Pay Gap/Physician Loan

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
buffywannabe

buffywannabe

Full Member
10+ Year Member
Joined
May 15, 2009
Messages
543
Reaction score
6
The time has come, I'm finishing residency!!! I'm sure you have all been through this and am wondering how to deal with the pay gap. I just got a SunTrust physician loan flier in the mail. have any of you done this? Obviously I should have just planned ahead and figured out how to save, but it's too late now and I think I'll have 4-8 weeks with no pay. (residency gave us full paycheck 2 days into residency, new job will have at least 2 week delay in pay) I tried to move up my start date but apparently that's not happening. I'd rather not stress any more than necessary (already moving from NC to NV with 2 cats and don't have anywhere to live yet) so was thinking maybe I should just take this loan and worry about paying money when I start making money. Thoughts???

Thanks for your help!

Oh and if anyone has any thoughts on health insurance for a month (just not get any???) that would also be helpful :)
Members don't see this ad.
 
You might be able to pay the price to extend your health insurance from residency for a month or two. The process used to be called "cobra" but I don't know if it exists for contracted folks, check with HR
 
Members don't see this ad :)
buffywannabe said:
The time has come, I'm finishing residency!!! I'm sure you have all been through this and am wondering how to deal with the pay gap. I just got a SunTrust physician loan flier in the mail. have any of you done this? Obviously I should have just planned ahead and figured out how to save, but it's too late now and I think I'll have 4-8 weeks with no pay. (residency gave us full paycheck 2 days into residency, new job will have at least 2 week delay in pay) I tried to move up my start date but apparently that's not happening. I'd rather not stress any more than necessary (already moving from NC to NV with 2 cats and don't have anywhere to live yet) so was thinking maybe I should just take this loan and worry about paying money when I start making money. Thoughts???

Thanks for your help!

Oh and if anyone has any thoughts on health insurance for a month (just not get any???) that would also be helpful :)
Click to expand...

Don't get too stressed out. Banks should be willing to offer you any amount of money at this point knowing you are good for it. I borrowed money at the beginning of residency for about 25K, paid interest on it during residency and paid it back pretty quickly after I residency. Borrow as much as you need and hopefully you negotiated a sign on bonus with your new job. You can use the sign on to pay back after you get the money from your new employer or pay back the loan fairly quickly with the money you'll soon be making. Relax and enjoy finishing residency and the time off before your new job. Exciting time, Congrats on finishing!

As for health insurance, I would just take out a policy from whomever you intend on using once you start your new job. Use the money you borrow to pay the premium for a couple of months.
 
CliveStaples said:
Do you not have an emergency fund saved? These are the kinds of moments you should have an emergency fund for. I foresee some WCI reading in your future.
Click to expand...
Residency is a tough time to do such a thing. But you either already knew that, or have no idea what residency pay combined with rent and loan payments really comes down to.
 
Dr.McNinja said:
Residency is a tough time to do such a thing. But you either already knew that, or have no idea what residency pay combined with rent and loan payments really comes down to.
Click to expand...

I confess I don't get my first paycheck for another couple months. That said, earning the median household income in the united states, even while paying 10% of discretionary income to REPAYE for student loans should afford me the opportunity to not have to live paycheck to paycheck. I didn't claim it was easy but residency is a time to build financial habits which pay big dividends later.
 
Not everyone uses REPAYE though. I agree that it's a good idea, but some people simply can't during residency. So they live like a resident for the first year of attendinghood to get to that goal. I had to open a new credit card to pay for my moving truck. And I was living on a 2 resident salary. But I also had a kid. And a house.
 
I agree that one size doesn't fit all (maybe he has a kid too, maybe he is paying for an ailing family member, etc.) and I admit I'm pretty averse to borrowing money. But when I hear a resident having to take out a loan to make ends meet, I just see a highly probably situation where financial literacy could potentially be improved.
 
  • Like
Reactions: 1 user
CliveStaples said:
Do you not have an emergency fund saved? These are the kinds of moments you should have an emergency fund for. I foresee some WCI reading in your future.
Click to expand...

I did, this fizzled when I had to start paying alimony while in residency...

Dr.McNinja said:
Residency is a tough time to do such a thing. But you either already knew that, or have no idea what residency pay combined with rent and loan payments really comes down to.
Click to expand...

This.
 
My understanding of Cobra is that it can be put in place retroactively for a period of time around 2 months or so. So, I wouldn't do anything about health insurance unless you end of not having your new insurance start until after this window has expired. Check with your current HR department about timing.
 
Do you have access to moonlighting? This would likely cover any needs.


Sent from my iPhone using Tapatalk
 
CliveStaples said:
Do you not have an emergency fund saved? These are the kinds of moments you should have an emergency fund for. I foresee some WCI reading in your future.
Click to expand...

