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W0lfgang

RBC's new LOC $325,000 max at prime -0.25

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Ask if your bank would match this. My guy at Scotia is working on it. They can go up to at $300,000 max but probably not much beyond it as of now. Here's the email from RBC:

Has the recent decision by the Canadian Medical Association (CMA) to sell MD Financial Management made you think of your financial options? If so, we wanted to share these special offers from RBC®

Save the monthly fee on RBC VIP Banking® account while you're a student or a resident and also receive a $120 annual fee rebate if you are approved for the RBC Visa® Platinum Avion credit card1. Simply sign up by February 28, 2019 and save up to $4801 per year!
Get up to $325,0002 at 0.25% below Prime3,4 to support you through your training with a $275,000 Student Royal Credit Line® for medical school and an additional $50,000 unsecured Royal Credit Line® for residency.
Transfer in costs up to $5,0005covered when you switch your investment assets to RBC. Benefit from potentially lower fee rates with the RBC Investment Advantage Account.

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I totally agree.
At the end of the day, the LOC should be the last resort.
I took it because I simply wanted free credit cards that I use like debit cards.
You never know where life will lead you.
Taking debt on early in life can be stressful.
Don't spend because it's there.
I've seen many people 'upgrade' their lifestyle because they had 300K$.

 

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1 hour ago, HoopDreams said:

I totally agree.
At the end of the day, the LOC should be the last resort.
I took it because I simply wanted free credit cards that I use like debit cards.
You never know where life will lead you.
Taking debt on early in life can be stressful.
Don't spend because it's there.
I've seen many people 'upgrade' their lifestyle because they had 300K$.

 

what you will see later unfortunately is the relatively stressful struggle to pay it off. Starting to get to be shall I say a non trivial amount to pay off as a staff physician. 

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I switched to RBC in PGY5 because of the lower rate and two year grace period. 

But my mortgage is only $210k...

I know tuition fees have really gotten out of control in some places (e.g. Ontario) but $325k is at least $100k more debt than anyone should ever consider taking on. In retrospect I would have ate out a lot less and been more frugal over the last 9-10 years. 

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10 hours ago, rmorelan said:

 

(usual side note that it is getting really scary that people need that kind of money with the interest rate increases and tuition going up. Not to mention the increased number of post residency training which is becoming more and more common)

I'd say. 

I had a spouse who was only substitute teaching during med school. Then we moved partway across the country for my 5 year residency, she did a masters and we had kids. She stayed home with the kids till I was done fellowship. Even I looked at it and figured it was more than I needed. 

I also agree that rising interest rates make this even more worrisome than it would have been 4 years ago. 

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With Scotia, you have to negotiate.
They offered me 12 months after residency but I got it up to 24.
Also, be careful about the fees related to your checking accounts and the free credit cards.
RBC offered me no fees until after medical school.
On the other hand, with Scotia, I was able to get no fees at all until the end of residency.
You can always negotiate.

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50 minutes ago, heydere said:

Do both RBC and Scotiabank provide a 24 month grace period after residency/fellowship for repayment? 

or is the grace period after graduation from medical school?

I know for RBC its 2 years after residency (http://www.rbcroyalbank.com/services/student/medical-dental-credit.html), but cant figure out for scotiabank.  

The same. Interest only payments automatically added to your account balance monthly while enrolled in School/Residency/Fellowship. Interest only payments during 24 month grace period.

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2 hours ago, HoopDreams said:

With Scotia, you have to negotiate.
They offered me 12 months after residency but I got it up to 24.
Also, be careful about the fees related to your checking accounts and the free credit cards.
RBC offered me no fees until after medical school.
On the other hand, with Scotia, I was able to get no fees at all until the end of residency.
You can always negotiate.

you can push that into fellowship as well if it applies. Ha, important for me as I am doing two years :)

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7 minutes ago, PhD2MD said:

Please do not spend $300k on a medical. Period.

In my professional opinion, don't spend anything on it. Find another profession. Medicine sucks. 

Maybe consider it if you are independently wealthy and can finance yourself with existing funds that you can walk away from if you decide you hate medicine. Otherwise, stay the hell away. It is very easy to become a life ruining prison.

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21 minutes ago, NLengr said:

In my professional opinion, don't spend anything on it. Find another profession. Medicine sucks. 

Maybe consider it if you are independently wealthy and can finance yourself with existing funds that you can walk away from if you decide you hate medicine. Otherwise, stay the hell away. It is very easy to become a life ruining prison.

I think medical school does a great job promoting medicine as the "ultimate" career when the truth is that there are always going to be students who aren't a good fit. There's no way to know until you get through it. For every colleague I have who is content with the staff life I know one other that isn't happy. Given those odds and the length and difficulty of training, I feel bad for those who make it through all the way only to see that there wasn't really a light at the end of the tunnel. 

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24 minutes ago, NLengr said:

In my professional opinion, don't spend anything on it. Find another profession. Medicine sucks. 

