MONEY SAVING TIPS FROM MEDICAL SCHOOL WIVES

A WORD ON LOANS

According to the AAMC, for medical school graduates “…the median debt was $200,000 in 2018. At private schools, 21% of students have debt of $300,000 or more. The average four-year cost for public school students is $243,902. For private school students, the cost is $322,767.”

Yikes.

My tip for loans? Well shoot, I wish I could tell you I had a fantastic, quick answer for this that could save you a lot of pain. But I don’t. So, my tip?

Educate yourself.

This is a goal of mine and something that I am working on. I really don’t understand the best route when it comes to paying off loans. And when it came to taking loans out, we just made a spreadsheet with all our expenses and then some. So, my goal is to educate myself about our loans, the interest rate, and how to pay it all off.

Tips on loans?

AMANDA: I wish I would have learned about radical acceptance first. You might have to look that up- because I had too! It’s learning to accept thing the way that they are, and moving forward while accepting that element in your life. It was so so hard for me to accept taking out loans. The tuition was massive, the cost of living was massive, the interest was massive, everything was just so massively expensive! I spent a lot of time beating myself up over not being able to afford everything on my own.

After a while, I was able to radically accept what I couldn’t change. I couldn’t change the cost of tuition, the cost of living, or the interest on loans. Loans are what they are. But I DO have a good job, and a solid budget plan with a determination to do the best that I can. I think everyone has a good idea on what they actually need, and what is more of just a want. If you stay in tune with that, the financial burden becomes much easier. In the end, you’ll have a great paying job and you WILL be able to pay back those loans.

SAMANTHA: This question is hard to answer because I think everyone can look at it differently and it depends on the mindset of the family. From the aspect of a medical family this experience on “loans” is quite unique…and a little different. Knowing you’re coming out of medical schools with close to a quarter or even close to a half million dollars in debt isn’t uncommon – it’s expected.

Our family situation is unique in that we are an older couple (early 30’s) going through this experience…we also have children…and I decided to become a stay at home mom once our son Rowan was just over a year old. In 2017 we went from using my income to help supplement to only living off of financial aid for a year and a half. Meaning we weren’t making any money at all! Living on loans and financial aid!

Since then, we’ve taken out extra loan money to help pay for things our family needs. We’ve come to the conclusion that in the end, our plan is to live within our means when Dusty finishes residency and has a salary increase. We will live comfortably but not glamorously. We have met with a financial planner and have talked through all of our debt, loans, projected income. A game plan is in place and we have a trusted adviser to help us retire comfortably in our mid to late 50’s. All while living a comfortable life.

So much of the world of “loans” as a medical student/soon to be Dr. is based (in my opinion) on what you want your lifestyle to be and what you expect at the end of it. We’ve always been the type of people who like comfort vs luxury. And let’s be real…if we have a roof over our heads, bed to sleep in, food to eat, health care, and extra spending money after that for things…we are doing pretty darn good!

I think things get so hard and tiresome…grueling really…when we are in the thick of things as a medical family that we often don’t realize that if we are careful with how we save and pay off loans when we get out of this process…we can live just fine…and comfortable. I think the desire to go big once things are said and done and “reward” ourselves is where we fall into a trap. For example – if our 2002 Envoy is still running in 4 years… (after residency and fellowship) you can bet Dusty will still be driving it to the clinic.

In the end, my biggest piece of advice is to meet with a well-seasoned financial planner who works with medical families. Talk through your expectations as a family once medical training is done. Consider your potential income and your retirement goals and go from there! Lastly, a lot of rural medical hospital programs offer loan forgiveness of some sort when you finish residency. Consider this option as a no brainer! The medical doctor shortage is only going to grow – salaries are going to go up, demand is going to continue to grow. There are plenty of creative ways to help chop at the debt you’ve accrued over the years.

MICHAELLA: If you don’t need to take the full loan disbursement, then don’t. Live within your means while still being able to enjoy certain pleasures of life. We never took out the full loan disbursement till the last part of medical school as we knew that we had to plan for residency applications, interview season, and away rotations the first half of fourth year. This will EASILY cost at least 5-figures and if you don’t plan correctly, it can be very overwhelming.

Look into student-loan repayment during fourth year. This is something that is inevitable and better to get an idea of the path that is best for you and your situation. We spoke with someone who helped us evaluate our options and figured out what is best for our specific situation. Do not go with the first advice that you receive whether it be from past medical school graduates, family, friends, or professionals. Really do your research because you’re dealing with money…and a lot of it. You don’t want to make a mistake and pay back more than you should have if there was a way you could have paid off more quickly.

CASSIDY: This category can be scary. When you see the amount of money that needs to be borrowed, it really can make you sick to your stomach. However, what we realized is that this is the best investment that we could possibly make. My husband doesn’t want to be in any other career, this is his dream and we are investing in his dream. I think if you can switch your perspective and look at it more in that way, it can help take the scary out of it a little bit.

A tip I would give is do some reading/research! There are sources out there that explain repayment options and what other physician families did to pay them off quickly. I definitely got some peace of mind reading about how so many people were able to pay them off quickly even though the loan amount is huge.

KRISTEN: Less debt is always ideal, but not always possible. Medical students typically will take out tuition plus some additional loans to use for extra educational costs: books, materials, clothing, tools, programs, board exams, interviews, and cost of living. There is a federal cap and depending on the tuition cost of the school will depend on the amount left over to use for the extras. If at all possible, try to not take out additional private loans or use credit cards with high interest. I look at the cap as a hedge of protection from accruing too much debt.

To reduce the amount of loans you take out, you can use up to 10K from Roth IRA toward tuition so that you take out 10K less in loans. Depending on the market it might be best to use this 4th year right before having to pay compounding interest on those loans.

The White Coat Investor blog sends daily emails. I use to read these daily and my husband and I would talk about them for fun. I’d encourage any couple to talk about finances together and for both to have an understanding about the loan process and family finances. 

TAMELA: This is another long one for me, that I also have a post about, What Your School Won’t Tell You About Your Grad School Loans.

I think the absolute most important thing about loans is making sure you understand them. In our situation, we basically have to take out loans (unless your rich uncle is paying for everything). And they kind of just say “sign your name here please” without any real explanation of what you are signing. Because we have to have them. Understanding what they are and how they work can give you a lot of peace of mind.

Do you have any tips on medical school loans? Share in the comments below!

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