how to manage student debt

[sazerac]

By the way, thank you all for voting. Congratulations to those who voted zero debt, all income. That must be an incredibly liberating feeling to be debt free

Any sage advice to share? Are you guys med students, pgy's or attendings?

Yes, it is incredibly liberating, thanks for asking. Here was my "secret":

(1) my scholarship was bigger than yours
(2) my savings before medical school was bigger than yours
(3) my income during medical school was bigger than yours
(4) I didn't put debt on credit cards

I just don't think my strategy is very applicable to the general medical student audience. Students have very little control over their scholarships. Many don't have any control over their tuition. Most didn't have high paying jobs before medical school. Most don't have working spouses. For most, having a job during medical school would be an incredibly poor use of limited time.

I take a keen interest in medical student debt because I worry about my peers. I learned a lot about the topic, and I spend some time answering questions and correcting misinformation in the financial aid & finance forums on this site.

When I see your posts here (and I've read your blog too), I just don't see much that you can offer the typical medical student. You earned about a year of tuition by working during med school. You got second year of tuition via a combination scholarships / personal savings / credit card bonuses. You flat out charged a third year of tuition to credit cards in a dangerous and frankly dishonest shell game. We still haven't accounted for either your fourth year of tuition nor any home expenses.

What exactly is your advice here in the MS-0 and beyond forum? Med students and acceptees should invest their savings for 11% returns? Med students and acceptees should pull scholarships out of thin air? Med students and acceptees should float a lifestyle on what are essentially liar loans on whack-a-mole credit cards? I'm not seeing it.

I'd like to end my post on a positive note, so how about this: You seem to have earned a lot of wage income as a medical student. What kind of jobs should medical students look for? What kind of income should they seek to make it worthwhile? How much can they work during years 1, 2, 3, and 4? We've had a few theoretical posts in here and in pre-allo about the topic, but you seem to have genuine experience in this department. You pulled it off successfully. Any sage advice to share?

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[Red Lobster Actual]

Also because he actually went nuts. But go on.

To be fair, he was kind of a raging dick.

Hahaha, fair enough.

Bleaching your hands before touching a baby is an incredibly stupid idea

True, but so is delivering babies right after coming out of cadaver lab without washing your hands. Which was what those medical students were doing prior to the hand washing policy change.

 

[Debt Free Doctor]

Yes it is.

Lying on a credit card application is FRAUD. If the card is from a federally insured bank, it becomes a federal crime which is punishable by hefty fines and/or imprisonment. If the OP is really doing this and recommending it, this is extremely bad advice.

I'd advise her to delete that information before a credit card company traces this back to her. Admitting fraud on-line is unwise. Your anonymity is not assured.

I agree. No one should lie on their credit card application.

But I do advise everyone to try to get a side job, that can be easy like library desk, clinic volunteer coordinator, something where they can study to boost their income.
Additionally, since we are all pretty successful academically, tutoring is quite high return/hour side job as well

 

[Debt Free Doctor]

this thread is full of win. Man if you posters represented all U.S. doctors, maybe the public wouldnt hate doctors so much (well except for DFD).

I really hope people, especially here on SDN, don't hate me.
Because I could have just kept my success to myself and NOT share anything learned... One thing I didn't emphasize is how much work it took ME to learn these strategies or build it from scratch for myself... I didn't read someone's post and have a game plan from the get go...

I thought I might have been doing a good thing when I started this thread.

Yes, everyone has a different time line and different level of tolerance for credit card debt.
I am only putting my experience out here so people take what they want.

If one doesn't have enough credit line to charge all tuition, then charge 1/2, or charge 1/4, or charge whatever amount suits your credit and your style of debt management.

It really just comes down to, "I" was more comfortable with carrying a 0% interest debt that came with cash incentive but requires some work (ie. reading the terms, shifting the money around every 12-18 months), than carrying a federal student loan that starts charging 5.4-6.8% or even higher (Not sure what's the max, never went there) day one of disbursement...

I wanted EVERY dollar of payment I make to my debt go towards PRINCIPLE, or as much as possible.

Sure it seemed more work to deal with credit card debt than federal student debt.

But I justified the hours of management I pour into switching credit cards and doing homework with quite a bit of "tax free" "guaranteed" return as it is interest savings not actual taxable income. The cash back incentives are 1099 income.

 

[Debt Free Doctor]

Yes, it is incredibly liberating, thanks for asking. Here was my "secret":

(1) my scholarship was bigger than yours
(2) my savings before medical school was bigger than yours
(3) my income during medical school was bigger than yours
(4) I didn't put debt on credit cards

I just don't think my strategy is very applicable to the general medical student audience. Students have very little control over their scholarships. Many don't have any control over their tuition. Most didn't have high paying jobs before medical school. Most don't have working spouses. For most, having a job during medical school would be an incredibly poor use of limited of time.

I take a keen interest in medical student debt because I worry about my peers. I learned a lot about the topic, and I spend some time answering questions and correcting misinformation in the financial aid & finance forums on this site.

When I see your posts here (and I've read your blog too), I just don't see much that you can offer the typical medical student. You earned about a year of tuition by working during med school. You got second year of tuition via a combination scholarships / personal savings / credit card bonuses. You flat out charged a third year of tuition to credit cards in a dangerous and frankly dishonest shell game. We still haven't accounted for either your fourth year of tuition nor any home expenses.

What exactly is your advice here in the MS-0 and beyond forum? Med students and acceptees should invest their savings for 11% returns? Med students and acceptees should pull scholarships out of thin air? Med students and acceptees should float a lifestyle on what are essentially liar loans on whack-a-mole credit cards? I'm not seeing it.

