Is Medical school debt that bad?

[Dr.Sticks]

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As someone interested in med school it could potentially cost me 400k at the high end of things. However how is that too much debt that would take a long time to pay?
Say you go into FM and your after tax take home is 100k..
You could pay 50k a year into your debt and pay it off in 8 years!
That is the worst case scenario of course..
If you did something better and made 200k after tax you could pay the debt off in 4 years.

Anyone should be able to live off 50k a year, and one should certainly be able to live off of 100k a year.

Maybe I am looking at this wrong, but 400k doesn't just look that bad to me.

I do not see why people make living off 50k a year appear to be poverty..

Honestly I think 50k itself is fairly lavish, one could live on even less like 35k a year in a more Midwestern location.

 

[hsmooth]

Live like a resident even on attending salary and there's your secret to financial independence. Don't buy your McMansion house, new BMW, or divorce and get a new spouse within your first few years of practice and you're good.

 

[benjamin94559]

Dont forget that interest acruews in residency depending on your loans and what not.

If you want to have kids before you're 40 childcare is pretty freakin expensive for the good stuff.
Most people want to buy homes before their 40 so they have that white piccket fence crap, good luck saving for a down payment.

Also remember at 400k your first 12grand of payments a year (i did some handwaivy finance shhhh) goes to interest alone. Is it doable, sure people do it all the time but compared to 100k its quite a large difference, esp when your projected life time earnings are like 3ish million for an FM/primary care doc.

 

[Lannister]

I'd guess that after 7+ years of living on very little and then being handed a big check, it's not that easy to not take advantage of it and start living a little better. Especially since a lot of med students grew up relatively wealthy, so the way they were living in med school/residency is kind of rough compared to how they grew up.

 

[Dr.Sticks]

Dont forget that interest acruews in residency depending on your loans and what not.

If you want to have kids before you're 40 childcare is pretty freakin expensive for the good stuff.
Most people want to buy homes before their 40 so they have that white piccket fence crap, good luck saving for a down payment.

Also remember at 400k your first 12grand of payments a year (i did some handwaivy finance shhhh) goes to interest alone. Is it doable, sure people do it all the time but compared to 100k its quite a large difference, esp when your projected life time earnings are like 3ish million for an FM/primary care doc.

Why can't you buy a home making 50k a year?
Plenty of people do it.

 

[vm26]

As someone interested in med school it could potentially cost me 400k at the high end of things. However how is that too much debt that would take a long time to pay?
Say you go into FM and your after tax take home is 100k..
You could pay 50k a year into your debt and pay it off in 8 years!
That is the worst case scenario of course..
If you did something better and made 200k after tax you could pay the debt off in 4 years.

Anyone should be able to live off 50k a year, and one should certainly be able to live off of 100k a year.

Maybe I am looking at this wrong, but 400k doesn't just look that bad to me.

I do not see why people make living off 50k a year appear to be poverty..

Honestly I think 50k itself is fairly lavish, one could live on even less like 35k a year in a more Midwestern location.

I've heard that general rule of thumb is total student debt should not exceed projected 1st year income...in terms of actual numbers, I graduated with 165K in government loans at 3.9%, my monthly payments are about $900 (for 30 year repayment)

 

[Dr.Sticks]

I'd guess that after 7+ years of living on very little and then being handed a big check, it's not that easy to not take advantage of it and start living a little better. Especially since a lot of med students grew up relatively wealthy, so the way they were living in med school/residency is kind of rough compared to how they grew up.

Eh..
I never lived in anything bigger than a small apartment so I don't really care for that
I guess it is perspective
To me even making 30k a year is a lot of money lol

 

[Dr.Sticks]

I've heard that general rule of thumb is total student debt should not exceed projected 1st year income...in terms of actual numbers, I graduated with 165K in government loans at 3.9%, my monthly payments are about $900 (for 30 year repayment)

Are you going to take 30 years to pay it off?

 

[hsmooth]

Average American family median income is like $50,000. Doesn't that put things into perspective?

 

[Pepe18]

.

 

[Dr.Sticks]

Average American family median income is like $50,000. Doesn't that put things into perspective?

