How much to save for applying to residency?

[TheLionheart]

Hello all!

I'll be starting school this summer, and am currently working on creating a budget for M1. Question--how much money should I set aside for residency applications? The current plan is to save incrementally as I go over the course of the next few years, rather than take out more loans or use credit cards to apply.

I'll be attending a school in AZ, so all trips to the east coast will be of significant cost. Not sure which specialty I'll be applying to, but fairly certain I'd like to be in an academic medicine setting during residency.

Thanks for the help!

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[Winged Scapula]

There are threads around here with most people spending less than 5K ,some more and some much less (driving to all interviews, crashing on couches etc).

 

[Wordead]

I spent ~6K I think. You can get away with less if you are applying near your school, but I was all over.

 

[arkdoc]

I just did it and spent less than 5k and maybe less than 4k. I interviewed at 10. Flew to 3. Had 2 hotels paid for. Used rental cars for the ones I flew to. You get discounted rates at most hotels too.

 

[JP2740]

I spent ~6K I think. You can get away with less if you are applying near your school, but I was all over.

Yeah shouldn't be more than this. I actually spent quite a lot afraid to say the actual number. I spent an extra couple days whenever I could in each spot and would hit up restaurants and party a bit. It was worth it just because I had a fun time in a lot of states I might never go to again. Oh well

 

[Wordead]

Yeah shouldn't be more than this. I actually spent quite a lot afraid to say the actual number. I spent an extra couple days whenever I could in each spot and would hit up restaurants and party a bit. It was worth it just because I had a fun time in a lot of states I might never go to again. Oh well

I splurged on restaurants and boozing but I always stayed in cheapo airbnbs and hotels instead of the "discounted" $200 hotels programs loved to recommend.

 

[startswithb]

I spent around 10K for 2 away rotations (housing costs) and 15 interviews. Stayed in cheapo hotels but the coastal flights cost me a lot. I had to take out a residency relocation loan otherwise I would not have been able to afford it. Interest rate was around 6.5%.

 

[masaraksh]

In theory, isn't it better to just take out what you need for your budget now, and take out loans for residency stuff later when you need to.... because interest...

 

[Hemorrage]

In theory, isn't it better to just take out what you need for your budget now, and take out loans for residency stuff later when you need to.... because interest...

Exactly. Just take out a private loan 4th year or spend the next three years building a solid credit card profile so you'll have a limit between 5k-10k. Charge to card and pay it off over time during residency. Better yet, start racking up miles and points on credit cards and use those.

 

[TheLionheart]

In theory, isn't it better to just take out what you need for your budget now, and take out loans for residency stuff later when you need to.... because interest...

Exactly. Just take out a private loan 4th year or spend the next three years building a solid credit card profile so you'll have a limit between 5k-10k. Charge to card and pay it off over time during residency. Better yet, start racking up miles and points on credit cards and use those.

You guys are right, that makes sense! Just recently applied to an airlines rewards card as well. I'll deal with the taking out of the money when needed.

Thanks for everyones replies! Not looking forward to all these expenses.

 

[Wordead]

Exactly. Just take out a private loan 4th year or spend the next three years building a solid credit card profile so you'll have a limit between 5k-10k. Charge to card and pay it off over time during residency. Better yet, start racking up miles and points on credit cards and use those.

It's not that simple....if you're going to do IBR/PSLF, student loan money will get paid off regardless vs credit card debt you have to pay down immediately out of your pocket.

Not to mention that private loan or credit card with a balance looks a lot worse than student loans to lenders, and a lot of people are trying to buy a house or car and having a high debt on your revolving credit gets your worse rates.

 

[PL198]

I splurged on restaurants and boozing but I always stayed in cheapo airbnbs and hotels instead of the "discounted" $200 hotels programs loved to recommend.

we talkin solo or did you schedule interviews with buddies

 

[Wordead]

we talkin solo or did you schedule interviews with buddies

Both. You make friends on the trail to go out with, but if not you gotta ride solo

 

[tiedyeddog]

I spent a ton of money. How much you spend depends on
1. how many you do
2. how far apart programs are
3. if you find people to share costs
4. If you do second looks

I did 18 interviews, I could only drive to three of them due to how far apart programs are. I also did multiple second looks. Flew cross country and back ~6 times and some of my interviews required two nights or more. I did two aways and could not sub-let my apartment while I was gone. I spent every bit of 15-20K during aways and interviews.