I'd like to end my post on a positive note, so how about this: You seem to have earned a lot of wage income as a medical student. What kind of jobs should medical students look for? What kind of income should they seek to make it worthwhile? How much can they work during years 1, 2, 3, and 4? We've had a few theoretical posts in here and in pre-allo about the topic, but you seem to have genuine experience in this department. You pulled it off successfully. Any sage advice to share?

Congrats to you!!!

You are definitely in the best position.
As prevention is the best medicine
This is true for debt management for sure!

I don't agree with any of the following, and not sure how you got these ideas...
Med students and acceptees should invest their savings for 11% returns? Med students and acceptees should pull scholarships out of thin air? Med students and acceptees should float a lifestyle on what are essentially liar loans on whack-a-mole credit cards?

Could you please share with us how you got the awesome scholarships?
how you got the bigger savings prior to med school?
what did you do during med school for such good income?

 

[jeffk805dent]

Additionally, since we are all pretty successful academically, tutoring is quite high return/hour side job as well

two problems with tutoring:

1.) you have to be really really good in the subject that students want, and it often includes subjects in organic chemistry and Calculus II - stuff that I wouldn't call easy to teach someone else

2.) there are a lot of tutors out there and sometimes the student-customer often reneges a deal at the last minute because they found someone else or they used chegg to solve all their homework problems. Tutoring is easy said than done.

 

[Debt Free Doctor]

Yes, it is incredibly liberating, thanks for asking. Here was my "secret":

I'd like to end my post on a positive note, so how about this: You seem to have earned a lot of wage income as a medical student. What kind of jobs should medical students look for? What kind of income should they seek to make it worthwhile? How much can they work during years 1, 2, 3, and 4? We've had a few theoretical posts in here and in pre-allo about the topic, but you seem to have genuine experience in this department. You pulled it off successfully. Any sage advice to share?

On your positive note,
I do advise everyone to try to get a side job, that can be easy like library desk, clinic volunteer coordinator, something where they can study to boost their income.
Additionally, since we are all pretty successful academically, tutoring is quite high return/hour side job as well
Not only will you know your stuff better (basic sciences, MCAT, boards, any MCAT course, etc) but also you enjoy making income and helping someone else out!

I've formally tutored (get paid for) since I was 14... and always have a love for education and collaboration (as you can tell from my effort in starting this thread...)

 

[Debt Free Doctor]

two problems with tutoring:

1.) you have to be really really good in the subject that students want, and it often includes subjects in organic chemistry and Calculus II - stuff that I wouldn't call easy to teach someone else

2.) there are a lot of tutors out there and sometimes the student-customer often reneges a deal at the last minute because they found someone else or they used chegg to solve all their homework problems. Tutoring is easy said than done.

Perhaps, tutoring was always the first thing that came to me when I need additional income...
cuz I'm sort of nerdy, love taking standardized tests... and enjoy helping others do well.

 

[sazerac]

Could you please share with us how you got the awesome scholarships?
how you got the bigger savings prior to med school?
what did you do during med school for such good income?

While I could, and I have in the past in this forum and other places on this board, I will politely decline now. Nothing I did would cause any current or incoming medical student to change their behavior one bit, so it's irrelevant.

To get savings before medical school, go get a job and then apply to medical school. The scholarship process is so random that it makes medical school applications look deterministic. My current income is leftovers from what I did before medical school. etc. I have nothing to offer the Allopathic forum on SDN on this topic.

 

[RangerBob]

I agree the OP's methods likely aren't for everyone--I think the reason she succeed isn't so much due to her methods but her attitude towards debt. That likely led her to be far more thrifty than most of us and then get creative with what she did have to borrow. Using credit cards is risky, but if you do it right it's certainly possible. There was one point where I was getting those offers every few weeks, often without any balance transfer fee. Personally I prefer federal loans and the safety net they provide, but I just like to play things safe. And I accrued $40k in interest in medical school by doing just that...

I wish I had given a lot more thought to my loans before I started medical school, and I think that's the main take-home point people should take from the OP--you don't have to copy what she did exactly, but you can learn a lot from what she's done. I wish I knew about WCI and all that years ago. Read up the advice from as many people as you can and then develop your own financial plan for medical school to minimize the amount of debt your in. Step number 1 should always be borrow as little as possible.

Not everyone can work during medical school (or for the money you do make to be worth it), but explore your options. I definitely could've had time to work as a medical student, in M1 and M2, but I didn't. As an intern I couldn't moonlight, but I was allowed to work non-clinical jobs during vacations. Since my wife's jobs at the time allowed minimal vacation, I used two weeks of vacation time to do some EMR consulting. I was able make an extra ~$10k (closer to $7 or 8k after self-employment taxes) that I put almost exclusively towards loans. My loans are nowhere near paid off, but it sure felt good to apply that additional payment to a private loan I took out for my post-bac.

The OP has a kid, went to a private school, and came out with very little debt, which is amazing. If there's one take-home point from her experience, it should be: get resourceful.

 

[ortnakas]

This is credit card roulette and luck at best, and credit card fraud at worst. I'm very glad things are working out for you, OP, but I don't think it's a solid recommendation for pre-meds and current students.

 

[Debt Free Doctor]

I agree the OP's methods likely aren't for everyone--I think the reason she succeed isn't so much due to her methods but her attitude towards debt. That likely led her to be far more thrifty than most of us and then get creative with what she did have to borrow. Using credit cards is risky, but if you do it right it's certainly possible. There was one point where I was getting those offers every few weeks, often without any balance transfer fee. Personally I prefer federal loans and the safety net they provide, but I just like to play things safe. And I accrued $40k in interest in medical school by doing just that...

