If you recently graduated from med school (or you graduated in the not-so-distant past), you’re probably no stranger to debt. From student loans, to credit cards – debt is an unfortunate reality for many young medical professionals. You might feel that debt is an unavoidable part of your life now, or that with crazy high student loans you’re better off just embracing them by picking a repayment plan and sticking to it. I’m here to tell you that debt doesn’t have to be a part of your life. In fact, we should be striving to get you out of debt as fast as humanly possible.

Picking the repayment plan that works best for you right now and being diligent about making those payments might sound like you’re being responsible, but you need a better strategy. If you want to get out of debt, you need to make a strategic game plan and execute it aggressively. The good news is that this isn’t that hard to do!

Over the course of the next several weeks, I’ll be publishing parts of this Debt Demolition Series. By the end of this series, you should be armed with the knowledge you need to put a strategic debt repayment plan together, get out of debt, and then stay out of debt. So, without further ado, let’s kick things off with some of the basics.

WHY SHOULD YOU FOCUS ON YOUR DEBT?

Debt is soul-sucking. You might think I’m being dramatic – I’m not. Studies have shown that debt has a negative impact on your mental and physical wellbeing. Student loans by themselves can lead to severe depression, anxiety, and overall poor psychological functioning. Aside from the scientific evidence, I can confidently tell you that living in debt also has a generally cruddy effect on your day-to-day emotions, as well. Even if you don’t feel particularly depressed about the amount of debt you’re in, it’s likely eating at you in one way or another with some regularity. That’s no way to live.

Young medical professionals are in a particularly tight spot when it comes to their debt. It’s likely that your student loans are high – probably in the six-figure range. On top of that, you might have consumer debt that you accumulated during your time in school or during your residency. This is all normalized because of the culture you’re a part of – everyone has that kind of debt, so your case must not be a big deal, right? Wrong. Just because most young medical professionals live this way does not mean that you have to live this way. Focusing on your debt is the first step to financial freedom.

WHAT KIND OF DEBT-RELATED PROBLEMS ARE YOU FACING?

1. Student Loans. We’ve already talked about your biggest debt issue – your student loans. Yes, these technically qualify as “good debt.” But if we’re being honest, no debt is truly good. Even if you have no debt other than your student loans, you’re still in debt. A large portion of your monthly income is disappearing to pay off those loans.
2. Keeping Up With the Joneses. The amount of debt that you’re already in is only further complicated by the amount of debt you might get yourself into in the coming years. It’s easy to believe that now that you’re graduated and have been gainfully employed for a few years you’ve made it. There’s no denying that you’ve worked hard. Unfortunately, all that hard work doesn’t entitle you to a certain kind of lifestyle right away. It’s incredibly important to resist the urge to take on more debt right now. You may feel like you need a brand-new car because everyone else in your field drives a brand-new car, but you’re probably better off sticking with something you can pay cash for or keeping that old, rusted out station wagon around for a few more years. Lifestyle inflation is dangerous, especially because taking on more debt than you’re already in to pay for a lifestyle you can’t truly afford will hurt you in the long run.
3. Debt Repayment. Circling back to the student loans that have you buried – you’re probably looking at repayment options (or have already selected one but are now reevaluating). It’s typical that people pick the repayment plan that works best for them right now. Admittedly, this doesn’t sound like a bad idea. But selecting something like minimum monthly payments or choosing an income-based repayment plan might cause you to pay more than you need to on your loans in interest – and it could take you way longer than it needs to. (We’ll cover the costs and benefits of different repayment plans in Part Two of the Debt Demolition Series).
4. Future Debts. As a new (or new-ish) graduate, you might be looking at some big life changes in your future. Getting married, having a kid, buying a house…these are all things that could lead to more debt if you don’t think through them ahead of time.

HOW CAN A DEBT DEMOLITION PLAN-OF-ATTACK HELP?

When you have a large amount of debt, throwing money at it without a plan won’t help. It can end up costing you in the long run. You need a strategy that helps you pay back your debt quickly and efficiently. Extending your repayment timeline will only ensure one thing – that you’ll lose money hand over fist to high interest rates, and you’ll be miserable the entire time.

During this series, we’re going to cover a few key things to help you set up your Debt Demolition strategy. Here’s what you can expect:

• What you might not currently know about your student loans – and why the traditional income-based or minimum-payment plans might cause you to take on more debt (or lose more money) rather than pay it off.
• Different repayment plan types, and the pros and cons of each.
• Creating a budget that prioritized debt repayment.
• How to structure your debt repayment to snowball your debts and pay them off faster.
• The emotional side of debt and how to channel your frustrations into a positive approach.
• How to repay your debt while still living and enjoying your life.
• Planning for future big-ticket purchases – like buying a home or having a baby.

Your debt doesn’t have to have power over your life. With a carefully crafted strategy that’s unique to you, you can take back control. Stay tuned for our next blog in the series – where we’ll cover different repayment plans and how to select the one that works for you!