how to manage student debt

[Esquire]

In the event that I die, I do hope that my 7 year old daughter will NOT inherit my 30k of credit card debt. Could you please tell me a bit more about what would happen to my credit card debt if I do unfortunately pass?
I did sign up for life insurance so that my kid will have some money if I leave this world, and it's plenty to cover the credit card debt....

But death is definitely something I'm working really hard to avoid, since I'm the sole breadwinner for many people

Debt is not inherited, but merely paid from your estate. What's left will go to your beneficiaries. Life insurance proceeds go directly to your beneficiaries & have nothing to do with your debt. You probably have term insurance, but you're better off switching to whole life insurance as your assets & income grow. Lots of cool things you can do with it in terms of deferred comp, tax deductions, investments, asset/malpractice protection, etc. secondary to the insurance industry's lobbying for very favorable tax & financial regulations.

As far as "income" on your app, it seems like you admit you lied, oops. But you have an extremely low chance of being sued by the bank for fraud (compared to a 100% chance you will named in several malpractice suits as a doc). The term "income" is astonishingly hazy when applied legally. The tax lawyers at my firm would bill $800/hr to research obscure tax cases and generate a 2 page letter saying they had no idea what would be interpreted as income. They would also ask the IRS, and the IRS would send a letter back stating they have no conclusion. And the feds have better things to do. They've only prosecuted 1 or 2 of the thousands of execs who told their mortgage bankers, in smoking gun emails, to lie about mortgage applicants' incomes.

I wouldn't recommend the avg person do what you did, but it's commendable that you're actively using money & debt as a tool compared to the usual, "I will have $400,000 in med school loans when I'm done, woe is me" attitude. Money is fire -- it can burn you or it can be harnessed.

In any event, there's no secret to becoming debt free in a relatively short time: make more, spend less, save more, invest. But talking about finances to med students/docs is like talking about diet & exercise to fat patients -- they know what to do, but they ain't gonna do it. It's all good though because the hospital-health insurance industrial complex can't run without highly educated W2 wage slaves, and the minority of us who are semi-financially literate will likely be overrepresented as practice owners and employers of physicians.

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[Esquire]

Please, the average MBA couldn't figure out the perineum from the peritoneum

Agreed.
Why figure out a belly button from a butt hole when a hospital MBA can just hire docs to generate RVUs & facility fees? And if you're a health insurance MBA, why figure out medical gibberish on a claims reimbursement? Just throw it in the trash.

 

[Hemorrage]

Just some thoughts for everyone to keep in mind if this thread is giving you the urge to submit a bunch of credit card apps.

35% of your FICO score is based off your payment history so simply making minimum payments and never having a late payment is A+

30% comes from utilization ratio (i.e amount of credit used/total credit via all banks)... ideally you want a ratio of < 0.3 to maintain a solid score or grow a solid score.

15% comes from AAOA (average age of accounts).. you calculate this in months from when the account was opened. For example you have 2 credit cards, one has been opened for 24 months, the second for 2 months. 24+2/2 = 13 months AAOA. As you can see, if you spam apply for a ton of cards and get approved, you'll shred your AAOA. My plan has been to add 1-2 solid cards/6 months for 2 years to reach 6-8 cards total. The one benefit to this strategy is that it won't shred your AAOA immediately, and once the cards age like fine wines, your AAOA will be able to take hits like a champ.

10% comes from new credit .. this is a vague measure that basically shows on applications whether or not you've opened new accounts recently based on the number of credit inquiries you have

10% comes from account diversity ... ideally you want a mixture of several credit accounts (car loan, credit card, etc.)


One note on AAOA that is significant in regards to AMEX (american express) is that they are the only company that does what we call "backdating" for AAOA. Its ideal to get in with AMEX as early as possible to take advantage of this. For example, if you get the AMEX green card (easiest card to get currently), you'll become an AMEX member at 03/2015. Any other cards you open with amex in the future will get backdated to this 03/2015 date even though you might have opened it in 2018. As you can see this carries a huge benefit in regards to AAOA.

 

[Debt Free Doctor]

Just some thoughts for everyone to keep in mind if this thread is giving you the urge to submit a bunch of credit card apps.

35% of your FICO score is based off your payment history so simply making minimum payments and never having a late payment is A+

30% comes from utilization ratio (i.e amount of credit used/total credit via all banks)... ideally you want a ratio of < 0.3 to maintain a solid score or grow a solid score.

15% comes from AAOA (average age of accounts).. you calculate this in months from when the account was opened. For example you have 2 credit cards, one has been opened for 24 months, the second for 2 months. 24+2/2 = 13 months AAOA. As you can see, if you spam apply for a ton of cards and get approved, you'll shred your AAOA. My plan has been to add 1-2 solid cards/6 months for 2 years to reach 6-8 cards total. The one benefit to this strategy is that it won't shred your AAOA immediately, and once the cards age like fine wines, your AAOA will be able to take hits like a champ.

10% comes from new credit .. this is a vague measure that basically shows on applications whether or not you've opened new accounts recently based on the number of credit inquiries you have

10% comes from account diversity ... ideally you want a mixture of several credit accounts (car loan, credit card, etc.)