 

[PL198]

I spent a ton of money. How much you spend depends on
1. how many you do
2. how far apart programs are
3. if you find people to share costs
4. If you do second looks

I did 18 interviews, I could only drive to three of them due to how far apart programs are. I also did multiple second looks. Flew cross country and back ~6 times and some of my interviews required two nights or more. I did two aways and could not sub-let my apartment while I was gone. I spent every bit of 15-20K during aways and interviews.

holy ****

 

[Wordead]

I spent a ton of money. How much you spend depends on
1. how many you do
2. how far apart programs are
3. if you find people to share costs
4. If you do second looks

I did 18 interviews, I could only drive to three of them due to how far apart programs are. I also did multiple second looks. Flew cross country and back ~6 times and some of my interviews required two nights or more. I did two aways and could not sub-let my apartment while I was gone. I spent every bit of 15-20K during aways and interviews.

Wow what specialty are you? I didn't hear about anyone doing second looks.

I guess once you factor in aways (I did 3), it becomes 10-12K

 

[tiedyeddog]

Wow what specialty are you? I didn't hear about anyone doing second looks.

I guess once you factor in aways (I did 3), it becomes 10-12K

neurosurg, but I think applying to it is very different from most fields.

Many of my friends in FM, Peds, IM did 8-12 interviews. I know one person who applied to Peds and had almost every single interview within a 240 mile radius and drove to all of them. Some fields simply don't have that option...

 

[Stedari]

I would budget 18 cents per mile of estimated travel. Multiply that by 1.15 if you don't live in a hub city. Divide by 1.3 if you drive a Subaru. If you got above 250 on Step 1 then divide by 2. If you are a DO multiply by 3. Easy peezy.

 

[redpanda]

I spent $1700, seriously. Includes direct application expenses, food, gas, tolls, and restaurant bills from taking my friend-hosts for edibles. Applied to 20 programs, attended 14 interviews all within an 8 hour driving distance of my own or parents' home. Grouped all interviews but 2 from the same region and/or city into the same weeks, drove everywhere, and spent all nights away from home but 3 nights (go Airbnb) on the couches or beds of friends and family.

 

[masaraksh]

I would budget 18 cents per mile of estimated travel. Multiply that by 1.15 if you don't live in a hub city. Divide by 1.3 if you drive a Subaru. If you got above 250 on Step 1 then divide by 2. If you are a DO multiply by 3. Easy peezy.

If you are a carib grad...

priceless

 

[MedSchoolSurvivor]

The cost varies tremendously but it will probably be at least a few grand, don't forget about the 1-1.5k for the ERAS application itself. Here are some tips to save money:

1. Schedule your fourth year free time during your interview season. Since different specialties interview at different times, ask current residents the range of their interview dates to get an idea. By doing this you will avoid the expense of having to travel back and forth to your home school to avoid failing a rotation.

2. Try to drive if possible. This can be difficult, especially if your school isn't near any other programs. If you can spare the time by following the above tip then this may be more feasible.

3. Use Priceline's name your own price for hotels and cars. This will likely be MUCH cheaper than the "discount" hotel that programs often offer.

4. Stay with anyone you know in the area. I once stayed with my girlfriend's mother's family friend from the neighborhood they used to live in 15 years ago.

5. See step 3.

 

[Hemorrage]

It's not that simple....if you're going to do IBR/PSLF, student loan money will get paid off regardless vs credit card debt you have to pay down immediately out of your pocket.

Not to mention that private loan or credit card with a balance looks a lot worse than student loans to lenders, and a lot of people are trying to buy a house or car and having a high debt on your revolving credit gets your worse rates.

The point is that government loan money is limited and it doesn't many ANY mathematical sense to take out more money than you need years ahead (with the possible exception of 4th year) and accrue interest when there are plenty of credit card financial products out there to solve "small money" problems like $5k-10k expenditures. Thats why i was advising OP to start working on building a strong credit profile during the first three years of medical school. By 4th year, he/she will easily qualify for a credit card that has 12-18 month 0% APR financing. One could easily put $5k-10k expenditures on 1-2 0% APR cards (depending on how lucky you get with the credit limit) and pay that down during residency. Even at a variable APR of 24.99% which is really high for a credit card, you'd still only be accruing 2.08% interest per month on those residency expenditures assuming you don't budget to pay it off before the 0% APR period is over. Either way this is a smarter way of dealing with those expenses than saving up money from loans year prior that are accruing anywhere from 6.41-7.21% annually.

