Debt Management Guides

How to lead debt free life

July 25, 2016

This is not just a medical school thing

This is not just a medical school thing it is a college student thing. That is why many are moving back in with mom and dad after graduation and because most don’t own property many just declare bankruptcy. Medical students just have a larger problem due to the length of the educational process. That being said the life style of today’s students (my daughter just graduated) is a bit different then it used to be thanks to easy credit. 30 years ago people did get through college without credit cards and made it work because they had no choice. You could not use credit cards at the grocery store and a gas card was only good for gas and some snacks.

Lisa, my concern is your minimum payment will be eating up an ever increasing amount of what ever income you do bring in. This is going to quickly snow ball into larger and large dependence on credit which will drive up the minimum payment exponentially. Looking at the numbers and how tight your budget is now I don’t see how you can make it two more years without defaulting on some of the debt. If you want to emerge from this with good credit and in a position to purchase a house when you move then I don’t see how you can continue with your current plan. Prior to getting in so deep you have no choice I think you should consider other options.

June 22, 2016

I thank you for your concern for my financial situation

I thank you for your concern for my financial situation. I do think that many of you are severely misunderstanding my situation. I’m not sure what the term “Doc-itis” means, but I’d assume it refers to someone who suffers from the dream of a doctor’s income. Your references to owning a home near a country club. If you have read my posts, I am not what you would typically stereotype as a doctor’s wife. I come from a small town and a household that taught me how to earn money, save and be smart about my finances.

How do doctors financially survive medical school, residency and fellowship? I can tell you that every single resident that I know of has credit card debt. It’s not due frivolous spending and “if come”. It’s due to the huge lack of income and the number of expenses that be put forth during the education years. It’s an investment, for sure. And, in the end, if the investment is not fruitful, of course it will be tragic and very hard to overcome. Just as students take out student loans, many residents user credit cards to pay for gas and groceries because their incomes can’t afford their living.

I’ve cut costs in every direction possible. I simply cannot pay for groceries and gas with our income. We do not spend frivolously. We are tight with our money – always have been. At the age of 30, neither of us have EVER had credit card debt. We decided that for me to not go completely insane, I can’t work. This leaves us paying for groceries and gas on our credit card. This credit card is 0% interest and will be that way until we are done with the credit card. We have “planned” this and don’t intend to rack up any more than 20k-25k on it.

I understand that you all have experience with credit card debt. But, have any of you ever planned it? We are planning it, and this is a different situation. I understand that your advice comes from experience. I ask that those who are in my situation give me advice. If you have never been in my situation, I ask that you read and understand it. I’d like some advice that pertains to my situation, not yours.

May 25, 2016

I am not in a similar situation

I will be the first to admit that I am not in a similar situation. The reason is that I refuse to hit a brick wall in what I can and can not do.

If I am living with a shortfall of $500 a month and using credit cards to make ends meet then I know I have to stop with the excuses and start finding the solutions… most of which I will not like.

I see from your savings the following:

  1. traded my car for a much cheaper one with better gas mileage, cutting about $160/month – this is good but do you really need a car?
  2. fuel decreased by about $45/month – you can kiss this savings goodbye unless you stop driving. Gas is going up, up and up with no in end until we catch up with other countries. Just this week it went up here 35 cents a gallon and for me that was an increase of $14 in one week! Plan on a budget of $3.5 a gallon for the next 2 years.
  3. called insurance company and decreased our monthly premium by $20 – have you checked other insurance companies for better rates. I know I hate insurance shopping but there is a big spread among them.
  4. started using a strict grocery list – which cut about $160/month – this again is going to go way up in the next couple years. Meat alone here has gone up over $1 a pound I the last year alone.
  5. started using coupons for items that I usual purchase for groceries, and started purchasing store brand (not sure how much this cuts down, but it’s something – this is a BIG something and a great way to cut down.
  6. consolidated my students loans and put them on forbearance (for 2 years) I was paying off $180/month while I was working. – another great idea! But this is only a stalling tactic that will cost you down the road.
  7. stopped purchasing clothes for work for me – cutting about $150/month – This is really not a savings because the income that paid for this expense is gone.
  8. started taking clothing donations from friends for my daughter. I haven’t spent a dime on clothes for her in 8 months – this is really great considering that children grow so fast. And there is nothing wrong with wearing donated clothes. I buy most of my clothes from garage sales. Spent $14 to start my summer!
  9. I breastfeed – that has cut about $1500 thus far if not more – this will not last for the next 2 years.

