Debt to Income Ratio

[JPSmyth]

I will be finishing medical school with just around 300k in loans. (Yes I worked during medical school, yes I went to my state school and I minimized loans as much as I possibly could. School is just expensive.)

There are many fields that I can see myself being happy going into. However I do see medical school as an investment and I want a good return on my investment. How low of a salary can I realistically consider taking before I may be in some hot water?

300k at 6-7% interest which is continually accruing throughout residency, fellowship, etc. That is a very significant debt burden. Can any finance-saavy people chime in? Would 250k before taxes be acceptable or should I really aim for my salary to be higher than my debt burden, so something north of 300-350k?

Like I said, I have a list of fields that I would be more than happy going into, ranging from IM to rads so I don’t really need to hear “do what you’ll be happiest doing,” I have no plans of going into a field that I can’t see myself being happy in just for the money.

Thank you!

---

Members don't see this ad.

 

[PatsyStone]

The best advice I ever got is "it's just as easy to fall in love with a rich man as it is a poor one." No one knows what will be a high or low paying specialty in the future, but the highs tend to stay high and the lows tend to stay low over time.

A salary is relative: 300k in the Bay Area is different than in St Louis, and 300k with no kids is different than 300k with kids.

You will be able to repay your loans, but the degree to how easy or difficult it will be is up to you. Living in a high COL area, having children, and picking a low paying specialty will make it difficult; choosing the opposite will make it easier.

 

[Perrotfish]

I will be finishing medical school with just around 300k in loans. (Yes I worked during medical school, yes I went to my state school and I minimized loans as much as I possibly could. School is just expensive.)

There are many fields that I can see myself being happy going into. However I do see medical school as an investment and I want a good return on my investment. How low of a salary can I realistically consider taking before I may be in some hot water?

300k at 6-7% interest which is continually accruing throughout residency, fellowship, etc. That is a very significant debt burden. Can any finance-saavy people chime in? Would 250k before taxes be acceptable or should I really aim for my salary to be higher than my debt burden, so something north of 300-350k?

Like I said, I have a list of fields that I would be more than happy going into, ranging from IM to rads so I don’t really need to hear “do what you’ll be happiest doing,” I have no plans of going into a field that I can’t see myself being happy in just for the money.

Thank you!

So I don't think debt to income rules work terribly well for medical students, or anyone else with similarly large amounts of debt and income. Instead I recommend you:

1) Take your debt on the last day of medical school and multiply by 3. This is good back of the envelope way to estimate the pretax dollars you need to earn to pay off the debt.

2) Figure out a number of post take dollars you would be happy living on a year. Multiple by 1.5 to figure out how many pretax dollars you'll need to earn to get there. Now multiply by 35 to figure out your pretax earnings for an average career.

3) .Add 1 to 2 to figure out the number if oretax dollars you need to earn in a career to be happy. Divide by 35 and that's your floor for an annual salary.

As others have said the floor you need, and the profession you need to get there, depends heavily on where you live. A rural FM doctor can make 300+/year easily in an area where a three bedroom home costs 100K. Same doctor in DC might make less than 200K in an area where a nice 3 bedroom costs 500K.

 

[NITRAS]

I’m in the pay yout debt off super fast (2-3 years) camp, which really needs a 1:1 debt to income and no life. Much worse than a 2:1 debt to income starts to feel bleak.

Agree with the above, cost of living makes a big difference in earnings power.

I’d suggest you act like a broke resident when you are an attending until your loans are paid off.

 

[Money Moniker]

There is really no way to know, OP. Best case scenario, salaries in specialties across the board stay the same as today adjusted for inflation and you can pay 300k back rather easily even in FM if you hustle hard. Worst case scenario, the democrats get back into power, institute Single Payer and slash reimbursement across all specialties by 50% while hiking up tax rates on what's left to over 50% to pay for it. Maybe they'll even institute "free college" so that you'll have the privilege of paying for the next crop's college tuition even as you work yourself into an early grave paying the interest on your own educational loans. Or anything in between. Nobody can predict the future, unfortunately.

 

[Tenk]

I will be finishing medical school with just around 300k in loans. (Yes I worked during medical school, yes I went to my state school and I minimized loans as much as I possibly could. School is just expensive.)

There are many fields that I can see myself being happy going into. However I do see medical school as an investment and I want a good return on my investment. How low of a salary can I realistically consider taking before I may be in some hot water?

300k at 6-7% interest which is continually accruing throughout residency, fellowship, etc. That is a very significant debt burden. Can any finance-saavy people chime in? Would 250k before taxes be acceptable or should I really aim for my salary to be higher than my debt burden, so something north of 300-350k?

Like I said, I have a list of fields that I would be more than happy going into, ranging from IM to rads so I don’t really need to hear “do what you’ll be happiest doing,” I have no plans of going into a field that I can’t see myself being happy in just for the money.

Thank you!

This post is a little bit pointless and the reason is because it all depends on what state you end up in due to taxes and cost of living.

 

[jd989898]

Sometimes it feels like matriculating to med school after 2015 is like buying bitcoin at $20,000.