One note on AAOA that is significant in regards to AMEX (american express) is that they are the only company that does what we call "backdating" for AAOA. Its ideal to get in with AMEX as early as possible to take advantage of this. For example, if you get the AMEX green card (easiest card to get currently), you'll become an AMEX member at 03/2015. Any other cards you open with amex in the future will get backdated to this 03/2015 date even though you might have opened it in 2018. As you can see this carries a huge benefit in regards to AAOA.

This is incredible!!!

Thank you for the education
Especially love the back dating idea

 

[mostwanted]

I think this is a very important discussion as it affects overwhelming number of graduates. I have been part of this forum for over a decade and I can attest to utilizing some of the aforementioned methods. However, I have also utilized other methods outlined below and have given lectures regarding the topic multiple times.

I agree starting planning from day 1 is key. I was a late bloomer and didn't realize the full extent of the problem (insane debt) until after graduating medical school.

Things that I did wrong during med school: paid excessively high rent (contributed abt 10k to my debt in MS1), had an 8 cyl car, ate out often, gym membership (which I still have) etc

Things that I did right during med school: looked for not commonly utilized grants, loans, scholarships saved me over $20k over span of 4 years.

Upon graduation I quickly realized as the OP pointed out main problem is the interest, seeing interest rates of 6.8% meant close to 10k in interest per year with a graduating debt of over 150k. Starting PGY1 year I made it an absolute priority to avoid paying interest. And student deferment is one of the best ways to achieve that.

One method that has not been utilized to this day saves me close to 4k in interest every year, going through loan rule book, I realized if you are half time student (6 credits), your subsidized loans are deferred. I did the math and found an online school that was cheapest and enrolled for 6 credits and have been doing so for past 4.5 years. They can be any class and you don't even have to pass, just can't drop the courses. This has worked incredibly well for me because I have a over 50k in subsidized loans. (I understand Budget control act of 2011 has severely limits this now due to taking away of subsidized grad loans $8500/yr over 4 years, 34k lost from subsidized loans) So with my subsidized loan in deferment, my focus turned to paying off unsubsidized portion as quickly as possible.

I contacted my hospital HR dept and they offered a 0% small loan that was taken out of my paycheck in small increments and given upfront, saved me about 8 months of interest on a few thousand because I took the check and put it towards unsub. I utilized the Slate card OP mentioned as well and usually Sallie mae doesn't accept credit card as payment, but during one of my calls to Sallie Mae I was able to put 3k on it and save 15 months of interest. It took me 1.5 yrs to successfully pay off unsub (lived within my means)

I have been interest free since 2012, and expect to be completely debt free by the end of this year. It is not easy, but proper planning can certainly help your cause.

OP also mentioned using credit cards I wasn't aware of the full utility of this until recently. I have taken probably 1o plus free flights in the last three years utilizing sign up bonuses from credit cards. I must mention I am meticulous in making payments on time and keeping track of what needs to be paid by when and plan accordingly.

Things you can do: minimize your loan burden (live with friends, save rent, use a gas efficient vehicle, minimize eating out), utilize google to search for 0% loans (they are out there), have a solid plan coming out of med school, think outside of the box (reach out to your hospital, cautiously use credit cards, enroll as a half time student )

And OP stop apologizing, it behooves any individual to utilize this advice and any other to free themselves from shackles of debt.

 

[Debt Free Doctor]

I think this is a very important discussion as it affects overwhelming number of graduates. I have been part of this forum for over a decade and I can attest to utilizing some of the aforementioned methods. However, I have also utilized other methods outlined below and have given lectures regarding the topic multiple times.

I agree starting planning from day 1 is key. I was a late bloomer and didn't realize the full extent of the problem (insane debt) until after graduating medical school.

Things that I did wrong during med school: paid excessively high rent (contributed abt 10k to my debt in MS1), had an 8 cyl car, ate out often, gym membership (which I still have) etc

Things that I did right during med school: looked for not commonly utilized grants, loans, scholarships saved me over $20k over span of 4 years.

Upon graduation I quickly realized as the OP pointed out main problem is the interest, seeing interest rates of 6.8% meant close to 10k in interest per year with a graduating debt of over 150k. Starting PGY1 year I made it an absolute priority to avoid paying interest. And student deferment is one of the best ways to achieve that.

One method that has not been utilized to this day saves me close to 4k in interest every year, going through loan rule book, I realized if you are half time student (6 credits), your subsidized loans are deferred. I did the math and found an online school that was cheapest and enrolled for 6 credits and have been doing so for past 4.5 years. They can be any class and you don't even have to pass, just can't drop the courses. This has worked incredibly well for me because I have a over 50k in subsidized loans. (I understand Budget control act of 2011 has severely limits this now due to taking away of subsidized grad loans $8500/yr over 4 years, 34k lost from subsidized loans) So with my subsidized loan in deferment, my focus turned to paying off unsubsidized portion as quickly as possible.

