soonthere

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Feb 14, 2005
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hey,

i have a few questions about managing money in med school. the idea of living off of borrowed money seems a little weird to me. i am trying very hard to save quite a bit this year. i know this is a silly question, but: how much should i aim to save? i know the more the better, but for those of you in school, how much of a savings did you have going in? what do you think would have been ideal? also, the issue of credit cards. i am also trying to pay as much of those down before i go. can you use loan money for that (i doubt i will have paid them all down before i start)? thanks a lot!
 

katrinadams9

Working class hero
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Nov 9, 2004
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Medical Student
soonthere said:
hey,

i have a few questions about managing money in med school. the idea of living off of borrowed money seems a little weird to me. i am trying very hard to save quite a bit this year. i know this is a silly question, but: how much should i aim to save? i know the more the better, but for those of you in school, how much of a savings did you have going in? what do you think would have been ideal? also, the issue of credit cards. i am also trying to pay as much of those down before i go. can you use loan money for that (i doubt i will have paid them all down before i start)? thanks a lot!
I'd say it's pretty helpful to have at least a thousand bucks stashed away as a "rainy day fund" for those expenses that you didn't factor into your budget. Also, you should know that you might not get your reimbursment check from the gov. before you have to enroll. Here at Wayne, we had to enroll before we could get our check. In order to enroll, we had to have proof of health insurance otherwise we had to pay the $2500 for catestrophic ins. through the university. Also, we were expected to pay our $700 student fees on the day of enrollment as well. Your school should give you a heads up on those expenses in advance...

So, basically I was really lucky that I had just enough in my bank account to cover the $3200 to enroll. I ended up using my credit card to pay to fix my car (which I need to commute to school everyday). I can't tell you how glad I was to get my $10,000 check from the university the week school started....
 
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soonthere

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Feb 14, 2005
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thx! i didn't even consider that the funds wouldn't be available immediately...so, for those with credit cards, do you use your loan money to pay those monthly? what do those with sizeable credit card balances do?
 

katrinadams9

Working class hero
10+ Year Member
5+ Year Member
Nov 9, 2004
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Medical Student
soonthere said:
thx! i didn't even consider that the funds wouldn't be available immediately...so, for those with credit cards, do you use your loan money to pay those monthly? what do those with sizeable credit card balances do?
You can use your loan money to pay off your credit cards. It actually might be a good idea in the long run, b/c the interest is so much higher with the credit cards than your loan. I didn't really have much of a balance on my card other than the car stuff, so I'll be paying mine off with my tax returns....
 

Random_Walk

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Mar 2, 2005
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soonthere said:
hey,

i have a few questions about managing money in med school. the idea of living off of borrowed money seems a little weird to me. i am trying very hard to save quite a bit this year. i know this is a silly question, but: how much should i aim to save? i know the more the better, but for those of you in school, how much of a savings did you have going in? what do you think would have been ideal? also, the issue of credit cards. i am also trying to pay as much of those down before i go. can you use loan money for that (i doubt i will have paid them all down before i start)? thanks a lot!

Obviously it would be a good idea to pay back your principal as early as possible. If you can't back back your principal early, here is what I'd recommend. (I am not a financial advisor, but I have worked in the finance industry to acquire the knowledge to answer your question with some care.)

You are absolutely right about focusing first on credit cards. Service your credit card balance before you pay the interest on the student loan. I'd pay that off within a 1-2 year time frame. Hopefully you have a source of income that allows you to do this. If you don't have an income source or generous friend or relative, I'd use the loans that you've acquired to pay off the debt in as short of a period as possible. Living below your means for a short time is far better than suffering the psychological and financial anguish that accompany you with credit card debt years to come.

The next step is to service the interest on the student loan debt. It is a bad idea to forego payment of the interest, even if the interest is capped, protecting you from the ravages of inflation uncertainty.

Although in principle it makes little sense to invest money in financial markets while you have debt, it is human nature to spend money on discretionary income. Because of this, I'd consider tax-free savings accounts. After you have paid off your credit card debt and serviced the interest on the student loan, I don't see why shouldn't put your savings into a Roth IRA. Unless I'm mistaken, this requires you to have taxable income in 2004 to start a Roth IRA for 2004 (deadline in April 2005 when you submit your 1040). Also, consider health savings accounts. Any vehicle that allows you to invest tax-free will benefit you thirty years from now.

Hope this helps.