 

[Wordead]

The point is that government loan money is limited and it doesn't many ANY mathematical sense to take out more money than you need years ahead (with the possible exception of 4th year) and accrue interest when there are plenty of credit card financial products out there to solve "small money" problems like $5k-10k expenditures. Thats why i was advising OP to start working on building a strong credit profile during the first three years of medical school. By 4th year, he/she will easily qualify for a credit card that has 12-18 month 0% APR financing. One could easily put $5k-10k expenditures on 1-2 0% APR cards (depending on how lucky you get with the credit limit) and pay that down during residency. Even at a variable APR of 24.99% which is really high for a credit card, you'd still only be accruing 2.08% interest per month on those residency expenditures assuming you don't budget to pay it off before the 0% APR period is over. Either way this is a smarter way of dealing with those expenses than saving up money from loans year prior that are accruing anywhere from 6.41-7.21% annually.

I don't think you read anything I wrote

 

[operaman]

Wow, OP, please do not put anything on credit cards if you can help it. I'm not sure if it's possible to give more terrible financial advice than that. Beware of reward cards and 0% interest offers -- CC companies are not charities and statistically they know they will make a profit. Yes, there are situations where you can beat the house and come out ahead, but these are rare.

I would set aside $8k ish over time, divided up however you like. The issue with federal loans is that you are limited in how much you can take out in any single year, so getting an extra 8-10k all at once in 4th year may not be possible. That said, if your cost of attendance (ie. your max federal loan amount) is higher than your actual expenses and you are taking out substantially less than the max each semester, then you could probably just maximize your federal loans only as a fourth year and have plenty. In general, I think most people need a pretty generous portion of their loans to live on. If you are one of these, I would take out 1200 each semester and set it aside. You have 7 loan checks before M4, so that would put you in the ballpark.

Yes, you will accrue some interest on this money, but the amount will be negligible in comparison to your overall loan debt (my back of the napkin calculation says ~$600 total in additional accrued interest if you take out a little extra each time). Federal loans also come with a LOT of repayment options, flexibility, etc. If you need a year of forbearance (no payments but interest accrues) in the future, you can do it with federal loans; not so with credit cards or private loans. As a resident, you will likely be doing IBR for your loans, and the additional accrued money from interview season would simply be part of your overall debt and thus included as part of your IBR payment. Since IBR is set a % of income, your actual payment won't change if your overall loan debt is 10k higher. If you do a credit card for your 8-10k of interview expenses, that will be ~250 /month extra just to make the minimum payments. That's 250 in addition to the ~300 /month in IBR payments.

I think 5-8k is probably good number. I would probably err on the high side just because you'll have lots of other expenses anyhow. Don't forget about board exams, moving expenses, etc. Moving for me is looking like it will cost at least $5,000 for a drivable move (security deposit, first month of rent, additional month of rent til my paycheck starts coming, uhaul rental, etc.). So if you take out too much, don't worry, there will be plenty of things to spend it on. Especially if you're a totally independent adult without Mom&Dad National Bank handy, you'll need to think ahead like you're doing and make sure you have adequate liquidity.

Check with your school also and see if there are any professional financial advisors in your area who will do pro bono work with med students. Many will do this; it would be nice to sit down with a pro and talk real numbers and personal details.

 

[Hemorrage]

Wow, OP, please do not put anything on credit cards if you can help it. I'm not sure if it's possible to give more terrible financial advice than that. Beware of reward cards and 0% interest offers -- CC companies are not charities and statistically they know they will make a profit. Yes, there are situations where you can beat the house and come out ahead, but these are rare.