I see where you are trying to save But you are still spending for a 2 income family and using the cc’s as the second income. If it works for you then great. It just would not work for me. Too much can happen that would put me into a dire financial situation. Been there… done that… learned lesson!

April 09, 2016

When you need extra income and your kids are little

I think when you need extra income and your kids are little you need to stay clear of anything that could cost and possibly not pay off. This would include any marketing and sales like Avon and Mary Kay ect…

That being said what can you do. If it is a small amount under $1000 child care for 1 family if you pick that family carefully. This is quick and easy to find.

Beyond that you need to know what your skills are. Take an inventory and look through the services sections of Craig’s List in other locations and see what people are offering look and what people are looking for.

I have a friend who is making about $750 a month cash House and Pet sitting. She takes her 7 month old along. She has two clients that she walks and scoops daily. She puts her baby in the back pack and walks the dogs and avoids the need to go the the gym. They have an excuse to get out without going to the mall and she gets to meet people and their pets. It works because she loves walking and dogs. She got all her clients from Craig’s list and word of mouth and spent nothing to start this.

I also know a couple of gals who take phone calls and schedule appointments for some other service people and one who does book keeping. The one who does book keeping took a class at her Junior College. She has been given a computer and her internet access and cell phone are paid for too.

A stay at home Dad I know is now cooking for two other families and covering all his own families food budget and it takes him very little more time than just cooking and meal planning for his own family. He deliveries twice a week cleans the fridges and organizes the pantry of each client(3 hours a week). It helps he loves cooking and meal planning so this if fun for him. He gets calls all the time to take new clients and since he has twin 2 year olds he says no because they are what he is at home and they come first. His family is eating salmon and shrimp and organic grains and veggies and meats and it is costing the family budget nothing. His clients are spending less on food and eating better then ever so it is win win for everyone.

Another family during the week picks up a neighbor’s middle school age kids after school and take one to dance and another to music class once a week. In exchange they get Saturday babysitting by the Mom. On Saturdays they run a decluttering and closet organization business. They go in and clean closets with clients and install organizers and hull away unneeded junk to charity. Occasionally they get a client who wants to sell it and they provide ebay and craig’s list or garage sale assistance profits are split. They both enjoy having a day to work together. They make enough extra income to pay for a great vacation every year and sponsor two Kids through Christian Children’s Fund. They are booked out as long as 4 months in advanced and it is all word of mouth. Another option to get extra cash fast is applying for 500 dollar loan online from one of numerous companies.

When offering services to busy families looks for free ways to advertise school news letter, craig’s list, posting signs(know your local laws here). Look at newer more affluent neighborhoods where two earners are likely. Talk to real estate agents posting signs there how do they advertise? Do something you love and are good at. If you can make money and enjoy what you are doing and feel the reward of your accomplishment you are bound to be successful. Think beyond income what services are you currently paying for that you can trade for. How can you provide a service and cover some of your own expenses too. Don’t think about just earning money think about using your skills and passions.

March 20, 2016

At that time my finanical life was as bad as it could get


This is my first post here, so I’d like to share my story. In June of 2012 my wife, kids and I were on vacation and met a retired couple that were buying a condo directly above the one we were renting.

They were about 60 and told us they had also bought a large RV to live in and were going to rent the condo some of the time and live in it some of the time. I thought wow these people must be doctors or lawyers or something like that to be able to retire at 60. When I found out they were both high school teachers it was like a slap in the face. At that time my financial life was as bad as it could get and would never be able to retire.

In fact we really couldn’t afford a vacation but I didn’t want to let my family down. On the drive home I decided to take control of my life. I started a two pronged attack, first to get completely out of debt and second, built as much as I could for retirement. I got on my computer and built a spreadsheet with all my debts listed across the top. On the left was the month, and on the right the total debt and next to that the amount I got out of debt that month. At the bottom right I have a total out of debt and a total percentage out of debt. I transfered as much credit card debt to new cards with zero percent intrest.

