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Johnny Appleseed

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I have a few questions about how to finance medical school and stay on top of the debt. I have read many threads on this, but I still have a few specific questions. I apologize for the length, I will be very thankful for those who take the time to read it and offer any advice. Thanks in advance.

The schools I plan on applying too next year have tuition prices anywhere from $30,000 (My state school and LECOM) to $60,000 (AZCOM) and everywhere in between. My cost of living at the moment, for my wife and I, is about $18,000 a year. This will likely go up a fair amount by the time I would hypothetically start med school as we plan on starting a family in the next couple years and I will be removed from my parents health insurance. Assuming our cost of living goes up to around $25,000-30,000 per year and tuition for medical school is $50,000 we will have $80,000 of expenses per year.

First. Is my logic correct in calculating out $80,000 a year for a family of 3 or 4? Or are there other hidden expenses that raise this significantly (e.g. books, stethoscopes, hidden fees etc..)? I know it will vary by school, but I am just wondering generally speaking.

Second. I receive scholarships and pell grants to pay for some of my undergraduate now. Is there a pell grant or any other aid that will reduce med school tuition? I don't mean a special scholarship for the elite, I mean one that is easy to get, that all med school student take advantage of. Basically my question is, is there any way to reduce tuition costs?

Third. My wife will be done with nursing school by the time I start medical school. She works graves now, and for some reason she loves them (I don't know how or why, but she does). We have talked about how things would work in medical school and she has suggested working a couple graves and a weekend day throughout my 4 years in medical school. That would eliminate the need for childcare and she would likely get a small increase in pay. If she makes $25 an hour as a nurse and worked 36 hours a week she would make roughly $40,000 annually. If expenses are $80,000 and we are making $40,000 I will need to take out $40,000 of loans every year for a total of $160,000. Am I being to simplistic when thinking this way? I ask because the average indebtedness of many graduates is $250,000+, and I am worried I am not seeing some of the expenses.

Fourth. Is it possible to work during medical school? In a research lab, hospital etc.? I don't mean 40 hrs a week, but even 8 hours a week would help right? Also during residency is it possible to moonlight in all fields (such as surgery, internal medicine)? Or is it only possible in residencies such as FP, or psychiatry? With $160,000 in debt, I would like to start paying it off as a resident.

Lastly. Is it reasonable to pay off $160,000 in two years on a salary of $250,000? I know there are countless variables that will play into this, and I can do math, but what I really want to know is when it says a certain physician make $250,000 a year, how much of that is really going into their pocket? Taxes are 40% in the top brackets, so is this figure before or after taxes?

The price of med school is really boggling, but I feel like if you plan and manage well, you can get through it and be debt free within a few years of graduating residency. However, I am just a naive premed and I don't want a rude awakening when I really get into. Give it to me straight, let me know how the numbers really work. Once again thank you for your advice and time (time is money, so thanks for your money too)!
 

Plastikos

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Choose the cheaper school if you get the choice.

Why do you think its so expensive to live for a family of 3 or 4? This is the time to live small and be frugal to the extent its possible. Also, hate to sound like China here but why not let your wife work and have children a little later? You're basically asking how much you can stack the deck against yourself as early as possible.

It is not possible to work during medical school outside of the first summer. Med school is expensive, it is imperative you do everything you can including sacrificing having everything you want right now. You can have everything, but not all at once, and thats better than 99% of people in the world.

Lastly? No it is not reasonable to pay off 160k with 250k salary, even if taxes didnt exist (and they do) where are your living expenses? Also, I think you forgot about the wonderful magic of compounding which will make that 190-250 or more when youre finished. Did you somehow learn to live on less money 7 years later, because that is the opposite of the normal arc of things. At 250k even in a high tax state your effective tax rate should be around 16-20% depending on the specifics.

It is not possible to moonlight in all specialties or even institutions, in fact it is specifically forbade at some, and very generous at others. I would probably choose a shorter specialty that allowed generous moonlighting options during residency if I could do it over again. Things that come to mind; rads, ed, etc...you'll have to do the research but this would be great.

