Dr. Wise Money

True to form of our current medical education fad, a flash card/table was made by AAMC for the topic (aspiring) doctors are least educated on: student debt.

This series of 2 posts utilize AAMC’s debt fact card to emphasize a few points for those entering medical school, graduating from medical school, training in residency/fellowship, and at last working as attending physicians. This second post is for residents/fellow and attendings.

• PGY’s

Quoting from my 7 year old’s favorite Disney Frozen song,  “the past is in the past.” As freshly minted med school grads, most of you now have a student loan balance of 246-286k from public schools; 339-359k from private schools.

Increase your income/net worth:

1. find creative ways to  make money and take a break from doctoring: I recently stumbled on the PennyHoarder. lots of great ideas of making/growing your money.
2. i still tutor, sometimes i make more in a few hours tutoring than in a whole week as a lowly pgy1
3. moonlight! moonlight away! but do you cost/benefit analysis on your own (insurance cost, time away from loved ones or potentially time away from learning) although frequently moonlighting gives you more practice/more volume to get better in your medical field of training
4. prioritize your cash flow allotment towards the greatest return based on your personal risk tolerance (ie. I paid off all my student before maxing out my ROTH accounts because i prefer the guaranteed saving of 6.8%  over the LONG TERM potential gain of 8-10% in stock market)

Minimize your debt burden:

1. credit card interest free purchases and balance transfers @ 0-3% interest
2. refi your house to pay our student loan down
3. borrow from IRS (if you do have a side income as an independent contractor). under safe-harbor law, you can just pay the estimated amount of taxes based on prior year and borrow the rest of your (higher) income this current year interest-free UNTIL 4/15.
4. personal loans. this likely will be much lower interest than 6.8%. offer your family/friend guaranteed 3% interest/return (win-win for you and them)
5. refi your student loans (part or all depending on what you qualify for) to slightly lower rate (pro is it will save you 1000’s of dollars over the span of your loan and you can still get tax deduction on student loan interest after refi; con is you CAN NOT go for federal loan forgiveness after private refi)
6. be cautious with planning for loan forgiveness.

• 40% of doctors PLAN to enter loan forgiveness. 43% of these same people have >200k graduating debt compounding at 6.8+% making minimum payments based on PAYE. These debts all grow out of control during residency with the pgys hoping for forgiveness in 10-20 years by the tax payers.
• How sustainable do you think PSLF is given that our government is financially insolvent as is?
• Also, what does it tell you that the first class getting PSLF in 2017 has not even gotten a clue what the final forgiveness application will look like?
• How likely you can get a non-profit employee position (independent contractors to a non profit do not qualify for PSLF), when 40% of your peers are competing for the same positions?
• Congress attempted though failed (thankfully) to cap forgiveness at 57k last year (this wouldn’t even pay for the interest accrued on your loan prior to becoming an attending).

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• Attending Doctors

You are where everyone has aspired to be. You are in a marvelous position to build a high net worth. Like WCI often says, you just need to translate your high income to a high net worth!

1. Live like a resident for as long as you can (hopefully you didn’t live like an attending prior to becoming one.)
2. Optimize your credit score to get the best rate on your student loan refi/major purchases (like a house)
3. Max out retirement funds and find more space to save efficiently (tax-wise.)
4. Pay for financial education and manage your own money instead of paying someone else to manage your money. If you just dedicate 3% of your massive brain CPU to your personal finances, you’d be a millionaire easily.
5. read this post specific for attending physicians 

• Are you going for PSLF? Why or why not?
• Anything else that made you debt-free or wealthy sooner than you would have otherwise?
• What asset allocation do you employ for your training vs. attending years?

Comment below!

True to form of our current medical education fad, a flash card/table was made by AAMC for the topic (aspiring) doctors are least educated about: student debt.

This series of 2 posts utilize AAMC’s debt fact card to emphasize few points for those entering medical school, graduating from medical school, training in residency/fellowship, and at last working as attending physicians. This first post is for pre-med and med students.

• Pre-med:

Be aware of the price tag. A medical doctor’s degree will cost you 226k in public schools; 299k in private schools. This price grossly under-estimates the TRUE costs to you because this does NOT include the 6.8+ % interest that starts accruing day ONE of your medical school and accumulates into 40-60k over the span of medical school. If you take out your student loan at the beginning of each semester as your Financial Aid Office suggests, expect your degree to cost 246-286k in public schools; 339-359k in private schools.

Best medicine is prevention. You are in the best position to minimize student debt.

Seriously consider ways to cut your COA (cost of attendance):

1. given comparably decent education, choose low COL (cost of living) cities to attend medical school
2. chose cheaper schools
3. live at home! (no shame to this)
4. explore options of lower interest loans/scholarships

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• Med student:

You are in whatever school and city you are in. Not much can be done with your COA at this point.

As it turned out, I chose a very expensive medical school in a very high COL area. In hindsight, I would have chosen a lower COL area, maxed out my retirement accounts and bought a house during med school.

But point is if I can pay off my student loans in less than 1 year of graduating med school (vs. many of my cohort have 400k and growing student loan balance), there are many ways to minimize if not pay off your debt aggressively.

Seriously consider ways to make SOME income:

1. pick up a work study job at your school library/research lab (get paid to study and pursue your academic interest). if you finish working your allotted award hours early in the semester, ask your financial aid office for more! at times, i worked upwards of 30-40 hours/week during med school.
2. if you have a family and are the only bread-winner (this was my case), apply for government assistance. (there is no shame in that).
3. apply for scholarships. write an essay for 500 bucks… etc. if you write it on a topic you love and spend about 10 hours, let’s an hourly return of 50 bucks!
4. tutor. no better way to combine 3 awesome tasks: help others, enhance your knowledge, and pay some bills
5. find creative ways to  make money and take a break from studying: I recently stumbled on the PennyHoarder. lots of great ideas of making/growing your money.

Explore loans with lower interest rate than the 6.8+% at your fingertip:

1. credit cards (you can read all about how i saved on interest, made extra cash using credit cards to pay for my COA in the smart credit section)
2. reif your house (if you have one) it is a WAY cheaper loan than government, let alone private, student loans
3. borrow from IRS (if you do have a side income as an independent contractor). under safe-harbor law, you can just pay the estimated amount of taxes based on prior year and borrow the rest of your (higher) income this current year interest free UNTIL 4/15.
4. personal loans. family members may be willing to lend you interest free or lower interest loans
5. most importantly, DELAY taking out student loans as much as possible. 

MS3/4:

1. Be cost economic with your audition rotations and residency interview strategies.
2. This is your renewed chance to choose the COL of where you train/live for the next 3-10 years… apply the lessons you learned in med school now.
3. During residency interviews, ask about moonlighting opportunities.

• how do you make income during pre med years?
• what’s a good side job/income source in med school?
• is there a hidden jam of a med school in low COL cities?
• any experience with a personal loan or credit card balance transfers? pros and cons?

Comment below!