Credit Card Debt

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huskygirl123

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This post was meant to find out if anyone knew of any special loans/programs to cover credit card debt while in medical school that I was unaware of. Got some good advice from some of you and from the financial aid counselors.

So thank you for all of you who took the time to write some useful advice, and thank you to the others who expressed their frustration/feelings/judgements - they are all valid.
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Start being frugal. Sheesh 470 for the car....that's way too much
 
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I concur with the others. Get rid of the car. Oh, and stop eating out so much.
 
How much is the car worth? It can be hard to sell a used car for what you currently owe. and, then what will you do for a car??

How much did you pay for the car and how old is it?

The car debt may not be the easiest to get rid of.

Why do you have so much CC debt?


One thing you might do is this.... Borrow the full COA for med school, but find CHEAP housing so that you can put a good bit of your COA loan towards your CC debt or car debt.

The summer before med school, I worked full time in a restaurant saving as much as I could in income and tips. Do something like that.

Are you working now? If not, you should be.

I know this sounds blunt, but without additional info, it appears that you're an inpulse buyer. A college kid doesnt need a car with $26k loan. If you've been paying on that for a bit, then you certainly purchased a much better car than what was needed. A $12k car would be reliable and plenty decent for a college student. I am still driving the car my parents bought me in high school! When this one dies, I'll get some reliable car for about $12k that will get me thru the rest of med school and thru residency. I can't even imagine what the insurance is on your car.

The $22k in CC debt also sounds like impulsive purchases. You're being charged high interest on all that debt. If you thought that you were buying some "great deal" purchases (maybe something on sale), the discount will be long lost by the interest you're being charged.

Are you only making minimum payments on all that debt? do you have a parent who can pay some of this off and you can make payments to them (without that horrible interest rate)?


edit: It appears that you're on a gap year. If so, then I hope that you're working full time and living frugally while throwing every dime at that CC debt.
 
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that's a helluva cc debt. I agree with the post above that said borrow full COA and a find a place with cheap rent so you can put as much of the difference down on that card.
 
NotaCop said:
You're screwed with those numbers man. Are you URM? Start applying DO asap
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? Why?

the OP has already been accepted to a MD school. What advantage would going to a DO school be?

I think the OP is OOS for the Arizona med school that has accepted her, so the cost may be high, but I would think that DO schools would be just as $$ if not more.


I now see that the OP is a non-trad who has been working for several years. This even more suggests a lot of impulse buying. The income should have been high enough to provide without racking up high debt.

Guessing that the OP is fully employed now. If so, cut up the CCs, eat at home, and pay down those credit cards. The car will also be a problem. Likely hard to sell for what you owe. You're still going to need a car.

I hope you have family that can help you with this.
 
Sell the car, live frugally (no more eating out, frequent bar tabs, buying clothes you don't need) and throw everything you can at that cc debt.

Once you get out of this remember it as a lesson not to spend money you don't have

Edit: if you need a car 2k is a reasonable amount to spend. I saw 12k above, wtf
 
SOMBound13 said:
? Why?

the OP has already been accepted to a MD school. What advantage would going to a DO school be?

I think the OP is OOS for the Arizona med school that has accepted her, so the cost may be high, but I would think that DO schools would be just as $$ if not more.
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200w.gif
 
Holy smokes. I've been feeling guilty for taking out loans to get through undergrad, but you've taken out more loans just on your credit card and car than I did to fund my education. I'm not saying that to make you feel bad, but that should really put into perspective how much you've been spending.

Call your bank or credit card company, whomever you're borrowing from, and see if you can set up a payment plan when you start back in school.
Likewise, figure out what you'll still owe on your car if you sell it and see if they'll let you spread out your loans over a few more years.
Finally, read up on Dave Ramsey and quit spending so much gawddamn money that you don't have.
 
SOMBound13 said:
How much is the car worth? It can be hard to sell a used car for what you currently owe. and, then what will you do for a car??

How much did you pay for the car and how old is it?