Sorry if this comes across as harsh, but....let me tell you from experience. Went to private med school, didnt know squat about finances, married and added second kid during school, lived in an expensive city and didnt really think how to minimize bills and thus loans. Did a long residency where my loans nearly doubled, and bam! 500k in debt to start "real life". That is no fun whatsoever. You'll learn to be frugal and finance smart then, but theres no need to wait for you as you're at least asking the right questions. It is far far far easier to buckle down and rough it a bit during med school than when you're older and have an attendings salary and feel like you should be living better. You will thank yourself everyday when you're in minimal debt later on.

Now go to amazon and buy The White Coat Investor book to avoid other potential pitfalls like buying a house in residency. Reading that book late was a huge realization for me, but ultimately way too late as the top ten list of not to do's was basically exactly what I did. Pure wisdom, read it, learn it, live it and prosper.
 
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Johnny Appleseed

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I figured $30,000 was a reasonable estimate for a family of three or four. Perhaps we could live a lot cheaper... I just wanted to estimate more on the safe side. We have definitely considered waiting to have kids, but we are getting older so we want to start before we are into our thirties. My wife plans on working whether we have kids or not, she likes the grave shifts.

A salary of 250,000 would be roughly $20,000 a month if taxes are $7,000 you have $13000 to work with. If you use $5,000 to live off you could use the other $8,000 to put towards debt. $8,000 a month could pay off the loans pretty quick right? Sorry maybe I am being way to simplistic about this.

Thanks for the response, I am looking for some harsh wake up calls now, rather than in 5 years when I have über amounts of debt and its too late. I have order the The White Coat Investor book (a used copy to save money), so hopefully that answers some questions and helps me plan a bit. Thanks!
 

Plastikos

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Its always a tradeoff. Where you put that money vs. where it could go or the opportunity cost. Its nice to assume 5k/month, but thats just 60k and if you're thinking 80k during school...well lifestyle inflation will make that a pipe dream. 30's is not old for having your kids, and theres nothing that will age you quite like stress. A simple few years will put you massively ahead as you have less unpredictable events that can derail your best laid plans. Medical school is tough on a lot of fronts, no need to purposefully make it harder. Enjoy this pre children time together, you never ever get it back, and while they are absolutely amazing, im sure you feel the same about your spouse and this time should also be cherished, again, cuz it will be gone forever.

You want to limit debt accumulation, not maximize how you can pay it down all things being equal. I personally (and many many disagree) would max out all available tax deferred retirement plans before throwing money at your student loan debt (the net worth effect is the same and youre arbitraging compounding time frames/rates/taxes). Obviously, get all other debts in order now. Credit cards, cars, etc...eliminate them (debt/interest wise), I use only credit cards for everything possible, just never carry a balance. If you cant do that, dont have them. If you decide to not have kids asap, you can get a small very affordable place and work to not take much loans out. This is by far the best plan, its always more painful to make it up afterwards, but you have to do whats best for you. Trust me, your ability and enjoyment of living frugally/small will not increase as you age. Take advantage of being young. Immediately upon being able to, refinance your loans or enroll in a program where you can be forgiven if specialty/place of employment allow you to do so.

I would use that overarching theme as you approach the whole process. What school, field, residency type, etc..etc...think about the cost/value/time value of money/opportunity cost. Whether you can moonlight, how fast you'll be making attending salary (how long loans will compound), etc...Pay loans as much as possible during residency. Save for retirement/FU/FI money asap as well, it will give you an incredible amount of freedom. Think about things long term and in net worth before making any large decisions, and be flexible youre not married to one way just because you started it. Your wife may not want/need to work and honestly if you run the numbers tax/daycare/lost time/convenience it may not make any sense (didnt for us).

I know that the salary sounds like a lot and its hard to wrap your head around how a few thousand here/there will be noticeable, but just remember taxes and unpredictable events can really eat into plans and this is before lifestyle inflation and having a smidgen of fun. Also remember you're paying all these things at your marginal tax rate, thats what hurts so much with dumping more into student loans as they are not deductible.
 
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QofQuimica

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I figured $30,000 was a reasonable estimate for a family of three or four. Perhaps we could live a lot cheaper... I just wanted to estimate more on the safe side. We have definitely considered waiting to have kids, but we are getting older so we want to start before we are into our thirties. My wife plans on working whether we have kids or not, she likes the grave shifts.

A salary of 250,000 would be roughly $20,000 a month if taxes are $7,000 you have $13000 to work with. If you use $5,000 to live off you could use the other $8,000 to put towards debt. $8,000 a month could pay off the loans pretty quick right? Sorry maybe I am being way to simplistic about this.