I know right
It comes off very elitist and privileged to act like 50k is like poverty

 

[Lannister]

Eh..
I never lived in anything bigger than a small apartment so I don't really care for that
I guess it is perspective
To me even making 30k a year is a lot of money lol

It's definitely all about perspective. To me, and probably to a lot of med students, 30k sounds barely livable, especially with a family. (Yes, I know that's a spoiled point of view)

 

[Dr.Sticks]

Uhhhhhh, you will get capitalized interest and then your loans will be gaining about $28K/yr in interesting. If you only put $50K/yr towards loans, it will take a longgggg time to pay over $400K off. You will also have finished 7 yrs of not really having any money while watching your friends and family establish their lives, which sucks.

$400K pre interest is getting to the point where med school may not be a good idea. I know that I would not be able to mentally handle that kind of financial pressure

You could take out a new loan at a lower interest rate to pay that off and then start paying 50k a year to the new loan

Anyways 50k is the median income
How can one not establish life around that, buy a nice car, decent house, etc?

 

[benjamin94559]

Why can't you buy a home making 50k a year?
Plenty of people do it.

I'm not saying you cant buy a home, I'm just saying it will add at least a year or two to save up money for a down payment and by then you might be impatient if you want that family and white picket fence stuff.

 

[Pepe18]

.

 

[Lannister]

I know right
It comes off very elitist and privileged to act like 50k is like poverty

I'm pretty sure most people who think that 50k isn't a lot of money are not being intentionally snotty, they just grew up in a very different kind of world than the average American, and it's hard to understand things that you've never been exposed to or had any experience with.

 

[Pepe18]

.

 

[Dr.Sticks]

It's not really elitist to not be happy with $50K a yr as a physician. My nurse sister makes almost double that and my dad who did not attend college and works repairing equipment makes more than $50K

You make more than but you live on less to pay off debt
That is all it is
So personally I do not see how 50k a year isn't comfortable living

 

[Dr.Sticks]

One of the problems in the US now is that people can't afford to establish their lives or retire on the average income

Because they aren't wise with money
Car oayments, mortgages that are too large, excessive luxury...
Not everyone but many who live paycheck to paycheck put themselves in that position by taking on all sorts of luxury..
Cable itself can be over 100 bucks a month..
That's crazy

 

[Pepe18]

.

 

[benjamin94559]

One of the biggest drivers for the quality of life people want is the quality of life they had as a child growing up AKA income of mommy and daddy. Since I would wager, people in med school/premed and whatever draw disproportionatly from upper middle class backgrounds, they want more than 50k a year for what they consider "comfortable"

 

[benjamin94559]

I'm not saying uncomfortable. But you are going to want to put $20K/yr towards retirement (because you already 10 yrs behind on building your retirement) and I think having a family/being an adult is a lot more expensive than you think it is

also compound interest is the 8th wonder of the world

 

[vm26]

Are you going to take 30 years to pay it off?

probably not but have bigger fish to fry (mortgage at 3.6%)

 

[Dr.Sticks]

I'm not saying uncomfortable. But you are going to want to put $20K/yr towards retirement (because you already 10 yrs behind on building your retirement) and I think having a family/being an adult is a lot more expensive than you think it is

Plenty of people manage to retire on 50k a year
Say you get a 30k sign on bonus use it to buy a house and your mortgage is 800 a month
50K is 4166 a month and some cents we will ignore
Okay
So mortgage and utilities
1k
3166 a month
Investment/Retirement 1k
So 2166 a month
Lets just say you have a car payment and it is 300
1866 a month
Now insurance is say 200
1666
Now I will say you spend 300 on groceries a month
1366
I will say your phone is 100 a month
1266

I mean dude
I am running out of stuff to add???
I don't even know what you could do with that extra 1266
Edit:
Very expensive insurance 500 a month
You still have 766 left..
That I have no clue what to do with

 

[Lannister]

Plenty of people manage to retire on 50k a year
Say you get a 30k sign on bonus use it to buy a house and your mortgage is 800 a month
50K is 4166 a month and some cents we will ignore
Okay
So mortgage and utilities
1k
3166 a month
Investment/Retirement 1k
So 2166 a month
Lets just say you have a car payment and it is 300
1866 a month
Now insurance is say 200
1666
Now I will say you spend 300 on groceries a month
1366
I will say your phone is 100 a month
1266

I mean dude
I am running out of stuff to add???
I don't even know what you could do with that extra 1266

Serious question, is it really doable to live on $300 per month for groceries for a family of four, assuming you're not starving yourself or eating nothing but processed junk food? I spend about that just for myself and I don't eat much.




