Are Student Loans Good Debt or Bad Debt?

As many of us are well aware, the cost of a college education has rapidly increased. In fact, many college graduates finish school with tens of thousands of dollars in student loans to repay. While some people feel as though the price of their degree was worth it, many others aren’t so convinced. Truth is, student loans can be “good debt” for some people and “bad debt” for others. Let’s determine where it falls for you:  

1. Did you actually earn a degree? Many people finish high school and enroll in a college with good intentions to get their degree. Unfortunately, life doesn’t always work out as planned. Due to the rising cost of tuition, work obligations, competing expenses, or family responsibilities, some people may have to post-pone their college dreams. Accumulating student loan debt, without a tangible degree to increase your potential job opportunities and salary can be detrimental to your finances. If you obtained a degree then the student loans may be "good debt." If you didn't then they may be "bad debt." 

2. How much debt do you have? While getting a college degree is a notable accomplishment, it’s important to examine if you did so at a fair price. Some people get scholarships to pay for the entire cost, others have to maximize federal and private loans to cover their basic needs. Where do you fall on this spectrum? The more debt you have, the more you may have to consider whether the debt was worth the added benefit of the degree.

3. Were you able to get a job after graduating? Not all colleges are created equal. Some schools may be better at helping their graduates get jobs than others. Unfortunately, not all degrees are created equal either. Some degrees such as those in engineering or science may be more marketable or have better job prospects than others in language arts or history. If you earned a degree but are struggling to find a job with that degree, then it may be time to question if the loans you took out to get the degree was money well spent. 

4. Does the job you got earn you a decent salary? “Decent” can vary from person to person. The general rule of thumb is to make sure your student loans don’t exceed your [projected] income. For example, if you get a degree in education and the average salary for teachers is $45,000 then your student loans should not exceed $45,000. Some people extend this rule to 1.5x their salary, but usually anything more than can be challenging to pay back. Although these rules may not apply to everyone, having a general guideline can help us ensure that we aren’t borrowing more money than we’ll be able to repay. If you borrowed less than 1.5x your salary then perhaps the student loans were a good investment. 

5. Does the degree you earned lead to other opportunities? Taking out student loans can be about more than getting a degree to increase your pay. Aside from the job opportunities and salary the degree may or may not have afforded you, think about other opportunities. Did the skills you learned with the degree allow you to accomplish a lifelong goal? Did the people you met while getting the degree give you access to lucrative networks and people that can help you going forward? Did it provide you with invaluable life lessons, maturity, or the self-confidence needed to help you gather the courage to go after your goals with reckless abandon?

My point: Obtaining student loans to attend college is something that is commonplace. While the worth of a degree shouldn’t be judged purely on how much money it cost you or the job you obtained afterwards, one must be realistic. If student loans are going to be considered “good debt” then we must ensure they meet a few criteria. We should refrain from taking out much more than our projected salary, use the degree to advance in our careers, and leverage our time in college to obtain access to other invaluable opportunities.

5 Financial Mistakes To Avoid As A Young Professional

As working professionals we must be exemplary at our jobs and diligent with our finances. Unfortunately, the later goal is easier said than done. Although we may work hard at our jobs, managing our money in the most prudent way can take extra work and have negative effects if we fail to handle it properly, especially during times of an economic recession like we have today. Here are 5 financial mistakes to avoid as a young professional:

1. Overspending. As young professionals with a decent salary, we can be very tempted to overspend. Many of us may not have children or family members who rely on our incomes, so we may purchase numerous things we may not need with our discretionary (left over) income. Whether it’s new clothes, take-out food, weekly happy hours, or frequent travel, we may find ourselves spending a lot more than we anticipated at the end of each month. Although it’s acceptable to “treat ourselves” every now and then, we must make sure that we have set a budget on how much we want to spend each month and have a reliable way to track our expenses. The less we overspend the more money we have for other priorities like saving and investing.

2. Not saving enough money. If this pandemic has taught us anything, it’s that we should all have some money saved up. We never know when something unexpected will happen and it behooves us to have money available just in case our income drops or a large expense comes our way. Although we may be tempted to simply save whatever we don’t spend from each pay period, we should instead take a more proactive approach. Consider writing down how much money you’d like to save each month, then have that money automatically deducted from your checking account into a savings account. Saving money this way will ensure you meet your savings goal.  