Thanks for the response, I am looking for some harsh wake up calls now, rather than in 5 years when I have über amounts of debt and its too late. I have order the The White Coat Investor book (a used copy to save money), so hopefully that answers some questions and helps me plan a bit. Thanks!
You're not being simplistic, but you're probably being unrealistic. That's what the other poster is trying to explain to you.

What you are suggesting is certainly possible. I live on $2500/month even now as an attending, which is basically what I was spending as a resident (actually, a bit less since FL is a cheaper place to live than where I did residency). That being said, I'm the only person I know at my stage (board-certified attending) who is still continuing to live this way. I can do it, because I'm single, and no one else is affected by what I do or don't spend my money on. That's not your situation. Be honest here: will your wife really be happy continuing to live frugally once you're out of residency? And once you have kids, will you and she really be ok with denying them things their upper middle class friends have, like summer camps or trips abroad or joining whatever expensive organization happens to be popular at the time? If you're going, yeah, yeah, Q, of course it will be fine, then what I would say to you is this: you GREATLY underestimate the peer pressure you will feel to keep up with the Joneses once you become an attending, particularly since you expect to have a family. Odds are almost certain that you won't keep to your plan, especially if your wife isn't 100% on board with living that kind of low-consumption lifestyle.

P.S. If you want to save money, don't ever buy books, not even used books. Join your local library and you can borrow them for free. This is the kind of mindset you will need to develop if you're really going to embrace a frugal lifestyle and raise a family on $30,000/year. If you're serious about doing this, I suggest that you read the Mr. Money Mustache and Extreme Early Retirement blogs for other advice that will help you learn to be frugal by decreasing your consumerism as a family. But again, if your wife isn't totally on board with it like MMM's wife is, it isn't going to work.
 
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Johnny Appleseed

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You're not being simplistic, but you're probably being unrealistic. That's what the other poster is trying to explain to you.

What you are suggesting is certainly possible. I live on $2500/month even now as an attending, which is basically what I was spending as a resident (actually, a bit less since FL is a cheaper place to live than where I did residency). That being said, I'm the only person I know at my stage (board-certified attending) who is still continuing to live this way. I can do it, because I'm single, and no one else is affected by what I do or don't spend my money on. That's not your situation. Be honest here: will your wife really be happy continuing to live frugally once you're out of residency? And once you have kids, will you and she really be ok with denying them things their upper middle class friends have, like summer camps or trips abroad or joining whatever expensive organization happens to be popular at the time? If you're going, yeah, yeah, Q, of course it will be fine, then what I would say to you is this: you GREATLY underestimate the peer pressure you will feel to keep up with the Joneses once you become an attending, particularly since you expect to have a family. Odds are almost certain that you won't keep to your plan, especially if your wife isn't 100% on board with living that kind of low-consumption lifestyle.

P.S. If you want to save money, don't ever buy books, not even used books. Join your local library and you can borrow them for free. This is the kind of mindset you will need to develop if you're really going to embrace a frugal lifestyle and raise a family on $30,000/year. If you're serious about doing this, I suggest that you read the Mr. Money Mustache and Extreme Early Retirement blogs for other advice that will help you learn to be frugal by decreasing your consumerism as a family. But again, if your wife isn't totally on board with it like MMM's wife is, it isn't going to work.
I understand your points here. I imagine it is difficult to keep to such a tight budget when you don't have too. My wife is from a poor background and is really conservative with money, she rarely spends and chews me out when I do. I think I would be the one more likely to break from a budget. I didn't consider peer pressure, but I see how that could be an issue.

I will say my Dad has made a lot of money investing and living frugally, so I am very dedicated to emulating his example. Hopefully I can stick to the plan, if it is possible I want to pay off the debt as quickly as I can. I just skimmed through the blogs you mentioned, they look like they have some great info. Thanks for the advice! (Also I checked the libraries in my county, none of them had the White Coat Investor book... so I bought it probably a bad decision, you gave me the guilt trip I needed I guess).
 

QofQuimica

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I understand your points here. I imagine it is difficult to keep to such a tight budget when you don't have too. My wife is from a poor background and is really conservative with money, she rarely spends and chews me out when I do. I think I would be the one more likely to break from a budget. I didn't consider peer pressure, but I see how that could be an issue.