Maybe consider it if you are independently wealthy and can finance yourself with existing funds that you can walk away from if you decide you hate medicine. Otherwise, stay the hell away. It is very easy to become a life ruining prison.

Why? If you study here, then long-term, you're still way better off than the average person. Even with a 250-300 K loan, you'll be pulling 6 figures and have a prestigious degree. Sure, there is more stress involved than normal jobs but it is still a great career with great pay. I wouldn't advise going abroad (Caribbean) and doing med to practice in Canada though...there are def better alternatives.

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9 minutes ago, Compton said:

Why? If you study here, then long-term, you're still way better off than the average person. Even with a 250-300 K loan, you'll be pulling 6 figures and have a prestigious degree. Sure, there is more stress involved than normal jobs but it is still a great career with great pay. I wouldn't advise going abroad (Caribbean) and doing med to practice in Canada though...there are def better alternatives.

 

Financially people do better in medicine than the average person. I think a lot of my peers just dislike the work and the commitment needed in medicine, but are too behind because of debt and the long training time to leave medicine. Also there isn't always an "ideal" ending. I know orthopedic surgeons that essentially don't operate anymore due to OR time shortages and the specialist job market can be hit or miss. 

I think NLengr has posted about how he dislikes practicing medicine in the middle of nowhere in a difficult hospital even though his compensation is fine. If you really want to chase money and use that as a metric for success I can't even say that medicine is the best outcome for the amount of time and effort put in. My friends who put in a similar effort and were similarly talented in the fields of law, finance, etc do far better than me so it's all relative I suppose. 

 

Edit: I will say that for disclosure I'm content with medicine. This is just based on conversations with friends and peers now that I'm on the other side. 

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16 minutes ago, blah1234 said:

I think medical school does a great job promoting medicine as the "ultimate" career when the truth is that there are always going to be students who aren't a good fit. There's no way to know until you get through it. For every colleague I have who is content with the staff life I know one other that isn't happy. Given those odds and the length and difficulty of training, I feel bad for those who make it through all the way only to see that there wasn't really a light at the end of the tunnel. 

Yup. Given the rate of burnout and depression among physicians, as well as the high percentage that are unhappy with their career, med schools do a total disservice by whitewashing all the unhappiness and issues in the profession. 

Honestly, I think the best think medical schools could do is have some average physicians come on and talk about their careers, including multiples ones who are unhappy. And tell the students very specifically all the issues in medicine (way too many to list right now) and be up front that there is a very real.chance they will regret it all. Then at least they could say they were warned. 

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35 minutes ago, Compton said:

Why? If you study here, then long-term, you're still way better off than the average person. Even with a 250-300 K loan, you'll be pulling 6 figures and have a prestigious degree. Sure, there is more stress involved than normal jobs but it is still a great career with great pay. I wouldn't advise going abroad (Caribbean) and doing med to practice in Canada though...there are def better alternatives.

The average person is not who does medicine. People who do medicine would also have good careers in other professions or business and be well (although not as well) compensated financially. But I can tell you 125k a year (what a salaried engineer in my former field makes quite easily) makes you just as happy as making 170k or 250k (roughly the going rate for salaried family docs and specialists in an urban area in my province).

Second, define better off. Sure, you are better off financially. But you are much worse off from the point of view of burnout, risk of mental illness, substance abuse, career regret/dissatisfaction , risk of divorice, family life, stress, longevity, workplace bullying, support from co-workers and administration, personal safety, career mobility, ability to live where you want etc. So it's highly dependent on the metrics you chose when you say you are better off. 

Medicine may be a "great career" for some, but for many physicians, it is far from a "great career" and the data backs this up. 

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Been reading these posts and I am very curious why having 100-150K debt is so bad?

As staff wouldnt you be able to pay off this debt within a few years? Im in my mid twenties and a M2, I hope to pay off my debt fully within 1-2 years as working as staff. 

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4 minutes ago, RicardoKaká said:

Been reading these posts and I am very curious why having 100-150K debt is so bad?

As staff wouldnt you be able to pay off this debt within a few years? Im in my mid twenties and a M2, I hope to pay off my debt fully within 1-2 years as working as staff. 

Let's say you take out 25k/yr over 4 years of med school and take out nothing during residency. You put all the interest (3%) on your LOC. You end up with ~107k in debt at the end of med school, and 114k at the end of your 2-yr FM residency.

Now you're a staff FM, earning ~220k/yr. You lose 30% to overhead = you have 154k left. Your after-tax income is between $98k (QC) and 112k (Nunavut -- but this probably comes with higher COL lol), assuming you don't deduct anything. That's less than your actual debt. If you want to pay it off over two years, well, you'd make a total of 196k - 224k over two years, but that leaves you with 89k - 114k over two years (44.5k/57k per year), ignoring the amount that your debt would grow over that additional year. It's certainly doable, but it's not a lot of money left over to live + save with -- don't forget you fund your own retirement and health insurance now. Furthermore, that calculation didn't factor in the cost of CMPA fees, licensing fees, disability insurance,...