I contacted my hospital HR dept and they offered a 0% small loan that was taken out of my paycheck in small increments and given upfront, saved me about 8 months of interest on a few thousand because I took the check and put it towards unsub. I utilized the Slate card OP mentioned as well and usually Sallie mae doesn't accept credit card as payment, but during one of my calls to Sallie Mae I was able to put 3k on it and save 15 months of interest. It took me 1.5 yrs to successfully pay off unsub (lived within my means)

I have been interest free since 2012, and expect to be completely debt free by the end of this year. It is not easy, but proper planning can certainly help your cause.

OP also mentioned using credit cards I wasn't aware of the full utility of this until recently. I have taken probably 1o plus free flights in the last three years utilizing sign up bonuses from credit cards. I must mention I am meticulous in making payments on time and keeping track of what needs to be paid by when and plan accordingly.

Things you can do: minimize your loan burden (live with friends, save rent, use a gas efficient vehicle, minimize eating out), utilize google to search for 0% loans (they are out there), have a solid plan coming out of med school, think outside of the box (reach out to your hospital, cautiously use credit cards, enroll as a half time student )

And OP stop apologizing, it behooves any individual to utilize this advice and any other to free themselves from shackles of debt.

What you did was brilliant! I was not aware of the enrolling in classes way of avoiding interest. (I think though starting 2012, there was no longer sub loans in med school...)

It's awesome that your hospital provides this 0% loan from your paycheck.
And wow, you are disciplined!
Congratulations for almost getting there and thank you for stepping forward to share your success story with SDN.

Best wishes to you and please keep raising debt awareness among our colleagues.
I believe since we are dedicated enough to delay our gratification and attend a range from 23rd (3 year residency) to 32nd (for those gunner who did double residency for a total 12 years) grades, we should be at least starting off as attending with minimal to NO debt, instead of in the largely negative.

 

[Debt Free Doctor]

Hey guys, I need investment advice. I'm totally new to investment. Never saved a penny before for retirement, should have...
It's never too late I guess.
Since I still have 30-35 years of working years ahead of me, I'm thinking to do Vanguard stocks with super low exp ratio of 0.04%.
Any advice?
All lessons and ideas are deeply appreciated from seasoned investors. Thank you

 

[Debt Free Doctor]

I just did a tally after paying off my student loans. My maximum total student loan principle in medical school was $73,641.95. The total interest I paid over the last 4 years and 9 months was $2,391.16. If I were to take out 18.4k each year of medical school @ the beginning of each school year, i'd have a much higher amount of interest accrued.
This table attached shows the power of interest. Assuming I take out student loan as most people do, at the beginning of each school year. Assume the interest rate was 6.8%. For the same amount of money I borrow ($73,641.95 or, 1.8k each year for 4 years), I'd have accrued $19,317 dollars in INTEREST alone by the end of my intern year.

So by delaying taking out medical school loan (till I run out of interest free credit card offers), i was able save ~17k in interest. This is a slight over-estimate as not all loan was 6.8%. I believe I had some student loan at 5.4% in the last year of medical school. but it gives a rough idea...

• How did you fund your medical education?
• How did you minimize interest?
• How did you make your "limited" dollars stretch?

 

[PL198]

wait so you're a PGY-1 now? i thought you said you had like a few hundred dollars of student loans?

 

[Smart Money MD]

Hey guys, I need investment advice. I'm totally new to investment. Never saved a penny before for retirement, should have...
It's never too late I guess.
Since I still have 30-35 years of working years ahead of me, I'm thinking to do Vanguard stocks with super low exp ratio of 0.04%.
Any advice?
All lessons and ideas are deeply appreciated from seasoned investors. Thank you

In general, it is recommended to place your investments into broad index funds, as the stock market inevitably goes up if you have a long investing horizon. In your case, you might want to chip away at any higher interest debt hard while contributing to your retirement funds as well.

* Not a financial advisor.

 

[Debt Free Doctor]

wait so you're a PGY-1 now? i thought you said you had like a few hundred dollars of student loans?

yeah

I had $733 of student loan left a little over a week ago... I paid off all my student loan 3/18/15.

 

[Debt Free Doctor]

In general, it is recommended to place your investments into broad index funds, as the stock market inevitably goes up if you have a long investing horizon. In your case, you might want to chip away at any higher interest debt hard while contributing to your retirement funds as well.

* Not a financial advisor.

awesome thank you!

my highest interest rate debt NOW (after paying off my student loans) is my mortgage at 3.375%. so probably saving for retirement (new to this) in vanguard stocks and vanguard index funds ok?

thanks for your advice!

 

[PL198]

nvm

 

[Smart Money MD]

awesome thank you!

my highest interest rate debt NOW (after paying off my student loans) is my mortgage at 3.375%. so probably saving for retirement (new to this) in vanguard stocks and vanguard index funds ok?

thanks for your advice!

That's probably a good option. Fidelity also has freedom funds that also have low expense ratios as well. They all aim to follow certain indices of the market.

 

[Debt Free Doctor]

That's probably a good option. Fidelity also has freedom funds that also have low expense ratios as well. They all aim to follow certain indices of the market.

Thanks!

 

[Debt Free Doctor]

I'm excited to have a meeting with a fidelity adviser today. Goal is to find out how to best prioritize retirement savings/funds allocation of various types, ROTH IRA, vs. ROTH 403b vs. 401k pretax (with matching), 457, etc.
Anyone has any suggestion on how to best invest/save during residency, assuming the income is between 50k-100k (with optimism in moonlighting and side job in tutoring)?
there's currently lots of moon-lighting opportunities at my program during pgy2-4 (I pray that these won't go away), and I have another 5 years of training after internship year.

