What in the personal finance is gonna happen to me in medical school?

Gonzalo de Montalvo

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DO Class of 2024 (woot woot), but I have a few questions about my finances. My situation:

I expect to take out just shy of $100k/year for school; this is on top of ~$15k debt I have across credit cards and a small Sallie Mae loan from undergrad. My credit limit is essentially maxed out, and the revolving utilization makes my credit score in the mid 600's. I'm very disciplined and this debt was mandatory, so not looking for retroactive advice please and thanks.

My questions:

--> When do loan funds usually disburse? Can I expect any $ at all before school starts to help me with new laptop/ipad/moving expenses?

--> When loans do disburse, will I just get a phat ~$30k refund check from my school for living expenses, or monthly checks, or one each semester? (My guess is all at once for the year due to the emphasis schools place on figuring out a budget early).

--> My minimum monthly CC payments are high and I'd prefer to dodge their high interest rates in the long term by basically paying them down with my loan money as soon as I can (say, the first year of med school, or if I can, and have enough money, all at once when I get my refund check). (Also, using my school's cost of attendance sheet, there are definite areas that I will save on that they list as being expensive, i.e. health insurance which I already have through my parents; yet, I'll still take out their calculated amount which is higher than the personal budget I came up with). So devil's advocate: Why shouldn't I do this (pay off CC's and Sallie Mae ASAP)? Of course I wouldn't want to run out of loan monies before the year's over, but suppose my budget is otherwise flawless and I'm disciplined enough to stick to it. PLUS, if I do pay them off, in the worst case scenario I run out of money, and I would have my entire high CC limit as a buffer.

--> What's going to happen to my credit score? For a moment I thought if I did the above that it would go way up because of the lower revolving utilization that lowered it in the first place, but then I remembered I'm going into 100's of thousands in debt, so maybe it doesn't matter "where" the debt is among CC's, student loans, etc. (Also I won't have any, or at least negligible, income, obviously).

--> Hear me out on this one... I have a decent moonlighting opportunity that would allow me to work as much or as little as I like, at my own schedule, throughout med school if I wanted. Why shouldn't I do it? I could ramp up on holidays and stop completely the week or so before exams or as needed to rest. People have other similar commitments in medical school like working out for an hour every day. Wouldn't it be OK for me to work even just 1 hour, 5 days/wk and make $20/day, ($600/mo, $7,200/year!!)? I could factor that out of my living expenses and save tons in interest down the line.

Thanks in advance.
 

jamaica jan sun princess

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You should consider opening a balance transfer credit card with a 0% promotional interest rate. You don't want to be strapped for cash while trying to keep up in medical school. If you haven't paid it off by the time the promo interest period is up, open a new one and transfer the remaining balance. That way, you can pay it off a little each month as you have the money without accruing additional interest. As long as you don't miss a payment, your credit should stay in the low 600s.

As for the loan disbursement, I assume it's the same as the federal loan I just received for graduate school. You get half per semester, with what is left over after tuition and fees refunded to your bank account.
 
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Gonzalo de Montalvo

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@procrastitator Thank you for the input. I have done this before to get the 0% interest but, I'm worried with my credit score now that opening a new card wouldn't give me a big enough limit to make it worth it.
 
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jamaica jan sun princess

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Is there any chance you can pay off a decent portion of it before matriculating this Fall? Maybe find a second job or work a lot of hours at your moonlight opportunity.
 
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400k is rough. The obvious advice, eat rice and beans, ect. applies. Most importantly, dominate school so you are competitive for specialties that justify that type of debt load

If the work is truly whenever you want then sure, doing it a few hours during the week and weekends would help. But the opportunity cost of not studying/ doing research is high so don't compromise that for a few thousand bucks if can't effectively manage your time
 
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May 24, 2019
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Is there any chance you can pay off a decent portion of it before matriculating this Fall? Maybe find a second job or work a lot of hours at your moonlight opportunity.


You are a pre med student... yes there are opportunity to moonlight and make money during last year of residency into attending years... you are still 7-10 years away from that and your priorities change, understand that there is only 24 hours in a day, you can dream about working 2-4 jobs but it may or may not be physically possible... but right now what i will say is live frugally throughout the next 4 years..

If you have your moonlighting opportunity by making 7200$ a year now with working 5 hour a week, while at med school, do it.
 
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Cornfed101

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Student loans aren’t factored into your credit score so your score would go up as your utilization decreases as long as nothing else changes.
 
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jamaica jan sun princess

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You are a pre med student... yes there are opportunity to moonlight and make money during last year of residency into attending years... you are still 7-10 years away from that and your priorities change, understand that there is only 24 hours in a day, you can dream about working 2-4 jobs but it may or may not be physically possible... but right now what i will say is live frugally throughout the next 4 years..

