RN to medical school and loans

[FCMike11]

I have never posted here and hope this is the appropriate forum, please bare with me I would really apprecite any advice.

I will be applying for the upcoming cycle a year from now. I am enrolling in a program to finish my bachelor's degree (some 30 credit hours) and will be done by the time application cycle opens. Total cost is approximately 9k. My wife is also a nurse and is doing the exact same thing so she can have her bachelor's by the time we move to a larger city.

We have aproximately 8k in savings (I work full time she is part time) and we also have a 10 month old. So over the next 12-18 months we will be shelling out a combined +/- 18k for education (on top of application fees/traveling).

I feel like the best course of action is to pay for hers in cash (we can manage that as we go along paychecks) but to pay cash for both we would have to dip into our savings. I believe we would be better off paying hers off as we go and taking out loans for mine, as the 9k wont be a huge difference in the end when I am going to have medical school loans as well.To clarify wife will be working full time when I start medical school, so no loans for living expensives will we necessary. I also live in Texas so if I can stay in state (TCOM is appropriate for my stats) loans wont be huge.

Total other debts amount to some 18k on a car (0 % interest, no rush here), and 2k in credit card debt (computer/wedding dress, this will be paid off by the end of december). Currently no student loans

My questions are: is the correct course of action to take out loans for the remainder of my education? Also will I have to start paying on these as soon as I finish my bachelors, or will I be able to defer along with my medical education until I am a resident? (this wouldnt be a huge deal either way, itd be nice if it could be deferred so less bill for wife to pay while in medical school)

---

Members don't see this ad.

 

[Glimmer1991]

How high is the interest rate on the CC debt? Unless it is 0% (I'm guessing it's not or you would have told us), I would kill that immediately... no waiting until December. It's 2k. Kill it. Assuming it is at around ~10% interest, it's hard to get that kind of return on your money anywhere else.

I am almost certain that while you are in school full-time, you can defer your undergrad loans. Otherwise, people who take the traditional route straight from undergrad --> med school would have no shot at making the payments. Interest will still accumulate, but you won't need to make payments.

Take out as much in loans as you have to--nothing unusual there.

Also curious... how old are you?

I may be off base here, though. Someone with more experience please chime in.

 

[FCMike11]

How high is the interest rate on the CC debt? Unless it is 0% (I'm guessing it's not or you would have told us), I would kill that immediately... no waiting until December. It's 2k. Kill it. Assuming it is at around ~10% interest, it's hard to get that kind of return on your money anywhere else.

I am almost certain that while you are in school full-time, you can defer your undergrad loans. Otherwise, people who take the traditional route straight from undergrad --> med school would have no shot at making the payments. Interest will still accumulate, but you won't need to make payments.

Take out as much in loans as you have to--nothing unusual there.

Also curious... how old are you?

I may be off base here, though. Someone with more experience please chime in.

All of the CC debt is 0% interest (unless we let it fall out of the time range). I get your point though, maybe we will just take the money out of savings and slam it now.

Yeah i actually found some information, as long as your stay part time you defer, so ill just have to continue taking 6 hours a semester until I start.

I am 24.

 

[Glimmer1991]

All of the CC debt is 0% interest (unless we let it fall out of the time range). I get your point though, maybe we will just take the money out of savings and slam it now.

Yeah i actually found some information, as long as your stay part time you defer, so ill just have to continue taking 6 hours a semester until I start.

I am 24.

Oh! If the CC is at 0%, then by all means, pay it off until the end of the term. I was afraid it was at 10% or more.

Another thought... If you aren't already, keep your savings in an account that actually gets some interest gains. There are online savings accounts that get ~0.8% right now, which is better than nothing. I recently made the switch to Ally Bank and really like it--I get 0.87% on my savings account, and I've had no issues with the company thus far. I like that I can also have my checking with them, too. The 0.87% is much better than the 0.01% I was getting with Bank of America...

 

[FCMike11]

Oh! If the CC is at 0%, then by all means, pay it off until the end of the term. I was afraid is was at 10% or more.

Another thought... If you aren't already, keep your savings in an account that actually gets some interest gains. There are online savings accounts that get ~0.8% right now, which is better than nothing. I recently made the switch to Ally Bank and really like it--I get 0.87% on my savings account, and I've had no issues with the company thus far. I like that I can also have my checking with them, too. The 0.87% is much better than the 0.01% I was getting with Bank of America...

We use a rinky dink local area bank with almost nothing in regards to returns. Thanks for the specific example I will look into it, it has bothered me that my bank genuinely offers me nothing. So you get 0.87 of total savings balance compounded a month?

 

[Glimmer1991]

We use a rinky dink local area bank with almost nothing in regards to returns. Thanks for the specific example I will look into it, it has bothered me that my bank genuinely offers me nothing. So you get 0.87 of total savings balance compounded a month?

http://www.ally.com/bank/online-savings-account/?INTCMPID=HP_NAV_SVG
There is the link to some info about it.