What kind of employer match do people get as attending physicians and residents? Thanks for sharing!

 

[deleted390966]

how do you think the public would react if they knew doctors making six figures had a program in place that would forgive hundreds of thousands of dollars in debt at the expense of the American taxpayer?

About the IBR, PAYE: At the end of payment period, there is a tax to be paid for the remaining amount that has accumulated over 20-30 years! So it's not like anything is "forgiven". The tax amount is like income tax amount... Anyone who plans to utilize these repayment plans should know this: The amount you'll end up paying may far exceed what you owe!

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

 

[wiggitywack12]

Everything about this thread is shady.

 

[deleted390966]

@Debt Free Doctor : Why did you use your money earned from work to pay for credit card but not use a new card to pay for a card that is about to expire?

 

[wiggitywack12]

By the way. I grew up really poor too.

With debt collectors at our door when I was still in Asia.
My parents who are asian totally didn't possess the most important asian virtue of $ management. So they've got is debt, no asset. That's why i'm so debt-adverse and will do anything LEGAL to avoid and minimize debt.

Growing up poor and having my parents being fincnially insolvant also pushed me to worked 7 jobs in college to send home money to home for paying bastard credit card companies who are charging my dad 30% interest rate for not reading or understanding the fine print.

I played the "cathc me if you can" chase with credit card companies by shifting my student loan balance around from one card to another, therefore nearly always avoiding the student loan interest, and never paying more than 2% and mostly riding 0% interest throughout medical school and even now.

I did not have lots of income, my current income is not much more than 50k of internship, with a little supplemental income from tutoring MCAT/USMLE.
But I make my income flow in circle so that I build wealth from "cash flow" rather than "cash" alone.

The more I read this, the funnier this thread becomes.


LOL @ her parents lacking the "asian virtue" of debt management. Now I'm 100% that not only are you lying, you're not Asian. You sound like you're more than likely American born Caucasian ....probably from the Midwest actually. First off, no one says "when I was in Asia" ...if you were actually Asian you would have specified a country because Asia is relatively large and although you're from the Midwest and you have a monolithic view of the continent (like your ideas about their virtues) Asia has several vastly different countries, cultures and histories and unlike you they don't think they're all the same. No Asian born Asian says "I'm from Asia" ....they say "I'm from ___" enter whichever country they're actually from.

So you grew up poor, had debt collectors after your parents in "Asia", but you have a family member who gives you 35K a year, but you still worked 7 jobs in college and you gave your parents 35K a year to support them while you were in school. This isn't adding up. If you were getting 35K a year in support you wouldn't have qualified for work study. In another post you also said you were working so much that even after your costs of living you were able to give your parents 35K a year to support them, but having this much money would also disqualify you from work study.

And your financial advice is to play "catch me if you can" with credit card companies....I actually did laugh out loud when I read that. Maybe you did do all of these things but even the 25K per year in work study sounds like nothing I've ever heard--ever. I know kids who were from families on food stamps, no savings, no credit for loans, no "generous" family members and the money from work study wasn't even close to 25K a year and they worked 5 days a week. So you squeezing 100K out of an already tight stringed government assistance program truly strikes me as a fabrication.

I feel like I'm being scammed by a university student whose parents fund his tuition + living expenses, failed a good deal of his accounting courses and seeks to make money off of his "financial genius" online.

 

[jeffk805dent]

Everything about this thread is shady.

its an internet board, I am actually part of Skynet, where that John Connor guy at.

 

[Mass Effect]

About the IBR, PAYE: At the end of payment period, there is a tax to be paid for the remaining amount that has accumulated over 20-30 years! So it's not like anything is "forgiven". The tax amount is like income tax amount... Anyone who plans to utilize these repayment plans should know this: The amount you'll end up paying may far exceed what you owe!

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

How could the amount you end up paying in tax exceed what you owe if by then, you owe half a million dollars? Also, if you do the PSLF, there is no tax. Yes, that might disappear in a few years, but from what I understand, that will only apply to new borrowers.

 

[deleted390966]

How could the amount you end up paying in tax exceed what you owe if by then, you owe half a million dollars? Also, if you do the PSLF, there is no tax. Yes, that might disappear in a few years, but from what I understand, that will only apply to new borrowers.

The remaining amount (+ interest accumulated at the end) is taxed as regular income. So let's say after 20-30 years, you still have $100,000 and you make another $100,000 from working so your taxable income is $200,000. In this case, you would pay about 25% federal tax so about $50,000. I think you would also pay state income tax if applicable.
THAT + the monthly loan payments you pay for 20-30 years under these plans = more than the amount you owe in most cases.

PAYE/IBR let you pay over a longer period of time but it is going to cost you more money. That's just a mathematical fact. This "tax bomb" was introduced by Republicans a few years ago; there have been attempts to eliminate it...