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[Pepe18]

.

 

[Dr.Sticks]

Serious question, is it really doable to live on $300 per month for groceries for a family of four, assuming you're not starving yourself or eating nothing but processed junk food? I spend about that just for myself and I don't eat much.




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If you buy raw food and cook from scratch

Eat a lot of legumes, chicken,rice, etc

I mean he'll you could up that 300 to 600 and still be left with 466 that I wouldn't know what to do with

 

[Dr.Sticks]

How bout food will probably cost more than $300/month? Health insurance? The fact that you will want some kind of entertainment? Home insurances? Property taxes? Mortgage and utilities will probably be over $1K?

Then add in the fact that many people do want families.

We will never be struggling, but money will be tighter than you expect. You obviously made your mind up on what the finances will be like, so why did you bother asking?

Because I don't get how people think 50k is poverty or how 400k is a lot of debt for a physician even if you are in primary care

 

[ReadyforMed]

Loan debt isn't bad at all.
I mean, nothing is bad if you don't look at it for years at a time.
But then, they email you every semester telling you how much interest you accrued that semester making you think about it.

It really isn't terrible if you never think about it. Just pretend it isn't there. Ignore your problems.

 

[Lannister]

Because I don't get how people think 50k is poverty or how 400k is a lot of debt for a physician even if you are in primary care

I think you answered your question earlier, it's about perspective. If you would be happy living on 50k/yr and paying off your debt quickly then I think that's fantastic. But there are all kinds of reasons why people don't do that, whether it's because they can't or because they don't want to. I don't think there's anything wrong with wanting to live off of more than 50k.


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[Pepe18]

.

 

[Dr.Sticks]

I never heard anyone say poverty- you are using that word, and I think it is reasonable for someone to be annoyed at netting $30K/yr after all this training while also working 60hr weeks in a stressful job. By the time you are an attending, you will have already made many sacrifices.

And like Lannister say, you don't need to get anyone. If you made up your mind that it's okay, then don't worry about other people. I personally think that $400K won't be manageable in primary care unless you go far from a city. $400K will be manageable in other specialties, but I don't think it will be as pleasant as you imagine to pay it off- though you will be able to be comfortable

Eh; I would probably live in a 5th wheel even if I was an attending
With solar panels and find someone willing to let ya park for like 200 or 300
And you are set

 

[Fancy_Feast]

A lot of this depends on where you end up living. Want to live in LA on 50k a year? Get ready to live in a studio or share an apartment. Want to live somewhere rural? Your mortgage on a 4 bedroom house will be half of what the LA rent will cost you.

 

[Gurkhali]

Because I don't get how people think 50k is poverty or how 400k is a lot of debt for a physician even if you are in primary care

The issue is you're not trying to get how people think it might be the case. You are projecting your own perspective. Not everyone is willing to live as a "5th wheel" or very frugally when they work so hard and have to come home and deal with a multitude of other responsibilities. Maybe you have a great mental fortitude but that is not the case for everyone, especially if they have been stripped from their well-off lifestyle and have spent their past 10 years living frugally.

Whole post has an air of arrogance to it to be honest.

 

[hard08]

I don't think 400K is that bad. If I had to take on that much debt I would specialize I think.
If you wanna do FM and you like it then I think it's fine as long as your aware of what that actually means afterwards in terms of repayment. Which it looks like you are with you already planning on living on 50k a year.

You could always live rural or do that loan forgiveness thing. But this means your making more sacrifices after already going through 7 years of school and residency.

400K is okay as long as you are aware of what it means. People who say, "I'll just pay if off cause I'll be a doctor and I'll be rich" are kinda dumb. Not saying you shouldn't do it but really understand the costs and what your life will look like while repaying and how you'll repay your debt.

 

[Dr.Sticks]

I don't think 400K is that bad. If I had to take on that much debt I would specialize I think.
If you wanna do FM and you like it then I think it's fine as long as your aware of what that actually means afterwards in terms of repayment. Which it looks like you are with you already planning on living on 50k a year.

You could always live rural or do that loan forgiveness thing. But this means your making more sacrifices after already going through 7 years of school and residency.