I wish I had given a lot more thought to my loans before I started medical school, and I think that's the main take-home point people should take from the OP--you don't have to copy what she did exactly, but you can learn a lot from what she's done. I wish I knew about WCI and all that years ago. Read up the advice from as many people as you can and then develop your own financial plan for medical school to minimize the amount of debt your in. Step number 1 should always be borrow as little as possible.

Not everyone can work during medical school (or for the money you do make to be worth it), but explore your options. I definitely could've had time to work as a medical student, in M1 and M2, but I didn't. As an intern I couldn't moonlight, but I was allowed to work non-clinical jobs during vacations. Since my wife's jobs at the time allowed minimal vacation, I used two weeks of vacation time to do some EMR consulting. I was able make an extra ~$10k (closer to $7 or 8k after self-employment taxes) that I put almost exclusively towards loans. My loans are nowhere near paid off, but it sure felt good to apply that additional payment to a private loan I took out for my post-bac.

The OP has a kid, went to a private school, and came out with very little debt, which is amazing. If there's one take-home point from her experience, it should be: get resourceful.

I wish I had gotten across to people as eloquently as you did.
In the end, I'm just trying to alert people to the danger of unrelenting interest of loans/debts in general.

You are right on that "necessity is the mother of inventions." We are all smart and determined folks to be in medicine, perhaps a small fraction of attention put into debt management can reap pretty large marginal benefit... Wish everyone the best and optimistic to learn from anyone who has stories to share

 

[Debt Free Doctor]

Step number 1 should always be borrow as little as possible.

So true.

Since taking out student loan (in my experience from the medical school I attended) was as easy as shooting my financial aid counselor an email as "I need 10k unsub loan." and the check arrives within 30 days, I didn't see a reason to borrow in advance...

I just simply delay and minimize borrowing student loan as much as possible.

 

[Debt Free Doctor]

This is credit card roulette and luck at best, and credit card fraud at worst. I'm very glad things are working out for you, OP, but I don't think it's a solid recommendation for pre-meds and current students.

Luck is preparation meets opportunity is what I like to think

I did lots of homework and paid all my bills on time...

I do feel lucky and grateful that building credit during med school did prepare me to purchase my 1st home before med school graduation, on doctor's loan. It also positioned me well to refi my house within 7 months of purchasing it to further lower my mortgage interest, at no cost.

I'm sure you have a solid plan for your own debt management and net worth building.
Please do share if you have something to add in this respect

I like to learn from everyone, hence starting the post in the first place.

 

[Debt Free Doctor]

While I could, and I have in the past in this forum and other places on this board, I will politely decline now. Nothing I did would cause any current or incoming medical student to change their behavior one bit, so it's irrelevant.

To get savings before medical school, go get a job and then apply to medical school. The scholarship process is so random that it makes medical school applications look deterministic. My current income is leftovers from what I did before medical school. etc. I have nothing to offer the Allopathic forum on SDN on this topic.

Thank you!
I'm pretty new to SDN.
Could you either link us to the other places on this forum where you discussed the above?

 

[Apoplexy__]

Thought I'd weigh in on a couple things that caught my eye...

Additionally, I wouldn't be surprised at all to hear that other companies would reject her for a card if they saw she had a history of this. While OP may be building up good long-term credit once everything gets paid off, she is also destroying her ability to get a card from these companies and their associates.

Time will tell, but I would be very surprised if this were the case. Almost all credit card applications are instant-decision these days, and the computer algorithm is not sophisticated enough to make this sort of decision. I suppose a more in-depth look at an account is theoretically possible, but one is unlikely to make more than a round-trip transfer of balances per company (i.e. the more likely situation is Chase --> Citi --> Amex --> Discover --> Chase) in the duration of this "shell-game".

I do have to say that I am jealous of @kirbymiester for already having money invested. That would be a pretty amazing start to the future nest egg...

Hah, thank you. But >80% of my capital is debt anyway, so it's really nothing more than a strategic financial move for those not risk averse.

fraud fraud fraud fraud fraud fraud fraud

It is fraud to lie about your income on a credit application. However, many medical students are middle class; the combined income of many medical students and their parents exceeds $150k. If this is the case, and you're not putting that as your "income available to pay off debt" (and you're >21 yrs), then you're selling yourself short. This is explicitly stated in most credit card applications -- they want you to qualify for more debt, so they can make more money off you.

For the record, there are several red flags that can warrant a "financial review" for Amex, where they do actually formally request financial documents for proof of income. This may be the case for other companies as well. Don't be stupid.

 

[pathologyDO]

Thought I'd weigh in on a couple things that caught my eye...



Time will tell, but I would be very surprised if this were the case. Almost all credit card applications are instant-decision these days, and the computer algorithm is not sophisticated enough to make this sort of decision. I suppose a more in-depth look at an account is theoretically possible, but one is unlikely to make more than a round-trip transfer of balances per company (i.e. the more likely situation is Chase --> Citi --> Amex --> Discover --> Chase) in the duration of this "shell-game".



Hah, thank you. But >80% of my capital is debt anyway, so it's really nothing more than a strategic financial move for those not risk averse.



It is fraud to lie about your income on a credit application. However, many medical students are middle class; the combined income of many medical students and their parents exceeds $150k. If this is the case, and you're not putting that as your "income available to pay off debt" (and you're >21 yrs), then you're selling yourself short. This is explicitly stated in most credit card applications -- they want you to qualify for more debt, so they can make more money off you.

