‘I am a 4th year medical student who is really stupid with money’: I have maxed out credit cards and a consolidation loan, with mounting expenses and future uncertainty. How can I navigate this financial mess before starting residency?

Hi Money Minder,

Hey Money Minder,

I’m a fourth-year med student and let me tell you, I’m a mess when it comes to money. I’ve maxed out credit cards, got a consolidation loan, then maxed them out again – it’s a vicious cycle. I’ve read about filing for bankruptcy but I’m not sure if that’s the right move.

Right now, I’m living off 32k in student loans, struggling to cover my expenses:
– Rent and utilities: $1400
– Car: $330
– Credit cards: $430 a month, $20k total (thanks to those insane interest rates)
– Consolidation loan: $425, with 17k left
– School-related stuff: around $200 a month on average

Once I finish school, I’ll start my residency in June, making around 48-60k, with the option to make 120 bucks an hour moonlighting after the first year. After my residency, I’m looking at a minimum of 250k per year.

My family’s in a tough spot too, so they can’t help me out. If I’m 90 days late on any bills, I might not qualify for federal grad loans and then I’m really screwed.

Any advice on what I should do moving forward?

Thanks,
Medical Mayhem

Response from THE MONEY MINDER:

Thank you for reaching out to us. How can we assist you with your financial needs today?

"Hello There,"

Hello,

I understand the financial challenges you are facing as a fourth-year medical student with personal debt. It sounds like you have a clear plan for your future with the completion of your residency and the potentially lucrative job to follow. However, managing your current financial situation is crucial to avoid further complications in the future.

Firstly, it’s commendable that you have identified the issues with maxed-out credit cards and a consolidation loan. Filing for bankruptcy should be considered a last resort due to its long-term consequences on your credit score and financial standing. Instead, a more practical approach would be to create a strict budget and stick to it.

Consider reducing unnecessary expenses, such as eating out or subscription services, to free up more funds for debt repayment. Prioritize paying off the credit card debt with the highest interest rates first, followed by the consolidation loan. Taking advantage of any extra income opportunities during your residency, like moonlighting, can significantly boost your debt repayment efforts.

Additionally, reaching out to your credit card companies and the credit union that provided the consolidation loan to discuss possible repayment plans or refinancing options could help alleviate the financial burden. It’s crucial to avoid falling behind on payments to maintain your eligibility for federal graduate loans and tuition payment.

Ultimately, creating a solid financial plan and staying disciplined in managing your money will help you overcome this challenging situation. Stay focused on your long-term goals and make informed financial decisions to secure a stable financial future. Best of luck as you navigate through this financial challenge.

THE MONEY MINDER