The Millionaire Next Door by Stanley and Danko was a longitudinal study of millionaires. This study showed that most millionaires don’t drive expensive cars. In fact, most drive “normal” cars or buy them used. In addition, most don’t live in large houses in expensive neighborhoods. Their study showed that physicians are notorious for buying these items to live up to society’s expectations. Doctors are supposed to drive luxury cars and live in expensive neighborhoods, right? This is also why they found that physicians under accumulate wealth and have much a lower net worth than their income would predict.
Do yourself a favor and buy a smaller house, drive a less expensive car, and avoid a boat. You don’t want to own the boat, you want to be best friends with the owner of the boat. Skip the vacation home. You can probably rent an equivalent home for much less than it would cost to buy it, and in 2013 the Nobel Prize in Economics was given to Robert J. Shiller, who showed that housing prices barely outpace inflation over the long haul, making real estate a less attractive investment.
While the ultimate goal is to get to the point where you can pay cash for cars and other major purchases, you will likely take out loans for some period of time when a major need arises. Here are some financial rules of thumb to keep you from getting in debt beyond what you can handle:
- Monthly debt payments (excluding your mortgage) should be <20% of your monthly income.
- Your housing costs should be <30% of your income.
No matter what debt you accumulate, make sure you always make your payments on time. The #1 factor that goes into calculating your credit score is your ability to make timely payments on your debt, and your credit score will determine the interest rate you are charged on nearly every loan you ever take. One late $50 payment could cost you thousands of dollars on a mortgage, for example.
Credit Cards
“Keeping a balance on your credit card is about the worst financial move you can make.” – Burton G. Malkiel, Chair of Economics, Princeton University, Author of A Random Walk Down Wall Street
The quote above says it all. If you are going to use a credit card for the convenience, always pay off the entire balance every month because the interest rates they charge can be very high. If you can’t control your credit card debt, cut them up, cancel them, or only have one that you use in special circumstances. If you have to keep credit card debt, make sure you ask your credit card company to lower the rate or transfer the debt to a low rate card. Check credit.com, cardtrak.com, or lowcards.com for a list of low rate cards.
Good Debt?
In addition to helping you achieve financial goals that are important to you, debt can be used to limit the amount of your own investments that must be in cash equivalents. Having easy access to credit can provide a nice backstop in case of a sudden need for cash.
If you have equity in your home, a home equity line of credit can serve this purpose. Their interest rates are usually low and the interest is often tax deductible, further lowering the cost of borrowing. Home equity lines of credit (and other lines of credit as well) should be set up in advance, not after you or your spouse/partner loses their job and you are a credit risk. Beware of fees your lender may charge and see if you can find one that will waive them for a slightly higher interest rate. A slightly higher interest rate isn’t that big of a deal as you hope to never use this line of credit anyway.
Student Loans
Despite the HPSP program and USUHS, many readers will have significant student loans. Since I never had student loans, I will admit that this is a weak area in my financial knowledge. By far the best source for information on student loans, paying them off, getting them forgiven, and refinancing them is The White Coat Investor. I would STRONGLY ENCOURAGE anyone, especially those with student loans, to check out this resource. It is unparalleled and the most useful financial site for physicians on the web.
Probably the most important step that residents can take to pay off their student loans is to avoid jumping straight into the “doctor lifestyle” as soon as they graduate residency. If you continue to live like a resident until your student loans are paid off, it shouldn’t take more than a few years to get rid of them, after which you can splurge a little and enjoy your income free of student loans. This is easy to type and hard to do, but just a few years of “roughing it” can wipe out your student loans.
Paying Off Debt
When you pay off debt, you are earning an after-tax return equivalent to the interest rate you are being charged. For example, if you pay off credit card debt with an 18% interest rate, this is the equivalent of earning a guaranteed 18% return on your investment tax-free. With the long-term rate of return for the stock market averaging just under 10%, you can see that paying off high-rate debt is often a better move than investing in the stock market. In other words, it makes no sense to pay the minimum on high-interest debt like credit cards while investing in the stock market. Pay off your high interest debt first.
The one exception to this is if you get an employer match on your retirement account contributions. If you get a 50% match, that is an immediate 50% return on your investment, so contribute to your retirement account up to the maximum that your employer matches, then pay off high interest debt. Unfortunately, military physicians don’t get any match right now.
If you have multiple loans, pay off the one with the highest interest rate first. In addition, see if you can stretch out the payments for your low interest loans over a longer period of time, lowering your monthly payments and freeing up cash to pay off your higher interest debts faster. For example, if you have credit card debt with a 14% interest rate, a car loan with an 8% rate, and a mortgage with a 5% rate, pay off the credit card first, then the car loan, and then the mortgage.
Keep in mind that it often doesn’t make sense to pay off debt when the interest rate is lower than the after-tax rate you could earn on an investment. If you want a number, I would pay off high-interest debt (rates greater than 6-8%) such as credit cards, car loans, and private educational loans. If the rate is less than 6%, as with most mortgages nowadays, it probably makes more sense to invest the money in mutual funds and pay off the debt as slowly as possible.
Another move to consider is to take out a home equity loan to pay off high interest debt. You get a lump sum with a fixed interest rate that is often lower than your current debt and pay it off over 5-15 years. In most cases the interest you pay is tax deductible. Keep in mind that you could lose your house if you default on this type of loan, and beware of any up front fees that you need to factor into your calculations.
Conclusion
Don’t wait until a crisis hits (divorce, job loss, disability, or a lawsuit) to get your debt in order. If you have major problems with debt and need help, seek a fee-only financial planner with experience with high-income individuals who can help you restructure and manage your debt.
Joel Schofer's Career Planning Blog 