3. Under-estimating our expenses. When I was younger and more financially immature, I seemed to always run low on funds at the end of each month. There were several times that I would hope and pray I had enough money in my checking account to cover my monthly bills. Don’t be like be, have a monthly budget and be as precise as you can when it comes to your monthly expenses. Oftentimes, we may know how much we spend on rent or electricity but we may underestimate or forget to save money for other expenses like car repairs, grocery bills, and transportation costs. Underestimating these items can give us a false sense of security and cause us to think we have more money to spend in our accounts than we actually do. Being more precise with our monthly expenses allows us to better account for how much money we can spend each month and ensures that all of our necessary expenses are covered, especially during this current pandemic where our disposable income may be different from normal.

4. Taking on too much debt. With today’s age it can be relatively easy to get access to a credit card, qualify for a car loan, or receive a student loan. Although there are many good uses of these items, we must not forget that they are still forms of debt. One of the biggest mistakes many young professionals make is taking on too much debt. We may graduate from college with tens of thousands of dollars in student loan debt. We may move to a new city and pay for expenses with a credit card. We may decide our current car is too old and opt for a lease or finance a newer ride altogether. We may even get married and decide to purchase home. All of these decisions may bring us joy but may also cause us to incur a lot of debt, which may make us financially vulnerable to changes in our income. If some unfortunate event happens and we are furloughed from our job or experience a decrease in our pay, it may be difficult for us to cover all of these debt payments. We are better protected financially when we refrain from incurring too much debt at once by vowing to pay off or pay down some of our debt before incurring more.

5. Having too much confidence in our investment abilities. As we start to mature and hang around other professionals in our work or social life, we may desire to build our net worth and start investing. Many of the advice we hear about investing requires us to pick which companies we want to invest in and purchase stock. Although there is nothing wrong with buying stocks, we must do so in a way that minimizes our risk. Unless you have a crystal ball to predict the future, it can be virtually impossible to predict  which stocks will increase in value over time (which make us money) and which may decrease over time (which may lose us money). Although we can try to speculate based on news events,  most of the “insider information” is known by wall street investors and active portfolio managers long before is it known by members of the public. Since we can’t guarantee that we’ll make accurate predictions regarding a stock’s future value its best to not have to choose. Many financially savvy people purchase index funds (a collection of many or all of the stocks available) since it spares us the burden of having to pick which investments will do well and which ones wont. Plus, if one company’s value goes down, we have so many other companies that can help cushion the blow and prevent us from losing too much money. Data from the past few decades show that index funds tend to outperform the majority of actively-managed funds, which virtually guarantees us a good profit on our money when we buy index funds. Try to avoid overestimating your own investment ability and consider purchasing index funds to minimize your risk.  

As a young professional, which financial mistakes have you avoided and which ones have been more difficult to bypass?

5 ways to ensure you’re financially protected against the unexpected

As we continue to advance in our careers, we must ensure that we have protected ourselves financially. If unexpected expenses, life events, or pandemics, come our way, we must make sure we have the financial means to cover our bills and take care of our families without worry. Here are 5 ways to protect yourself financially:

1. Keep your fixed expenses low. One of the first things you can do as you are getting your finances in order is keep your fixed expenses low. Fixed expenses are regular expenses (like your monthly rent or mortgage payment) that don’t vary much in price and occur each week or each month. Keeping these expenses low allows you to save and invest more money towards your future goals. It also gives you a cushion financially in case something unexpected arises. If you have the unfortunate luck of losing your job, undergoing financial hardship, or simply living through this current pandemic that has wrecked the economy and lowered your salary, it is much easier to adjust to the changes and make any necessary spending cuts if your fixed expenses are low. If your fixed expenses are high it is much harder to weather the storm and cover your bills during times of hardship. Keep your fixed expenses low.

2. Reduce (and eliminate) your debt. Along with decreasing your fixed expenses, you should also work to eliminate your debt. The sooner you pay off your credit card bills, car loans, and student loans the sooner you’ll be debt free and have less money from your paycheck going to these expenses. It’s much easier to adjust to a reduction in income or a financial hardship when you have fewer bills and expenses to cover. Plus, paying off your debt leaves more money in your pocket each month that you can use to save or invest for the future.

