Do you have student loans? Won’t you love to destroy them and be debt-free? What would you do with the cash flow you free up once your student loans are paid off? I’d like to invite you to join me in a movement to terminate the deadly burden of student loans.

Under my cover as a mom, radiology resident, blogger, gourmet chef, USMLE tutor, my true identity is a terminator, specifically programmed to terminate deadly student debts. Below, I will share my weapons of termination in hopes of eliminating student debt on the scale of an entire generation.

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Intentionally using credit card can help you pay off your student debt much sooner. Borrow the 0% to even negative interest credit cards to pay down your student loan faster.
  1. Credit cards.
  • I charge all my expenses that are chargeable onto my credit cards and funnel my (limited) cash flow towards debts with interests. There are lots of variations in terms of what can be charged on a credit card. Some people’s circumstances even allow them to pay for rent on credit card. At one point, I used to pay my landlord by charging her necessities such as gas and groceries on my credit cards. This takes a little more effort than just writing a check.
    Now, I buy thousands of dollars’ worth of grocery gift cards (enough to last 6-12 months because once a year there’s a 10% discount on gift cards). I also pay my electricity one year in advance. Funneling cash this way, often got me negative 1-5% interest, which gave me more cash to pay down student loans. But there’s a limit to this.`
  • This second method, balance transfer checks, usually allows for more aggressive paying down of a higher interest debt. The cheapest balance transfer checks I got was with Travelocity American Express at 1% transaction fee for 0% APR for a year. So by writing a check of $15,000 towards a debt such as student loan at @ 6.8% interest rate, I would save 5.8% for the next 12 months. The balance transfer transaction fee is charged up front, so just be sure that if your limit is $15,000, that you write a check in the amount lower than the limit enough to pay for the fee. This is to ensure that the check goes through, and you’re not charged an additional fee. (I have never gotten a fee before, as I always err on the safe side.)
  • There is one card that does not charge transaction fee for balance transfer if you use it within 60 days of account opening. You can read about it here.
  • Some banks allow you to open a new checking account by funding it with a credit card. You need to be very cautious with this. You need to make sure that funding is equivalent to a purchase, and not considered a cash advance. When your credit card company processes funding a new bank account as a purchase, that purchase will give you cash back (if your card offers cash back features). When your credit card company processes funding a new bank account as a cash advance, you will be charged an interest of 20-30% starting the day the transaction posts. So this method only works if your credit card company processes your act of funding a banking account as a purchase.

2. Refinance

For a while residents and fellows have no refinancing options to lower their student loan interests. However, mid 2015, private banks began to offer student loan refinancing to residents and fellows so no one needs to suffer the 3-7 years of debt snowballing at 6.8+% during training. The only drawback is that you forego loan forgiveness when you refinance. (My mentor Dr. James Dahle @ whitecoatinvestor.com commented that “student loan refinancing isn’t new. It just went away for a few years. My class all refinanced at 1-2% back in 2003.”) To think that the refinancing option disappeared for a while and all the PGY’s who suffered through their debt snowballing during training, until 2 private banks come along and start refinancing student loans during PGY.

  1. Home equity loan.

Home equity loan is frequently much cheaper than 6.8%. It’s a perfectly simple, passive, effortless way to make your hard earned dollar go further. With lower interest rate, every dollar you dedicate to your debt pays down a greater percentage of principle.

For 7 more ways to terminate your student loan, read the full article  published on Physician’s Money Digest here. 

Then make comment or ask questions on this blog, drwisemoney.com; I usually answer them within 24-36 hours.

Be a Student Loan Terminator. (PMD2)

6 thoughts on “Be a Student Loan Terminator. (PMD2)

  • August 15, 2016 at 11:41 pm
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    Thanks for all this information! I am about to start working as an FM attending and finances are daunting to say the least to me. I am trying to better educate myself, so have read the WCI book and some of your blog posts. Some questions:

    Should I look for a financial advisor or accountant to sort of point me in the direction of where to begin in paying back my loans and determine what’s more feasible, 10-years, 15-years, or 20-years (I know, earlier the better will be the general rule).
    If I have previously consolidated my loans, will this in any way affect my refinancing options or capabilities?

