Tag: budgeting

During Medical School: Managing Debt and Living Costs

So you’ve chosen a medical school, enrolled, and are happily studying through first year and loving anatomy lab. How do you manage your expenses and loans while in school? Excellent question, dear reader, and this builds on the previous post in the series that provides a high level summary of securing student loans.

Every person has a unique financial and life situation – perhaps you have a partner and are sharing living expenses. Are they in school? Are they working? Do they make a comfortable amount and are you close enough such that they can support you while you’re in school?

What kind of loans do you have, private or public?

From the perspective of managing loans while in school, both private and public loans generally allow you to defer making payments while you’re a full time student. Note however, that your loans will continue to accrue interest whether or not you’re making payments. Because you’re fully focused on school, it doesn’t make sense to make payments until after you’ve graduated. I’ll go into detail about ways to manage your public and private loans once you’ve graduated from medical school in a future post.

Managing Expenses – Find a Roommate!

Here’s where having the discipline to focus on keeping a budget will save you in the long run. By using one (or more) of these tools, you can get a perfect picture of your monthly income and expenditure, and carefully plan out what you’ll need each semester.

If you don’t have a partner that you’d consider sharing expenses with, there are additional options you have to save on housing costs. Check with your fellow classmates to see if they’re looking for roommates – do make sure you’re compatible living together. If the idea of living with a fellow med student is like bringing work home with you, see if you school has other graduate programs. Like med students, students in other grad programs are typically focused, high achieving, and might make an ideal roommate or three.

Ultimately, shacking up with a roommate for a few years while in school isn’t the worst thing you can do. It’s a great way to save on your largest expense outside of med school tuition and can reduce your need for loans.

Budget for Larger Expenses

As you progress through medical school, remember the long game. By the time you become an attending, (if you’re in the US), your superlative education will include:

  • Four years of undergrad
  • Four years of medical school
  • at least 3 years of residency
  • TOTAL: 11 YEARS after high school

If you’re like the Surgeon and planning on a surgery sub-specialty, that’s a seven year residency (including research). Tack on roughly two years of fellowship. Say you’re interested in becoming a Thoracic Surgeon. That’s a 17 YEAR ride after high school – buckle up.

My point with this isn’t to scare you, but to realize that your high income years (at this point) are about a decade away, the decisions you make regarding finances early on can save you much later in the long run. Remember, life is a marathon, not a sprint.

During medical school, larger expenses might include mandatory testing (like STEP exams), vacation (responsibly), transportation (keeping your car alive), and in your fourth year: residency interviews. Loans are certainly one way to manage these expenses. But another, perhaps more prudent option, would be budgeting and planning for these expenses ahead of time.

What Should YOU Do?

In the end, I can’t tell you what to do. I know what worked for The Surgeon and me, and I’ve seen what can work for others. Ultimately, it’s about being responsible with your financial decisions, closely evaluating living arrangements and expenses, and keeping your mind and body healthy for the long run.

It’s also great to instill these habits early, so that once you are making a bit of an income (at least adding to the positive side of the ledger) in residency, you can work on saving. Keeping those habits into your attending years will have you set up to be debt free while maximizing your financial potential for your life time!

What questions about expenses and budgeting do you have while in med school? How to make ramen more tasty? Adding an egg and some leafy greens can really kick up a ramen pack on the cheap.

-SurgeonJourney

Budgeting and Financial Tools for the Win

The ol’ adage of “you can’t improve what you don’t measure” is certainly true in the financial health and literacy department. A big part of setting up a successful financial plan that fits your needs and circumstances starts with understanding where you are today.

This means seeing where money is coming in, where it’s going out, and how much you have as a surplus (or savings) each month. In a single metric to track your financial health, I’d likely point to using Net Worth.

What You Own – What You Owe = Net Worth

Lucky for you, dear reader, there’s never been a better time to create a monthly budget and track your net worth to make sure you can afford those Balenciaga’s (for those hype beasts out there, you know who you are) or a new vehicle or vacation plans.

There are a number of tools out there designed to help you keep track of your finances so you can see where you are today, and set budgets and goals for the future.

Types of Financial and Budgeting Tools

In most cases, the tools that you’ll want to use are web applications that integrate with the various banks, loans, and investing platforms that you have. They aggregate all the information collected from your different accounts and provide you with a holistic financial picture complete with a net worth calculation.

How do they do this? You will need to provide your login credentials to the tool or tools of your choice so that they can pull the appropriate transaction and balance information from each of your accounts.

For example, if you have a checking and savings account with Chase, and you have a ROTH IRA with Fidelity, you’ll provide your username and passwords for Chase and Fidelity to the online financial tool so that it can gather your information from each of these institutions respectively.