The car debt may not be the easiest to get rid of.

Why do you have so much CC debt?


One thing you might do is this.... Borrow the full COA for med school, but find CHEAP housing so that you can put a good bit of your COA loan towards your CC debt or car debt.

The summer before med school, I worked full time in a restaurant saving as much as I could in income and tips. Do something like that.

Are you working now? If not, you should be.

I know this sounds blunt, but without additional info, it appears that you're an inpulse buyer. A college kid doesnt need a car with $26k loan. If you've been paying on that for a bit, then you certainly purchased a much better car than what was needed. A $12k car would be reliable and plenty decent for a college student. I am still driving the car my parents bought me in high school! When this one dies, I'll get some reliable car for about $12k that will get me thru the rest of med school and thru residency. I can't even imagine what the insurance is on your car.

The $22k in CC debt also sounds like impulsive purchases. You're being charged high interest on all that debt. If you thought that you were buying some "great deal" purchases (maybe something on sale), the discount will be long lost by the interest you're being charged.

Are you only making minimum payments on all that debt? do you have a parent who can pay some of this off and you can make payments to them (without that horrible interest rate)?


edit: It appears that you're on a gap year. If so, then I hope that you're working full time and living frugally while throwing every dime at that CC debt.
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I've been working full time for the past 12 years - also while in school - my husband was unemployed for a while and we needed to pay for a lot of living expenses on CC, and I also added on another 8k while applying for medical school (missed work, app fees, travelled to a few interviews cross country, etc). The car I bought in 2012 and needed a large reliable car for my work - but again that's an easy one to return to the dealer. My main worry is CC - I'll continue working full time until it's time for school but unless I get a second job (already work 45 hrs/week while in school) and sleep 3 hours/night that won't cut 🙁
Thanks for your thoughts!
 
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I think the point people are trying to make is that you need to align your spending habits with your financial situation.

Yes, some things might seem necessary (such as that expensive, big car) but in reality it isn't (you can get like a decently used, reliable car of any size for ~10k. Less if you hunt around/look for private sellers). I'm going to go out on a limb and say that $22k in credit card debt, $15k in deferred loans, and $26k in remaining car payments are indicative of the American affliction of spending money that we just don't have.

If you can reevaluate your expenses I bet you can cut out massive costs, because well, many many other people in pretty much your identical situation get by on far fewer expenditures.
 
Affiche said:
Holy smokes. I've been feeling guilty for taking out loans to get through undergrad, but you've taken out more loans just on your credit card and car than I did to fund my education. I'm not saying that to make you feel bad, but that should really put into perspective how much you've been spending.

Call your bank or credit card company, whomever you're borrowing from, and see if you can set up a payment plan when you start back in school.
Likewise, figure out what you'll still owe on your car if you sell it and see if they'll let you spread out your loans over a few more years.
Finally, read up on Dave Ramsey and quit spending so much gawddamn money that you don't have.
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Thanks for your thoughts. I'm already eating less - dieting would be good for me 🙂
I know it sounds like I spend irresponsibly, but unfortunately that's not the case - I wish it were and I would have nice clothes and drive a Tesla. I drive a toyota!
 
md-2020 said:
I think the point people are trying to make is that you need to align your spending habits with your financial situation.

Yes, some things might seem necessary (such as that expensive, big car) but in reality it isn't (you can get like a decently used, reliable car of any size for ~10k. Less if you hunt around/look for private sellers). I'm going to go out on a limb and say that $22k in credit card debt, $15k in deferred loans, and $26k in remaining car payments are indicative of the American affliction of spending money that we just don't have.

If you can reevaluate your expenses I bet you can cut out massive costs, because well, many many other people in pretty much your identical situation get by on far fewer expenditures.
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Gotcha! Can't wait to leave CA! $2300 for a studio in a not so nice neighborhood is a crime!
 
