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Taking out private loans during residency

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  • Taking out private loans during residency

    Has anyone thought about taking out a small private loan each year to manage expenses during residency? My wife + newborn will be moving to a more expensive city for my advanced program this summer, and we will be relying mostly on my income as a resident. Just curious if anyone else has done this. Thanks!

  • #2
    Why not moonlight?

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    • #3
      That starts a slippery slope of just taking out more and more loans thinking you’ll just pay it off once you’re an attending.

      You can make it just about anywhere in the country on a resident salary if you actively budget and consciously make good financial decisions.

      Once you’re able to, moonlight or see what supplemental income your spouse can do at home with the newborn. I’m sure there will be others with kids that need babysitting or dogs walked as well.

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      • #4
        I see you just posted about saving for retirement during residency and now posting about private loans. Don't do it. Taking out private loans means you're not living within your means.

        Agree with others the residency salary albeit low is enough even for expensive cities. Instead lower your costs - live in a cheaper apartment. I was in a very expensive city for residency and fellowship - making 42-52K/year. Never took out loans. However if you're a family of 3 on that income you may qualify for food stamps. Look into it if needed.

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        • #5
          Your program will be paying you slightly above the average US household median. If you can not live on that, then you have a spending problem.

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          • #6
            Ok, it's one thing to not contribute to retirement in residency, it's a whole other thing to take on debt during residency. That is a bad idea. You could post a budget if you need ideas on where to cut spending.

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            • #7
              I always take those internet quotation sites with a grain of salt, but this gem is attributed to J. Ruben Clark, Jr.:

              “It is a rule...in all the world that interest is to be paid on borrowed money. May I say something about interest? Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels . . . it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands nor orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you."

              You're smart enough to get through a graduate health professions program, so it seems to reason that you are smart enough to come up with a simple budget that doesn't dig the hole any deeper. A residency loan just digs the hole deeper...

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              • #8
                Behavioral finance thought pattern:
                This standard of living is what was provided to you during childhood and your post graduate training.
                You made a decision to get married and have a child.
                Option 1: Get a loan and continue the standard that you deserve.
                Option 2: Mature and grow up, you can't afford it. Live within your means.

                Change your behavioral tendencies, you have not earned it. You will never be able to out earn poor behavioral finance habits. Grow up. No offense, very immature habits that will cause problems until you mature.

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                • #9
                  How much were you thinking of borrowing each year? And what's the typical rent for a decent 1 bedroom apartment in that city (not luxury apartment), something like $1800-2000?

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                  • #10
                    Originally posted by FreshPaint View Post
                    How much were you thinking of borrowing each year? And what's the typical rent for a decent 1 bedroom apartment in that city (not luxury apartment), something like $1800-2000?
                    A decent 2-bedroom apartment in the city of my residency is around $1500-$2000

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                    • #11
                      Thank you for the advice everyone, this confirms my suspicion that taking out additional loans during residency is a terrible decision. I appreciate your help

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                      • #12
                        Originally posted by wideopenspaces View Post
                        Ok, it's one thing to not contribute to retirement in residency, it's a whole other thing to take on debt during residency. That is a bad idea. You could post a budget if you need ideas on where to cut spending.

                        Thanks! I've been using the app PocketGuard to track our expenses over the past few months. Here is a breakdown of this past month:
                        • Rent: $1,400
                        • Health/Medical (advance payments for pregnancy/delivery costs): $600
                        • Eating out: $612
                        • Groceries: $610
                        • Shopping: $567
                        • Bills (phone, private loan repayments, credit card charges): $540
                        • Automobile (car loan, gas, repairs): $513
                        • Entertainment: $259
                        • Electronics/software (netflix, youtube monthly fee, apple tv charges): $191
                        • Gifts/donations: $180
                        • Insurance (life, disability): $143
                        • Pets: $80
                        Altogether, this was around $5,700. My wife and I typically spend between $5,500-6,000/month total so this was about average. Any idea where we can cut out extra expenses?

                        Thank you all so much

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                        • #13
                          Originally posted by BrownsFan2021 View Post
                          Any idea where we can cut out extra expenses?

                          Thank you all so much
                          The low hanging fruit here is eating out less and the monthly subscriptions

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                          • #14
                            You almost spend more then we do and we are a family of 6!!!

                            I just looked over last year and we only spent 400/month eating out!

                            What is shopping? Do less of it!!

                            Can you decrease car costs?

                            You are not rich yet! Live like a resident!!!

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                            • #15
                              Originally posted by BrownsFan2021 View Post


                              Thanks! I've been using the app PocketGuard to track our expenses over the past few months. Here is a breakdown of this past month:
                              • Rent: $1,400
                              • Health/Medical (advance payments for pregnancy/delivery costs): $600
                              • Eating out: $612
                              • Groceries: $610
                              • Shopping: $567
                              • Bills (phone, private loan repayments, credit card charges): $540
                              • Automobile (car loan, gas, repairs): $513
                              • Entertainment: $259
                              • Electronics/software (netflix, youtube monthly fee, apple tv charges): $191
                              • Gifts/donations: $180
                              • Insurance (life, disability): $143
                              • Pets: $80
                              Altogether, this was around $5,700. My wife and I typically spend between $5,500-6,000/month total so this was about average. Any idea where we can cut out extra expenses?

                              Thank you all so much
                              Your areas are eating out, groceries, shopping. Shopping the most obvious. I think you are living beyond your means TBH. I remember residency (~10 years ago) and I never shopped and would occasionally go to movies with sneaking in my own beer (lol). Eating out was Five Guys. Then my second year I started moonlighting an extra $30K a year and saved/paid down loan interest. You need to have a hard look at your own spending. $259 for entertainment? Subscriptions? This is more than I spend as a staff of 8 years.

                              Lastly, why is credit card charges itemized? Does that mean interest on the credit card balance???

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