Being financially independent for med school

[millie03]

Going on to my second year, I was surprised when I entered med school to hear that not many of my classmates opened up a LOC account right away to pay for their tuition. Many people were getting financial support from their parents. In comparison I went through 4 years of undergrad with as much OSAP (gov't student loan) as I can, and am still doing the same for med school too. I'm completely independent financially (meaning living off of only OSAP and LOC) ever since entering med school and honestly it gets me really worried sometimes to see the debt just rise. If you're in the same/similar situation as me I'd like to hear stories about how other people are dealing with it practically and emotionally.

My current financial outlook is the following: (i'm talking in terms of LOC only here since that's what i see when I do banking and OSAP isn't "fixed")

I'll skip the details but Tuition - OSAP + rent is close to 30K. If I live a "normal" lifestyle, my monthly card bill is a little under 1K, including utilities, bills, everthing. I worked this summer so I got roughly 5K extra and hope to do the same next summer. So in total I take out about 37~42K loan annually from LOC leaving only 8~13K for anything else (considering 50K max annually). 

I do live in an apartment by myself so the rent is over 1K but that's the only thing I would consider above average expenditure in comparison with my classmates. I do live a "normal" lifestyle but that's only as in, I spend money on leisurely activity from time to time and I don't always go for the cheapest item on the menu. I think I'm being somewhat frugal... but then I still get stressed out with the 42K/year debt. Added onto that is extra expenses expected from things like CARMS.

I really want to travel but honestly the thought of LOC always pops up in my head whenever someone mentions travelling. 

How are you coping with med school financially?

[Bambi]

I come from poverty, survived throughout Cégep & undergrad on student loans. For med school, I had to move to another city and had to buy a car. Throughout med school, I survived on my LOC. I have always lived frugally but bought myself the occasional treat in med school, and paid for vacations with my LOC. My LOC has increased during residency. I am not worried. I will pay it off after residency and am grateful for this lifeline that has allowed me to live stress free throughout my student years. And I have travelled! All the expenses you incur are necessary, CaRMS and vacation included. It is the cost of life and is affordable notwithstanding the growing debt. We all go through it, survive and thrive!

[ellorie]

I just thank God the interest rate has been so low over the last years and hope it doesn't rise too high while I'm still a resident. 

It is stressful though and I admit sometimes I'm a little envious of people who don't have as much debt to worry about. 

[Bambi]

ellorie, excellent point about the interest rate that is low, although I think most of us at this stage are in the 200K+ zone.

[ralk]

I think this is a good reminder that when it comes to debt, not all debt is created equal.

The debt you're taking on now largely has a purpose - to pay for the necessary costs to build your future career. You can't establish your career without taking on that debt, you're getting that debt at as low a rate as can be realistically achieved (ie there's no lower-cost options), and importantly, once your career is established you'll be able to pay off that debt and then some. The debt is useful to achieving a meaningful goal, responsible relative to alternatives, and it pays for itself in the long run. In short, it is productive debt.

Contrast this against non-productive debt, which doesn't have one or more of those three general traits. The obvious example is credit card debts for non-essential consumer goods. These products aren't going towards a meaningful goal, credit card debt is expensive relative to other options for debt, and it doesn't pay for itself moving forward. It's spending tomorrow's money for today.

So what about something like travel during medical school? It honestly falls into a bit of a grey zone. It's not strictly speaking necessary, though it could be useful as a means of personal growth and stress relief to help you through the process of becoming a physician. There's almost certainly a cheaper way to try to grow as a person and relieve stress, but these alternatives may not be as effective as travel to a desired location. It won't pay for itself - unless it helps sustain you through medical school/residency and/or helps provide the motivation to pursue higher-income careers within medicine.

I financed my medical education on my LOC and I traveled during medical school. I'm glad I did. Yes, it was a bit expensive, but I kept those trips small and frugal, certainly cheaper than some of my classmates' vacations. It added to my debt load, but by less than I expected and didn't change the overall figure by much. And, overall, my debt still remains manageable and will be paid off in good time. Even in my first couple months of residency, my debt load is starting to decrease. It's important not to throw money around careless in medical school, but that doesn't mean stinginess is required throughout either.

[distressedpremed]

I agree with Ralk. I think that people take on debt to do crazy things, and there are recent news reports in re: to how the average consumer debt in Canada is ballooning 

(https://www.google.ca/search?q=consumer+debt+canada&rlz=1C5CHFA_enCA721CA721&oq=consumer+debt+canada+&aqs=chrome..69i57.2223j0j7&sourceid=chrome&ie=UTF-8) 

You're taking on your debt to improve income potential. 