Man lol
The only person in this thread who hasn't earned a paycheck yet is coming in here trying to talk a big game
It's cute.
 
  • Like
Reactions: 1 users
Groove said:
As for health insurance, I would just take out a policy from whomever you intend on using once you start your new job. Use the money you borrow to pay the premium for a couple of months.
Click to expand...

Not always possible to get on a plan immediately when you start a new job.

Normally COBRA is retroactive. I would just let it ride.

I was in the same situation once. I think your soon to be previous employer is required to give you written notice of your rights under COBRA. Until you have this you can't even really do anything.
 
Members don't see this ad :)
buffywannabe said:
I did, this fizzled when I had to start paying alimony while in residency...
Click to expand...

Apologies, that sounds like a difficult financial situation.

Psai said:
Man lol
The only person in this thread who hasn't earned a paycheck yet is coming in here trying to talk a big game
It's cute.
Click to expand...

I'm genuinely surprised advocating for an emergency fund in residency is so derided. But I can report back if you're skeptical that I won't change my tune :)
 
CliveStaples said:
I'm genuinely surprised advocating for an emergency fund in residency is so derided. But I can report back if you're skeptical that I won't change my tune :)
Click to expand...

I agree emergency funds are good and also completely doable on $50k-$60k. For most people, there is no reason to not save throughout residency. However sometimes crap just happens and savings can be used up quickly. I think the WCI book is full of great advice. I also read Dave Ramsey years ago, and he tends to advocate for similar financial strategies.
 
I did save. I just chose to max out my Roth rather than put it towards an emergency fund. Maxing out my Roth was close to 12% of my gross income.
 
CliveStaples said:
Maxing out a Roth IRA is actually the perfect place to save because it can function as both an emergency fund and retirement investing (since up to the contributory amount can be withdrawn penalty free).
Click to expand...
I don't think you can actually do that penalty free unless you are over 59. I "borrowed" from mine once but had to pay it back within 60 days to avoid early disbursement fees of 10%.

Sent from my XT1095 using SDN mobile
 
Last edited:
Dr.McNinja said:
I did save. I just chose to max out my Roth rather than put it towards an emergency fund. Maxing out my Roth was close to 12% of my gross income.
Click to expand...
Maxing out a Roth is awesome. I contributed a little to my Roth even when making $40-50k but never could max it out. I went with the Dave Ramsey strategy more or less. Emergency fund, then pay off debt "snowball" starting with highest interest debt first. if you don't mind me asking, how did this work out? When you had a big expense such as major car repairs, home repair, etc. did you just take money out of your Roth? Use credit or loans?
 
  • Like
Reactions: 1 user
CliveStaples said:
Apologies, that sounds like a difficult financial situation.



I'm genuinely surprised advocating for an emergency fund in residency is so derided. But I can report back if you're skeptical that I won't change my tune :)
Click to expand...
It isn't the advocating for an emergency fund during residency, it is your sanctimonious delivery that rubs people the wrong way.
 
  • Like
Reactions: 2 users
buffywannabe said:
The time has come, I'm finishing residency!!! I'm sure you have all been through this and am wondering how to deal with the pay gap. I just got a SunTrust physician loan flier in the mail. have any of you done this? Obviously I should have just planned ahead and figured out how to save, but it's too late now and I think I'll have 4-8 weeks with no pay. (residency gave us full paycheck 2 days into residency, new job will have at least 2 week delay in pay) I tried to move up my start date but apparently that's not happening. I'd rather not stress any more than necessary (already moving from NC to NV with 2 cats and don't have anywhere to live yet) so was thinking maybe I should just take this loan and worry about paying money when I start making money. Thoughts???

Thanks for your help!

Oh and if anyone has any thoughts on health insurance for a month (just not get any???) that would also be helpful :)
Click to expand...

Good example of why saving in residency is important, both developing the habits for long-term retirement kind of saving as well as short term saving. This pay gap was very predictable (like interviewing expenses and moving expenses when you came into residency.) Think of it this way and hopefully it'll motivate you to save more later:

You've made $150K (average household income in America x 3 years) and have nothing to show for it. Many attendings are the same way. After 20 years of an attending income (let's say $400K*20 = $8M) they've only got $200K to show for it. It's good for young docs to think about this question- "How much should I have 20 years after residency?" and hopefully it'll motivate them to get there.

At any rate, that's all water under the bridge now for you. You have a cash flow issue and a not uncommon one. It is eventually solved by living like a resident for 2-5 years after residency, but in the meantime, you've got to cut expenses to the bone and maybe even borrow some money. Since it will be very short-term (right?) I would probably use a 0% short term credit card deal over the Suntrust loan or borrow a little from family, but since you'll be paying it back very quickly after you start working (right?) the interest rate doesn't matter so much. So if you want a private loan it's not the end of the world, but you need to get on top of this financial stuff soon or you'll be one of those folks I use as examples in my talks who are 68 years old and working 12 night shifts a month because they have to.

