Stressed About Debt

[mvenus929]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

My take home pay as a resident is about $40K, give or take. I put $500 towards loans and $500 towards my Roth IRA each month, so in effect, I live in $30K. This still gives me plenty to go out, buy new clothes, go on a vacation every now and then, etc. So, I think it's feasible to continue living as a resident for the first few years of attendinghood to pay off loans.

My current plan is to take a year off between residency and fellowship. I'm going to put all of my excess salary as an attending towards one of my loans (my only non-federal one, despite it having a lower interest rate, because it doesn't have the same guarantees as federal loans should something happen to me), and hopefully pay it off during that time. I'll continue putting some portion of my salary above the minimum payment towards my loans each month during fellowship to blunt the amount of interest accruing, though I recognize I won't be able to pay off all the interest each month.

If you look at the finance and investment forum, there's a thread from a guy who has nearly paid off all his student loans within a year of finishing residency. He's working really hard to do it, but it's a huge priority for him and it seems to be working well. You just have to have a plan, make it a priority, and stick to it. Most people don't make it a priority for one reason or another (family, kids, wanting a house, wanting to keep up with the Joneses, etc).

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[moisne]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

Totally possible (esp with no kids). If you had 143 k to commit to loans... Hopefully you should pay off your debt in less than two years :/ (unless your are out of state - everything gets wacked and hope you get scholarships).

 

[TBV]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

Way better to find a highly paid spouse to take care of the everyday stuff while you do this.

 

[Mansamusa]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

Definitely could work. I am from the NY-metro area (meaning $1.5K/month rent for a 1br). I sat down with my mom and we worked through some estimates and calculated that $40K post-tax is enough to definitely live comfortably (comfortably meaning not having to live paycheck to paycheck or sweat every dollar spent- this doesn't include retirement savings though).

And just remember that other people's opinions matter for absolutely nothing. No need for status luxeries. The only reason to have a lot of money is to retire, travel, enjoy life, reduce your work hours if you need to, and to be able to leave a toxic job without worrying. Other fancy things are just unnecessary icing on the cake.

Then give yourself your one thing that will keep you happy even though you're living on a lower budget than you could be. Like I will probably give myself a $1K clothes budget a year. It's like dieting- if you deny yourself too much for too long you start making stupid decisions because you've "earned it."

(The hardest part though, will be finding a job that is $173K after taxes. That is a $250K job in a state with no state income tax)

 

[EverStriving]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

I would think it would depend mostly on your location and any S.O. relationship. If they're reasonable and they understand you're trying to get rid of the loans ASAP, I bet you could do it. The timing of starting a family (if you're thinking of that) might also interfere.

I've been living comfortably (if simply) on less than that, and saving quite a bit of money in the process. Which is saying a lot since I live in a high-COL area.

 

[drwoofs]

My take home pay as a resident is about $40K, give or take. I put $500 towards loans and $500 towards my Roth IRA each month, so in effect, I live in $30K. This still gives me plenty to go out, buy new clothes, go on a vacation every now and then, etc. So, I think it's feasible to continue living as a resident for the first few years of attendinghood to pay off loans.

My current plan is to take a year off between residency and fellowship. I'm going to put all of my excess salary as an attending towards one of my loans (my only non-federal one, despite it having a lower interest rate, because it doesn't have the same guarantees as federal loans should something happen to me), and hopefully pay it off during that time. I'll continue putting some portion of my salary above the minimum payment towards my loans each month during fellowship to blunt the amount of interest accruing, though I recognize I won't be able to pay off all the interest each month.

If you look at the finance and investment forum, there's a thread from a guy who has nearly paid off all his student loans within a year of finishing residency. He's working really hard to do it, but it's a huge priority for him and it seems to be working well. You just have to have a plan, make it a priority, and stick to it. Most people don't make it a priority for one reason or another (family, kids, wanting a house, wanting to keep up with the Joneses, etc).

Out of curiosity what year resident are you? 40K seems like a lot to take home after taxes! That's awesome that you're able to live so well off it.

http://www.businessinsider.com/google-employee-lives-in-truck-in-parking-lot-2015-10

Sent from my XT1030 using SDN mobile

This so much.... My dream. 90% savings of every paycheck. Trip to the crag whenever. Dirtbag life.