I will say my Dad has made a lot of money investing and living frugally, so I am very dedicated to emulating his example. Hopefully I can stick to the plan, if it is possible I want to pay off the debt as quickly as I can. I just skimmed through the blogs you mentioned, they look like they have some great info. Thanks for the advice! (Also I checked the libraries in my county, none of them had the White Coat Investor book... so I bought it probably a bad decision, you gave me the guilt trip I needed I guess).
In my case it's not difficult because there isn't anything I want to buy that I'm not buying. But yes, if you are constantly feeling like you're depriving yourself (or worse, like you're depriving your family), that will make being frugal difficult and unpleasant instead of creative and fun. Both of those bloggers I mentioned are advocates of changing your mindset so that you want what you already have instead of feeling dissatisfied because you want things you don't have.

Not meaning to give you a guilt trip. You're still in college, right? Check your school library too. :)
 

Plastikos

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You can obviously go over board, the point is to be frugal on the things that dont matter, not miserly. Find out the things that really make you and your spouse happy, you can spend on that, just be conscious and mindful about the other areas. I usually pick up clothes every so few years and far between, usually on clearance at target or whatever, because beyond a shirt and jeans I could not really care less. Just bought several shirts/shorts etc...all under 3 bucks a pop, ecstatic. I also really love riding bikes and mine is somewhere around 5k, and I just bought myself some new power meter pedals for another thousand, dont care I love cycling and its healthy. Have to have a balance. I basically have anything I really want, I just pay attention to the frivolous drain. Its amazing how much mindless spending people do and can catch you if not paying attention.

The book I would consider an investment.
 

The White Coat Investor

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I have a few questions about how to finance medical school and stay on top of the debt. I have read many threads on this, but I still have a few specific questions. I apologize for the length, I will be very thankful for those who take the time to read it and offer any advice. Thanks in advance.

The schools I plan on applying too next year have tuition prices anywhere from $30,000 (My state school and LECOM) to $60,000 (AZCOM) and everywhere in between. My cost of living at the moment, for my wife and I, is about $18,000 a year. This will likely go up a fair amount by the time I would hypothetically start med school as we plan on starting a family in the next couple years and I will be removed from my parents health insurance. Assuming our cost of living goes up to around $25,000-30,000 per year and tuition for medical school is $50,000 we will have $80,000 of expenses per year.

First. Is my logic correct in calculating out $80,000 a year for a family of 3 or 4? Or are there other hidden expenses that raise this significantly (e.g. books, stethoscopes, hidden fees etc..)? I know it will vary by school, but I am just wondering generally speaking.

Second. I receive scholarships and pell grants to pay for some of my undergraduate now. Is there a pell grant or any other aid that will reduce med school tuition? I don't mean a special scholarship for the elite, I mean one that is easy to get, that all med school student take advantage of. Basically my question is, is there any way to reduce tuition costs?

Third. My wife will be done with nursing school by the time I start medical school. She works graves now, and for some reason she loves them (I don't know how or why, but she does). We have talked about how things would work in medical school and she has suggested working a couple graves and a weekend day throughout my 4 years in medical school. That would eliminate the need for childcare and she would likely get a small increase in pay. If she makes $25 an hour as a nurse and worked 36 hours a week she would make roughly $40,000 annually. If expenses are $80,000 and we are making $40,000 I will need to take out $40,000 of loans every year for a total of $160,000. Am I being to simplistic when thinking this way? I ask because the average indebtedness of many graduates is $250,000+, and I am worried I am not seeing some of the expenses.

Fourth. Is it possible to work during medical school? In a research lab, hospital etc.? I don't mean 40 hrs a week, but even 8 hours a week would help right? Also during residency is it possible to moonlight in all fields (such as surgery, internal medicine)? Or is it only possible in residencies such as FP, or psychiatry? With $160,000 in debt, I would like to start paying it off as a resident.

Lastly. Is it reasonable to pay off $160,000 in two years on a salary of $250,000? I know there are countless variables that will play into this, and I can do math, but what I really want to know is when it says a certain physician make $250,000 a year, how much of that is really going into their pocket? Taxes are 40% in the top brackets, so is this figure before or after taxes?