 

[Mass Effect]

The remaining amount (+ interest accumulated at the end) is taxed as regular income. So let's say after 20-30 years, you still have $100,000 and you make another $100,000 from working so your taxable income is $200,000. In this case, you would pay about 25% federal tax so about $50,000. I think you would also pay state income tax if applicable.
THAT + the monthly loan payments you pay for 20-30 years under these plans = more than the amount you owe in most cases.

PAYE/IBR let you pay over a longer period of time but it is going to cost you more money. That's just a mathematical fact.

It really isn't a mathematical fact. You're not taking into consideration that most residents can't afford to pay back loans without IBR, which means interest continues to accrue during residency. Besides, as Is aid, the PSLF as of right now, is available. There's no reason not to use it.

 

[deleted390966]

I am not against IBR/PAYE. I would like to utilize it myself, too. The annoying part is the "tax bomb" at the end that some people are not aware of. That was in response to the posts that say the loan burden is shifted to taxpayers while in fact, hardly anything is "forgiven" via these plans.

 

[PreMedBeauty]

I'm just gunna pretend I didn't read that

I don't think she's really lying. Also, she's doing what she is capable of and not doing anything out of the extreme. If anything I need to get on your level! lol As someone else mentioned I have a tough enough time getting a credit limit increase but that's probably because I'm at a disadvantage from building my credit late. My credit score is pretty decent and I pay off my debt-not school related. As student loans I'm doing the best I can with the small amount of money I make from a part time job. I wish I were in your shoes right now.

 

[Debt Free Doctor]

@Debt Free Doctor : Why did you use your money earned from work to pay for credit card but not use a new card to pay for a card that is about to expire?

I do this too.
I do transfer balances around to minimize interests...
But I don't close any credit cards that I paid off, I just leave them alone if they don't offer good incentives to use them after the promotional periods.
hence the really large credit limit I have.

 

[Debt Free Doctor]

The more I read this, the funnier this thread becomes.


LOL @ her parents lacking the "asian virtue" of debt management. Now I'm 100% that not only are you lying, you're not Asian. You sound like you're more than likely American born Caucasian ....probably from the Midwest actually. First off, no one says "when I was in Asia" ...if you were actually Asian you would have specified a country because Asia is relatively large and although you're from the Midwest and you have a monolithic view of the continent (like your ideas about their virtues) Asia has several vastly different countries, cultures and histories and unlike you they don't think they're all the same. No Asian born Asian says "I'm from Asia" ....they say "I'm from ___" enter whichever country they're actually from.

So you grew up poor, had debt collectors after your parents in "Asia", but you have a family member who gives you 35K a year, but you still worked 7 jobs in college and you gave your parents 35K a year to support them while you were in school. This isn't adding up. If you were getting 35K a year in support you wouldn't have qualified for work study. In another post you also said you were working so much that even after your costs of living you were able to give your parents 35K a year to support them, but having this much money would also disqualify you from work study.

And your financial advice is to play "catch me if you can" with credit card companies....I actually did laugh out loud when I read that. Maybe you did do all of these things but even the 25K per year in work study sounds like nothing I've ever heard--ever. I know kids who were from families on food stamps, no savings, no credit for loans, no "generous" family members and the money from work study wasn't even close to 25K a year and they worked 5 days a week. So you squeezing 100K out of an already tight stringed government assistance program truly strikes me as a fabrication.

I feel like I'm being scammed by a university student whose parents fund his tuition + living expenses, failed a good deal of his accounting courses and seeks to make money off of his "financial genius" online.

haha I am truly Asian...
didn't want to reveal too much about where I was from because I was weary of identity theft...
and the correction is that I gave my family 35k during college. not 35k a year.
I do wish I can make that much money for my family, but the jobs I had in college were tutoring/ babysitting/ care taking/ library circulation jobs that don't pay more than 20/hr... couldn't have sent home 35k/yr on that.

I did get 35k family assistance, though not from my parents. from my well to do extended family, who expect me to pay them back after residency. this I am very grateful for.

 

[Debt Free Doctor]

The remaining amount (+ interest accumulated at the end) is taxed as regular income. So let's say after 20-30 years, you still have $100,000 and you make another $100,000 from working so your taxable income is $200,000. In this case, you would pay about 25% federal tax so about $50,000. I think you would also pay state income tax if applicable.
THAT + the monthly loan payments you pay for 20-30 years under these plans = more than the amount you owe in most cases.

PAYE/IBR let you pay over a longer period of time but it is going to cost you more money. That's just a mathematical fact. This "tax bomb" was introduced by Republicans a few years ago; there have been attempts to eliminate it...

wow

this is brilliant information. I never knew this.
more reason to pay our bills ourselves rather than waiting for forgiveness....

 

[Debt Free Doctor]

I am not against IBR/PAYE. I would like to utilize it myself, too. The annoying part is the "tax bomb" at the end that some people are not aware of. That was in response to the posts that say the loan burden is shifted to taxpayers while in fact, hardly anything is "forgiven" via these plans.

totally agree
forgiveness is not all that FORGIVING.

one has to jump through lots of hoops and wait out 10 years total to get it, without certainty.
my training is long, at least 6 years including 1 year in fellowship... and with the job market of radiology going sort of down these days, I may do another fellowship

even with 7 years automatically qualifying me for PSLF, I'm not willing to wait out another 3 years to see if I get forgiven.