Way better to find a highly paid spouse to take care of the everyday stuff while you do this.

I wish... my SO is going to be attending dental school as well...

 

[drwoofs]

(The hardest part though, will be finding a job that is $173K after taxes. That is a $250K job in a state with no state income tax)

Texas or Washington..!

 

[Debt Free Doctor]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

I think it is entirely doable to live off of 30k single, as long as you choose a low cost of living area for training.

 

[pageantry]

I really appreciated this thread before it became an advertising spam forum for information that is freely accessible at AAMC.org.

 

[mvenus929]

Out of curiosity what year resident are you? 40K seems like a lot to take home after taxes! That's awesome that you're able to live so well off it...

Second year. The amount deposited in my account every month is in the ballpark of $3300. Some months I make a little more thanks to moonlighting. I think my contract lists my gross salary at like $53K. I just about break even on my tax return. I imagine take home pay varies based on the state and local income taxes--my state income taxes are roughly 5.5%.

 

[IlDestriero]

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.

$8,000 watch? Get a real watch big boy!
But good lord, don't borrow anything to pay for it.


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Il Destriero

 

[Just1voice]

I think there are government programs that pay for medical school if you go into primary care. Have you already thought about what specialty you want to go into? Also, I think there's a website called the WhiteCoat Investor that may help. Congratulations on your acceptance!

 

[pageantry]

I thought there were government programs that pay for medical school if you go into primary care? Have you already thought about what specialty you want to do? And I think there's a website called the WhiteCoat Investor that may help. Congratulations on your acceptance!

I worry that those programs are very hard on doctors. I have read program participants talking about being jerked around, thinking they were going to work one place and then getting moves to another, or ending up in nightmare locations. That scares me.

 

[ERDOC555]

I think there are government programs that pay for medical school if you go into primary care. Have you already thought about what specialty you want to go into? Also, I think there's a website called the WhiteCoat Investor that may help. Congratulations on your acceptance!

I have definitely considered the many ways to sell my soul and get school paid for. Unfortunately I enjoy what little autonomy and freedom I'll have in private practice more than suffering through med school. I think that financially, being able to practice the specialty I want, in the location I want, with the type of practice I want, is worth more than whatever loans I'll have to take out. But if I was interested in primary care I would certainly look into those options

Realistically I can pay what will likely be $150-180k of debt off in a little over a year as an attending even if I end up in a low paying field. Debt isn't the end of the world, but it definitely won't be pleasant for the next 8+ years

Thanks for the advice through Also, I love the WCI!!!

 

[Ismet]

Realistically I can pay what will likely be $150-180k of debt off in a little over a year as an attending even if I end up in a low paying field.

How do you figure that?

 

[ERDOC555]

How do you figure that?

Low paying field = 220k => 150k after taxes => Live off 50k pay off 100k, repeat for two years.
High paying field = 400k => 275k after taxes => Live off 100k pay off all debt in 1 year.

These are both assuming I pay nothing off in residency, which I probably will

 

[JMMTB]

Low paying field = 220k => 150k after taxes => Live off 50k pay off 100k, repeat for two years.
High paying field = 400k => 275k after taxes => Live off 100k pay off all debt in 1 year.

These are both assuming I pay nothing off in residency, which I probably will

So you're planning on getting out with less than 200k even when your interest has been compounding for 7-10+ years?

 

[ERDOC555]

So you're planning on getting out with less than 200k even when your interest has been compounding for 7-10+ years?

Yes, I do have some family contribution. Likely I won't need to take out loans until MS2 and with what I will need, I've calculated each year with 7% compounding interest. I will for be at or just under 200k by the end of residency.

 

[Ismet]

Low paying field = 220k => 150k after taxes => Live off 50k pay off 100k, repeat for two years.
High paying field = 400k => 275k after taxes => Live off 100k pay off all debt in 1 year.

These are both assuming I pay nothing off in residency, which I probably will

I wouldn't exactly call 220k a low paying starting salary.

Are you taking accruing interest into account? And that it will capitalize once when you start repaying?

I mean it's doable but not easy/simple. Especially if you throw a wrench into it like getting married/starting a family/etc

Edit: nvm you have the luxury of family contribution

 

[rotarman]

You would never be in a state of poverty unless you chose it. Work 10 years in non for profit under REPAYE is worst case scenario. You'll pay 10% of everything you make above 150% poverty line (30-40k depending on family size). Debt sucks, but let's not be dramatic.