At any rate, congrats on finishing residency and getting a job. It's the best financial thing you have done for yourself in the last 10 years and will make a huge difference in your future financial picture.
 
KGflyboy said:
When you had a big expense such as major car repairs, home repair, etc. did you just take money out of your Roth? Use credit or loans?
Click to expand...
Never had any of those until I moved. The moving van was something like $5K for 1800 miles. Then I just paid with a credit card.
 
I was able to get my employer to reimburse my moving expenses. See if you can ask them about a moving allowance....


Sent from my iPhone using Tapatalk
 
buffywannabe said:
The time has come, I'm finishing residency!!! I'm sure you have all been through this and am wondering how to deal with the pay gap. I just got a SunTrust physician loan flier in the mail. have any of you done this? Obviously I should have just planned ahead and figured out how to save, but it's too late now and I think I'll have 4-8 weeks with no pay. (residency gave us full paycheck 2 days into residency, new job will have at least 2 week delay in pay) I tried to move up my start date but apparently that's not happening. I'd rather not stress any more than necessary (already moving from NC to NV with 2 cats and don't have anywhere to live yet) so was thinking maybe I should just take this loan and worry about paying money when I start making money. Thoughts???

Thanks for your help!

Oh and if anyone has any thoughts on health insurance for a month (just not get any???) that would also be helpful :)
Click to expand...

You could also call your new job and see if they'll advance your first month of pay for you. Reasonable employers may consider doing this. It can't hurt to ask. Since they're not paying out any more that they would have anyways, the only risk is if you don't show up and completely bail out of your job, which is a risk they're already exposed to by signing a contract with you.


Sent from my iPhone using SDN mobile
 
When I moved after residency my current position offered to pay me 1/2 my monthly income early if needed. I choose not to, but this may be an option for you going forward. I agree with the above though, credit cards and rapid payback are in your future.
 
Also second the 0% credit card idea. I mean, why pay interest on borrowed money if you DONT have to?

I actually did exactly that, as I was going two months without a paycheck when I started. Had about 5k on it and paid it off with no interest over a few months.


Sent from my iPhone using Tapatalk
 
Last edited:
I'm still 2nd year resident but does everyone always experience this one to two month delay in getting paid? I'll be signing shortly and getting a monthly stipend for the one year prior to starting this job. Would such a delay still apply if they already have my bank info from the monthly stipend?
 
GTP said:
I'm still 2nd year resident but does everyone always experience this one to two month delay in getting paid? I'll be signing shortly and getting a monthly stipend for the one year prior to starting this job. Would such a delay still apply if they already have my bank info from the monthly stipend?
Click to expand...

Dude. If you have a resident salary, monthly stipend +/- moonlighting, you shouldn't care about this pay gap at all. If you can't save up 1-2mo expenses on that pay, you need to rethink your budget.
 
  • Like
Reactions: 1 user
TimesNewRoman said:
Dude. If you have a resident salary, monthly stipend +/- moonlighting, you shouldn't care about this pay gap at all. If you can't save up 1-2mo expenses on that pay, you need to rethink your budget.
Click to expand...
lol I'm not actually worried. I'll be living with a spouse who has agreed to let me mooch off them for a year. I was just wondering because my loans are minimal and I wanted to have it paid off with the stipend and by the second or third attending check. def don't have budgeting problems. I've been cheap all my life and will continue to be cheap.
 
I used a cash advance credit card that offered to loan me up to $10k for a 1% transaction fee, 0% interest for 6 months, and no other hidden fees, etc etc.

So basically I paid $75 to get $7500 to play with for 2 months then paid it all off.

This was very helpful as we moved into a nicer apartment that required first month, last month, and a deposit equal to a months rent, and the next months rent was due the day of my first paycheck (only paid monthly at that gig). So aside from day-to-day living and moving fees, I need 4x my rent. I had a bit of an emergency fund and my wife had been funding her 401k pretty aggressively and I had a couple grand in a roth, but for $75 I could not decimate our savings, and fill our new fridge with something aside from rice and beans. Worth it.

Just don't use it as an excuse to constantly live above your means. While we upgraded our apartment, we continued to share one old beat up car and otherwise lived very reasonably and put a TON of $$$ into loans and savings my first year out. I'm glad we did.
 
You must log in or register to reply here.
Next unread thread

Similar threads

cyanide12345678
Physician reviewer for hospital
Replies
42
Views
2K
end stage fibro
end stage fibro
K
WaPO: Physician salaries
Replies
48
Views
4K
Kryptocoin
K
M
Physician coach
Replies
39
Views
3K
miacomet
M
alphaholic06
Physician Solutions, LP
Replies
8
Views
1K
southerndoc
southerndoc
B
RVU pay and quitting
Replies
3
Views
1K
TooMuchResearch
T
Top