The interest technically compounds daily, but they deposit it all in one chunk at the end of the month. My savings account makes more money in ONE DAY than it did in an entire YEAR at Bank of America. LOL!

I really, really like this bank. My Dad uses Capital One 360 (formerly ING) and likes it well enough, but the interest rate isn't as high and it takes a lot longer for e-check deposits to go through. So far, I have absolutely no complaints about my checking or my savings account.

I keep a tiny balance (right at the minimum) at a brick and mortar bank just in case I ever need a physical bank for one reason or another.

Oh, and here is info about the checking account: http://www.ally.com/bank/interest-checking-account/

Transfers between your Ally checking and savings accounts are instantaneous. I keep almost all of my money in my savings account because the interest rate is much higher; but, when I need it in my checking, I just transfer it over and its there.

I put everything on my credit cards and hardly ever anything on debit, so I usually just make one "big" transfer from my savings to checking whenever my CC bills are due. I have all of my CC due dates on the same day for this reason.

 

[The White Coat Investor]

You're a lot more comfortable with debt than I think you should be. "It's not big deal, it's at 0%." "Our $18K car loan is at 0%, so no big deal." "Might as well pay cash for hers and borrow for mine since I'm going to have so much debt anyway." I think changing your behavior/attitude toward debt will lead to a lot more wealth in the long run than how you decide this particular financial question.

Here's what I'd do. I'd sell the $18K car, buy a $5K car, pay off the credit cards, pay cash for both of your educations this year (yes, you'll probably still need to take out some med school loans but maybe very little if your wife makes a lot or you moonlight as a nurse in med school), and never take out another loan again on a credit card or a car. But if you like carrying debt and driving a car the bank owns, feel free to do something else. Why do I feel like Dave Ramsey right now?

 

[FCMike11]

You're a lot more comfortable with debt than I think you should be. "It's not big deal, it's at 0%." "Our $18K car loan is at 0%, so no big deal." "Might as well pay cash for hers and borrow for mine since I'm going to have so much debt anyway." I think changing your behavior/attitude toward debt will lead to a lot more wealth in the long run than how you decide this particular financial question.

Here's what I'd do. I'd sell the $18K car, buy a $5K car, pay off the credit cards, pay cash for both of your educations this year (yes, you'll probably still need to take out some med school loans but maybe very little if your wife makes a lot or you moonlight as a nurse in med school), and never take out another loan again on a credit card or a car. But if you like carrying debt and driving a car the bank owns, feel free to do something else. Why do I feel like Dave Ramsey right now?

I get your point. My previous vehicle was about to break down and bought prius (anticipating it lasting me until the end of residency). Selling the car would only pay off the car loan. Then what? Still looking at having to deplete my savings to purchase another car/pay for my education.

 

[The White Coat Investor]

I get your point. My previous vehicle was about to break down and bought prius (anticipating it lasting me until the end of residency). Selling the car would only pay off the car loan. Then what? Still looking at having to deplete my savings to purchase another car/pay for my education.

What do you mean, then what? Then you get a $5K car loan instead of an $18K car loan. When that's paid off, you start saving toward your next car, which you pay cash for. You can pay off a $5K car a lot faster than an $18K one, or at least it costs you less in cash flow each month if you stretch out the payments.

I guess this is something I'll never understand. Why people feel this need to spend a bundle on cars is beyond me. A lot of it seems like an irrational fear of a car breaking. That's what cars do. Stuff breaks. You repair it. New cars break. Cars with 100K miles break. Cars with 200K miles break. Unless the repair costs more than the car is worth, you're almost always better off repairing it than buying a new one. This idea that unless you spend $18K on a car it's a bucket of bolts is crazy. You can buy brand new cars with 100K mile warranties for less than that. Certainly you can get something very reliable with 50K miles for less than that (2009 Mazda 3 with 50K miles is $9K). That could last you 10 or 15 years depending on how much you drive. You can buy a 10 year old Sentra with 100K miles on it for $4K. You can certainly get 5 years out of that, probably 10. You could buy 4 of those for $18K and just throw them away when the windshield wiper breaks if you like.

Don't tell me this doesn't work. In the last 15 years my family has owned 7 cars. I paid $19K, $6K, $8K, $3K, $3K, $4K, and $2K for them. Only one was driven into the ground (make sure you put the oil cap back on after changing the oil). Two were totaled and insurance paid us about what we paid for them. Two others were sold for about what we paid for them and we still have two.

Look. If you're making $300K, then fine, buy what you like (with cash) and drive it for as long as you like. If you're a broke medical student or resident, then live like it. You're basically renting a car at this point. You make payments every month and its value is falling at the same rate as the loan is being paid off.

Rant over.