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5 minutes ago, insomnias said:

Let's say you take out 25k/yr over 4 years of med school and take out nothing during residency. You put all the interest (3%) on your LOC. You end up with ~107k in debt at the end of med school, and 114k at the end of your 2-yr FM residency.

Now you're a staff FM, earning ~220k/yr. You lose 30% to overhead = you have 154k left. Your after-tax income is between $98k (QC) and 112k (Nunavut -- but this probably comes with higher COL lol), assuming you don't deduct anything. That's less than your actual debt. If you want to pay it off over two years, well, you'd make a total of 196k - 224k over two years, but that leaves you with 89k - 114k over two years (44.5k/57k per year), ignoring the amount that your debt would grow over that additional year. It's certainly doable, but it's not a lot of money left over to live + save with -- don't forget you fund your own retirement and health insurance now. Furthermore, that calculation didn't factor in the cost of CMPA fees, licensing fees, disability insurance,...

Thanks for the information. Fair enough, yes definitely being lenient on other insidious fees that will likely put oneself in a stump while trying to pay off the LOC. I wonder how the comparison could be made when going for a non-FM specialty (i.e. Surgery for example). More years of residency at lower income but higher overall pay at the end. Has anyone ever calculated this to see theoretically who could pay off their LOC quicker? (Ex. FM vs. Surgery).

I assume the interest accrual on the LOC throughout the 5 year residency + life (family, mortgages etc.) would maybe mean that FM doctors pay off their debt quicker compared to the 5-year residency counterpart.

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12 hours ago, RicardoKaká said:

Thanks for the information. Fair enough, yes definitely being lenient on other insidious fees that will likely put oneself in a stump while trying to pay off the LOC. I wonder how the comparison could be made when going for a non-FM specialty (i.e. Surgery for example). More years of residency at lower income but higher overall pay at the end. Has anyone ever calculated this to see theoretically who could pay off their LOC quicker? (Ex. FM vs. Surgery).

I assume the interest accrual on the LOC throughout the 5 year residency + life (family, mortgages etc.) would maybe mean that FM doctors pay off their debt quicker compared to the 5-year residency counterpart.

I don't know a lot about how much surgery makes/if they have to pay overhead/how long their residency is, so I'll assume they make 400k pre-tax/overhead, 30% overhead, and the person is a superstar and gets a job right out of PGY5. Their LOC is $124.9k, and they have $280k pretax => after-tax of 158.8k - 184.7k (QC - NU). Obviously they could pay that off in a year, but assuming they pay it off in two, that's roughly $65k in payments each year, leaving them with ~93 - 119k/yr to spend otherwise.

If we assume that a doctor in QC works for 35 years after medical school (including residency) before retiring, requires 35k/yr to survive wherever they're living (big if; I know we'd want more) and invests the rest at 6% in some index fund, then at the end of a 35-year career, a FM will have saved/made $5.3M, whereas a surgeon will have made $9M. The surgeon surpasses the family doctor pretty quickly since they hit their peak income early on.

You'll lose a lot of this to taxes, and a lot of these assumptions fall through (I think it would take until PGY9-10 to get a job as a surgeon; I think most would accumulate debt during residency; I don't think living on 35k/yr for the rest of your life is unrealistic), but that's why I've attached a spreadsheet so those interested can model this with their own numbers. For those who dare to dream, here's a graph:

image.png.f2cc871580b26b5cf5d7de109a68640b.png

Note that I redid the numbers in my earlier post and found that a FM would have to pay more like 60k/yr to pay off their loans in two years (hence I assumed the person needs 35k/yr to survive).

Modeling physician salary and debt.xlsx

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16 hours ago, RicardoKaká said:

Been reading these posts and I am very curious why having 100-150K debt is so bad?

As staff wouldnt you be able to pay off this debt within a few years? Im in my mid twenties and a M2, I hope to pay off my debt fully within 1-2 years as working as staff. 

I think the ability to pay off debt is straightforward as a staff physician. The main problem is that the debt locks many people into medicine as they have to use it to finance their debt and opportunity cost even if they don't enjoy medicine. 

 

If you want to leave medicine chances are you have to put in your dues in a different job and climb your way up. This is after the marathon that is medical training and puts you even further behind the savings curve. 

 

If you compare your medical path to alternatives in undergrad you see that you could be anywhere between 5-10+ years behind your peers/alternative self and the associated savings. The compound interest of your savings balances out much of the advantage medicine gives you, assuming you were just as dedicated and hardworking in other demanding jobs. 

 

I have many friends who did very well and worked hard in other fields and had close to 1M net worth while I was finishing up residency and 6 figures in debt. I like what I do but I don't think money should be the main driver as people can have successful careers in other fields. NLengr has pointed out how money can't offset a lot of the dissatisfaction some physicians have and that you might not even make as much compared to other smart hardworking ambitious individuals in other jobs. 

 

That being said this is all relative to other successful people and we do well compared to the average Canadian. If you don't like the job then the money will never be enough to make you happy. 

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