 

[ERDOC555]

You would never be in a state of poverty unless you chose it. Work 10 years in non for profit under REPAYE is worst case scenario. You'll pay 10% of everything you make above 150% poverty line (30-40k depending on family size). Debt sucks, but let's not be dramatic.

I addressed this in my original post by clarifying what I meant by less than poverty. Poor people have close to 0 net worth. Med Students have several 100k of negative net worth due to debt. Therefore we are temporarily financially worse off than the poor.

I used less than poverty to = negative net worth, not starving.

 

[rotarman]

I addressed this in my original post by clarifying what I meant by less than poverty. Poor people have close to 0 net worth. Med Students have several 100k of negative net worth due to debt. Therefore we are temporarily financially worse off than the poor.

I used less than poverty to = negative net worth, not starving.

I suppose that would be true if the intellectual capital of medical school was considered worthless. Also the debt is guranteed dischargeable by working in not for profit, so if you don't feel like making enough money to pay it back, it just goes away.

 

[ERDOC555]

I suppose that would be true if the intellectual capital of medical school was considered worthless. Also the debt is guranteed dischargeable by working in not for profit, so if you don't feel like making enough money to pay it back, it just goes away.

Don't get me wrong, I fully agree that the debt is worth it in the end (a solid investment) and there are ways to get rid of it. For me the struggle is to go so long knowing everyday that I have that debt looming over me.

 

[Perrotfish]

How feasible without kids is it to simply just live off 30k a year and commit all of your income to loans for two-three years? I seems insane to pay that much interest. If I take 173k after taxes and have 143k to commit to loans for three years sound just about do it. Of course this sounds naive.

Feasible? Definitely. Likely? No. My experience is that medical students and residents are to saving money what premends are to saving the world. Everyone is going to do it, but at the end of the day only a handful actually follow through In my experience the people who do make this work are either very deeply, emotionally debt averse, or they have a specific goal that the debt is standing in the way of.

Which isn't to say that getting rid of it as fast as possible isn't a good idea. Besides the simple math that it costs more to pay off debt over a longer period, there is great data that people with debt actually work more to earn less. Indebted physicians are risk averse physicians, and risk averse physicians agree to stay in awful, low paying jobs. If you can stay debt averse, that's the best possible way to be. Just don't let the perfect be the enemy of the good.

 

[IlDestriero]

Feasible? Definitely. Likely? No. My experience is that medical students and residents are to saving money what premends are to saving the world. Everyone is going to do it, but at the end of the day only a handful actually follow through In my experience the people who do make this work are either very deeply, emotionally debt averse, or they have a specific goal that the debt is standing in the way of.

Which isn't to say that getting rid of it as fast as possible isn't a good idea. Besides the simple math that it costs more to pay off debt over a longer period, there is great data that people with debt actually work more to earn less. Indebted physicians are risk averse physicians, and risk averse physicians agree to stay in awful, low paying jobs. If you can stay debt averse, that's the best possible way to be. Just don't let the perfect be the enemy of the good.

I've seen several new faculty do this. Lease a modest new car for 3 years or keep their old one, keep renting a modest apartment, take a couple nice week long vacations a year and pay down ALL of their debt in 2-3 years. Anyone can do it. The problems may arise if you have kids that need to go to school. Affordable city apartments are usually not in what would be considered a decent school district, and private schools can be very expensive. However if you limit luxury spending and crush your debt in 2 years vs 10+, you'll be in the drivers seat and living in the 10/10 school district suburbs in your mansionette in no time.


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Il Destriero

 

[Strudel19]

You will not be living in a state of less than poverty. Not even close. You get a significant amount for living expenses. You will never have to be hungry, not have health insurance, worried about being homeless. While you might be borrowing the money you get, you won't have any problem getting it.

You will be in debt, that you will pay off eventually as physicians are one of the highest paid "jobs" period. Being in debt sucks sure, but its part of the process and everyone does it.