For the record, there are several red flags that can warrant a "financial review" for Amex, where they do actually formally request financial documents for proof of income. This may be the case for other companies as well. Don't be stupid.

When they ask about your income they are asking about YOUR income, not your parents. Unless you're putting your parents names on your card or account as well, then OK definitely add them in. But otherwise you should only include your own income. Now, if you got away with it great! I just think its terrible advice to tell people to commit credit fraud, especially online on a high traffic forum. Its just bad form

 

[calvnandhobbs68]

Let's just make a caveat here that many schools aren't going to let you charge your tuition to credit cards. OP is lucky her school did but most schools either won't or will charge a "convenience fee" equal to the amount Visa/MC is dinging them for processing the payment.

 

[Debt Free Doctor]

Great info
Wasn't aware of that some school charge you fees for using credit card to pay tuition.
The way to combat this is to Balance transfer into your checking account, then write your school a check for the tuition. You can avoid the credit card charge fee from your school, but you will likely miss out on the cash back bonuses.
It's a trade off, and you will know by the number which route to take.

IE if you school charges you 3% fee, and the cash back bonus is mere 1% for credit card purchases. I will go for the Balance transfer route.

If somehow you make a net positive by charging tuition on credit card INSPITE of the fee your school charges, then I will take this route.

 

[Apoplexy__]

When they ask about your income they are asking about YOUR income, not your parents. Unless you're putting your parents names on your card or account as well, then OK definitely add them in. But otherwise you should only include your own income. Now, if you got away with it great! I just think its terrible advice to tell people to commit credit fraud, especially online on a high traffic forum. Its just bad form

I was being serious about most card applications explicitly stating in the prompt to include your parents' income. It's not fraud, it's literally what their directions tell you to do.

Here's an attached screenshot from Chase Slate's application:

 

[xffan624]

I was being serious about most card applications explicitly stating in the prompt to include your parents' income. It's not fraud, it's literally what their directions tell you to do.

Here's an attached screenshot from Chase Slate's application:
View attachment 190256

That's assuming you actually receive income from your parents. I can't say I have ever regularly received income from my parents post-21 years of ago.

 

[pathologyDO]

I was being serious about most card applications explicitly stating in the prompt to include your parents' income. It's not fraud, it's literally what their directions tell you to do.

Here's an attached screenshot from Chase Slate's application:
View attachment 190256

That doesn't say include your parents salary, that says you can add that couple hundred monthly that your parents give you to help out. Totally different. One adds a few thousand, the other adds potentially hundreds of thousands.

For the record I have only applied to 2 credit cards and neither asked for my parents income to be included in my total income. It may have said to add any parental contributions, however.

 

[sazerac]

I was being serious about most card applications explicitly stating in the prompt to include your parents' income. It's not fraud, it's literally what their directions tell you to do.

Here's an attached screenshot from Chase Slate's application:
View attachment 190256

I do count my income tax refund as a part of my annual income. The federal government made $3.02 trillion dollars last year, so is it okay if I include all that as my income too?

 

[Apoplexy__]

That doesn't say include your parents salary, that says you can add that couple hundred monthly that your parents give you to help out. Totally different. One adds a few thousand, the other adds potentially hundreds of thousands.

For the record I have only applied to 2 credit cards and neither asked for my parents income to be included in my total income. It may have said to add any parental contributions, however.

That's assuming you actually receive income from your parents. I can't say I have ever regularly received income from my parents post-21 years of ago.

Good point. The wording of that one does sound more like what you guys are saying. Many times the wording is more like "all income available to pay off debt," which is very intentionally vague. I'll probably call up a representative next time I apply to be sure I can include parental gross income.

Sometimes that prompt is in the fine print, which may explain why some applications do and don't appear to state that.

I do count my income tax refund as a part of my annual income. The federal government made $3.02 trillion dollars last year, so is it okay if I include all that as my income too?

Yes. And China's government as well.

 

[Debt Free Doctor]

I was being serious about most card applications explicitly stating in the prompt to include your parents' income. It's not fraud, it's literally what their directions tell you to do.

Here's an attached screenshot from Chase Slate's application:
View attachment 190256

This is great information.

Thank you for doing the homework and bringing it to SDN.

I actually didn't remember reading this myself... but probably because my parents never were able to provide financial help...
I was sending money home working 7 jobs in college. Don't get me wrong, they were amazing parents

This is exactly what I wanted to foster with this thread. Discussion and awareness.
While everyone's circumstance is different, we can all stand to be educated and informed or even challenged by one another.

For those who have received regular support from parents, which many of my classmates had; some even had pretty much full ride paid for by family.
This is great news.

Because if they use the fact that they have nearly 80k annual income (from family support), they will qualify for amazing credit limits and enjoy cash back benefits that they can (and required by law to) report as 1099, then fund their ROTH IRA up to the income they "DID" earn via 1099 or W2's.

I never was in this position but if anyone is, and starts building their credit AND retirement in med school, I'm happy for them

 

[Debt Free Doctor]

Let's just make a caveat here that many schools aren't going to let you charge your tuition to credit cards. OP is lucky her school did but most schools either won't or will charge a "convenience fee" equal to the amount Visa/MC is dinging them for processing the payment.

good point to note.
but a way to work around this and still ride 0% interest for 12-18 months is to take advantage of balance transfer deals...
often time there's a transaction fee such as 3% for 18 mos, which is effective interest rate of 2% annually.
which means you still stands to save fed student loan interest rate -2% for the duration of 12-18 months.

