YareYare
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Thank you for your response!If you’re asking the internet permission to borrow money to pay off borrowed money, and borrow money to go on vacation - then my answer is no.
You need to change your behaviors asap or you’ll be another paycheck to paycheck doctor.
Yeah, I definitely learned my lesson a little while ago regarding managing a CC and didn't ever really use it until recently. I definitely have learned a lot of lessons in regard to being more financially literate. Most of this CC debt is due to me having major car issues which drained my emergency fund and really screwed my finances. Most of the debt is from covering the money I did not have to pay for the bill on top of all the costs that came with applying to medical school as all of my savings were gone and my paychecks were barely covering living expenses and bills.Do what you need to do regarding the current credit card debt. But I would advise you (and all others) to never use a credit card for anything other than convenience only. (ie., pay it off every month, and only use the credit card because it's better than carrying around $1000 in cash, and you get points with it unlike a debit card).
If you can't learn to use a credit card that way, then shred your credit cards. Seriously. The only time a credit card should carry a balance is for a legitimate emergency.
Thank you for taking the time to answer!Here's my take: You are permitted to take loans to cover "cost of living" while in school. No one audits how you use that money. You could be buying groceries or buying a wedding cake, paying for a subscription to the New England Journal or a subscription to Netflix. No one cares. You can pay off your credit card bill and then live on $417 less each month than would otherwise be allotted for living expenses. In all likelihood, the interest rate on the student loan is less than the interest rate on the credit card so in the end, you are in a good place..
On the other hand, you've paid off a debt that can be discharged in bankruptcy and taken a loan that can't be paid off in bankruptcy. That shouldn't matter if you don't expect to end up in bankruptcy but it might be a consideration.
How much vacation are we talking about? Whatever you can't pay for in cash might end up costing you double when you consider how long it might take to pay it back with interest.
Thank you for your detailed response!Here is my old-man take, which is easier said than done: Be careful with using student loans to pay off credit card debt. Doing so may violate your loan agreement, which may require you to use the money for educational purposes. I suspect this will not be an issue if you become a doctor, but you also need to remember that student loan debt, unlike credit card debt, typically cannot be discharged in bankruptcy. Finally, I would counsel against borrowing on credit cards (which charge quasi-usurius rates) to a finance vacation. It will likely end up being a very expensive vacation.
Here's why: One of the most important financial concepts to understand--and to leverage to your benefit--is the time-value of money. When you save money (e.,g., in your 401K plan), compound interest rates cause it to grow appreciably over time. For example, if you invest money at an 8% annual compounded rate of return, your money will double in about nine years. Thus, $100 invested at age 27, will become $200 at age 36, $400 at age 45, $800 at age 54, and $1,600 at age 63 (about the time you're ready to retire). Of course, when you borrow money--particularly at 20% on a credit card--the opposite is true (e.g., if you borrow $100 at 20%, you will owe $200 in about 3 1/2 years, $400 in 7 years, $800 in 10 years, etc.).
Good luck in medical school!
I feel like I see you in every other thread that I am in lol.I used leftover study abroad scholarship money to travel so 🤫 it’s not the same as a loan but I imagine if you can budget the loan amount you take out for COL, you can take a small vacation and pay off at least some of the credit card. I've guilty of using my cards for COL items so I get the struggle. A tip I’d have is to take out a travel credit card and pay for a trip with that since many have sign-on bonuses and you’ll get miles or $200-300 cash back. Only do this if you can pay it back though.
Do schools typically have something that bar students from working? While I def wouldn't have a job interfere with my studies, is it common for people to maybe work per diem or one to two shifts per week?