3. Insure yourself against catastrophe. As we’ve all seen during this pandemic, you can’t always predict when financial hardship will occur or how long it will last. Aside from keeping your expenses low and paying off your debts so that you are better able to handle any income changes or unexpected expenses, you should also make sure you’re insured. We can’t always predict when large expenses will occur and may need some assistance if they do occur. Just like all people need health insurance, all working people should also have disability insurance. You need disability insurance so that if you are injured, sick, or unable to work at your full capacity for a prolonged period of time, you can get money each month to cover your bills. People with a spouse, kids, or family members who depend on their income should also have life insurance so that if they pass away unexpectedly, their family members are covered.

4. Save money for unexpected emergencies. Although you can’t always predict when unexpected things will occur, you should prepare for this possibility so that you are ready if it does occur. Part of protecting yourself financially means having an emergency fund with enough cash to cover 3-6 months of expenses. It may take some time to save up this amount of money, but putting a certain percentage of each paycheck into a separate bank account for emergencies will ensure that you are protected financially. Many people who had emergency funds before the Coronavirus pandemic found themselves in a much better position to handle the economic impacts than those who did not have an emergency fund.

5. Make sure your retirement is funded and diversified. Another thing you can do to protect yourself financially is make sure that you have invested money for retirement in a way that increases your profits and decreases your risk. Many people who were not investing money toward retirement when they were young have fewer years to let compound interest work in their favor and may have to work even longer and save even more money to be able to retire after several decades in the workforce. Others have invested a great deal of money towards retirement but have done so in a way that makes them extremely vulnerable to changes in the real estate market or stock market. Both groups of people may be even more impacted than others during this current pandemic. The goal is to have your money invested in many different companies across a variety of industries (ideally through index mutual funds) so that you are in a good position to gain interest on your money overtime but better protected in an economic downturn.

My point? While none of us have a crystal ball to predict when unexpected things will occur, we can do the things above to protect ourselves if and when hardship arises.

What should we do with money from our side gig?

Many of us have side gigs or extra income outside of our day jobs. While the extra money is nice, is there something “smart” we should be doing with it? Here are 4 options:  

Choice 1: Pay off Debt  

Whether it’s student loans, a car loan, or credit cards, one of the first things you should consider doing with any extra income, is paying down any debt or loans you have. As someone who is going for public service loan forgiveness (PSLF), paying off my student loans is not a priority for me, right now. With PSLF, my payments are currently capped at 10% of my discretionary income. After 10 years of these low payments, the government will “forgive” any debt I still have left, tax-free. This is a pretty sweet deal, so I have little incentive to pay more money towards this debt than I have to.  If you aren’t going for PSLF, then your strategy may be vastly different. Perhaps you’d want to consider refinancing your student loans at a lower interest rate and paying them off as quickly as possible. If that’s the case, then using money from your side gig to pay off your student loans faster might be a good option.

For those who don’t have any student loan debt or have already paid theirs off, you could use the money from your side gig to pay off any other debts, especially anything with an interest rate higher than 8%. For example, if you have credit card debt or a car loan, using the money from your side gig to get rid of these debts quicker may not only save you money in interest over time but it will also leave more money in your pocket each month as you begin to get rid of that debt and no longer have those payments as one of your monthly bills.

Choice 2: Save It.

As a first-year physician, saving money is a major priority for me. Unlike many other graduate school programs, it was virtually impossible to work a job in medical school. The inability to work, precluded me from making money which meant I couldn’t save money. As a result, my emergency fund was non-existent and I didn’t have all the funds I needed to move to a new city, make necessary travel plans for various events, or even schedule the celebratory vacation I needed before starting one of the most demanding jobs in the country. After going through that experience, I never want to be in that position again.

If you haven’t been able to save a good chunk of money from your main job, perhaps you should use the extra money from your side gig. You should not only consider saving money for emergencies but also factor in saving money for future vacations, Christmas gifts, car maintenance or any other large purchases. They key is save the money in a high-yield savings account or money market account which will allow you gain a interest on your money in a way that is risk-free while still giving you the freedom to pull money out of the account easily whenever you need it.

Choice 3: Spend It

As a resident physician who can sometimes work up to 80 hours a week without any extra over-time pay, work can be a bit exhausting. Sometimes being able to purchase something I really want, have monthly self-care days that include a massage and trip to the spa, or going on an international vacation to one of the places on my bucket list can be just the refresher I need. While I’m all about financial independence and having enough money to create a life you don’t need to vacation from, career longevity is vitally important, at least at this stage in my life. Sometimes the best thing we can do to maintain career longevity is to take necessary breaks and occasionally treat ourselves to some of the things we really love and enjoy. We all need balance in our lives, especially in terms of work vs play or work and relaxation.