 

[Debt Free Doctor]

I don't think she's really lying. Also, she's doing what she is capable of and not doing anything out of the extreme. If anything I need to get on your level! lol As someone else mentioned I have a tough enough time getting a credit limit increase but that's probably because I'm at a disadvantage from building my credit late. My credit score is pretty decent and I pay off my debt-not school related. As student loans I'm doing the best I can with the small amount of money I make from a part time job. I wish I were in your shoes right now.

thank you for being positive

first of all, I'd like to applaud you for taking on a job to reduce student loan.
prevention is the best medicine.
in 2012, there was no longer subsidized student loan via my medical school, in other words, the day the student loan was originated (with a origination fee), the principle was starting to accrue interest.

Recently, I was helping a co-intern figure out how to best reduce his debt/grow this net worth. I was stunned that he graduated with 160k in student loan and in the matter of 2-3 years, his balance has grew to 210k!!!!
He was making IBR payments, which unfortunately allowed his loan to undergo negative amortization. the measly payments he mad was not even denting the shear interest accrued each month on his principle.
Hence, he never even saw or used a penny from the extra 50k debt over 3 years.

so the fact that you are NOT borrowing as much as you would without a side job is huge.
time value of money is important.
eventually, our goal is to be on the side of collecting interest
rather than paying interest.

in regards to growing your credit limit and making credit card companies compete to carry your debt,
refer to early posts of this thread where I took excerpt from my website...

it gives you some principle on how to maximize your credit limit.
best of luck and let me know if you have any other q's

 

[pathologyDO]

I don't think she's really lying. Also, she's doing what she is capable of and not doing anything out of the extreme. If anything I need to get on your level! lol As someone else mentioned I have a tough enough time getting a credit limit increase but that's probably because I'm at a disadvantage from building my credit late. My credit score is pretty decent and I pay off my debt-not school related. As student loans I'm doing the best I can with the small amount of money I make from a part time job. I wish I were in your shoes right now.

Oh ? I will spare sharing her statement about how she gets high credit balances (she edited her original post but I quoted it so you can see it in one of my quotes.)

I'm done with this thread for real though. Good luck to those going this route, it is both risky and if you lie about your income, definitely illegal. Even if you do all these things basically all you will be doing is coming out with 0% interest, rather than not having any debt. Sure, I would like to not have that extra interest payment... but you must continue this credit card transfer crap, or make minimum payments, even through residency... which is way more stress than I want to worry about. By the time you get to residency, who knows, will there still be all these 0% APR and free or cheap credit line transfers still? Hard to say. You may miss a transfer on 1 of your cards and boom, potentially 25% interest rate blows the whole deal and you end up paying more than originally intended.

This plan is only for the meticulous and those who don't mind playing risk with $200k+

Anyways, good luck

 

[Debt Free Doctor]

"meticulous and those who don't mind playing risk with $200k+"

agreed. sounds like many of my colleagues who are excellent physician because they are both meticulous with their work
& took on the risk of incurring 200+k student loan debt for their education/training.

you have a good point and I appreciate your voice in this thread!

 

[pathologyDO]

"meticulous and those who don't mind playing risk with $200k+"

agreed. sounds like many of my colleagues who are excellent physician because they are both meticulous with their work
& took on the risk of incurring 200+k student loan debt for their education/training.

you have a good point and I appreciate your voice in this thread!

Meh, not worth my time to go further with this. But thanks, hopefully my voice will help people understand the implications of your "method"

 

[PreMedBeauty]

thank you for being positive

first of all, I'd like to applaud you for taking on a job to reduce student loan.
prevention is the best medicine.
in 2012, there was no longer subsidized student loan via my medical school, in other words, the day the student loan was originated (with a origination fee), the principle was starting to accrue interest.

Recently, I was helping a co-intern figure out how to best reduce his debt/grow this net worth. I was stunned that he graduated with 160k in student loan and in the matter of 2-3 years, his balance has grew to 210k!!!!
He was making IBR payments, which unfortunately allowed his loan to undergo negative amortization. the measly payments he mad was not even denting the shear interest accrued each month on his principle.
Hence, he never even saw or used a penny from the extra 50k debt over 3 years.

so the fact that you are NOT borrowing as much as you would without a side job is huge.
time value of money is important.
eventually, our goal is to be on the side of collecting interest
rather than paying interest.

in regards to growing your credit limit and making credit card companies compete to carry your debt,
refer to early posts of this thread where I took excerpt from my website...

it gives you some principle on how to maximize your credit limit.
best of luck and let me know if you have any other q's

I'm happy I came across this thread. lol Even though I can't fully do what you did because of the amount of income you had vs. what I'm currently making at minimum wage working part time lol but it has given me some ideas on how to save some money. Besides, I understand more of what can be done related to what I have previous done, which is similar but not as beneficial (only because of your income and opportunities). I understand that this is very risky and of course I will only do what is within my means. Also, I have not shopped or done much besides paying towards my loans. I don't spend much on things and only pay for necessities at this time in my life. I have a huge amount of loans due to just graduating from Business school. Now I'm trying to pursue medicine because I don't really feel business is a good fit for me. Good choice right? haha I am too Asian, btw. Now everyone is going to go around and think Asians are bad and hate us.