Concerns about security and sharing your data? It’s definitely something you should consider when choosing a tool, and also when using the internet in general. I’ve decided that I trust the financial tools that I use and understand the potential implications of sharing my usernames and passwords.

In any case, I’m going to take this moment to get on my soapbox and ask you to please, please, please, use a Password Manager and make sure you have a unique and random password for each and every account that you create. Yes, your dog is the cutest with the easiest name to remember, but that’s also incredibly easy for a nefarious individual to compromise.

Best Tools for Budgeting and Getting your Financial Picture

In order of which tools I prefer, here’s the SurgeonJourney Approved (TM) list of online and offline tools for tracking your finances.

  1. Personal Capital
  2. Mint
  3. A Spreadsheet
  4. YNAB – You Need a Budget

Why this list, you may ask? I’m going to go through each one to explain my pros and cons. While this is the definitive SurgeonJourney list of finance and budget tools, you may have a different tool of choice depending on your needs and priorities, like security, for example.

Personal Capital – The Investors Choice

I’ve been using Personal Capital for the last few years and I can’t say enough good things. It’s focused primarily on tracking investment performance and can also help with portfolio composition analysis. Because the tool is built so that you can get a clear picture of where your investments are and how they are performing, I check multiple times a week to see how my net worth is doing.

I should note that while I look at Personal Capital a few times a week, I don’t make changes to my investment plans based on day to day changes in the market – that is bad (I’ll dig into investing strategies in a future post!).

Pros for Personal Capital

  • Great investment analysis and tracking tools
  • Intuitive UI and functional desktop and mobile applications
  • The financial tools are provided free of charge because they want you to use their Wealth Management services
  • Because Personal Capital is trying to sell you a service by offering their wealth management advising, it’s less likely they’re trying to sell your data to marketing partners

Cons for Personal Capital

  • Budgeting tools and goal creation isn’t as robust as Mint
  • Transaction categories are limited and I’ve found automatic categorization to be less accurate than Mint
  • The financial institutions that are available to connect with are slightly more limited than Mint, though in practice this really isn’t an issue
  • Online tool requires that you share your financial account credentials with Personal Capital

While there are some draw backs, Personal Capital fits most of our needs and we have linked accounts from banking to investing to loans, even our house and cars. It’s a great way to get your complete financial picture in one holistic view.

Try out Personal Capital

Mint – The Budgeting Incumbent and Intuit Behemoth

Before I started using Personal Capital, I was on team Mint for years. It’s one of the original financial aggregation tools to gain broad appeal and does an excellent job with account integration. It’s primarily a budgeting and goal setting tool and it excels at both of those tasks.

It has a friendly interface and solid web and mobile applications, making it easy to track your finances. You can even set alerts for low balances and also it will track when bills are due.

Pros for Mint

  • Excellent budgeting and goals tools, this is what I started with to set up my monthly spending and savings plans
  • Great integrations with a plethora of accounts from banking to wealth management and more
  • Bill tracking and payment through Mint if desired
  • Free credit score provided quarterly

Cons for Mint

  • Investment tracking is a feature, but not as robust as Personal Capital
  • Investment charts still use Flash and won’t display for most users with modern browsers (like Chrome)
  • You are the product, as in your data is most definitely sold and shared with marketing partners of Mint and Intuit
  • Online tool requires that you share your financial account credentials with Mint

Given that I’ve shifted our focus to investing, I would recommend Mint after Personal Capital. If you are just starting out with budgeting and setting goals, give Mint a shot. I will say that be aware that the information you provide to Mint is absolutely shared with partners. While the offers you will receive are tailored to you based on your accounts and spending habits, it’s up to you whether that’s worth it to you.

Try out Mint

A Spreadsheet – The Manual Option

For full control and complete customization, consider using Google Sheets or Microsoft Excel (don’t use Numbers, just don’t) to keep track of your finances. It’s definitely not the easiest and it’s probably the most time consuming, but going through the exercise of crafting a spreadsheet budget will help you become intimately familiar with your finances.

Additionally, building the discipline to enter your transactions and tracking your investments manually will have you more attuned to your spending than most. Do what works for you.

Pros for Spreadsheets

  • Infinite customization, very flexible to fit the format and needs of your financial picture
  • Templates are available online to help you get started
  • You can keep all your account information private, you don’t need to share credentials to gather transactions and balances
  • Most banking and investment accounts offer the option to download transactions to spreadsheet, making it easier to move transactions into your budget and tracking sheet
  • The self satisfaction of creating and maintaining your own spreadsheet shouldn’t be underestimated

Cons for Spreasheets

  • Very manual, you’ll need to have the time and discipline to enter in transactions and investments monthly
  • Charts and graphs will need to be created manually
  • No automated investing and savings recommendations

While there’s a big time investment to making your own financial tracking spreadsheet, you’ll have a deep understanding of your spending and saving habits after you do this for a few months. There are some great resources to create your own if you’re interested! I’ll be posting some resources I like to use in the future.