Choice 4: Invest It

As I’ve stacked up a decent emergency fund and paid off all of my credit card debt, one of the things I’ve been contemplating more and more is how to invest the money from my side gig. While I don’t like the risk associated with buying individual stocks, I’m a huge fan of index mutual funds and have always liked real estate, so when it comes to investing side income I  have a few options:

-Put the money into a retirement account (such as Roth IRA or increase the percentage I contribute to the 401K I have at my job)

-Open a taxable brokerage account (so I can make different types of investments in a way that isn’t tied to my retirement so that I can more easily pull the money out if I need it)

-Invest in real estate (either through rental properties, apartment syndications with other investors, or a variety of other options).

My point? I’ve listed many options of things you can do with income from your side gig. However, the right choice may be different for each person. If you don’t have a decent emergency fund, perhaps you should start by saving your side income. If you have some high-interest debt from credit cards or a car loan, eliminating that might be your second option. If you’re nearly debt-free and already have money saved for emergencies and other large expenses, consider investing your side gig money into retirement accounts, taxable accounts, or real estate.

Want a Side Hustle? Try these ideas

Of note, this blog was initially written and published on Doximity Op-Med and can be found here.

It’s 2020 and many of us are more motivated than ever. We want to get fit, eat healthier, and continue to survive residency. While these are noteworthy goals, consider one more thing: making money doing something you love…outside of medicine. Aka, start a side hustle. If you’re unsure of where to start, here are a few side gigs to pursue as a resident: 

Start a Blog

For those who love to write, consider starting a blog. Doing so has relatively low startup costs, if anything at all. Once you get a unique website domain, you can use a pre-formed template via platforms like Wordpress or SquareSpace to create a website or blog for little to no money. Although it can be daunting initially, starting a blog will allow you to create a platform and accumulate a following through which you can express yourself. I was very nervous when I started my own blog Career Money Moves, but I’m so glad I did. Doing so allowed me to garner a unique list of email subscribers that I can market to directly and communicate with on a regular basis. Plus, I eventually got approached by sponsors who offered to pay me for advertisements, allowing me to make money doing something I enjoyed. 

Launch a Podcast

It’s 2020 and many people believe podcasting is the new blogging. There may be limited times where we are free enough or focused enough to read an entire book or blog post, but there are plenty of places where we can listen to a podcast. Since you can record episodes on the smartphone you already own, the startup costs are quite low. Why not launch one of your own? Doing so will allow you to curate an audience of people through which you can share your views on a growing platform. There’s no rule dictating how frequently you have to record. You can do it on your own time, whenever you have time. AND, you can talk about whatever you want, whether that’s your career, your hobbies, or your personal take on various issues and life events. 

Write a Book

If publishing blogs or recording podcasts on a regular basis sounds like too big of a commitment, why not consider an alternative: writing a book. Although this can seem impractical, it may not be as difficult as you think, especially if you break it up into sections and have a goal of writing one chapter a month. Some people have found it manageable to work on a book during their down time at work or late at night as they unwind from their day. Writing on a topic you enjoy will likely make the writing process even more enjoyable. If you’ve managed to find peace in your life despite many commitments, write about work-life balance. If you managed to stay sane while raising toddlers, write about parenting in medicine. If you’ve managed to successfully create a business, build a high net worth, practice medicine through locums, or do something unique in your specialty, write about that. Being able to author something you love and sell the finished product may result in an additional income and lead to other lucrative opportunities such as paid speaking engagements, television appearances, or exclusive business groups.

Leverage Business on Social Media

If writing isn’t your thing and launching a podcast seems like too much work, consider making money from social media. Many of us are on Instagram or Facebook for free already, so why not get paid to use these platforms? If you like making videos, consider starting a YouTube channel. If you love beauty and fashion, why not review products on Instagram? If you’re passionate about a particular industry or topic, consider setting up your own Facebook group to discuss various topics of interest. Either one of these ideas allows you to create a platform by which you can build a network of people. You can then leverage that network to attract companies or advertisers that will pay you money for access and influence. 

