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Debt/budgeting advice for incoming medical student

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  • Debt/budgeting advice for incoming medical student

    Hello everyone. I was recently accepted to medical school so I'm excited to have come across the WCI community. I was hoping to get some financial/budgeting advice for the next ~8 months before starting medical school and am hoping to build some good habits for the future.

    Current situation:

    Income: ~6k/month from new job
    Expenses: ~1100/month rent and utilities
    Cash/liquid savings: ~3.5k
    Retirement: 15k (401k) & 6k (403b) <-- from previous jobs
    CC debt: ~15k: 6k @ 0% until 4/21 and rest have varying interest rates
    Student Loans: 40k (4.3-7.08% all federal) from a master's degree I just completed - balance is all principal so far but will accrue after Dec 31st when CARES act ends

    Long story short, the past year has been kinda crazy with full-time grad school, covid, and applying to med school so I got a bit overwhelmed with my finances.
    • Need to knock out the CC debt asap so I was wondering what's the best way to go about this. Use savings and get a personal loan to pay 9k immediately and then the 6k in April once the 0% ends? Or do I just start paying off the highest interest rate and go from there?
    • How should I approach funding retirement over the next 8 months? New employer has a 401k but I also don't have an IRA or anything like that yet. Or do I focus more on building cash savings?
    • Suggestions for what to do with my 401k and 403b from past jobs? Not sure if/how I should consolidate them
    • After the CC debt, do I start making payments towards the student loans?
    • I'm looking around for budgeting resources/apps to start consistently using so if there are any suggestions about ones that you like or use that would be awesome
    I think that's all I have for now so if anyone has advice on those points above that would be greatly appreciated. Hoping to get some good habits over the next few months and looking forward to being a part of this community!

  • #2
    Sorry stopped reading at 15K CC debt.


    • #3
      Well since you want to start some good habits, I would take your extra $4k+ for the next 4 months and knock out the credit card debt. That should definitely be gone before med school starts. If you still have money left over, put it in a rIRA.


      • #4
        Welcome! I started learning in medical school by reading WCI's "start here" page for beginners. There's a lot of great blog posts on the basics of personal finance. Be sure to google any terms you don't understand there and ask questions in the forum.

        Obviously it seems like you realize the credit card debt is a major albatross. Your first priority should be using the income from your current job to pay off your credit card debt before starting med school, and never getting into credit card debt again.

        Mathematically, a personal loan may help with lowering the interest, but the most important parts of finance are often behavioral, not math. I would start today with paying a little bit of your savings towards the highest interest CC debt and then make a written plan for how you will pay the entire 15k off in the next 8 months.

        You can plan this along with making a written budget for yourself. I personally made an excel spreadsheet after looking up a sample budget, but there are paid services like YNAB if you want the structure.


        • #5
          1.) You can always roll your previous retirement accounts into your current retirement accounts to consolidate them. Given your (what I presume) $0 income in medical school, I would look into getting your previous retirement plans rolled over strategically into your Roth.

          2.) Make sure you fix whatever the reason for the credit card debt. Depending on the interest rates of your credit card debt, which I assume is high, I would make that a priority.

          3.) I use Mint in order to track spending moreso than as a budgeting tool but it's important to find something that works for you. If you tend to be an overspending then you can look into the Dave Ramsey envelope system.