400K is okay as long as you are aware of what it means. People who say, "I'll just pay if off cause I'll be a doctor and I'll be rich" are kinda dumb. Not saying you shouldn't do it but really understand the costs and what your life will look like while repaying and how you'll repay your debt.

I am the minority then
Going rural would be a bonus for me not a con.(my name and profile pic) The only thing I dislike about specialty practice is you usually have to be in a mid size city or a big city depebding on how specialized.

The issue is you're not trying to get how people think it might be the case. You are projecting your own perspective. Not everyone is willing to live as a "5th wheel" or very frugally when they work so hard and have to come home and deal with a multitude of other responsibilities. Maybe you have a great mental fortitude but that is not the case for everyone, especially if they have been stripped from their well-off lifestyle and have spent their past 10 years living frugally.

Whole post has an air of arrogance to it to be honest.

I guess you are right; Different flavors for different people.

 

[freak7]

So your plan is to be a mid 30s single guy living in a van down by the river.

I mean I'm already a mid-20's guy doing that. I could see myself Krieger'ing in a van in a decade.

 

[Dr.Sticks]

Expenditures

Personal and professional clothing and grooming

Birthdays, Christmas, mother/fathered day...

Real amount of groceries

I would mention how expensive kids crap is but after you explained your plan to live in a fifth wheel, I don't think you have to worry about it.

Whole thread is bizarre. You're talking about keeping costs down by living on chicken and rice after 4yr undergrad, 4 yr med school, 3 yr residency.

So your plan is to be a mid 30s single guy living in a van down by the river.

I reckon so...
I mean the 5th wheel would be temp until I can build a cabin from trees I would chop down myself and mill.

 

[Dr.Sticks]

This millionaire lives in a van
http://www.espn.com/espn/feature/st...ue-jays-prospect-daniel-norris-lives-own-code

 

[hard08]

I am the minority then
Going rural would be a bonus for me not a con.(my name and profile pic) The only thing I dislike about specialty practice is you usually have to be in a mid size city or a big city depebding on how specialized.



I guess you are right; Different flavors for different people.

Are you from a rural area? If you want to practice there that would be great I think with 400K. Higher salary, low expenses and you could possibly do loan forgiveness.

 

[Dr.Sticks]

Are you from a rural area? If you want to practice there that would be great I think with 400K. Higher salary, low expenses and you could possibly do loan forgiveness.

Basically mostly farms but it is booming now
The main town is like over 30k people it is a city

But outskirts is all farms nothing but farms and state land

Drive about 40 minutes west or south west or north west and those areas give loan forgiveness

Also no I wouldn't want to come back here, I want to head west

I want to live off a dirt road ideally
I don't want to live near paved roads

 

[hard08]

Basically mostly farms but it is booming now
The main town is like over 30k people it is a city

But outskirts is all farms nothing but farms and state land

Drive about 40 minutes west or south west or north west and those areas give loan forgiveness

Also no I wouldn't want to come back here, I want to head west

I want to live off a dirt road ideally
I don't want to live near paved roads

Haha, your a unique individual. I'm probably the opposite of you. I once made a wrong turn in a rural area and I started freaking out because it was dark and everything looked so strange.

But I think the fact that you like rural areas would be really good and you shouldn't worry about 400K because it looks like you know what you're getting into. I hope my thread didn't freak you out haha.

 

[Dr.Sticks]

Haha, your a unique individual. I'm probably the opposite of you. I once made a wrong turn in a rural area and I started freaking out because it was dark and everything looked so strange.

But I think the fact that you like rural areas would be really good and you shouldn't worry about 400K because it looks like you know what you're getting into. I hope my thread didn't freak you out haha.

Nah lol
I love going down back roads
I just don't speed at night too many deer and curves and hills and in certain areas you are basically up in the mountains.

 

[libertyyne]

@Dr.Sticks . Although currently it may seem that you will be able to live in a van by the river, you are forgetting one thing. You will age, the current you will still be there but you will grow as a person and your life may get more complex. Have a gf? boom taking trips or eating out. Have a wife, boom spending money on quality food for home living in a safer area, buying a more reliable car, getting a dog , doggy healthcare, dog food dog trreats. Have children, boom day care, healthcare, education, food, car seats, traveling during holidays to in laws, moving to an area where the school districts are good. Life style creep is real. Your valiant efforts are commendable but life will get in the way. Taxes, retirement plans, brokerage accounts, child college funds, hobbies, decent food all cost money.