It doesn't sound like you have a lot of assets, especially if you dump the car. Why not work with the cc companies to cancel you debt? It can be taxable, so waiting until you are in school next year may be better. If you have more debt than assets some or all of it can be eliminated from taxation. Look into cancelation of debt and talk to a tax person. Better than declaring bankruptcy. Or you could just use your loans to pay off the debt and live off your husband's earnings.
 
The path of least resistance may be to find a debt consolidation company, then while in medical school you can use plus loans to pay the minimums. You will likely be in debt for a while once you start practicing, but if you're okay living frugally as you are now for a while it should be okay.
 
What do you mean by "cancelation of debt?" I've looked into those debt consolidation companies but it seems that screws up your credit for like 10 years... Thanks for your reply
 
Cancelation of debt can happen directly with the company itself. If your debt is with one company, you can offer to pay $10,000 and they are essentially write off $12,000. It lowers your credit temporarily but it hurts less than bankruptcy or not paying your bills.
 
OMG, i thought I had bad CC debt. Best of luck to you.
 
raiderette said:
Cancelation of debt can happen directly with the company itself. If your debt is with one company, you can offer to pay $10,000 and they are essentially write off $12,000. It lowers your credit temporarily but it hurts less than bankruptcy or not paying your bills.
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Thank you for the idea, will look into it!
 
You will notice I directed her to a tax advisor. It is something to explore and that can't be discounted.
 
I agree with the above that you should consult a tax/financial advisor. It is really difficult to pay off even a couple thousand in CC debt... $22 k (plus the other debt) is a different story. Since you are going to be in school (congrats on acceptance, btw!), I would definitely seek professional help before it becomes more impossible to pay off.
 
huskygirl123 said:
What do you mean by "cancelation of debt?" I've looked into those debt consolidation companies but it seems that screws up your credit for like 10 years... Thanks for your reply
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My grandparents did the debt consolidation that ended a year ago and her credit score on last check (I do it for her) was in the 780's. :shrug:
 
Alkaloid said:
Honestly, you need a certified financial advisor, not the premed on this forum, most of whom are still in college or just a few years out
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The reason I posted was to seek advice from anyone who has gone through a similar situation. Thank you.
 
I would suggest reading Dave Ramsey's books, and listening to or calling his radio show and getting advice. At least get some sort of professional help with your debt. As dave says, "No matter how much in debt you're in, there is always hope."
 
Just remember to not miss any payments and check your credit score! You don't want to compromise your ability to take out the Grad PLUS loans (which checks credit score). Do not take out a private loan for med school or then things could really get bad.

Edit: Why do you only get 3hr sleep if you work 45hrs/wk? If you could squeeze in a job, it would help. Or have your husband's salary go to the living expenses and use your income solely on paying debt. Or wait, can you use school loans for your cost of living in med school and then devote your husband's income entirely to the debt?
 
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I would be very careful about financial advisers, especially those dealing with credit card debt. Lots of scams out there. Some of them will take your money, leave you worse off than before, and ruin your credit in the process. Be careful about bankruptcy, as it will affect your ability to get loans.

OP, I don't know the details of your situation, but you should really assess your expenses. As others have noted, the car suggests that you might be spending more than you should be. Cancel cable, get a cheaper phone plan ( maybe just a prepaid phone with no internet ). No Starbucks. Move to a cheaper apartment, or move in with parents. Live in the garage. Do whatever it takes. As others suggested, dump the car. Get a cheaper one if you really need it, but best to go without. Use the money you were using for payments towards the other debt. Try to sell the car yourself instead of to the dealer to get more money, but be careful you don't get ripped off by buyers in the process.

Your best option, if possible, would be to use your med school loans to pay off your credit card debt, assuming that leaves you with enough to pay tuition and live on. That way the interest will be lower.

Going forward, you will need to live within your means. If you think that being a doctor means that you won't have to worry about money, you are very mistaken. Most doctors are terrible with money, and many are in debt their whole lives and have to work until they die. You are on track to become one of them. This is your best opportunity to change your ways. The way you are with money now is how you will be later, so you really need to learn how to use money properly.