I would set aside $8k ish over time, divided up however you like. The issue with federal loans is that you are limited in how much you can take out in any single year, so getting an extra 8-10k all at once in 4th year may not be possible. That said, if your cost of attendance (ie. your max federal loan amount) is higher than your actual expenses and you are taking out substantially less than the max each semester, then you could probably just maximize your federal loans only as a fourth year and have plenty. In general, I think most people need a pretty generous portion of their loans to live on. If you are one of these, I would take out 1200 each semester and set it aside. You have 7 loan checks before M4, so that would put you in the ballpark.

Yes, you will accrue some interest on this money, but the amount will be negligible in comparison to your overall loan debt (my back of the napkin calculation says ~$600 total in additional accrued interest if you take out a little extra each time). Federal loans also come with a LOT of repayment options, flexibility, etc. If you need a year of forbearance (no payments but interest accrues) in the future, you can do it with federal loans; not so with credit cards or private loans. As a resident, you will likely be doing IBR for your loans, and the additional accrued money from interview season would simply be part of your overall debt and thus included as part of your IBR payment. Since IBR is set a % of income, your actual payment won't change if your overall loan debt is 10k higher. If you do a credit card for your 8-10k of interview expenses, that will be ~250 /month extra just to make the minimum payments. That's 250 in addition to the ~300 /month in IBR payments.

I think 5-8k is probably good number. I would probably err on the high side just because you'll have lots of other expenses anyhow. Don't forget about board exams, moving expenses, etc. Moving for me is looking like it will cost at least $5,000 for a drivable move (security deposit, first month of rent, additional month of rent til my paycheck starts coming, uhaul rental, etc.). So if you take out too much, don't worry, there will be plenty of things to spend it on. Especially if you're a totally independent adult without Mom&Dad National Bank handy, you'll need to think ahead like you're doing and make sure you have adequate liquidity.

Check with your school also and see if there are any professional financial advisors in your area who will do pro bono work with med students. Many will do this; it would be nice to sit down with a pro and talk real numbers and personal details.

This sounds much like the illogical fears 90% of the population has about credit cards. Yes, credit card companies are not charities; however, if you read the terms if your contract carefully and pay attention to how the lending process on a credit card works, then theres absolutely no reason why the credit card route shouldn't work. You're advising the OP take out more than he needs to live on each year in medical school, which if you're math makes any sense at all adds up to quite a lot more interest than he should really pay. Why would anyone want to pay interest on borrowing 5-8k if they can avoid it? 0% APR offers are a dime a dozen, especially with really attractive offers like chase slate. Now the real caveat is to either pay that 5-8k expenditure off within the 12-18 month period they give you, or to pay off what you can, apply for a new 0% APR card when the other one is about to end and perform a balance transfer. The balance transfer fee is at most a minimal expenditure compared to how much money he would owe if he decided to borrow from the government and accrue interest from day one.

I get you may be afraid of credit card contracts but advising OP to pay years worth of interest which could easily be more than 2-3k on top of what he borrowed is plain stupidity when there are other alternatives.

 

[Wordead]

This sounds much like the illogical fears 90% of the population has about credit cards. Yes, credit card companies are not charities; however, if you read the terms if your contract carefully and pay attention to how the lending process on a credit card works, then theres absolutely no reason why the credit card route shouldn't work. You're advising the OP take out more than he needs to live on each year in medical school, which if you're math makes any sense at all adds up to quite a lot more interest than he should really pay. Why would anyone want to pay interest on borrowing 5-8k if they can avoid it? 0% APR offers are a dime a dozen, especially with really attractive offers like chase slate. Now the real caveat is to either pay that 5-8k expenditure off within the 12-18 month period they give you, or to pay off what you can, apply for a new 0% APR card when the other one is about to end and perform a balance transfer. The balance transfer fee is at most a minimal expenditure compared to how much money he would owe if he decided to borrow from the government and accrue interest from day one.

I get you may be afraid of credit card contracts but advising OP to pay years worth of interest which could easily be more than 2-3k on top of what he borrowed is plain stupidity when there are other alternatives.

Haha how much money do you think you make in residency? You think its just easy to pay off 5-10K just like that? You obviously don't even know the timeline - you apply in september (I'm not even accounting for away rotations which will cost a ton), you wont even get your first residency paycheck until july at earliest. Even IF you get a 18 month 0% interest card, you have what 7 months to pay it all off? Because setting aside $1000/month is really easy. And that's not even accounting for moving expenses, buying furniture, buying a house - expenses which are going to be there for the vast majority of people. If ANYTHING goes wrong, you're now snowballing that credit card debt.