Now back to the question:
400K @ 30 years @5% is roughly $2,147.29 a month. If you are making 100K after taxes 1. You should get an accountant because you are paying too much in taxes as a doctor. 2 your take home is 8.3K. That is a payment equal to a quarter of your income, that is a lot. You could either treat it like a tax and just say you will pay that for 30 years. Or you could aggressively try to pay it off by maintaining the median household income. so that leaves 45 K per year to apply to the loan. So now you are paying 3.75K per month in student loans. That would still take you 12 years to pay off!

 

[popopopop]

Plenty of people manage to retire on 50k a year
Say you get a 30k sign on bonus use it to buy a house and your mortgage is 800 a month
50K is 4166 a month and some cents we will ignore
Okay
So mortgage and utilities
1k
3166 a month
Investment/Retirement 1k
So 2166 a month
Lets just say you have a car payment and it is 300
1866 a month
Now insurance is say 200
1666
Now I will say you spend 300 on groceries a month
1366
I will say your phone is 100 a month
1266

I mean dude
I am running out of stuff to add???
I don't even know what you could do with that extra 1266
Edit:
Very expensive insurance 500 a month
You still have 766 left..
That I have no clue what to do with

Uhhh, isn't it $50k gross? For a single filer, it's 25% tax off of that, so you're looking at $37.5k a year, which is $3,125 a month.

 

[Lucca]

A good way to make financial decisions

1) Assume that every dollar you borrow in medical school is 3 dollars you need to earn (pre tax) to pay back the debt back later on

2) Translate the dollars you need to earn into the minutes of your life you need to spend at the office to earn them. Assume a typical physician's salary of $240,000

Examples

$8,000 watch -> $24,000 attending dollars -> 36.5 days. Am I willing trade more than a full month of this life I'll never get back for this ticking piece of metal? NO

$100 running shoes -> $300 attending dollars -> 0.5 days. Am I willing to work a single afternoon to make my 3x/week running habit feel better for the next year? YES

$30 meal out every Friday -> $90 attending dollars each Friday -> $32,760 attending dollars over all of medical school and residency -> 60 days. Is it worth it to work for two consecutive months for the memories I'd get from going out with friends each Friday night for 7 years? MAYBE. Depends on your priorities, and your friends.

Quoting this from @Perrotfish in an earlier thread because it's a great answer relevant to this issue.

 

[libertyyne]

Uhhh, isn't it $50k gross? For a single filer, it's 25% tax off of that, so you're looking at $37.5k a year, which is $3,125 a month.

Yeah but if we are talking house hold you have a spouse and two kids for deductions, plus if you are contributing to 401k that is not taxed, ultimately lowering your total tax amount. Also taxes ar bracketed so your only get 25% on the last 15K before that you get 15% and below 20~ish you get zero.

 

[Lexdiamondz]

Why can't you buy a home making 50k a year?
Plenty of people do it.

Depending on where you live, many can't.

Good luck buying a home on 50k these days if you live in any major city in the east or west coast.

 

[Lucca]

Depending on where you live, many can't.

Good luck buying a home on 50k these days if you live in any major city in the east or west coast.

100 year mortgage from the Bank of Diablo's Cow Level

 

[Perrotfish]

As someone interested in med school it could potentially cost me 400k at the high end of things. However how is that too much debt that would take a long time to pay?
Say you go into FM and your after tax take home is 100k..
You could pay 50k a year into your debt and pay it off in 8 years!
That is the worst case scenario of course..
If you did something better and made 200k after tax you could pay the debt off in 4 years.

Anyone should be able to live off 50k a year, and one should certainly be able to live off of 100k a year.

Maybe I am looking at this wrong, but 400k doesn't just look that bad to me.

I do not see why people make living off 50k a year appear to be poverty..

Honestly I think 50k itself is fairly lavish, one could live on even less like 35k a year in a more Midwestern location.

You forgot about compound interest. If you take out 400K in debt for medical school, you would owe 552K at the end of residency. It continues to compound through repayment, so on an 8 year plan you would pay a total of 700k, or 85K/year. That leaves you 15K out of your theoretical 100k

You are right, though, that a medicine is weird in that the salary goes up, rather than down, when you move to the middle of nowhere. You really can live quite richly if you are willing to move to he sticks to practice.