A couple 1000's of savings per 15k tuition payment may not be worth it for people to do the balance transfer.
but for someone who's arch enemy is debt and interest against me, it was worth my time

Plus there are fee-less balance transfer offers, which means "effective" interest rate is truly 0%.

 

[Stagg737]

Time will tell, but I would be very surprised if this were the case. Almost all credit card applications are instant-decision these days, and the computer algorithm is not sophisticated enough to make this sort of decision. I suppose a more in-depth look at an account is theoretically possible, but one is unlikely to make more than a round-trip transfer of balances per company (i.e. the more likely situation is Chase --> Citi --> Amex --> Discover --> Chase) in the duration of this "shell-game".

Are you saying prior cancellations wouldn't either send a red flag to an actual account manager or be accounted for in the algorithm? I find that somewhat hard to believe. Plus, if she ever had any issues and an account manage had to pull up her files, I'd be shocked if some of her old records or past history didn't come up as well. I'm sure that she could apply to those companies 7-10 years and it could be overlooked, but I'd rather not risk putting myself in a situation like that.

 

[Debt Free Doctor]

Many times the wording is more like "all income available to pay off debt," which is very intentionally vague."

Totally agree. Credit card companies does seem to make the fine line "intentionally vague."
As it they do stand to benefit from "approving" higher credit limit, getting more fees with larger purchases, and with hopes of charging interest on larger revolving balance.

One can see that credit card companies WANT to give you more limit and WANT you to make large purchases.

As long as you never borrow with the intention to file for bankruptcy, I think you are a responsible and upright

On the other hand, I did have classmates who max out their student loans to fund their retirement because they believe their massive student loans ultimately will be forgiven and paid for by the tax payers.

I am not saying one should not seek forgiveness when facing onerous debt of 300k-500k.
Just that the intention behind it is important as well.

 

[Apoplexy__]

Are you saying prior cancellations wouldn't either send a red flag to an actual account manager or be accounted for in the algorithm? I find that somewhat hard to believe. Plus, if she ever had any issues and an account manage had to pull up her files, I'd be shocked if some of her old records or past history didn't come up as well. I'm sure that she could apply to those companies 7-10 years and it could be overlooked, but I'd rather not risk putting myself in a situation like that.

I'm a bit confused what you mean. There's nothing wrong with cancelling a card after using it for 12+ months, then applying for another card within the same company soon after. It's very normal behavior. I've personally kept most of the credit cards I've balance transferred away from as well -- it increases my aggregate limit to improve my credit score.

I get it though, this stuff is risky and you may have to be a unique individual in unique circumstances to try it. I just wanted to be edgy and go against the SDN hivemind. +100 cool pts

 

[calvnandhobbs68]

good point to note.
but a way to work around this and still ride 0% interest for 12-18 months is to take advantage of balance transfer deals...
often time there's a transaction fee such as 3% for 18 mos, which is effective interest rate of 2% annually.
which means you still stands to save fed student loan interest rate -2% for the duration of 12-18 months.

A couple 1000's of savings per 15k tuition payment may not be worth it for people to do the balance transfer.
but for someone who's arch enemy is debt and interest against me, it was worth my time

Plus there are fee-less balance transfer offers, which means "effective" interest rate is truly 0%.

Sure but that has to do with the CC companies and transferring balances between them. The fee I'm talking about is charged by the schools themselves to offset the fee charged by the CC companies for processing the payment. Average fee is around 2-3% though, which is still below the interest you'd be paying on those loans.

 

[calvnandhobbs68]

I'm a bit confused what you mean. There's nothing wrong with cancelling a card after using it for 12+ months, then applying for another card within the same company soon after. It's very normal behavior. I've personally kept most of the credit cards I've balance transferred away from as well -- it increases my aggregate limit to improve my credit score.

I get it though, this stuff is risky and you may have to be a unique individual in unique circumstances to try it. I just wanted to be edgy and go against the SDN hivemind. +100 cool pts

Eh but you usually get dinged pretty significantly on your credit score for having so much activity going on. I find it pretty surprising that the poster has a score in the 740s but it could be true that those massive payments are balancing out her relatively short average credit history. Opening up multiple credit cards with large credit maxes is actually a big red flag in credit scoring, as it can indicate that you're about to put a lot of debt onto credit cards and then try to move it around to avoid paying (basically what this poster did). What they're concerned about of course is that you won't actually pay it off, because if you don't have the money to pay it off in 2-3 years it's unlikely (from their standpoint) that you'll have the money to pay it off in the future. Of course, OP actually paid off the debt, which probably offset this but I wouldn't have expected it to offset it to such a degree that she would still be riding a 740 credit score. Pretty interesting overall but it seems like OP knows what she's talking about.

 

[Debt Free Doctor]

Eh but you usually get dinged pretty significantly on your credit score for having so much activity going on. I find it pretty surprising that the poster has a score in the 740s but it could be true that those massive payments are balancing out her relatively short average credit history. Opening up multiple credit cards with large credit maxes is actually a big red flag in credit scoring, as it can indicate that you're about to put a lot of debt onto credit cards and then try to move it around to avoid paying (basically what this poster did). What they're concerned about of course is that you won't actually pay it off, because if you don't have the money to pay it off in 2-3 years it's unlikely (from their standpoint) that you'll have the money to pay it off in the future. Of course, OP actually paid off the debt, which probably offset this but I wouldn't have expected it to offset it to such a degree that she would still be riding a 740 credit score. Pretty interesting overall but it seems like OP knows what she's talking about.