Also, as I said before, holding debt on your revolving credit looks bad if you're applying for a mortgage (and I imagine car loans too). Who knows how it will change your mortgage rate.

Basically dude, you have a microscopic understanding of what the residency application and transition process involves and should stop giving advice.

 

[Hemorrage]

Haha how much money do you think you make in residency? You think its just easy to pay off 5-10K just like that? You obviously don't even know the timeline - you apply in september (I'm not even accounting for away rotations which will cost a ton), you wont even get your first residency paycheck until july at earliest. Even IF you get a 18 month 0% interest card, you have what 7 months to pay it all off? Because setting aside $1000/month is really easy. And that's not even accounting for moving expenses, buying furniture, buying a house - expenses which are going to be there for the vast majority of people. If ANYTHING goes wrong, you're now snowballing that credit card debt.

Also, as I said before, holding debt on your revolving credit looks bad if you're applying for a mortgage (and I imagine car loans too). Who knows how it will change your mortgage rate.

Basically dude, you have a microscopic understanding of what the residency application and transition process involves and should stop giving advice.

Holding onto debt on credit cards is only bad for your credit if you're utilizing >30% of your total CL at any given time. I'm at around 15k combined CL already myself, and I plan to have around 30K by the time I apply. That would put me at 26% utilization if I put 8k on a card.

I also have no idea where you're getting the 1000 per month figure. On an 8k balance with a 0% offer your minimum maybe is at most probably 100 a month. Of course you should pay more than that to get it done with in the promotional period but like I said if that's not possible a balance transfer to a new card is always a viable option assuming you keep your credit spiffy. One more thing, IBR payments are calculated based off the prior years tax return, if you're a med student you should have a very minimal IBR payment for intern year since you probably didn't make much money 4th year. To me that seems like a perfect time to chop away at the credit card debt.

You're right, I'm a first year and I don't know exactly how the process works but I also know you're being ignorant regarding non conventional ways to avoid accruing interest. Please go ahead and rack up more debt, I'll go ahead and keep up with my balance transfers and get my debt paid off with minimal interest paid.

 

[Wordead]

Holding onto debt on credit cards is only bad for your credit if you're utilizing >30% of your total CL at any given time. I'm at around 15k combined CL already myself, and I plan to have around 30K by the time I apply. That would put me at 26% utilization if I put 8k on a card.

I also have no idea where you're getting the 1000 per month figure. On an 8k balance with a 0% offer your minimum maybe is at most probably 100 a month. Of course you should pay more than that to get it done with in the promotional period but like I said if that's not possible a balance transfer to a new card is always a viable option assuming you keep your credit spiffy. One more thing, IBR payments are calculated based off the prior years tax return, if you're a med student you should have a very minimal IBR payment for intern year since you probably didn't make much money 4th year. To me that seems like a perfect time to chop away at the credit card debt.

You're right, I'm a first year and I don't know exactly how the process works but I also know you're being ignorant regarding non conventional ways to avoid accruing interest. Please go ahead and rack up more debt, I'll go ahead and keep up with my balance transfers and get my debt paid off with minimal interest paid.

I just bought a ****ing house and had to sit through multiple financial advisor and lender meetings, please keep lecturing me on what affects your mortgage rates. You're wrong.

As for the rest, you clearly didn't even read what I posted or are unable to understand it. OP can decide whether to put everything on a credit card and try to pay it off if he likes, because a M1 has come up with a revolutionary way to finance the residency application process that nobody has thought of before.

 

[Hemorrage]

I just bought a ****ing house and had to sit through multiple financial advisor and lender meetings, please keep lecturing me on what affects your mortgage rates. You're wrong.

As for the rest, you clearly didn't even read what I posted or are unable to understand it. OP can decide whether to put everything on a credit card and try to pay it off if he likes, because a M1 has come up with a revolutionary way to finance the residency application process that nobody has thought of before.

If you're referring to the fact that having a balance on a revolving line of credit will get you a lower interest rate on buying a house or a car- Sure that may be true but that had nothing to do with what OP asked or what i suggested. Alternatively, like i suggested many times already, if you're total CL is much greater than what you're going to charge, the kind of effect this will have on your interest rate is minimal at best. I know this from first hand experience from financing a car.