This is an investment in YOURSELF. Think about how if you invested money in a stock, how you would want it to grow and provide some profits. That stock is you. You want to be the next Apple, Amazon, whatever.  Right now you're not seeing a return, but later on, if you're successful, it'll be worth many many times over what you're paying. Think about how you want a company to spend your investment. You would probably want it to grow efficiently (use money to get to your research project, electives, new laptop to watch videos) and not be handing their CEOs gigantic bonuses (BMW, Rolex watches, flatscreen TV). 

$120 K isn't that much. I have classmates/colleagues that are over $250K. Some of them have families, others have made more extravagant purchases. Some people have mortgages on top of their LoC debt.  There was a pie chart (I can't find it) on average debt in med school, if I remember correctly a lot of people have debt >120K (majority). A small minority (?33%) had less than 85K, and only a sliver had less than 10K or no debt. It's ok. 

Like Bambi, I had to buy a car and move to a place with new expenditures. But residency does pay you an ok salary (not great) but I've been able to cut down $6K in the first 3-4 months of residency. If you want to save aggressively you can. The PGY-5 salary isn't too bad either. You can reduce some debt as well. 

Overall if you want to lean out your expenditures as much as possible, here are some basic tips. There are tons of frugality/minimalism blogs that are out there with more extensive information. 

1) Stop subscriptions that you dont need or use. If you're not using netflix that much, don't bother having it. If you're not going to the gym 5/7 days, don't bother and invest in some home equipment. 

2) Buy in bulk (costco, walmart). Avoid splurging on Amazon. 

3) Buy second hand where the quality to you doesn't make a difference. 

4) Use your school resources as much as possible - electricity, internet, etc if those are things you need to pay for, or the gym.  Sports clubs are availabe as a med student as well. 

5) Cut down groceries to local markets or use the Flipp app to find out where deals are happening. Use budgeting apps like YNAB which are free for students. 

6) Learn to cook. Dont' eat out - it's one of the biggest expenditures you can avoid. 

7) Use your student card for deals in conjunction with the SPC card (ex. Second cup has SPC deals) 

Hope this helps. Dont' be discouraged, just be mindful. 

[NLengr]

7 hours ago, distressedpremed said:

I agree with Ralk. I think that people take on debt to do crazy things, and there are recent news reports in re: to how the average consumer debt in Canada is ballooning 

(https://www.google.ca/search?q=consumer+debt+canada&rlz=1C5CHFA_enCA721CA721&oq=consumer+debt+canada+&aqs=chrome..69i57.2223j0j7&sourceid=chrome&ie=UTF-8) 

You're taking on your debt to improve income potential. 

This is an investment in YOURSELF. Think about how if you invested money in a stock, how you would want it to grow and provide some profits. That stock is you. You want to be the next Apple, Amazon, whatever.  Right now you're not seeing a return, but later on, if you're successful, it'll be worth many many times over what you're paying. Think about how you want a company to spend your investment. You would probably want it to grow efficiently (use money to get to your research project, electives, new laptop to watch videos) and not be handing their CEOs gigantic bonuses (BMW, Rolex watches, flatscreen TV). 

$120 K isn't that much. I have classmates/colleagues that are over $250K. Some of them have families, others have made more extravagant purchases. Some people have mortgages on top of their LoC debt.  There was a pie chart (I can't find it) on average debt in med school, if I remember correctly a lot of people have debt >120K (majority). A small minority (?33%) had less than 85K, and only a sliver had less than 10K or no debt. It's ok. 

Like Bambi, I had to buy a car and move to a place with new expenditures. But residency does pay you an ok salary (not great) but I've been able to cut down $6K in the first 3-4 months of residency. If you want to save aggressively you can. The PGY-5 salary isn't too bad either. You can reduce some debt as well. 

Overall if you want to lean out your expenditures as much as possible, here are some basic tips. There are tons of frugality/minimalism blogs that are out there with more extensive information. 

1) Stop subscriptions that you dont need or use. If you're not using netflix that much, don't bother having it. If you're not going to the gym 5/7 days, don't bother and invest in some home equipment. 

2) Buy in bulk (costco, walmart). Avoid splurging on Amazon. 

3) Buy second hand where the quality to you doesn't make a difference. 

4) Use your school resources as much as possible - electricity, internet, etc if those are things you need to pay for, or the gym.  Sports clubs are availabe as a med student as well. 

5) Cut down groceries to local markets or use the Flipp app to find out where deals are happening. Use budgeting apps like YNAB which are free for students. 

6) Learn to cook. Dont' eat out - it's one of the biggest expenditures you can avoid. 

7) Use your student card for deals in conjunction with the SPC card (ex. Second cup has SPC deals) 

Hope this helps. Dont' be discouraged, just be mindful. 

Don't have kids. It's like dumping bags of money into a burn barrel. 

/partial sarcasm

[futureGP]

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