    Having gone to an osteopathic school, I have amassed an impressive sum in loans and I know I will now be paying for it (quite literally). So I want to make sure I start strong and move forward maximizing my options. Thanks again for all the blogs!

    Reply
    • August 16, 2016 at 3:51 pm
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      Dear FamMed, my recommendation is read WCI’s book and try to meet with someone who charges hourly rate rather than a flat fee to discuss your financial priorities.
      You’ve mastered medicine, money matters are a lot simpler than medicine. After a few hours of Q&A and 1-2 personal finance book, you will be doing great.
      Let me know if I can be of assistance. If you need a recommendation. I think Johanna Fox is great. I work with her. She helps me maximize my tax efficiency 🙂 [disclosure, she advertises on this blog]

      you will have no trouble re-re-re finance your student loans as an attending. there’s no fee involved. refinance with the company that gives you the best rate. since you are in cali, definitely try first republic (they offer the lowest industry interest rate), sofi is awesome too if FR doesn’t work out for some reason.

      you can always shoot me an email of your stats/numbers/goals, I can write an anonymous case study on how I would approach your personal finance with prioritizing and maximizing net-worth building. once you got the blueprint figured out, you can seek professional help from good advisers/accountants like Johanna.

      Reply
  • August 9, 2016 at 10:02 am
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    It is funny how people want to look to avoid paying their student loans back because of the “inconvenience” but how would you like to be in the shoes of the lender. These babies have money for the latest I phones not only for themselves but their little children, but want to avoid paying a student loan back. Sounds rather immoral to me.

    Reply
    • August 9, 2016 at 9:44 pm
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      this post is exactly opposite of what you are saying. it’s trying to give people tools to pay back their loans, every penny of it. i paid off all my student loans in 2015 by working 2 jobs in medical school, and not buying myself anything the past decade… i agree. we take out the loans, we pay it off. people do have the option to work for PSLF-eligible jobs (where most of the time their paycheck is greatly reduced compared to working for non-PSLF-eligible job), I do think they are earning and paying off their debt with their service too.

      Reply
  • August 9, 2016 at 9:33 am
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    Great site DWM. Stumbled upon your blog from your posts on WCI and PoF. I am now 1 year post-fellowship in IM subspecialty with negative net assets with student loan and home mortgage, etc. I find your CC balance transfer strategy quite intriguing. Sure I have the Chase Slate, etc and I occasionally take advantage of their 0% APR and balance transfers but I find that to get cash transferred to my bank account to be able to pay for student loans, etc I am having to pay 3-5% fees for transaction fees. I read this post and others (http://drwisemoney.com/2015/03/14/credit-if-you-dont-stretch-it-aint-gonna-grow/) where you seemingly effortlessly “game the system.” I would love it if you could go into little bit more detail on how you are able to navigate the pitfalls of having to pay $450-750 on a 15K balance transfer, for ex.

    Overall, great work! Keep it up!!

    Reply
    • August 9, 2016 at 9:41 pm
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      Dear nephdoc. there are some posts on here with greater details, one of them is this http://www.hcplive.com/physicians-money-digest/contributor/dr-wise-money/2016/06/cash-is-king-credit-is-queen (it’s on PMD).
      so the most important thing is
      1. charge things as purchase as much as possible rather than balance transfer. (purchase comes with cash rewards, balance transfer has fees like you said.)
      2. open and take advantage of chase slate (the only balance transfer with 0% transaction fees during the first 60 days of account opening) after using it and paying it off at the end of 15 months. close this card, so that you can reopen and take advantage of the 0% transaction fee down the road
      3. to get fee free cash from credit cards, you can also open bank account and fund the bank account with a cash rewards card. as long as you did the research to ensure that your act of “funding the bank account” is considered purchase (come with rewards, good), instead of cash advance (come with horrible interest rate the day transaction happens).

      check this article, it gives you Alot more details on how exactly the math works on the debt flow in terms of how credit cards can save you interest and help you pay off debt more aggressively, every dime of you hard earned money goes towards greater % principle when you can lower your effective student loan interest rate.

      http://www.hcplive.com/physicians-money-digest/contributor/dr-wise-money/2016/06/the-day-i-started-with-nothing

      hope this helps.

      Reply

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