If you have your moonlighting opportunity by making 7200$ a year now with working 5 hour a week, while at med school, do it.

I understand what moonlighting is during graduate medical education. If you had read @Gonzalo de Montalvo original post, you would have read that he has an opportunity to work flexible hours that he referred to as moonlighting. I used his term for simplicity, even though it isn't commonly used like that on a medical forum. In the real world, the term moonlighting is commonly used to refer to a second job.

Also note that @Gonzalo de Montalvo isn't matriculating until this Fall. That provides at least 6 months of time to work and save money or pay off credit cards.

I'm not sure why you felt the need to write all of that... Perhaps some constructive input on the original poster's dilemma wouldn't been more useful.
 
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I understand what moonlighting is during graduate medical education. If you had read @Gonzalo de Montalvo original post, you would have read that he has an opportunity to work flexible hours that he referred to as moonlighting. I used his term for simplicity, even though it isn't commonly used like that on a medical forum. In the real world, the term moonlighting is commonly used to refer to a second job.

Also note that @Gonzalo de Montalvo isn't matriculating until this Fall. That provides at least 6 months of time to work and save money or pay off credit cards.

I'm not sure why you felt the need to write all of that... Perhaps some constructive input on the original poster's dilemma wouldn't been more useful.


Yeah, i read the whole thing... once you get to third year of med school, you will understand that you dont have to tell a person's whole life story during a presentation, only a relevent stuff... attendings filter out the rest of the useless info. Maybe you should have read all of my post as well...

But any ways, the second paragraph in my reply addresses his stuff about if he wants to to work during med school...
 

Angus Avagadro

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I dont have an answer for your specific questions. That's a huge amount of debt, (400k), at a high interest rate, avg about 7%. Borrowing money to pay off debt is not the best idea unless you can get a significant reduction in interest rate.
I would look heavily into lowering your costs for school. Having a roommate to share expenses . $700 a month rent with a roomate is better than $1400 a month living alone. Roughly $8400 a year in rent savings, $34,000 over 4 years. Check with the school about students looking for a roomate.Look for school work study jobs, tutor other students, etc. No need for a lecture about cheaper schools, you gotta go where you get in. Depending on how your schools schedule, it's possible you could do 3rd and 4 th yr rotations near your home town and live at home
Just a few suggestions
Good luck and best wishes.
 
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GreenDuck12

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--> When do loan funds usually disburse? Can I expect any $ at all before school starts to help me with new laptop/ipad/moving expenses?

Loans are usually disbursed at the start of each term. It isn’t advantageous to take it all at once as interest will begin accruing after the grace period.

--> When loans do disburse, will I just get a phat ~$30k refund check from my school for living expenses, or monthly checks, or one each semester? (My guess is all at once for the year due to the emphasis schools place on figuring out a budget early).

see above

--> My minimum monthly CC payments are high and I'd prefer to dodge their high interest rates in the long term by basically paying them down with my loan money as soon as I can (say, the first year of med school, or if I can, and have enough money, all at once when I get my refund check). (Also, using my school's cost of attendance sheet, there are definite areas that I will save on that they list as being expensive, i.e. health insurance which I already have through my parents; yet, I'll still take out their calculated amount which is higher than the personal budget I came up with). So devil's advocate: Why shouldn't I do this (pay off CC's and Sallie Mae ASAP)? Of course I wouldn't want to run out of loan monies before the year's over, but suppose my budget is otherwise flawless and I'm disciplined enough to stick to it. PLUS, if I do pay them off, in the worst case scenario I run out of money, and I would have my entire high CC limit as a buffer.

if the loan rate of your student loans is lower than your credit card interest rates, you should do this. However, you need to disciplined.

--> What's going to happen to my credit score? For a moment I thought if I did the above that it would go way up because of the lower revolving utilization that lowered it in the first place, but then I remembered I'm going into 100's of thousands in debt, so maybe it doesn't matter "where" the debt is among CC's, student loans, etc. (Also I won't have any, or at least negligible, income, obviously).

you can have a high credit score and high student loans

--> Hear me out on this one... I have a decent moonlighting opportunity that would allow me to work as much or as little as I like, at my own schedule, throughout med school if I wanted. Why shouldn't I do it? I could ramp up on holidays and stop completely the week or so before exams or as needed to rest. People have other similar commitments in medical school like working out for an hour every day. Wouldn't it be OK for me to work even just 1 hour, 5 days/wk and make $20/day, ($600/mo, $7,200/year!!)? I could factor that out of my living expenses and save tons in interest down the line.

as long as you’re performing well academically go for it
 
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jamaica jan sun princess

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Yeah, i read the whole thing... once you get to third year of med school, you will understand that you dont have to tell a person's whole life story during a presentation, only a relevent stuff... attendings filter out the rest of the useless info. Maybe you should have read all of my post as well...