Thanks
I did start doing this since 2007
Though not large balances and charges until med school because I was never a spender

And I was always responsible w my credit

 

[Debt Free Doctor]

I guess other things that helped my current credit are my house payments (didn't buy a house until the month I was graduating from medical school)
And my oldest credit card is 17 years old

 

[Debt Free Doctor]

so glad to see many
0 (no debt, all income) votes!
will you tell us where you are in your training/career (I assumed not everyone who voted was a med student or resident)
and how you got to where you are financially?

 

[fancymylotus]

What did I just read?
And does any of it help me buy more shooz?
I need to learn more about credit card stuff. I don't have many and have a combined limit of less than what you have. Somewhat on purpose so I don't overspend because that would suck.

 

[Stagg737]

I'm a bit confused what you mean. There's nothing wrong with cancelling a card after using it for 12+ months, then applying for another card within the same company soon after. It's very normal behavior. I've personally kept most of the credit cards I've balance transferred away from as well -- it increases my aggregate limit to improve my credit score.

I get it though, this stuff is risky and you may have to be a unique individual in unique circumstances to try it. I just wanted to be edgy and go against the SDN hivemind. +100 cool pts

@calvnandhobbs68 touched on what I was talking about. I meant that credit card companies wouldn't like to have that kind of debt passed around for long periods of time like OP did. If you're using a card regularly and making payments on it, then I'm sure they wouldn't mind. The impression I got from OP was that she was using these cards purely for her loans and wasn't making payments on them because it was 0% interest. As stated, if a cardholder was doing this for long periods of time, as a credit company I would start to wonder if they were ever going to actually get around to paying these charges back. Not to mention the potential for bringing your credit score down is pretty high. If that happens it'll be significantly more difficult to get a house or car or anything major that requires strong credit.

I guess if the cardholder is making payments>$0 though the credit companies are still making money, so maybe they wouldn't care. I just feel like there are more details to doing this that make it more difficult than OP is making it out to be. Couple that with the risk of something going wrong and I don't think this method would be right for most people, myself included.

 

[Debt Free Doctor]

@calvnandhobbs68 touched on what I was talking about. I meant that credit card companies wouldn't like to have that kind of debt passed around for long periods of time like OP did. If you're using a card regularly and making payments on it, then I'm sure they wouldn't mind. The impression I got from OP was that she was using these cards purely for her loans and wasn't making payments on them because it was 0% interest. As stated, if a cardholder was doing this for long periods of time, as a credit company I would start to wonder if they were ever going to actually get around to paying these charges back. Not to mention the potential for bringing your credit score down is pretty high. If that happens it'll be significantly more difficult to get a house or car or anything major that requires strong credit.

I guess if the cardholder is making payments>$0 though the credit companies are still making money, so maybe they wouldn't care. I just feel like there are more details to doing this that make it more difficult than OP is making it out to be. Couple that with the risk of something going wrong and I don't think this method would be right for most people, myself included.

I did write down much more details on my website. So here I go, I'll take excerpt again...

How credit card companies compete to save me interest on student loans

The following describes what I did over 2.25 years. I started actively managing my debt in since 2007 with various time frames/ credit card offers because it is SIMPLE and GUARANTEES 1000’s of tax free return annually for my time

All I did was shifting money around to minimize AND delay interest.

The first credit card of choice I started with was CHASE SLATE. It offers FEE-less balance transfer during the first 60 days of opening the credit card and promotional interest of 0% for 15 months.
All I did was,

1. Check my credit score (no point applying if I think i have no chance of getting approved. why waste a hard inquiry and injure my credit score?)
2. Apply for CHASE SLATE card online
3. Get the balance transfer check in the mail in a few days
4. Read the fees/interest rate of the balance transfer checks carefully… (each person’s offer MAY vary)
5. Write a check of 15k to pay down my student loan
6. Enjoy 15 months of 0% interest instead of 6.8% on a principle amount of 15k
7. This equals $1275 guaranteed tax free savings for the 1.25 year starting with the date my balance transfer check is cashed by my student loan servicer.

When 15 months of 0% interest rate run out…

Here is what I did next,

1. Check my credit score (always, know where you are before you pounce)
2. Apply for a card with good balance transfer offers (fee should not exceed 2-3% for 0% APR of 1 year)
3. If you can find another CHASE SLATE equivalent, kuddos to you. I think SLATE has the best deal for balance transfer.
4. I didn’t see another card like SLATE with FEE-less, 0% balance transfer for 15 months.
5. So I went for the second best; CHASE FREEDOM card, which charges 2% transaction fee for balance transfer with 0% interest for 12 months. This means, the true annual interest is 2%, still heck of a lot better than the 6.8% student loan interest.
6. If this same 15k of principle were still held by my student loan servicer @ 6.8%, I would have accrued $1020 each year. Even worse, for those who are making IRB payments, where their student loan is going through negative amortization*, the interest accrued each subsequent year is getting exponentially larger!!!
7. But with the 2% interest of FREEDOM card, the interest on 15k for 1 year is $450.
8. Again, this is net guaranteed tax free savings of $1020- $450= $570, or more if loan has negative amortization. 4.8%+ GUARANTEED tax free annual return for this financial move.

So at the end of 2.25 years,
With a few mouse clicks and writing 2 checks,
I have saved $1845+ in interest on 15k of student loan.

I'd say the hardest part was building up the discipline/organization/credit to do this AND knowing which cards are the best to use in what situation.

Hope this provides some of the details you are looking for.
This is just how 15k of expenses (tuition or not) can be shuffled around for 2.25 years for interest much lower than student loan interest.