Dave Ramsey is apparently good at helping people get out of debt, so if you can read his books and listen to his radio show, as suggested above, try that. However, do not pay to take his courses as they are just moneymakers for him, and definitely don't listen to his investment advice, as it's just wrong and unrealistic. Don't use his recommended financial advisers, ("endorsed local providers" - ELP ) as they send him commissions and sell inappropriate investments ( ie managed mutual funds with high sales charges and expenses, instead of low expense, better performing, commission free index funds...could the commissions he gets be the reason why???)

You should go to the website mrmoneymustache.com to learn how to spend less. You should also go to the whitecoatinvestor.com and learn how to be good with money. Also read there about doctors who are bad with money. Decide which kind of doctor you want to be.
 
bc65 said:
I would be very careful about financial advisers, especially those dealing with credit card debt. Lots of scams out there. Some of them will take your money, leave you worse off than before, and ruin your credit in the process. Be careful about bankruptcy, as it will affect your ability to get loans.

OP, I don't know the details of your situation, but you should really assess your expenses. As others have noted, the car suggests that you might be spending more than you should be. Cancel cable, get a cheaper phone plan ( maybe just a prepaid phone with no internet ). No Starbucks. Move to a cheaper apartment, or move in with parents. Live in the garage. Do whatever it takes. As others suggested, dump the car. Get a cheaper one if you really need it, but best to go without. Use the money you were using for payments towards the other debt. Try to sell the car yourself instead of to the dealer to get more money, but be careful you don't get ripped off by buyers in the process.

Your best option, if possible, would be to use your med school loans to pay off your credit card debt, assuming that leaves you with enough to pay tuition and live on. That way the interest will be lower.

Going forward, you will need to live within your means. If you think that being a doctor means that you won't have to worry about money, you are very mistaken. Most doctors are terrible with money, and many are in debt their whole lives and have to work until they die. You are on track to become one of them. This is your best opportunity to change your ways. The way you are with money now is how you will be later, so you really need to learn how to use money properly.

Dave Ramsey is apparently good at helping people get out of debt, so if you can read his books and listen to his radio show, as suggested above, try that. However, do not pay to take his courses as they are just moneymakers for him, and definitely don't listen to his investment advice, as it's just wrong and unrealistic. Don't use his recommended financial advisers, ("endorsed local providers" - ELP ) as they send him commissions and sell inappropriate investments ( ie managed mutual funds with high sales charges and expenses, instead of low expense, better performing, commission free index funds...could the commissions he gets be the reason why???)

You should go to the website mrmoneymustache.com to learn how to spend less. You should also go to the whitecoatinvestor.com and learn how to be good with money. Also read there about doctors who are bad with money. Decide which kind of doctor you want to be.
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Thank you for taking the time to give a novice your advice! I'll look into those sites and cuttable expenses.
 
Fastrada said:
Just remember to not miss any payments and check your credit score! You don't want to compromise your ability to take out the Grad PLUS loans (which checks credit score). Do not take out a private loan for med school or then things could really get bad.

Edit: Why do you only get 3hr sleep if you work 45hrs/wk? If you could squeeze in a job, it would help. Or have your husband's salary go to the living expenses and use your income solely on paying debt. Or wait, can you use school loans for your cost of living in med school and then devote your husband's income entirely to the debt?
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LOL... I don't, I get at least 6, but if I had to get a second job I would only get 3 🙁
Work 45 hours but volunteer 10, take 3 classes, you get the drill! I was actually looking into private loans, you think it's really bad hum?
 
huskygirl123 said:
LOL... I don't, I get at least 6, but if I had to get a second job I would only get 3 🙁
Work 45 hours but volunteer 10, take 3 classes, you get the drill! I was actually looking into private loans, you think it's really bad hum?
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You could always replace the volunteering with working- you really do not want to be dealing with this debt while in medical school.