Start Consulting

A consultant is someone who charges a fee to provide advice or guidance in a particular area. While you may not consider yourself an “expert,” you certainly have life experiences and higher education in areas others do not. Why not leverage that knowledge in a way that brings you more income? As a doctor, you can tutor pre-med students taking the MCAT or charge to proofread personal statements. If you are good with technology or have studied computer science, create software programs or website templates for new business owners. If you work in sales, provide specialized marketing strategies for new authors and young entrepreneurs. 

Freelance Work in the Arts

I’m very analytical, but there are many people who are extremely creative. If you are one of those people, use your creativity to establish an additional revenue stream. Maybe you like to paint and can create art to sell at various shows and exhibits. If you like to cook, consider hosting cooking classes for young couples, selling recipes on various forums, or even making your own cookbook. If you love to take pictures, you could become the go-to photographer for your colleagues’ holiday functions, weddings, or family Christmas cards. If you love to do hair and makeup, you can lend your services to those of us who struggle with our hair or desire different looks for fancy events. 

Moral of the story? Find something you’re interested in and enjoy doing outside of medicine. Then figure out how to leverage that interest in a way that brings you money. Although many people could work overtime at their job to make more money, doing so may not be as enjoyable and may even cause them to burn out from their career unexpectedly. The great thing about establishing a side gig or lucrative hobby is that oftentimes it’s something we enjoy. When you are paid to do things you love and enjoy, the “work” is less stressful, you’re happier, and your pockets are fuller.

4 Reasons you should start a side hustle

As young professionals we have a lot on our plate. We work crazy hours under high-stress conditions with limited time off. Although getting better at our jobs and making time for our families can be a feat in and of itself, I challenge you to consider 1 more thing this year: start a side hustle.

Starting a side hustle allows you to:

1. Explore one of your interests which may add balance to your life.  Outside of our careers, many of us have hobbies we enjoy and other skills we are good at. Instead of keeping these interests a secret or putting them on the back burner, why not explore them even more? Many of us know people who were working full time in their career, but launched a successful podcast on the side or started a coaching business. Perhaps some of our colleagues also work as weekend photographers or hair stylists in their free time. Some of the people we knew in college may have even dabbled in real estate, become public speakers, or authored a book. You can do something like that too. Whatever it is you choose, these additional things, outside of our careers, allow us to explore other interests and may add more balance to our lives.

2. Relieve stress and prevent burnout. As our careers become even more demanding and the work hours pile up, we can find ourselves feeling over-burdened. Although no job is completely void of stress, there are things we could do to decrease the stress we feel or at least lower its impact on our overall health. Oftentimes exploring our other interests, whether its art, photography, music, writing, speaking, or even exercising allows us to gain a new skill or explore a hobby that can decrease the stress we feel at our job.  

3. Standout from other young professionals and make yourself more marketable. As we enter this new decade in the age of social media and internet marketing, good branding is essential. While being competent at your day job is important, having multiple skills and things that you do well can help differentiate you from others. As you begin to stand out, you will likely garner more interest from other clients and patients which can lead to even more opportunities and higher levels of influence in both your main career and your side hustles.

4. Add additional revenue stream(s). One of the best things about exploring other hobbies and become skilled in multiple areas is that it could put extra money in your pocket. With the proper marketing, these skills and hobbies can open up additional doors for us and lead to lucrative opportunities and sponsorships that could be a reliable second or third source of income. Although your day job may pay you well, creating an additional revenue stream from a hobby or task you enjoy can increase your monthly income and make you less reliant on your day job. Plus, getting paid to do something you enjoy, and are good at, can make you even happier and increase your overall life satisfaction.

My point? Although our jobs are noble and can be rewarding in and of themselves, consider branching out a little. Think of other hobbies you enjoy or skills you possess and explore them even more. Doing so might add more enjoyment to your life and prevent you from burning out in your career. It could also help you stand out from others and may even lead to bigger and more lucrative opportunities in the future.

Tell me, would you consider pursuing a side hustle in 2020?

Money Moves I Should Have Made As a Grad Student

As the saying goes, “Hindsight is 20/20.” Looking back over my time as both a grad student and a medical student there are a few things I wish I would have done differently to put myself in a better position financially.

1.     Set up automatic withdrawals for recurring monthly payments. This may seem obvious, but as a female in her early twenties who did not have much experience paying bills, this was not common sense to me. I didn’t like the idea of money coming out of my account automatically and always feared that an if an emergency occurred I might need the money that had already been automatically deducted.  As a result, I would often rely on my memory and attempt to pay my credit card bill, car note, and cable bill on time. Unfortunately, that didn’t work too well.  