The price of med school is really boggling, but I feel like if you plan and manage well, you can get through it and be debt free within a few years of graduating residency. However, I am just a naive premed and I don't want a rude awakening when I really get into. Give it to me straight, let me know how the numbers really work. Once again thank you for your advice and time (time is money, so thanks for your money too)!

# 1 Try to go to the cheaper school if at all possible.
#2 Lots of small families live on less than $30K a year. It isn't fun, but it is certainly possible. Do everything you can to minimize your loans and learn the lessons of frugality now that will serve you later. Millions of doctors before you have learned to be frugal while in med school. You can do it too.
#3 Heck yes your wife should work in med school.
#4 Plan your family carefully. If you want 8 kids, you can't wait until you get out of training to get started. But the longer you can delay, the better financial position you will find yourself in. Even waiting until 3rd or 4th year will make a big difference because your wife can work full time. We had our first at the end of intern year and our last three after I was an attending. It worked for us, but partly because my wife is 3 years younger.
#5 Yes, you can work in med school. Don't plan on working a ton, especially during a third year, but it can be done. I did H&Ps for a surgical center as an MS4 for $20 an hour for example.
#6 Yes $160 an be paid off in 2 years on a salary of $250K a year. The key is how you live the year you get out of residency. Start planning for that most important year of your financial life now.

A family of four making $250K will probably pay $50k in taxes. So if you can live on $80K a year for a couple of years, you can put $40K into retirement plans and $80K toward the loans. After two years, you're out of debt and have $80K saved up for retirement.
 
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Johnny Appleseed

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If it's not worth your money, send it to me and I'll give you a refund.

We saved the book and I just opened it for Christmas. I'm more than half-way through it, and so far it is worth the money. I am learning a lot!

I am feeling slightly bummed that I am already older and have lost a lot of money due to "opportunity cost" as you say in your book (I also served a two year mission and I am taking a gap year so that my wife can finish nursing school) so I feel I need to be extra frugal to make up for some lost years.

My wife and I have both decided we need to be extra frugal to make up for lost time. We think we are living as frugally as we can, but perhaps we are not. I have two quick questions; Are we living on a reasonable budget (I posted a snippet from our budget below)? And how much money per month would that budget need to increase if we had a child (we are thinking $300 a month)? Right now my wife and I both work part-time while we go to school full-time, together our income is ~$1800. Our extra money goes to books, tuition that our scholarships don't cover, and MCAT practice tests so we are really not saving any money right now, we are just breaking even.

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#2 Lots of small families live on less than $30K a year. It isn't fun, but it is certainly possible. Do everything you can to minimize your loans and learn the lessons of frugality now that will serve you later. Millions of doctors before you have learned to be frugal while in med school. You can do it too.
.

In medical school if we had two kids our monthly bills would be ~$2200 if each kid cost $300 a month, or $26,500 a year. Do some families live cheaper than this? And if so how?
 

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If you're breaking even in college you're doing great. Good job!

Mr. Money Mustache's family lives on $25K a year. Read his blog for details. I can see at least one place to cut out an expense- that car payment. Other than that (and the charity/tithing) it looks like a pretty lean budget to me.
 

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If you're breaking even in college you're doing great. Good job!

Mr. Money Mustache's family lives on $25K a year. Read his blog for details. I can see at least one place to cut out an expense- that car payment. Other than that (and the charity/tithing) it looks like a pretty lean budget to me.
Just purchased your book. Looking forward to reading it! I was just talking to my wife yesterday about trying to live off her RN salary while I am in residency (and using my entire resident salary to pay off the loans). Would this be a good idea?
 
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Just purchased your book. Looking forward to reading it! I was just talking to my wife yesterday about trying to live off her RN salary while I am in residency (and using my entire resident salary to pay off the loans). Would this be a good idea?
It should be possible and depending on her salary and the cost of living in your area could be fairly comfortable. My husband's lvn salary was practically enough for us to live on during med school (not covering tuition though, and i had some income too) even with retirement savings. Even with us not bring super frugal we definitely had extra money each month in residency when we were both earning money.
 
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TheBoneDoctah

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It should be possible and depending on her salary and the cost of living in your area could be fairly comfortable. My husband's lvn salary was practically enough for us to live on during med school (not covering tuition though, and i had some income too) even with retirement savings. Even with us not bring super frugal we definitely had extra money each month in residency when we were both earning money.
Good to know! Thank you!
 