Private loans would be very bad unless you have a definitive plan to pay them off and you are financially savvy. Private loans have limited repayment options and you can end up getting screwed on interest rates if you aren't careful. Federal loans have an agreed upon interest rate and there are plans that cap your monthly loan payment at 10% of your income. Private loans could leave you paying thousands a month. Definitely read through https://students-residents.aamc.org/financial-aid/ and read the other financial sites people suggested

Edit: Tbh, and this may just be me, but I would probably choose to not go to medical school than to take out over $100K in private loans
 
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credit card debt is high interest; pay it off before your other loans
 
Private loans would be very bad unless you have a definitive plan to pay them off and you are financially savvy.
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This is true, obviously a subsidized federal loan would be better but if she can't get enough subsidized loans to pay for school and also pay off the credit card, then the next best choice would be to get a private loan at a lower rate than the credit card, which she can then use to pay off the credit card, and then aggressively pay down the private loan. Even a private loan would be better than paying credit card interest rates. A loan at 7% doubles every 10 years, at 10% every 7 years, at 18% every 4 years, and at 24% every 3 years.

OP, before considering a deal with the credit card company make sure that doing so won't hurt your credit and affect your ability to get a loan.
 
bc65 said:
This is true, obviously a subsidized federal loan would be better but if she can't get enough subsidized loans to pay for school and also pay off the credit card, then the next best choice would be to get a private loan at a lower rate than the credit card, which she can then use to pay off the credit card, and then aggressively pay down the private loan. Even a private loan would be better than paying credit card interest rates. A loan at 7% doubles every 10 years, at 10% every 7 years, at 18% every 4 years, and at 24% every 3 years.

OP, before considering a deal with the credit card company make sure that doing so won't hurt your credit and affect your ability to get a loan.
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Oh, we were talking about private loans to pay for medical school, not the credit card debt
 
Oh, we were talking about private loans to pay for medical school, not the credit card debt
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I know, but what I'm suggesting is that she try to take out enough loan money to cover school as well as the credit card debt. I don't know the details of how the loans are allocated, although I realize that they are limited to the budget they give you, but if there's a way to take out more, even if it's at higher private education loan rate, that I would do that, because the interest rate on a private education loan, while higher than the subsidized loan interest rate, is lower than credit card interest rate.

On the other hand, if she is going to declare bankruptcy, the credit card debt will be discharged, but not student loans. However, bankruptcy would likely disqualify her from subsidized loans and be much more expensive than the credit card debt she already has.

OP, you should also see about getting new credit cards with 0% introductory interest rates. Keep moving the money around from card to card so as to avoid interest charges, but only if you will use the money that you save on interest to pay down the principle.
 
bc65 said:
OP, you should also see about getting new credit cards with 0% introductory interest rates. Keep moving the money around from card to card so as to avoid interest charges, but only if you will use the money that you save on interest to pay down the principle.
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I get what you're going for here, but this is awful advice for someone who has had a hard time managing money. Don't give people 20k in credit card debt this advice. They didn't handle it responsibly the first time and they're going to dig deeper into a hole.
 
I get what you're going for here, but this is awful advice for someone who has had a hard time managing money. Don't give people 20k in credit card debt this advice. They didn't handle it responsibly the first time and they're going to dig deeper into a hole.
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That's why I bolded the caveat that they be sure not to use this as an opportunity to run up more debt. The idea of getting more credit cards to run up more debt is one that she has undoubtedly thought of already.