I would occasionally forget to send a payment in by the due date and have to call the company in a panic to pay over the phone and beg to get the late fee removed. After a few months, I started setting alerts in my phone to remind me of the payments. This worked well most of the time, but I still missed a few payments. Not because I did not have the money, but because sometimes I would be busy doing something else when the alert would go off. I would then silence the alarm notification and forget to pay the bill later. Finally, I let go of my pride, saved up a small emergency fund to ease my worries, and set up monthly automatic withdrawals. The moment I did that, my life got so much easier. I started doing that about 3 years ago and I don’t think I have missed any payments since then. I paid off my car shortly afterwards and my credit score improved. It’s amazing how much better things got when I relied less on my memory to pay monthly expenses.

2.     Cancel unnecessary [cable] subscriptions. You may be already doing this, but I’ll be honest and say I was not. Many people do not rely on cable and would rarely use it if they had it. I am NOT that person. I love tv. Not because I have an abundance of time to watch it, but because when I can spare a few minutes watching it, I’m better able to relax. I love being able to come home and marvel at the homes on HGTV, watch old comedies to get my mind off of a stressful day, and cheer on my beloved Duke Blue Devils during basketball season. Cutting cable was never something I even remotely considered. From my perspective, it was a necessary stress reliever and source of enjoyment.

Instead of just accepting this as fact and sending Cox Cable $100 a month, I should have done more research. It wasn’t until I was a 4th year medical student that I learned about services like YouTube TV which would allow me to watch live TV for around $35 a month. It also wasn’t until I was 4th year med student that I learned Hulu was free with my $5 student-Spotify account and had a live TV option that was cheaper than cable. If I had simply done more research sooner, I could have saved hundreds of dollars and still maintained my same standard of living. If only I could go back in time...

3.     Consider side hustles for additional cash. As a medical student I could not work. In fact, I think they made me sign some form agreeing to not accept any full-time positions as a student. As a 4th year medical student, I had much more time than I had the previous 3 years of medical school and should have considered side hustles or other ways to increase my cash flow. When I graduated, I desperately wanted to travel the world and make the most of my freedom before starting my first hospital job, but I also needed money for moving expenses. Having money saved from babysitting or some other side hustle would have been very useful.

Ironically enough, some of my friends who had already started their respective careers, told me about things they were doing to supplement their income and fund their tropical vacations. One was getting paid to test out new hair products on Instagram. Another was teaching English to kids online and tutoring current students on academic subjects she had mastered. A few others had created online blogs that were starting to gain traction, offering personal training services to people trying to get fit, and making diet plans for clients seeking to change their eating habits. I even knew of someone who charged people for consulting advice on how to manage finances and invest in the stock market. Regardless of the route, I wish I started thinking about my potential side hustle earlier. Even though I am starting my career as doctor, the high-paying salary is still years away and I needed cash sooner rather than later. Having a side hustle is a great solution to that problem.

4.     Make friends with people who are good with money. We pick up habits and emulate the behavior of our friends. Although the people in my life are amazing, I did not have anyone close to me who was “money savvy.” Most of us were in the same boat with similar spending habits. In fact, with my background in finance and passion for investing, I was the person all of my friends went to whenever they had questions about money. I wasn’t necessarily lacking in knowledge, I simply needed someone to help me implement some of the wise money practices I wanted to create.

I wanted a person around me who had actually created a budget they could stick to without getting discouraged. Someone who would caution me to think twice before splurging on a dress I didn’t need and advise me not to purchase overpriced food from restaurants that I could make at home. Since I didn’t have this ideal person, I decided to seek it out in the people closest to me. I started talking to my brother who showed me a few budgeting tools and apps that could help keep me motivated along the journey. I then let my friends know about my savings goals and we all made a pact to save and invest a similar amount of money each month. Having this kind of accountability and support has helped me so much. I wish I had thought of this sooner.

Tell me, was this helpful? What money moves do you wish you had made as a college student? 

Money Moves I Wish I Made as a Grad Student, Part 1

I started my master’s degree in public health before going to medical school. The courses I took in the program were incredible and I learned a great deal about how to improve community health. Unfortunately, I went into debt during the process. The program wasn’t cheap, and I hadn’t yet acquired the self-discipline to practice basic money management. Needless to say, I made quite a few financial mistakes. Although I learned valuable lessons, here are some things I would do differently if I could do the process all over again.