Since my tuition totaled ~200k over 4 years, and most offer are 12-18 months long... there may be a few balances getting shifted around at once...
I didn't track how all of my 12 times of ~15k tuition went, but the net result is that my total student loan is $733
and my total credit debt is $30,000 and because my credit limit is large (from years of showing credit worthiness), my credit score is 742 now.

But before I purchase a 2nd home for my parents (in 8-9 years), my credit should be back to 800+
As it is right now, Experian credit planning predicts that my credit score will be back to ~777 as long as I make all payments on time for 12 months.

By the way, Experian credit planning is a pretty cool tool
It wasn't available back in 2007 when I started building my credit actively.
But it sure gives you semi-crystal ball into how your actions will impact your FICO score.

 

[Debt Free Doctor]

The tool is called the FICO score simulator.
Much of what I learned through years of experiences/self education are totally summarized by this tool.
Wished that I had this earlier

Top is credit in 12 months if I keep the course and just make all payments on time.
Bottom is my current credit score.

 

[Debt Free Doctor]

The following is why I want to raise awareness about debt management.

When I got out of my car looking absolutely pooped from a 14 hour night shift cross covering 40 pts, admitting 5 new pts, and participating in 2 code blues, my mail man/ neighbor looked at me sympathetically and said people should really be nicer to doctors.

Then he told me that an average physician starts catching up to an average plumber financially (in net worth) at age of 57.
this woke me up!
*While this number isn’t the most accurate, it’s probably quite close to the reality.

The plumber starts working at age 18 vs. a doctor starts his attending job in his 30’s.

+ The time value of money put into retirement accounts starting at age 18 is WAY more powerful than that starting at age 38
+ Tremendous high interest snowballing student debt the doc accrues from age 18-early 30’s
+ Heavy taxes when the doc finally gets a real paycheck
= “doctors are wealthier than plumbers” is an illusion.

Most of us choose medicine/higher education because it is our calling/ passion, not for the money.
But it doesn’t mean we have to or want to be broke.

After starting my website, I'm very glad to be receiving messages from medical students and pre-medical students who are much more educated about debt/finance than I was.
I hope to start a grassroots movement where docs work into their 70's because they WANT to and not because they HAVE to.

Thank you for all the lively discussions thus far.
Please keep it up and share the lessons we learned with those who are coming after us, so that they have a less difficult and painful experience than ours

 

[Beamer128]

I figure I'd jump in here to defend Debt Free Doc.

I'm an SDN original. Check the join date and thoughtful nod to Harold and Kumar under my username. I have no idea who Debt Free Doc is, but I just happened to see her post about her blog on a website for our specialty. I thought some of her ideas were interesting and at the very least would spark some discussion in a topic that is woefully neglected across medical students, residents, and young attendings alike, so I encouraged her to post here and enlighten the youth.

I wake up every morning, log into Mint to check my net worth (-$348,464 and counting, woohoo!!), and wish that there was some way I could make this debt going away sooner so that the money I earn actually stays my money. It's disheartening to see everyone I went to college with owning homes, driving new cars, taking sweet vacations, etc. I encouraged her to post here because I know how active the medical student forum is and I wish I had done some of the things she posts about on her blog when I was a student.

Student loan debt is definitely something we all need to think long and hard about. Our salaries are getting smaller, and it's foolish to think that programs like PSLF are sustainable in the long haul (how do you think the public would react if they knew doctors making six figures had a program in place that would forgive hundreds of thousands of dollars in debt at the expense of the American taxpayer?) Medicine has proven itself time and time again to be reactionary to public perception (see MOC) and there isn't going to be anyone defending us when this comes to light.

TL; DR - educate yourself on debt/finance now (WCI, Debt Free Doc, Bogleheads, and whatever else is out there), do what you can to minimize your debt before you graduate, and don't depend on current programs that are in place now to be around in the future

And grammar police come at me bro, I too am on night float and can barely type haha

 

[pathologyDO]

So debt free doctor, would you layout how much money you saved by doing this credit card runaround, and then how much money you actually used from parents/jobs/tutoring/scholarships/government assistance. Numbers don't lie, so I would, if you wouldn't mind, like to see some factual numbers

Obviously the credit card scheme merely removes interest... yet you say you have almost no debt as a pgy-1. That necessarily means that you had to find ways to make an actual INCOME to pay for your loans and living expenses -> and I believe that this is where most students are not going to be able to do what you did... OR maybe we can? Please share your methods

 

[Debt Free Doctor]

I figure I'd jump in here to defend Debt Free Doc.

I'm an SDN original. Check the join date and thoughtful nod to Harold and Kumar under my username. I have no idea who Debt Free Doc is, but I just happened to see her post about her blog on a website for our specialty. I thought some of her ideas were interesting and at the very least would spark some discussion in a topic that is woefully neglected across medical students, residents, and young attendings alike, so I encouraged her to post here and enlighten the youth.

I wake up every morning, log into Mint to check my net worth (-$348,464 and counting, woohoo!!), and wish that there was some way I could make this debt going away sooner so that the money I earn actually stays my money. It's disheartening to see everyone I went to college with owning homes, driving new cars, taking sweet vacations, etc. I encouraged her to post here because I know how active the medical student forum is and I wish I had done some of the things she posts about on her blog when I was a student.

Student loan debt is definitely something we all need to think long and hard about. Our salaries are getting smaller, and it's foolish to think that programs like PSLF are sustainable in the long haul (how do you think the public would react if they knew doctors making six figures had a program in place that would forgive hundreds of thousands of dollars in debt at the expense of the American taxpayer?) Medicine has proven itself time and time again to be reactionary to public perception (see MOC) and there isn't going to be anyone defending us when this comes to light.