I do want to point out that I have recently looked into refinancing student loans and do not qualify for those companies again because of the income factor. The companies I researched had a requirement of at least 24,000, 50,000, and 80,000. I mean that is outrageous to believe that the people who are begging for a lower interest would have that income. My mom couldn't even qualify me for the loan as we're not rich. Anyway, thanks for your insight and having our back. I'm sure everyone has learned something from this thread. At this point I'm premed and not even at your level as far as my career/money and hope I will make it to medical school one day so congrats to everyone who has made it into med school and I hope I can be in your position one day.

 

[Debt Free Doctor]

I'm happy I came across this thread. lol Even though I can't fully do what you did because of the amount of income you had vs. what I'm currently making at minimum wage working part time lol but it has given me some ideas on how to save some money. Besides, I understand more of what can be done related to what I have previous done, which is similar but not as beneficial (only because of your income and opportunities). I understand that this is very risky and of course I will only do what is within my means. Also, I have not shopped or done much besides paying towards my loans. I don't spend much on things and only pay for necessities at this time in my life. I have a huge amount of loans due to just graduating from Business school. Now I'm trying to pursue medicine because I don't really feel business is a good fit for me. Good choice right? haha I am too Asian, btw. Now everyone is going to go around and think Asians are bad and hate us.

I do want to point out that I have recently looked into refinancing student loans and do not qualify for those companies again because of the income factor. The companies I researched had a requirement of at least 24,000, 50,000, and 80,000. I mean that is outrageous to believe that the people who are begging for a lower interest would have that income. My mom couldn't even qualify me for the loan as we're not rich. Anyway, thanks for your insight and having our back. I'm sure everyone has learned something from this thread. At this point I'm premed and not even at your level as far as my career/money and hope I will make it to medical school one day so congrats to everyone who has made it into med school and I hope I can be in your position one day.

wow you are super positive!
you will make it, both into med school and out of med school better off than most both professionally and financially.

I also took a break before medical school to raise my kid and was working several odd jobs like baby-sitting and tutoring.

the student loan refi companies SUCK for most people except for attending physicians.
I also attempted to ref my student loan at the beginning of my intern year when I still had 50k of med school loan...
they would not even consider me even though I can totally manage to make the monthly payment if they LET me refinance.
and the main reason that I'm refinancing is to be able to pay my debt down even FASTER, not slower. I wanted more of my hard earned money to go towards principle rather than interest.

Nope, Sofi/DRB (I didn't bother checking out the other ones because these 2 had the best refi interest rates) would not help. I also did not have anyone in my family who could/would co-apply to help me qualify for student loan refi.
That's when I got pretty angry and
REFI my student loan MYSELF using credit card offers.

so instead of lowering my interest rate from 6.8 to 4.5% (DRB said based on my credit score, IF They qualify me for 5 year fixed interest rate, they'd give me an interest rate around 4.5%).
I lowered my interest rate to 0% for 15 months. meanwhile, I've paid the principle down some more with being frugal and making some side money in tutoring.

I think if you keep up being frugal, actively seek help (talk to med school financial aid officer/professors for job opportunities in med school), delay taking out student loan (delay interest snowballing), you will likely come out of med school with below the average student debt.

"I have not shopped or done much besides paying towards my loans. I don't spend much on things and only pay for necessities at this time in my life." Way to go, keep up the good work here. The delayed gratification is really worth it when you realize how much lighter your student debt burden has become.

 

[iowafan]

About the IBR, PAYE: At the end of payment period, there is a tax to be paid for the remaining amount that has accumulated over 20-30 years! So it's not like anything is "forgiven". The tax amount is like income tax amount... Anyone who plans to utilize these repayment plans should know this: The amount you'll end up paying may far exceed what you owe!

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

Wish I had the source to cite this as I know it doesn't mean much otherwise, but I've read Obama wants to get rid of that tax on forgiven debt under PAYE and IBR like it is for PSLF.

Good for us specifically, bad for tax payer in general.

 

[Debt Free Doctor]

Wish I had the source to cite this as I know it doesn't mean much otherwise, but I've read Obama wants to get rid of that tax on forgiven debt under PAYE and IBR like it is for PSLF.

Good for us specifically, bad for tax payer in general.

agreed.
we are tax payers too.
still not sure that sure I'd go for PSLF for the hassle and uncertainty and giving my debt to the tax payers to absolve.

 

[deleted390966]

agreed.
we are tax payers too.
still not sure that sure I'd go for PSLF for the hassle and uncertainty and giving my debt to the tax payers to absolve.

Why is it bad for tax payers if the government doesn't suddenly increase taxes on the middle/upper classes? Taxes currently have been the lowest ever seen. Our taxes have gone to pay for wars anyway. Instead of throwing trillions into war, the government could have used that money to make college free for everyone for the next 10 years, but they didn't. Not to mention big corporations that moved their headquarters overseas to evade taxes for years, and McDonald that pays 0.1% on tax! The 0.5% upper class gets richer while the middle class and everyone else get poorer (and now those 0.5% elite want to reduce Medicaid, cut federal Pell grant, end Obamacare and Social Security while proposing an increase of ~$38 billion on military!)