If you're going to be a arrogant prick who thinks he knows so much more because you happen to be a few years ahead at least explain your logic. You're repeatedly showing me and anyone reading that you can't form a concrete argument on what you think i'm saying wrong by suggesting OP use a credit card and instead you resort to back handed comments about me being an M1.

 

[PL198]

Holding onto debt on credit cards is only bad for your credit if you're utilizing >30% of your total CL at any given time. I'm at around 15k combined CL already myself, and I plan to have around 30K by the time I apply. That would put me at 26% utilization if I put 8k on a card.

I also have no idea where you're getting the 1000 per month figure. On an 8k balance with a 0% offer your minimum maybe is at most probably 100 a month. Of course you should pay more than that to get it done with in the promotional period but like I said if that's not possible a balance transfer to a new card is always a viable option assuming you keep your credit spiffy. One more thing, IBR payments are calculated based off the prior years tax return, if you're a med student you should have a very minimal IBR payment for intern year since you probably didn't make much money 4th year. To me that seems like a perfect time to chop away at the credit card debt.

You're right, I'm a first year and I don't know exactly how the process works but I also know you're being ignorant regarding non conventional ways to avoid accruing interest. Please go ahead and rack up more debt, I'll go ahead and keep up with my balance transfers and get my debt paid off with minimal interest paid.

this is kinda ironic when you're talking about having 30k on credit cards when you graduate. there's a reason 99% of people with credit card debt are financially underwater and most people that have good financial skills don't.

 

[link2swim06]

I ended up with 11K in credit card debt at the start of residency mainly from interview costs, moving costs, and vacations. Now 10 months later I have $0 of credit card debt. You can pay it off in residency if you live way below your means and use your tax refund. Luckily I used discover balance transfer at the start of residency and essentially paid only $100-200 of interest on it all.

And yes it hurts your credit score but it rebounds extremely fast when you pay it off. Mine is already above 780 again (only got down to 710) even though I utilized >50% of my available credit.


In retrospect I probably would have done the exact same thing. Just do your due diligence when signing up for credit cards.

 

[hallowmann]

I put right around 20K into savings/investment intern year, so I think yeah you could probably pay off 5-10K of credit card debt in the same timeframe on a resident salary.

This really depends on where you live during that intern year. COL in some cities is way more than others.

I looked at cost of just rent and utilities in 2 cities I'm looking at. In one the rent and utilities are double the other, whereas resident salaries are almost identical (~$50k). In one, I could definitely live off of $20k, pay $8k to taxes, pay another $8k for loans, and have another $14k to save/pay off CCs. In the other city, I'd have less than $5k to save. This is all assuming some random extra cost doesn't come up.

Given how much can change in 4-5 yrs, I'd recommend not committing to either plan just yet. No need to take out extra money right now, unless as someone mentioned you're practically using the full COA. In 4th year decide whether you need the whole COA and/or extra with CCs. At least then the expenses are split and you can just tack on additional loan payments (if you're able to) intern year without significant interest adding up either way.

 

[Hemorrage]

this is kinda ironic when you're talking about having 30k on credit cards when you graduate. there's a reason 99% of people with credit card debt are financially underwater and most people that have good financial skills don't.

I meant 30k available credit line, not using 30k.

 

[Wordead]

I put right around 20K into savings/investment intern year, so I think yeah you could probably pay off 5-10K of credit card debt in the same timeframe on a resident salary.

*Shrug* If you are in a low COL city and have nothing go wrong and dont need to buy furniture/account for significant expenses, sure it's possible. I never said it wasn't. I'm saying that if anything goes wrong or someone doesn't have the circumstances that you apparently did (20K is crazy), the problems you face with credit card debt that isn't being paid off are way, way worse than having the higher student loan debt.

In any case, I made my case and people are free to do whatever they want.

 

[Doctor_Wonderboy]

Well this has been a wild ride of an SDN thread. Any updates from Wordead or Hemorrhage? Presumably, Wordead is now an attending/fellow (or thereabouts) and Hemorrage has graduated and moved off to begin his intern year. Also, lets not forget about TheLionheart who is in his third year racking up debt like the rest of us.