Financial question

[IncuriousGeorge]

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Hello SDNers who are more experience with real life issues than I am.
I had a question about what to do with left over loan money.
Main question is, what do you do with left over loan?
As in, after tuition and other fees, you will be left with money to pay your rent and living costs.

In previous posts similar to my question (several years old), people have said to put it in a savings account or invest it (the latter which I'm not going to do).
However, it was my understanding that savings account is for money to sit in there for a long period of time and there is a limit on number of withdrawals per month. But, I'm going to need it pay for everything that I'll be buying through out the year.
Is it even worth putting it in a savings account to accrue interest? I'm sure it is worth it but... (Personally only have checking at this point)
Split it into checking and saving?

Yes, I have googled it but I wanted to know the "real-life" perspective.

 

[allantois]

Just put it in your checking account. Savings account would pay an interest in the realm of something like 0.01%. Investing your med school loaned money is a no no

 

[CharmanderMD]

I'm planning on putting it all in my savings and "paying" myself every two weeks by transferring a budgeted amount into my checking. I'm stressing out about it all too though!

 

[mik30102]

Just put it in your checking account. Savings account would pay an interest in the realm of something like 0.01%. Investing your med school loaned money is a no no

Hey ally gives a apy of 0.99% for their savings account!

 

[Waggles]

Just a first year here but I hear that it is a good idea to save some money for traveling for residency interviews in your 4th year as you are not allocated any extra amount in your COA. This could probably be done with 2/3 year left over money.

Another thought is to give it back if you have several thousand left over as interest starts accruing immediately and the 8% interest you're being charged does not compare to the 1% you can earn from Ally bank.

 

[AlteredScale]

Moving to Finance and Investments.

 

[bwmd]

There are plenty of online savings accounts that can put it in and use like a checking account, but interest rates are sufficiently low that you won't earn much at this point over the few months you'll have it in there before spending it. The bonus from opening up a new checking account would probably supercede the interest growth, for example, so you can look around and see what the bonus are and just pick what looks best.

If you don't need all of it it, you can give it back. If you borrow money at 6.8% or worse as an MS1 to pay for MS4 traveling expenses, than you're paying a lot of extra interest for money you don't need. I'd recommend against that.

 

[CliveStaples]

I say you adjust to make sure you take that much less in loan distributions next year, twice over (once to get you to how much you really need to receive, and once more because you're going to use this extra money for your expenses instead of taking out more loans).

As far as where you keep it, you might as well find the best interest rate you get for your time horizon; so if you need the money in a year, you might as well stick it in the best year long CD you can find (or an Ally Savings Account; they're pretty darn good). If it's not enough money to be bothered doing that, then it doesn't matter.

 

[James Martin]

There are many online savings accounts that utilize like a checking account. You can use them.

 

[SigmaFS]

Hello SDNers who are more experience with real life issues than I am.
I had a question about what to do with left over loan money.
Main question is, what do you do with left over loan?
As in, after tuition and other fees, you will be left with money to pay your rent and living costs.

In previous posts similar to my question (several years old), people have said to put it in a savings account or invest it (the latter which I'm not going to do).
However, it was my understanding that savings account is for money to sit in there for a long period of time and there is a limit on number of withdrawals per month. But, I'm going to need it pay for everything that I'll be buying through out the year.
Is it even worth putting it in a savings account to accrue interest? I'm sure it is worth it but... (Personally only have checking at this point)
Split it into checking and saving?

Yes, I have googled it but I wanted to know the "real-life" perspective.

What is the interest rate on the loan? If they're Federal Direct Stafford and/or Grad PLUS, their respective rates are 5.41% and 6.21% plus loan fees of approximately 1.07% & 4.288%. So, you're considering depositing int0 a saving account generating < 1% while being charged 5% - 6%. Send it back to loan servicer. If you do it within 120 days of the original disbursement, you'll be credited for the accrued interest and the loan fees.

 

[The White Coat Investor]

I have a great guest post coming up on this subject in a few months. The moral of the story is you should have been taking out your loans as you go; there should be no extra. Relatively easy to do if you're using 0% credit cards and paying them off with student loans. Not too smart to be borrowing at 7% and investing at 1%.

 

[Waggles]

One more thing to consider is that you won't get a loan disbursement for your summer after MS1 (as you are not in class). Keep in mind that you may need money for rent/living during the summer months and if you don't plan on working it may be wise to save some of your leftovers from year 1, as you will not get another disbursement until MS2 starts.

 

[Anne Taylor]

There are plenty of online savings accounts that can put it in and use like a checking account, but interest rates are sufficiently low that you won't earn much at this point over the few months you'll have it in there before spending it.You can use any of them...

 

[PL198]

I have a great guest post coming up on this subject in a few months. The moral of the story is you should have been taking out your loans as you go; there should be no extra. Relatively easy to do if you're using 0% credit cards and paying them off with student loans. Not too smart to be borrowing at 7% and investing at 1%.

its pretty frightening how no one before you said " pay it back"

that 600 extra bucks doesn't seem like much now, but in 10 years it'll be 1200. repeat this every semester for your medical school career and it's an easy way to add 10k to your loan debt.