TL; DR - educate yourself on debt/finance now (WCI, Debt Free Doc, Bogleheads, and whatever else is out there), do what you can to minimize your debt before you graduate, and don't depend on current programs that are in place now to be around in the future

And grammar police come at me bro, I too am on night float and can barely type haha

You are so awesome, I'm very grateful

 

[Hemorrage]

So debt free doctor, would you layout how much money you saved by doing this credit card runaround, and then how much money you actually used from parents/jobs/tutoring/scholarships/government assistance. Numbers don't lie, so I would, if you wouldn't mind, like to see some factual numbers

Obviously the credit card scheme merely removes interest... yet you say you have almost no debt as a pgy-1. That necessarily means that you had to find ways to make an actual INCOME to pay for your loans and living expenses -> and I believe that this is where most students are not going to be able to do what you did... OR maybe we can? Please share your methods

Even merely removing interest is still money saved. For example, borrowing full CoA ~70k would be around $400 in interest every month- adding up to ~4500-4800 a year. Avoiding this interest for 12-18 months is still worthwhile.

 

[Debt Free Doctor]

View attachment 190284

So debt free doctor, would you layout how much money you saved by doing this credit card runaround, and then how much money you actually used from parents/jobs/tutoring/scholarships/government assistance. Numbers don't lie, so I would, if you wouldn't mind, like to see some factual numbers

Obviously the credit card scheme merely removes interest... yet you say you have almost no debt as a pgy-1. That necessarily means that you had to find ways to make an actual INCOME to pay for your loans and living expenses -> and I believe that this is where most students are not going to be able to do what you did... OR maybe we can? Please share your methods

Great question.

Here's the rough break down. I tried digging for my records and found some. some are my best estimates...
Feel free to ask questions. I try running the numbers a couple times... but question away if something doesn't make sense.

I did live with my parents for 1 year and didn't have to pay rent & ate freely, got free babysitting for a year!

 

[Debt Free Doctor]

Even merely removing interest is still money saved. For example, borrowing full CoA ~70k would be around $400 in interest every month- adding up to ~4500-4800 a year. Avoiding this interest for 12-18 months is still worthwhile.

Can't agree more

Interest saving is the best guaranteed tax free "return" one can get

 

[Debt Free Doctor]

As you can tell, I live very frugally, one might even say too cheap!!
If I live the way my school seems to suggest with their proposed cost of attendance, I would have accumulated lots more debt!
Also notice, savings in LOAN origination fees added up to ~ 10k too. Although I didn't avoid all the loan origination fee, I probably did save at least 5k in LOF.

 

[Debt Free Doctor]

Things I didn't spend money on

1. clothes
2. shoes
3. accessories
4. cars
5. eating out
6. partying
7. gym membership
8. books (I am not a reader. I A'ced college and med school without reading text books. I blame it on the fact that English is my 2nd language.)
9. boards prep other except for U world for a couple months
10. expensive hotels on interview trail (I did airBNB)
11. expensive lodging during audition rotations (I lived on a boat and cooked for the captain for my rotation at Mayo Jacksonville)
12. hair cuts, my daughter does a great job, she's gotten more professional since her first attempt at the age of 2!
13. make up, if you can't tell already, I don't give a ****
14. I really don't know what people spend money on these days...

*I was working so much and caring my for my child "as a single mom" for part of me school, I simply had no time to spend money


Things I cared to spend money on,

1. Opportunities for my child (ballet, horseback riding, painting, etc.)
2. food, I cooked almost daily, organic non-GMO
3. charity (god provided the ways to give at times, I didn't list it above)

this pretty much sums it up, hope this helps

 

[Debt Free Doctor]

So debt free doctor, would you layout how much money you saved by doing this credit card runaround, and then how much money you actually used from parents/jobs/tutoring/scholarships/government assistance. Numbers don't lie, so I would, if you wouldn't mind, like to see some factual numbers

Obviously the credit card scheme merely removes interest... yet you say you have almost no debt as a pgy-1. That necessarily means that you had to find ways to make an actual INCOME to pay for your loans and living expenses -> and I believe that this is where most students are not going to be able to do what you did... OR maybe we can? Please share your methods

Hope I had answered your questions with the above 3 posts.
If I can do it, you can do it too

 

[Hemorrage]

View attachment 190285
As you can tell, I live very frugally, one might even say too cheap!!
If I live the way my school seems to suggest with their proposed cost of attendance, I would have accumulated lots more debt!
Also notice, savings in LOAN origination fees added up to ~ 10k too. Although I didn't avoid all the loan origination fee, I probably did save at least 5k in LOF.

Can you explain how you dealt with the minimum payments? For example, one pays 5k/20k of semester tuition with a credit card offer that as 0% APR for 12 months. Did you use existing money to pay for your monthly payments?

 

[Debt Free Doctor]

Can you explain how you dealt with the minimum payments? For example, one pays 5k/20k of semester tuition with a credit card offer that as 0% APR for 12 months. Did you use existing money to pay for your monthly payments?

exactly!
you are a quick study.

Since I have limited cash flow but LOTS of expenses.
I saved very bit of cash for ONLY expenses that can't be paid for with credit cards...

Credit card minimum payment is one of these

Now, I always pay 1+minimum payment, because I somehow believe that it gets me a better FICO score to pay "above" min payments.
Could be superstition or even heresy... I'm Asian after all.