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Hi 09kseljaas.

Firstly, I wish I was as smart as you are when I was pre-med. Your interest and concern in your future financial well-being at your age will help you greatly later in life. I don't think I can add much more to what as already been said, but for what it's worth:

Go to the cheaper school.

It's difficult tell you what a family will cost you as there are many unexpected expenses that come up. However, I have had friends go through medical school on their spouse's salary alone. I am sure you can do it.

Medical school scholarships and grants are virtually non-existent. Don't count on receiving any.

Your wife should definitely work... however, that may delay children for a little while, which is probably a good thing. However, that is a discussion between you and your wife. For the most part, end of 3rd year of medical school, and pretty much the whole 4th year of medical school aren't too horrible, so planning to have a kid around that time is probably better for you to get some family time. However, then you begin internship and residency which will make it hard to spent too much time with your children. There is a reason that many physicians end up having children later in life than most.

It is possible to work during medical school... but it's not very plausible. Being a medical student is a full-time job as a 1st and 2nd year and probably 1.5-2x full time jobs as a 3rd year. I would not recommend working during medical school unless you find the content too easy in 1st and 2nd year or if you are blessed with a great clinical rotation schedule in 3rd year.

You can certainly pay off 160k on a salary of 250k, but it will difficult. As you stated, many variables come into play. The biggest variable is where you get your first job. A low cost-of-living and income tax-free state would certainly help a great deal. Also, not saving any money into a 401k/403b or a 457 will also help you. However, I personally do not think that sacrifice is worth it. A more reasonable goal is to pay off your loans in 3-5 years, with a frugal-moderate lifestyle while still maximizing your retirement options, similar to what WCI stated above. The other big thing to do is to not a buy a house until your debt is gone, if your debt is the highest priority to you. Owning a house has its own set of circumstances that are sometimes out of your control which can throw a wrench in your budget.

Once again, I applaud you for looking into your financial future so early. I do suggest that you don't forget to splurge once in awhile though. Medical school is stressful, as is residency and fellowship, treat yourself (and your wife) well.

-Sensei
 
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Mr Medschool Money

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We saved the book and I just opened it for Christmas. I'm more than half-way through it, and so far it is worth the money. I am learning a lot!

I am feeling slightly bummed that I am already older and have lost a lot of money due to "opportunity cost" as you say in your book (I also served a two year mission and I am taking a gap year so that my wife can finish nursing school) so I feel I need to be extra frugal to make up for some lost years.

My wife and I have both decided we need to be extra frugal to make up for lost time. We think we are living as frugally as we can, but perhaps we are not. I have two quick questions; Are we living on a reasonable budget (I posted a snippet from our budget below)? And how much money per month would that budget need to increase if we had a child (we are thinking $300 a month)? Right now my wife and I both work part-time while we go to school full-time, together our income is ~$1800. Our extra money goes to books, tuition that our scholarships don't cover, and MCAT practice tests so we are really not saving any money right now, we are just breaking even.

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In medical school if we had two kids our monthly bills would be ~$2200 if each kid cost $300 a month, or $26,500 a year. Do some families live cheaper than this? And if so how?

I'll throw my $.02 in.

I could not have predicted my expenses during medical school while I was pre-med. The point is not knowing exactly when you'll pay off your debt from med school while you're in pre-med. The point is to be live as frugally and wisely as possible. This means decreasing expenses and increasing income. Finance during medical school is a passion of mine, and I've made it a point to let people know that there are options for employment during med school that don't detract from your education.
Like you, I am also married. I'm in my clinical years of med school now (yr 3&4), and I have multiple part time jobs. The name of the game is flexibility. When i'm on a rotation that has tests, I work a little less and study more. When i'm on a required rotation that just requires me to show up, i crank out as much work as possible on the side. I haven't failed any rotations, and the extra money helps my wife to feel much more secure about our current financial situation. No, I'm not going to become debt free by working on the side during med school, but man is it nice to get a paycheck again.
You need to figure out what type of student you are. If you need all the possible time you have to study and be with your wife, then don't work. It'll just stress you out more. If you find yourself with some spare time here and there, consider a part time job- especially one where you can sit somewhere and be paid to study- I sit at a exercise facility at the front desk and study while getting paid. Hope that helps and blessings on your journey.
 
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