You can really budget and fret over every little detail and keep your debt less. Or you can not...and not. I think its fine to just be reasonably smart with your money, now obviously that means different things to different people so I'm not going to argue what that is, but I feel confident that my idea of it is just fine. Could I save 3k a year by eating ramen all the time and never doing anything? Sure...But I'd rather live my life to a certain degree of happiness and freedom. Every day now is just as much "your life" as every day in the future when you are making money. [/philosophical]

Very well said

 

[Mansamusa]

Feasible? Definitely. Likely? No. My experience is that medical students and residents are to saving money what premends are to saving the world. Everyone is going to do it, but at the end of the day only a handful actually follow through In my experience the people who do make this work are either very deeply, emotionally debt averse, or they have a specific goal that the debt is standing in the way of.

Which isn't to say that getting rid of it as fast as possible isn't a good idea. Besides the simple math that it costs more to pay off debt over a longer period, there is great data that people with debt actually work more to earn less. Indebted physicians are risk averse physicians, and risk averse physicians agree to stay in awful, low paying jobs. If you can stay debt averse, that's the best possible way to be. Just don't let the perfect be the enemy of the good.

Maybe that's because the more debt adverse people don't end up going to med school? I don't understand how debt adverse people convince themselves to make the jump into med school. I'll be at double the median amount of debt, so I have more reason to be worried, but I can't fathom how people are so okay taking such a huge financial risk. I have clear reasons for MD over PA, but PA seems so much more sensible and like a much less dangerous option. Been trying to convince myself for months that getting a MD won't be financial suicide (in terms of affording to have kids, retire, and finally leave the country for the first time). I'm going to pay more for my degree than my parents make in a decade

I definitely have the deeply and emotionally debt adverse part down though, haha

 

[Gibbward]

i just want to chime in and say that this has been one of the most interesting and helpful threads I've read here in SDN so kudos to y'all who are contributing and stirring up this discussion!

 

[pageantry]

By my calculations, if you do FM (per the Medscape median salary which assumes you make no investments, do not become an S-Corp, nothing), pay the dumbest tax rate with zero deductions, do it in NYC (expensive triple taxed place), and do PAYE, you're still *taking home* about $91k a year in cold hard cash. AFTER taxes. AFTER loans. Do the calculations yourself if you're worried.

That's not even counting all the other repayment options and incentives out there, nor the possibility of PSLF. (Specializing in EM, btw, brings you up around $125k takehome.)

Maybe $91k/year in cash doesn't sound like enough. I don't know what standard of living you're used to, and that's fair. That kind of cash can burn fast with a family living in, say, Manhattan. But if your problem is you're just debt averse, well... Think of it as a tax. You're still probably doing better than you would under a truly socialized European-style system.

But. There's more to life than money. Stay focused on the positive and you'll live a pretty good life, even if you have less money than some other random person.

 

[mvenus929]

Maybe that's because the more debt adverse people don't end up going to med school? I don't understand how debt adverse people convince themselves to make the jump into med school. I'll be at double the median amount of debt, so I have more reason to be worried, but I can't fathom how people are so okay taking such a huge financial risk. I have clear reasons for MD over PA, but PA seems so much more sensible and like a much less dangerous option. Been trying to convince myself for months that getting a MD won't be financial suicide (in terms of affording to have kids, retire, and finally leave the country for the first time). I'm going to pay more for my degree than my parents make in a decade

I definitely have the deeply and emotionally debt adverse part down though, haha

Because the vast majority of MDs who graduate have financial security for life, and it's only been recently that tuition rates have ballooned so much. It's not that risky of a situation if you are aware of it and can plan for it.

 

[Dr.TonySoprano]

Oh dear! Have you not heard of soap and water?

I'd just get plastic silverware from the cafeteria in the wrapping and put it in my white coat if i was him

 

[Debt Free Doctor]

Yes. My COA isn't as bad as most schools out there and I do have some family contribution. Likely I won't need to take out loans until MS2 and with what I will need, I've calculated each year with 7% compounding interest. I will for sure be under 200k by the end of residency. Maybe if I did a long fellowship afterwards it would hit 200k.

Again, that's assuming I pay off nothing during residency. I'm actually hoping to pay off 10-15 k per year and live off of the rest.

good job on getting a low COA school, that's a huge help
if i had the chance to do it over again, low COA would have been a priority since i believe education is mostly what you put into it as an individual.

 

[JMMTB]

.

 

[SouthParkStudio]

the debt is awful