There should be a better way to control the outrageous cost of education in this country than giving out loans at high interests.
It's a shame that Americans can study for free in these countries but become slaves to debts in our home country! (ever heard of some medical students who feel trapped even when they realized Medicine isn't for them just because they've owed too much debts to do anything else?)

 

[Debt Free Doctor]

I totally agree with you that our education should not have cost so much in the first place.
I know of no other profession than medicine that becomes so indebted that we are literally indentured servants.
I didn't even want to think about the fact that the whole time I worked so hard to reduce debt and pay off debt. If I had been able to attend FREE medical school in Taiwan, or nearly free med education in India, I would have a positive net worth of 250k plus!

I hope that one day some of us doctors will become more politically active so that we can make laws that are more friendly to physicians, including perhaps giving cheaper/free medical education. So that no one has to feel trapped in medicine or feel restricted in their choice of specialty because of the enormity of their student debt.

 

[Debt Free Doctor]

moving beyond student debt, time to max out ROTH accounts...

anyone has suggestion regarding a balanced portfolio?

i'm brand new to retirement savings. just started ROTH IRA 2014, now doing ROTH IRA and ROTH 403b for 2015.
initially started with 100% stocks since i'm 3 decades from retirement and think i can take the risk.

but also hearing that stock is not going to do too well in the short run, so perhaps i should diversify the allocation of my 2015 ROTH funds

any advice?
thanks!

 

[Mad Jack]

Step 1: pay tuition with credit cards.
Step 2: Finish school.
Step 3: Declare bankruptcy.
Step 4: You're now debt free, congratulations!

 

[WhendoIstartfirstaid?]

There's only two possible diagnosis I give after reading the first post,

either this all an elaborate ploy leading to a scam, or op needs a psych consult.

 

[Doudline]

I feel like I entered the Twilight Zone or something.

 

[jeffk805dent]

Step 1: pay tuition with credit cards.
Step 2: Finish school.
Step 3: Declare bankruptcy.
Step 4: You're now debt free, congratulations!

or just move out of the US and hope the lenders dont try to spend government money trying to catch you. Though this means leaving the US, I need my In-N-Out and Chipotle.

 

[Smart Money MD]

moving beyond student debt, time to max out ROTH accounts...

anyone has suggestion regarding a balanced portfolio?

i'm brand new to retirement savings. just started ROTH IRA 2014, now doing ROTH IRA and ROTH 403b for 2015.
initially started with 100% stocks since i'm 3 decades from retirement and think i can take the risk.

but also hearing that stock is not going to do too well in the short run, so perhaps i should diversify the allocation of my 2015 ROTH funds

any advice?
thanks!

If you're 30 years until retirement, you can take the risk. If you feel that 100% stock is too high, then perhaps you can diversify as you are adding additional funds into the accounts. I am in similar shoes, except that my career span may be shorter depending on how motivated I feel to retire earlier or how successful I end up in my retirement accounts.

 

[PL198]

if you're just starting now, then the fact that stocks are high right now means essentially nothing(if you had a net worth of 1M it would still not mean much, but it would mean more than with a small net worth). if you have little invested, you'd ideally want the market to absolutely tank right about now so you get the most value for your future investments as you continue to contribute.

point is, you have little value in the market right now, so a large decrease wouldn't even hurt you much and would be beneficial in the long run

 

[Debt Free Doctor]

great point, thank you for your advice!

i'm on track to max out 23.5k of roth until 2020, after which i will re-evaluate whether i will do pre-tax and other retirement saving vehicle before maxing out back door ROTH.
so none if none of my contribution grow or decrease (or on average no net gain in the next 6 years), i will have 146.5k by end of 2020 when I transition into attending hood.
but let's hope by then i would have at least average 5% growth in a 100% stock ROTH portfolio...

are there other investment vehicle i should be prioritizing with the limited cash flow i have during training?
in my mind ROTH space comes first.
then whenever matching becomes available, put towards getting the max matching first.
then maybe 529?

please share if there's other way to make money work for you, thanks!

 

[evooo8]

I read page one but got too lazy to read the other 4 pages. How were you able to receive such high credit limits on all these credit cards? It does not seem like a bad idea. But at the age of 21, there is no way I can get a credit card with a $45k limit to put a year of medical school tuition on. Let alone enough cards to juggle almost $250k in debt. I am however juggling living expenses on 0% APR which is helping out a lot.

 

[pathologyDO]

I read page one but got too lazy to read the other 4 pages. How were you able to receive such high credit limits on all these credit cards? It does not seem like a bad idea. But at the age of 21, there is no way I can get a credit card with a $45k limit to put a year of medical school tuition on. Let alone enough cards to juggle almost $250k in debt. I am however juggling living expenses on 0% APR which is helping out a lot.

Yeah... read up on those 4 pages... we discussed this ad nauseam to the last detail - you basically have to do what DFD considers telling a "white lie" about your income, but doing so is quite literally credit fraud... which you will most likely not be brought to court over, but it can happen in rare situations so its up to you to decide whether or not you feel it is ethical to do.