1. Reconsider where I live. Cost of living matters. As a young 22 year old who had just finished undergrad and had zero financial worries, I didn’t give much thought to the cost of living. All I knew was that I wanted to move to Washington, DC and use my newfound public policy degree to “change the world.” Although I did end up working in policy and doing some pretty cool things, I certainly did not change the world. What I did change, however, was my financial status.

   Living in DC was incredibly expensive, especially for someone like me who had never paid a bill in my life. I was sharing an apartment that cost $1800 a month (not including utilities) and was a health policy intern barely making $10 an hour. It didn’t take me long to realize that I needed more income. After my dad refused to let me use his credit cards to cover my expenses, I soon got a second job working nights and weekends at a workout gym. Despite having two incomes, I still struggled. Although these hard times taught me grit and compassion for the less fortunate, life would have been much easier if I had moved to a cheaper city closer to my family and friends.

2. Avoid credit card debt and lifestyle creep. This much easier said than done. As a grad student with student-loans that seemed to always run out before the semester ended, I found myself running short on funds. Pair that with multiple credit cards and a lack of self-discipline and you’ll quickly see how I accumulated a substantial amount of debt in a short amount of time. For starters, I was living in one of the most expensive cities in the country (Washington, DC). Everything from groceries to basic public transportation was much more expensive than it was in the south where I was from.

   Secondly, after 12 months of struggling, I had upgraded my jobs and was now getting paid almost double what I was making before. Although I was still barely making ends meet, I had so much more money in comparison to the year before that I upgraded my living situation. Instead of staying in my crappy, bug-infested apartment, my roommate and I upgraded to a sky-rise in the middle of the city. The hardwood floors and marble countertops were nice but came with a pretty hefty price tag…$2300 a month. Although I had started my masters degree and now had access to student loan money, I was using that money to pay for my expensive private school tuition at the Milken Institute for Public Health and naively relied on credit cards to fund basic expenses when the money from my jobs ran short. I would always tell myself that I would pay off the card at the end of each month, but sometimes that didn’t happened. There always seemed to be something else more important that I needed to spend that money on. At the end of the year I found myself nearly $4,000 in debt.

3. Make a spending budget. Part of the reason I started racking up credit card debt was because I had terrible spending habits. I had these terrible habits because I never had to make a budget before graduating from college. Even though I worked part-time in undergrad, my father paid for my room and board and even provided a small stipend for incidentals. Any money I made from my work-study went directly into my pocket to spend as I wanted. As a result, I created a bad habit of buying nice dresses and cute shoes whenever I went to the mall. By the time I moved out to DC and started working as a young adult, I kept that same terrible habit.

   To make matters worse, I had no idea how much money I was spending. Sometimes I would go grocery shopping, spend $100 for a weeks worth of food, then still end up eating out at restaurants twice a week when I “wanted something different.” Occasionally, I’d travel out of town, go visit friends in other cities, or simply go back to Florida for a holiday. Again, I did all of this with no budget and ended each month wondering where all of my money had gone. If I could do it again I’d definitely create a spending plan and try to stick to a monthly budget.

4. Check your monthly account statement. Once I started med school, my spending habits changed. Not because I magically started creating a budget, but because I realized I needed to stop relying on credit cards and actually start paying off the balance quicker. I set up automatic monthly withdrawals to cover my credit card payment and tried my best to avoid buying unnecessary clothes at the mall. Although these were good changes, I had neglected to take a vital step….check the monthly credit card balance. This might not seem like such a big deal, but mistakes happen more frequently than we may realize.

   Whether it’s a charge that showed up twice or a monthly payment you never authorized, it is imperative to check your accounts frequently. Even though I occasionally looked at my debit card balance, I never checked my credit card account history. When I finally did, I was mortified! I was paying nearly $70 a month for some added credit card protection I didn’t need and never remembered authorizing! Although I was able to call the bank and stop paying for that service, I was angry that I had such a high charge each month for something I never even wanted! As a struggling medical student, I could think of several other things I could spend that $70 on, none of which included handing it out for free to a bank. Ladies and gents, check your statements.

This is just part 1 of the financial mistakes I made in grad school. Stay tuned for part 2 of disastrous things I did with money before I got responsible and started paying back my bills. Tell me, what money mistakes did you make after college? If you could do things different what would you change?