Try out a Spreadsheet

YNAB – The Alternative, but also Great, Budgeting Tool

I’ll admit, I tried really hard to use You Need a Budget, and I just didn’t get it. It’s probably because I seek immediate gratification (I know, #millennial, sue me) and the logic of YNAB didn’t make sense to me; but I don’t want my experience to stop you. I’ve had friends use YNAB to great success and it can really help with wrangling expenses and debt if that is something your struggling with.

The idea is that you allocate every dollar in each month to a job. Whether it’s for groceries or a car payment or entertainment, every dollar should have a purpose and be put to use. That way, you don’t need to check whether you have enough for X expenditure, because you’ve carefully budgeted all your income and expenses for the month.

Pros for YNAB

  • Amazing budgeting tool, website has helpful tutorials to get started
  • Great for getting out of the paycheck to paycheck cycle, or paying down debt
  • Builds budgeting and spending discipline

Cons for YNAB

  • No investment tracking, for budgeting only
  • Budgeting paradigm might not work for everyone
  • YNAB isn’t free, but this may also help make sure you use the tool

Perhaps I didn’t give YNAB enough of a chance, but again, don’t let me stop you from trying out YNAB. It can really work wonders and I do recommend you giving it a shot to see whether it works for you or not.

Try out YNAB

It’s Not the Tool, It’s How You Use It

In the end, it’s not what you use, it’s how you use it, or whatever that old saying is. Understanding your earning and spending habits is critical to building a healthy financial foundation for your future. This can start while you’re in medical school and building the skills and discipline for budgeting and saving can never start soon enough.

By the time you’re an attending, you might earn a high income, but without the spending and saving habits you develop early – making $300,000 and living paycheck to paycheck isn’t where you want to be. Use investing and budgeting tools to start early and stay ahead of the game.

I’ve suggested a few tools above, let me know in the comments which ones you’ve tried and what works best for you!

-SurgeonJourney

Part 1: Med School Loans and How to Find Them

Accepted to Med School, Now What?

Congratulations! Your hard work through your undergrad years has paid off – that GPA and MCAT score and your summers spent doing research and shadowing have prepared you for the next four years, studying to become a doctor. As the glow fades from your monumental achievement, reality set in as you must figure out how to finance this expedition. (If you found this post by accident and you don’t require loans for medical school, go have a mai-tai and then come back for other info).

Let’s jump into the different ways one can pay for school. You’ll likely have information from the medical school you plan on attending to secure funding to pay for tuition and living expenses. You can skim through this section if you took loans out for undergrad. Keep in mind, the type of loan you accept will alter the different repayment options you can choose down the road. This decision, though seemingly minor, can have a large impact on a doctor’s financial situation for potentially decades.

Once you accept an offer, get your checkbook out – typically there’s a deposit required to hold your spot, and the school will provide resources to you for financial assistance depending on your situation. In my anecdotal experience, it seems that these Financial Aid offices can be anywhere from mildly helpful to possibly committing willful malfeasance. Your mileage may vary. Nevertheless, there are a TON of resources to talk you through the different options.

Since this blog is focused largely on surgeons with a residency of at least five years (my surgeon is in the greater than five year category), plus an additional one or two (or possibly three) year fellowship, I’ll focus on the decisions you need to make that will allow you to qualify for PSLF. I should note, also, that there are some longer residency + fellowship combos with medicine specialties that make this information helpful (cardiology, for one).

What’s PSLF? I’m Glad you Asked!

PSLF is an acronym for Public Service Loan Forgiveness, and the Consumer Financial Protection Bureau has a great summary of the program:

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your federal Direct Loans after you make 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying public service employer. 