Each month I pay extra to every card and am able to track my progress. In one year I’ve got out of debt by 22 percent. I also raised my 401k to 6% and just a couple of weeks ago I got a raise and I put the entire amount of the raise toward my 401k. (8% now) I’ve got a long way to go but am keeping steady. I can’t wait till the day that I’m debt free.

January 23, 2016

Even though all of this advice is correct

I’m sorry to say that even though all of this advice is correct and given with the best of intentions…she doesn’t appear to want it right now. As Dave Ramsey says, she has Docitis. She thinks this magical 6 figure future will erase the bad habits of the past and make everything OK. The problem, as we all know is that the problem isn’t the income, it’s the behaviors and attitudes.

I pray that you and your hubby come to some serious and painful decisions regarding the use and future use of credit. I pray that you find a way to cut expenses (sell the house?…it’s just a house) and don’t let the habit of living above your means grow any stronger.

Maybe these responses will be easier to understand in 3-5 years when your income is $200k and your debt is $150k plus a nice big house by the country club…maybe then it’ll be serious. I hope it doesn’t take that, but it is the normal progression with an attitude that debt is “OK”.

Good luck and God bless,

December 23, 2015

We went from below poverty level to a healthy middle

As one who always accuses my wife of being the prophetess of doom & gloom, let me do that for a minute. Twice, we went from below poverty level to a healthy middle – middle income. We immediately started living like it and went deep in debt. The last time, that middle income turned out to be short lived, and we were in serious trouble.

You and your husband have no idea what, if any, catastrophe may happen between now and his completing his fellowship. Should something awful happen that prevents him from earning that income, what do you tell your new found masters, known as creditors?

It is far better to live on less than 90% of what you currently make, do not use credit for anything short of a true emergency (e.g. zero transportation due to transmission lying in street). Then, we you move cross-country buy/rent well below what is needed. Keep at this until, I do mean until, he is well established in a practice. It near to impossible to even guess what his malpractice insurance will cost and the impact of that alone could jeopardize your plans.

Take it from someone who has tried your approach and failed miserably. No, I am not in the $200k and above bracket, but just the same, it is far better to start the new practice with no debt at all. Even then, if you follow Dave Ramsey’s approach, he would tell you to buy a real cheap house or better yet, rent, for a year or two. Then you can pay cash for a really nice house.

October 17, 2015

It appears you have about a $500 a month shortage

It appears you have about a $500 a month shortage currently which will grow as your debt because as your dept grows your minimum monthly payments will grow.

Your plan seems well thought out but, I know many Dr. and your income expectation consider the start up expenses and student loan payoffs and other costs associated with medical practice appear to be a bit high.

That being said you are over less then $1000. I would consider looking at ways to earn that. You could do child care for 1 child about your daughters age. Give her social interaction , make enough to stay out of debt, pay off what you have accumulated , give you some more breathing room once that debt is paid off. If that does not interst you consider what your skill set is and how you could work at home part time or trade child care arrangement a couple days a week. I agree a full time job as a single parent will add too much stress but that is not the only way to earn $500 to $1000 a month. Just avoid any kind of home base sales like Mary Kay or Avon it is pretty rare that anyone really makes any money unless they do it Full Time.

If your are firm you don’t want to earn the extra money then look for the very lowest interest rates you can find. Look at other loan options other then just credit cards.

August 17, 2015

I have already planned a big garage sale

If you were able to read my general reply, I answered most of your questions. I have already planned a big garage sale with my mother this summer.

I plan to sell a lot of furniture that we won’t be taking with us in our move. So, this will help a little bit. I plan to use it toward the CC debt. My husband is definitely guaranteed a job at the end of his fellowship.

Out of about 30 programs, he was accepted at the BEST fellowship hospital for trauma orthopedics in the country. So, basically he has his pick of jobs in the end. So, our light at the end of this big tunnel is very bright.

We plan to live way under our means for the first 10 years of his practice to pay off his students loans, mine and any CC debt we accumulate in the next 2 years. My only worry is the minimum payments on the CC’s.

