Survivor Saturday--Financing During Residency

This week's question comes from Kim: "I was wondering about financing during residency. It seems that a residents salary is so minimal and that it's almost impossible for us wives to work while the hubby is in residency (those of us with kids at least). What advice do any of you have about how to make ends meet during residency life. Did you have to take loans out to survive?"

Kathi's response:

When your spouse is interviewing for a job, urge him to ask if loan repayment is offered. If you play that poker hand and they don’t bite, ask if they offer a no interest loan refinance. That will save you the interest, if nothing else. If both of those options fail, you’ll have to get creative with financing.

Financing options are different today than in the past, especially in light of today’s economic climate. That being said, physicians have job security and banks are willing to take that into consideration. I suggest you go to banks in your area and ask if they have any “doctor loans” or “private banking” arrangements. Most banks will say yes to the latter and have no idea what that means. If you find one that seems to know what they’re doing, present your loan situation to them and ask what creative suggestions they may have. They may offer to refinance as a signature loan at an extremely low rate with option to pay interest only until your household income increases. They may also offer a more traditional loan, but stretch it out over 15 years. I doubt if they allow second mortgages anymore, but it’s worth asking if there are any loans available that will allow tax deduction (as a mortgage). The important thing to remember is that your financing options are not limited to what is offered to the general public and this is one benefit to all those years of sacrifice and hard work.

Jennifer's response:

A lot will depend on the cost of living where you live, what the PGY pay scale looks like at your program, whether or not you work, whether or not you have kids. I do have friends who took out loans during residency to cover the cost of living. In any case, your finances for the next 3-6 years will likely be tight. Here is what I would advise: be patient. You can make it work. In a few years when his training is done, you will be able to do the things you dream of doing but can’t afford to do right now. Hang in there for just a few more years. There are about 537 reasons I am not a doctor, and “delayed gratification” is right up there at the top of the list. It was so hard for me to be patient during residency, and I am the last person you want to take financial advice from, but I wish I would have been a little more disciplined and a lot more patient during residency. Check into different budgeting plans – Dave Ramsey and Crown Financial Ministries are two that I know of – talk with your husband, and make a plan that works for both of you.

In the meantime, there were a couple of things that I did that made it a little easier. First, I have a very dear friend who I met during residency. Her kids and my kids were born within months of each other, and they lived ½ mile down the road from us. We decided that we were sick and tired of not being able to keep our homes clean (our kids were around 3 and 1 at the time), and of course we couldn’t afford to pay someone to clean our homes (remember what I said about being patient? Very soon, my friend. Very soon.), so we came up with a plan that worked really well for both of us. One day of every week, we would go to one of our houses and spend a couple of hours cleaning it from top to bottom. (We can’t remember where our kids were during this time – either at preschool or plopped in front of PBS – there is so much of those years that I’ve blocked out!) Then the next week, we would go to the other house. We had great fun together, and we had at least one day twice a month when our homes were completely clean, which did a lot to help our sanity.

We also got together and made freezer meals. She had a freezer cooking cookbook, so we’d pick out a couple of recipes, go grocery shopping together, split the cost, then spend an afternoon assembling and cooking. For example, there was a recipe for seasoned ground beef that you could make into meatballs, spaghetti sauce, or meatloaf. That worked well – until the thought of even looking at another meatball made us queasy.

The two of us also took on home businesses during our last year of training – she sold Usbourne books and I sold Pampered Chef. That worked well because we coordinated our home show schedules with each other so we could trade off childcare. The supplemental income helped (though I think we spent most of our paychecks on books and kitchen tools), and it was a fun way to get out of the house.

Amanda's response:

Your need for financing with loans during residency will depend on where you'll be living and what type of pay scale the residency will be providing, which is pretty much what Jennifer discussed. My husband and I were lucky because he was able to finish undergraduate school without any student loans (a combination of a very good scholarship, working through the summer, and some help from his parents). He did get loans while in medical school, and we lived off those as well as any money I made while teaching or working in medical offices. I remember getting a seasonal job for Victoria's Secret one Christmas because my teacher's aide job paid hardly anything at all! Once he started residency, we found that we were able to live well off of what he and I made combined (I worked as a receptionist in a radiology department at that time). This was possible because we lived in apartments during his medical school years, kept a very low entertainment budget, ate most of our meals at home, paid off our credit cards every month, drove vehicles that were hand-me-downs from parents and/or already paid off, used hand-me-down furniture, and tried to live within our means as much as possible. Because we lived this way while he was in medical school, we were able to purchase our first home when he started residency. Again, we tried to keep our expenses at a minimum. We bought a small, relatively inexpensive (for the area) Cape Cod home with one bathroom and a tiny kitchen. It was a major fixer-upper, but because my in-laws have experience with flipping houses, we were able to make it comfortable and livable over the course of my husband's four-year residency. We continued to eat most of our meals at home, paid off our credit cards, and did other things (like joining NetFlix) to keep our expenses minimal. We had our son at the beginning of my husband's third year, partly because at that point, his program allowed the residents to apply for a medical license and begin moonlighting at other hospitals in the area. As soon as our son was born, I became a stay-at-home-mom, and my husband started moonlighting one or two evenings a month. He actually made more money in one moonlighting shift than I did in two weeks working in a medical office! We saved a lot of money by not needing day care for my son, I found a great play group that helped me get through those first couple of years of being a new mom, and we tried to do a lot of free and inexpensive activities for fun as a family. Unfortunately, when it was time to move and sell our home, we were in the midst of the housing crisis, and it didn't sell for as much as we had hoped. We're happy that it did sell, though, and we are grateful for our current living situation, which is above and beyond what we'd ever imagined. And, my husband has only been out of residency for about ten months! I know that not everyone is as lucky as us when it comes to being able to live comfortably during residency, but I wanted everyone to know that it can happen, if you're careful and live within your means.

We hope our responses answer your question, Kim! Thanks so much for the great response we've had, so far. Please keep leaving questions for us in the comments section. We're so happy to be able to share our experiences with all of you!

Kathi, Jennifer, and Amanda--aka "The Survivors"