You might find it worthwhile to read the book The Millionaire Next Door. The authors spend plenty of time discussing exactly your question and warn about how many doctors’ spending habits don’t lead to actual wealth (vs. income).
Here’s a wiki summary.
When I was 20, I had an interview for a well-paid job as a computer programmer. After the interview, the panel asked if I had any questions.
My first was “What is the pension like?”
Not only did that get me a very favourable response, I am now getting the pension (and it’s jolly good!)
I always paid my credit card off in full and saved for a deposit before buying a house.
Having done all that, I am now retired.
I have visited Vegas for a month. It cost about $2,500 (I stayed at the Luxor on the Strip and the cost includes return air-fare from the UK.)
Are you being ripped off?!
What those people are doing is called Consumption Smoothing. To some extent, it makes sense.
If you knew that you were going to have income that alternated between $10K/year and $200k/year every other year, it would not make sense to alternate between living in a shared studio and renting a 3-bdrm house and between eating ramen and caviar. It would make sense to take some debt in the first year to live at a higher standard and pay it off with higher income in later years.
However, there are risks.
Arguing that a few thousand dollars is minor compared to the hundreds of thousands in current debt is a cognitive bias. The utility-maximizing way to decide how much to spend on a trip to Vegas is to calculate how much effort it will take you to pay back the debt. This should actually go up as you have more debt, since you’ll have to take longer to pay off any additional debt and you’ll pay more interest (or you’ll forgo more future spending to pay it off quicker, which will be more painful).
But instead of considering the value in absolute terms, they’re comparing it in percentage terms and then deciding that as a small percentage, it doesn’t really matter. This is going to bite them in the end. But there’s a limit to how much you can save someone from their own poor decisions.
Remember a few years ago when people were buying houses with plasma TVs, and bundling the TV’s 4- or 5-figure cost into their mortgages? Yeah.
It’s not unusual for pharmacists to have serious financial problems too, especially because so many of them nowadays are graduating with 6-figure student loan debts AND cannot find a job.
I’m glad I lived frugally myself and was able to retire early. 
Even though I understand the rationale to live it up now when you’re young enough to appreciate it, I think there’s something to be said for delayed gratification. This is a skill that has to be honed just like anything else. If you can’t learn to have fun on the cheap when you’re young and unjaded, then you’re never going to be able to feel “rich”.
That said, I do envy people who are able to throw caution to the window and not worry about the financial “what ifs” all the time.
To give an extreme example, as a Peace Corps volunteer we received around $120 a month. This was more than enough to live a modestly comfortable life, and fulfilled the goal of integrating into the lifestyles of our community. And since these communities were rarely shopping and entertainment meccas, we rarely missed the cash.
Every few months, however, we would decamp for training in the big city, where all manner of things were available. Specifically, the big city had a delicious honest-to-god Tex-Mex restaurant with gooey cheesy nachos, giant margaritas, and real drip coffee. The prices were “absurd”, in that you’d pay $3-6 for a (full, American sized) meal. A local street food meal, for comparison, might cost around fifty cents. So half of us would happily head off to our delicious, highly anticipated treat. The rest (who made being a cheapskate a bit of a game) would grumble about it being too expensive and eat yet another bowl of noodles.
By scrimping and saving, they often managed to save up a couple hundred dollars over the couple years. Maybe it was worth it to them, but personally, the amount of agony they spent over spending two extra dollars made no sense. Each of us now easily drops a couple bucks on things like a cup of bad gas station coffee without blinking. That couple hundred extra dollars could have given them a HUGE improvement in their quality of life for quite some time, while realistically here it’s unlikely to go far. There certainly isn’t difference now financially between the folks who were tight with their living allowance and those who spent it fairly freely-- the salaries we make here now are so high they easily overwhelm any amount of saving we could have done out there.
Anyway, it’s all a matter of degrees. But the goal should be to make smart decisions, not just to blindly follow a rigid formula.
Except that one of the ways things change is that they get a lot more freaking expensive. So while your income may grow, what it costs to cover your monthly nut also grows. So you can’t assume that what seems like a lot of money to live off of as a single 20 something will be sufficient when you have a family and are trying to build a different sort of life.
Attending here who counsels my residents on financial matters on a pretty regular basis.
Yeah, it’s probably OK to come out of residency a few grand in the hole, personal debt-wise. I took out some extra money in my last year of med school to do some traveling, and I bought a slightly nicer car than I could have gotten by with in residency which meant keeping some credit card debt mostly unpaid. The plan was to pay all of that off in my first year in practice…and I did. The memories of my time in Italy or of driving home post-call with the top down are absolutely worth any extra interest I may have paid.
That doesn’t mean you can afford to be stupid.
A few far more important things:
–Make sure you have a few grand saved up for when residency ends. Depending on the timing of your job you might go a couple of months without a paycheck, and the landlord doesn’t take plastic. Getting a medical license or getting board certified involves sending surprisingly large checks to random people. If they’re your only choices, I’d say you’re better off coming into the last half of your last year with $6K in credit card debt and $3K in the bank than with $3K in credit card debt.
–The most important thing (which others have touched on): don’t raise your standard of living all at once as you come out of residency! Don’t raise it at all at that point if you can avoid it. If you’re working in the same town, don’t buy a house at that point. Don’t buy an expensive car. You can eat in better restaurants if you want, but don’t make any big financial commitments.
You might feel jealous of your colleagues in their big new houses and expensive cars, but you’ll feel much better a year from then when you’re personal-debt free and have a chunk of change sitting in the bank and they’re house-poor and making minimum credit card payments. Security isn’t having a big paycheck coming in; it’s having money in the bank.
Sounds like you’ve got your head screwed on straight. You’ll be fine.
When your young you have lots of time and no money and when your old you have lots of money and no time. It makes sense to borrow some money from the older you and use the time to make memories.
But gambling in Vegas seems less like making memories and more like poor impulse control. Being debt free or having small debt load can make you a lot freer to make decisions. You may find the first job you get has a horrible boss, and you can quit and look for a new job instead of having to keep working to service the debt.
Infinite income is a myth. Assured income is a myth. Ever-rising income is a myth. The notion of disposable income is a myth.
Spendy-spendy-spending because you will have only increasing income for the rest of your adult career is a hell of a lot higher on the risk scale than most people think. Ask any auto worker in 1975, any steel worker around 1980, most specialized tech workers around 2001 and pretty much any other “assured career” worker around 2008.
When the authors of The Millionaire Next Door examined the habits of wealth building (almost 20 years ago now!), they found that a surprisingly high percentage of high earners had failed to accumulate wealth proportionate to their income. All too many, it appeared, were undisciplined spenders and, worse, their ability to generate income gave them the perception that* money was the easiest thing of all to accumulate.*
Which is true for them, of course, right up until the time when you can’t anymore. And by then it’s too late. This habit is also prevalent in professional athletes; some ridiculous percentage of whom are broke two years after retiring from their sport.
Change…one thousand!
Hit!
Pair of eights…
Split em’!
Eighteen and eleven…
Double down!
Thirteen…Dealer has 21.
It is no less true for the average wage-earner; merely proportional and thus not found in tabloid headlines. But Joe Programmer sitting in a homeless shelter looks just like Joe Superstar.
We are deeply conditioned to be idiots about our personal wealth.