–consumerfinance.gov

So, what does that mean? Let’s break it down:

  • Federal Direct Loans
    • This means that the US Department of Education (and Betsy DeVos) is your lender. Basically you’re securing your loan directly from the Department of Education.
  • Qualifying Monthly Payments, 120 of them
    • Meeting the required payment each month as specified by your payment plan is all you need to do here. If you are attempting to qualify for PSLF, you should choose FedLoan as your servicer – they’re the only loan servicing operation that will manage PSLF.
  • Qualifying Repayment Plan
    • This is where some real value can come into play with the PSLF program. Federal loans can qualify for a number of different repayment plans, I’ll dig into this with lots more detail in a post dedicated to PSLF, but know for now that it can dramatically decrease your monthly payments to as little as $0.00.
  • Working Full-time
    • At least 40 hours a week. If you’re a general surgery resident, this will be less than half your week (unofficially; of course your week is officially 80 hours).
  • Qualifying Public Service Employer
    • In nearly all cases, as a resident you’ll be employed by a non-profit – 501(c)(3) – organization affiliated with your teaching hospital and have nothing to worry about here. (I’ve heard reports that Kaiser in CA does have their physicians, including residents, employed by a for-profit entity; I’ll do some more research on this).

So there it is! Work ten years for a non-profit while meeting the payment required each month and the remainder of your loan will be forgiven (principal and interest TAX FREE!) by good Ol’ Uncle Sam.

Too much of a good thing?

I have heard that there is brewing interest in Congress to institute caps on forgiveness, but for now there aren’t any. At the time of this post, it’s still safe to go for PSLF as a med student. If there are changes, most speculate that existing borrowers won’t be affected – depends how the US Treasury is looking.

Photo by Ricardo Rocha on Unsplash

Loan Decision Time

I digressed a bit with the PSLF intro, but let’s get back to paying for med school – it’ll all fit together, I promise. Once you get over the sticker shock, put together a rough budget of your expenses you think you’ll have each year, broken down by semester – there are lots of guides online for this, so I’ll just create an example here:

By Semester:Cost:
Tuition$25,000
Miscellaneous and spurious fees$4,000
Living costs: Housing ($1000/month), Food ($400/month)$8,400
Total (per semester):$37,400

Depending how frugal (or not) you are, you’ll be spending at least $70,000 per year between tuition and living expenses.

Getting that Cheddar, Public or Private?

Two main options are private and public loans. In order to qualify for PSLF, you must use a public loan. After submitting a FAFSA form, you’ll likely be approved for two federal loans, Direct Unsubsidized and Direct PLUS. The former are capped at $40,500 per year, though Direct Unsubsidized Loans don’t have any strict requirements, like credit checks, and come with a pretty reasonable fixed interest rate.

You might be wondering what’s the difference between Unsubsidized and Subsidized Loans – I sure did when I first saw it. It has to do with how the interest on your loan is handled. For Subsidized Loans, the kindly U.S. Department of Education will pay the interest accrued while you’re in medical school. They do come with more restrictions than unsubsidized loans and are based on financial need. You’re responsible for the interest accrued on unsubsidized loans while you’re in school – if you choose not to pay interest while you’re in school, it will capitalize (your interest accrued gets added to the principal) on your loan.

If you find yourself needing more than $40,500 per year in loans, and you very well might, Direct PLUS loans are your next stop. These do come with more requirements, like a credit check, and may have more restrictions for borrowers with an adverse credit history.

SurgeonJourney’s Suggestion

From my perspective, I didn’t fully understand how PSLF worked until my spouse’s last year of medical school. By that time, we had maxed out the Direct Unsubsidized option every year and covered the rest of tuition with private loans. Were we to do it again, I would likely try to take out all public loan options for the purpose of PSLF.

We were fortunate that while my spouse was in school, I was working a full time job at a software startup, which certainly eased concerns for living expenses. I know that not everyone will have this situation, so it’s important to know your loan options and also focus on managing your expenses wisely. There are some great budgeting tools out there I’ll cover in later posts.

Let me know your thoughts and questions in the comments!

-SurgeonJourney

Managing Federal Loans and Qualifying for PSLF, a Practical Guide

Loan decisions start as soon as an aspiring doctor receives their acceptance to medical school. After the wave of excitement passes, assuming you don’t have a trust fund, the next question is invariably: how am I going to pay for this education? Navigating loan options is complex and confusing – having first hand experience (well, via my spouse), I’m here to help!

This is going to be a multi-part series focusing on different phases in the progression of loan acquisition, spending, and eventual payoff or forgiveness.

Med School Loans: A Series

With the rising cost of medical school – even for state schools, it definitely is important to evaluate payment options and consider your residency and speciality wisely. Each of these decisions will have an impact on your future finances, from the type of loans you choose to your income as an attending. The length of residency and potential fellowship you choose will also affect which loan forgiveness and payment plans you will qualify for if you have federal loans.

We’re going to start at the beginning, right after you accept an offer to attend medical school. From there, each segment will focus on a different phase of the medical education and training process, culminating in graduation from residency and fellowship.

Along the way, we’ll look at different ways to manage student loans for medical school. If you have any questions, comments, or suggestions for this series – let me know in the comments!

-SurgeonJourney