Second, while we all seem to think that this problem is primarily one of poor spending habits, OP did say that there was an unexpected job loss, and application expenses. The car was presumably purchased before this all happened, and it was a Toyota, not a Ferrari. So, in giving this advice, I'm giving OP the benefit of the doubt. She's an adult and has to be responsible for herself.
 
financial advisers people! lol
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Most so-called " financial advisers" are salesmen, selling bad products to unsuspecting people. They are stock brokers, whole life insurance salesmen, annuity salesmen.
Only a small minority purport to be fiduciaries ( i.e. legally have to look out for your interests above theirs ) and many of those will rip you off anyway. And those won't take care of you unless you already have a lot of money. ( at least 100k) The ones who "fix your credit" are usually scammers. They take your money and disappear or file for bankruptcy or at best try to negotiate a deal with the credit card company for you, which you could have done yourself.
 
c). The car I bought in 2012 and needed a large reliable car for my work - but again that's an easy one to return to the dealer. M
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1) Sorry, but you didn't need an expensive car for your work. A $12k reliable car would have been fine.
You've been paying on this car for 3 years, at about $5k per year! You've already paid about $15k in payments towards that car and still owe $26k! How much did that Toyota cost when new? Your argument that it isn't a Tesla is silly. You don't seem to know the difference between "wants" and "needs".

2) Do you think you can just return that car to the dealer and be done? No. It doesn't work that way. The dealer might only give you $20k for it....or less. And then you'd still owe the rest....plus you'd need to buy ANOTHER car.

3) you easily could have bought TWO or THREE reliable cars for the amount you spent.
 
Read Get a Financial Life by Beth Kobliner

While I agree with a lot of the advice offered, she is qualified and gives a comprehensive approach to handling complex financial situations.

Seriously, read it. You've asked for advice but I'm getting the vibe you aren't giving the advice given much weight. Good luck!
 
huskygirl123 said:
LOL... I don't, I get at least 6, but if I had to get a second job I would only get 3 🙁
Work 45 hours but volunteer 10, take 3 classes, you get the drill! I was actually looking into private loans, you think it's really bad hum?
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You are already in so quit the volunteering and work those hours if possible. Are the three classes absolutely necessary (for your degree or for prerequisites) if not you could consider dropping one and work more. Are you eligible for any additional federal student loan funds from your school currently? If so, taking those funds to pay down credit card debt would be good (lower credit rate plus the ability to defer repayment while in school so you can focus any extra funds on the residual cc debt). The suggestion of moving balances to a low or zero interest rate introductory card is a good one for someone disciplined enough for that strategy, but getting the next low rate card isn't a guarantee so i would get any extra federal loan funds first.

What is your spouse doing currently and what will he be doing during school. Him working more now and earning enough during school so that you can use federal loan funds to pay down your cards will be very helpful (and is better than if you were single with this issue)
 
bc65 said:
You should go to the website mrmoneymustache.com to learn how to spend less.
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@bc65 just gave you an AMAZING gift, OP. S/he just did you a HUGE FAVOR by giving you the keys to a secret that most people don't find out until their sixties. That secret is Mr. Money Mustache's principles for a happy, financially secure, and fulfilling life.

One year ago, my brilliant friend @THS gave me this very same advice.

Today, one year later, you can see the results- that one website has completely changed my outlook on life and has made me very confident and empowered about my financial future.

OP, listen to @bc65 's advice that I have quoted above. It will serve you well. Read as much of MMM's blog that you can, and join the MMM forums.

I realize my unrestrained praise sounds like a marketing scheme- but the knowledge on there is free so you've got nothing to lose. And Mr. Money Mustache does NOT advertise on his website. In fact, he rejected a seven figure offer to buy out his website because he wants to educate his readers.

Make MMM your homepage now, and pass the word about MMM along. Life just got great for you.
 
Buck Winters said:
You've asked for advice but I'm getting the vibe you aren't giving the advice given much weight. Good luck!
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A lot of the advice is based on people's own projections rather than her actual situation so it is perfectly appropriate that she not give it much weight. Don't eat out so much and quit buying expensive stuff you don't need is worthless advice for someone who doesn't eat out and who bought silly stuff like groceries and utilities during a time when her spouse was out of work (maybe there were dumb purchases from before on there from when they had more income but there is no indication she is impylse buying now) The car could have been obtained at a time her husband was making good money and they figured they could afford it, and advice to buy a cheaper car isn't particularly useful if she doesn't plan to get another car.
 
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