But any ways, the second paragraph in my reply addresses his stuff about if he wants to to work during med school...

But you quoted my post and went on a tirade about moonlighting. I never suggested he work during medical school. Not sure what your second sentence onwards has to do with my post or the original questions...
 

dpmd

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Unless your Sallie Mae loan has a higher interest rate than your new student loans will have I see no advantage to taking more loan funds to pay it off (edit: even then probably not considering the origination fee you get charged). Credit card is another story since that probably does have higher interest rate, but I agree with the other poster who asked why you don't work more hours at that job you hope to do in school now and pay down your credit cards that way? As for working during school, you can do it as long as it doesn't adversely affect your studies. The balance transfer idea is something to look into if you currently have income. Even if you can't get the whole amount transfered it would still help versus the double digit rates you are probably currently paying. That way by the time you start school the balance won't be as high as it otherwise would have been. You aren't going to get funds disbursed before school starts though.
 
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@procrastitator Thank you for the input. I have done this before to get the 0% interest but, I'm worried with my credit score now that opening a new card wouldn't give me a big enough limit to make it worth it.


It looks to the total credit utilized/total credit available. Any significant line of credit will help even if you can't balance transfer all $15k.
 
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RangerBob

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$400k is a ton of debt. Get to know WhiteCoatInvestor and MrMoneyMoustache. Borrow as little as possible and your future self will thank you. Educate yourself in loan forgiveness programs.

I am skeptical about working during med school. Some people can handle it just fine in M1-2, others really need as much time as possible to study. Considering the amount of money you’re borrowing for med school, it’s not worth risking failing if you’re in the latter group that needs that extra time. Only way to know for sure is see how your test scores are once you’re in and go from there.
 

RangerBob

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:hijacked: I'm gonna hijack your thread a little. For med students who ended up moving farther away from home, did you get enough aid to reasonably cover furniture (bed, table etc.)?

I rented a uhaul trailer and took everything I needed with me. Mattress was in the floor for about a year. Otherwise I got all furniture from Craigslist and second hand stores.

The money you get in loans should be more than enough. In hindsight I could’ve borrowed quite a bit less than what I did.
 
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ciestar

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:hijacked: I'm gonna hijack your thread a little. For med students who ended up moving farther away from home, did you get enough aid to reasonably cover furniture (bed, table etc.)?

Try and catch your graduating M4’s and take their furniture cheap. If you’re reasonable, you’ll have more than you need to cover those kinds of things. Don’t need to go to American Signature and the like for all the bells and whistles.
 
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Gonzalo de Montalvo

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$400k is a ton of debt. Get to know WhiteCoatInvestor and MrMoneyMoustache. Borrow as little as possible and your future self will thank you. Educate yourself in loan forgiveness programs.

I am skeptical about working during med school. Some people can handle it just fine in M1-2, others really need as much time as possible to study. Considering the amount of money you’re borrowing for med school, it’s not worth risking failing if you’re in the latter group that needs that extra time. Only way to know for sure is see how your test scores are once you’re in and go from there.

Thank you for your reply! I've listened to WCI quite a bit and am broadening my personal finance knowledge, even drafting a long term plan. I am more partial to WCI's advice about living like a resident and paying off debt in ~5yr as opposed to Public Service Loan Forgiveness (or HSPS, military, etc.).

As an attending, what are your thoughts on putting 50% of my salary or more toward debt in residency and beyond? WCI says doc's would be doing well to do 20-30% of their after tax income, but I've lived frugally my whole life on ~$20-30k and unless I'm missing something it seems it's just a matter of discipline to save more. Thanks
 

RangerBob

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Thank you for your reply! I've listened to WCI quite a bit and am broadening my personal finance knowledge, even drafting a long term plan. I am more partial to WCI's advice about living like a resident and paying off debt in ~5yr as opposed to Public Service Loan Forgiveness (or HSPS, military, etc.).

As an attending, what are your thoughts on putting 50% of my salary or more toward debt in residency and beyond? WCI says doc's would be doing well to do 20-30% of their after tax income, but I've lived frugally my whole life on ~$20-30k and unless I'm missing something it seems it's just a matter of discipline to save more. Thanks

As long as living expenses and taxes are covered, you can put ad much as you want towards paying down your debt.

If I were single I could probably swing over 50% towards my loans just fine. But with a wife and kids there’s certain things we need, and certain things I don’t want to deprive them of that gives us a bit less disposable income.
 
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