May 14, 2015

To everyone who has provided me with some helpful suggestions

I’m replying to everyone who has provided me with some helpful suggestions. I believe I should explain myself much further. I think our situation may be different than you might assume. My husband is an orthopedic surgeon. He is currently in his 4th year of residency, with one year left. After residency, we are moving cross-country to do his fellowship. After that year, he is completely done with the education piece of his career. He will then enter into practice where he will be earning anywhere from $200k – $800k.

I have done extensive (or what I think is extensive) research into cutting our costs. We currently own a home and will be selling it when we move cross-country. In the event that we make a little money from the sell, that will go towards any credit card debt we will have accumulated during these 2 years. This is the only time we will have ever been in credit card debt. I have always been very frugal, purchasing only what we “need”. I mean this in the true sense. Here’s what we’ve done since we went to only 1 income:

  1. traded my car for a much cheaper one with better gas mileage, cutting about $160/month.
  2. fuel decreased by about $45/month
  3. called insurance company and decreased our monthly premium by $20
  4. started using a strict grocery list – which cut about $160/month
  5. started using coupons for items that I usual purchase for groceries, and started purchasing store brand (not sure how much this cuts down, but it’s something
  6. consolidated my students loans and put them on forbearance (for 2 years) I was paying off $180/month while I was working.
  7. stopped purchasing clothes for work for me – cutting about $150/month
  8. started taking clothing donations from friends for my daughter. I haven’t spent a dime on clothes for her in 8 months 9. I breastfeed – that has cut about $1500 thus far if not more

Our shortfall leaves us having to purchase ~500/month on the credit card. Christmas hurt us this year. We plan to cut down on Christmas the next two years by not buying for extended family. I also plan to make most of the gifts this year. I honestly don’t spend more than $20/week outside of bills and groceries. I’m not sure how I could possibly cut further. I spoken to friends and gotten lots of ideas on how to cut costs. If anyone has any suggestions on what more I could possibly do, please let me know!

I must continue to be a SAHM. My husband’s career makes it such that I have little to no help with anything. Working made me so stressed out, I had to quit. As far as working from home – my daughter is classified as high need (really), so I can’t work with her in the house. Paying for a babysitter comes out to a wash.

I’m still worried about the minimum payments on the credit card. I’m not so much concerned about the use of them. Like I said, unless something happens to my husband, then we will be able to pay this off very quickly in at the end of this 2 years.

If anyone is in a similar situation, I would appreciate any advice for what you have done. And, if you have any suggestions for how to further cut costs, please let me know.

March 15, 2015

I applaud your ability to know you will have a problem

I applaud your ability to know you will have a problem paying your bills in the next few months and your willingness to try and find a solution before it gets out of hand.

My suggestion is to stop using your cards now and work to pay them off instead of the continued usage that you acknowledge will get you in trouble in the future. It doesn’t matter what you will have in 2 years because there is a lot that happen between now and then.

I think we have all been in similar situations where we walk the tight rope between making ends meet and missing a step and falling. That is why some have filed BK. Things didn’t turn out as planned.

Work instead with what you have today.

January 20, 2015

Stop and re-read what you wrote

Cut up the cards or at least put them in the freezer, $8700 is much better than $20000, because I can beat the 20 will be $40000. But better than all of that is ZERO. You have to figure out what you need to live, roof, food, utilities,electric, gas, water, transportation, no what is left? If you can NOT pay with cash you can NOT afford it… period… and more than likely you do NOT need it.

We as Americans have been convinced we need it now, and how do we get it now? We buy it on credit. Visa is everywhere you want to be, MasterCard is priceless, What’s in your wallet…I’m 23 for a monument…and you know the rest…

Sorry I ranted. I just read your post and remember when I was 20 something and no one stopped me I was “if come” all the way…Now I’m paying, my fault, yes every single thing, but there should have been just as much influence as to show me how not to get in debt.

If there was I missed it…because everybody else was doing it my way too…. I SAY ENOUGH, I do NOT need Credit, a FICO score or anything else I need to be debt free PERIOD…. and I am working on that every single day…And all of you help me so that Thank You.