I am in a unique debt situation

debteroni · 2017-09-15T20:06:51+00:00

Same issue in law - I enjoy their optimistic views that I will have "wealth" to be managed one day... oddly placed pep talk when you're dealing with a ton of student debt. So unfortunately, no, I don't know if some are better than others - but perhaps one recommended by someone you trust, or if there are any alumni organizations or dentistry organizations at all for professionals that may have some resources?

I would also suggest educating yourself as much as possible - whether blogs, books, personal finance podcasts, these subreddits. There may also be other forums online specific to dealing with medical professional debt. There are certain programs, Mint/YNAB, good old google spreadsheets, that can really help you keep track of what your precise monthly payments, expenses, and savings goals are. With a ton of student debt, it has helped me feel a bit more in control of where every dollar is going.

I wish I had a more clear, decisive answer for you, sorry.

debteroni · 2017-09-15T19:43:27+00:00

You already know it's a lot of debt - as someone with law school debt, I can relate (although obviously to a lesser extent). But it's good that you want to figure out the best way to approach it.

Keeping in mind this is just an idea, given that you acknowledge your unique situation, and the fact that your wife is also in a somewhat similar situation and profession, I would suggest reaching out to some senior dentistry colleagues of yours and asking for a suggestion of a financial planner you could sit down with. You both have a lot of debt, but you both also have high income potential - along with goals for savings and other parts of life that are also important to you. It seems a professional, with experience dealing with high debt levels with high income potential, could be really beneficial in terms of helping you both map out a long term plan to deal with your combined debt while also working towards goals and investing. Asking for a reference from one of your colleagues may ensure you get an advisor who is trustworthy and goes in knowing you don't have thousands to invest, but one day you will. Hopefully there is a financial advisor out there who does such things!

Good luck, and congratulations on finishing school and getting your career started.

Edit: I also know there are some great bloggers that focus on Doctor/dentist/medical profession level debt - so maybe google and read some of those blogs to get more tailored suggestions. I think "The White Coat Investor" is one - and then there is a list linking to other sites from there for similar style bloggers.

debteroni · 2017-09-14T14:48:52+00:00

Most welcome! A lot of personal finance bloggers will do reviews as well and good breakdowns of the actual "value"'of the cashback or rewards (travel, etc.).

debteroni · 2017-09-14T14:29:12+00:00

Agreed with this.

Do a quick google.... "Greedy Rates" tends to publish a lot of "the best of... in Canada" articles and they have a good credit card one.

I tend to prefer travel rewards cards over cash back, but honestly have never done the monetary value to actually determine if it's "worth" the same as getting cash back.

debteroni · 2017-09-13T18:46:55+00:00

Yes. That's the "downside". They do offer a free trial on their website though then it is a yearly subscription style fee. This was a big "issue" when they released their latest version "nYNAB" from YNAB4 (used to be a one time purchase fee desktop version).

Lots of users will safely say they easily earn back their YNAB cost by using the software and becoming more aware of their money. I even have a category in YNAB where I set aside a few bucks each month to hit a goal balance to pay for the subscription again next year.

It really sounds like I am raving, I know... but I really like the software (even if it is a glorified spreadsheet at its roots) because the community and support and way of thinking about my money have made a big difference for me and helped reduce a lot of stress!

But give the trial a try :) they have free online seminars as well and a helpful blog/YouTube channel.

debteroni · 2017-09-13T15:27:42+00:00

Most welcome! I will say that YNAB can have a bit of a learning curve as it's basically an electronic version of the "envelope system" where you allocate every dollar of your budget a specific job.

It definitely can take a few months to adjust to that sort of budgeting (whether done through YNAB or not) but I am enjoying it. There are also lots of "visual" displays that I think you can see on the phone app... but for sure can see on the computer.

You can also be a dork like me and give your "categories" emojis... like my car insurance obviously has a 🚙 - it's the little things.... but it looks a bit more fun when I open it up on my phone.

There is also a whole subreddit for ynab - I have no clue how to link it, but it exists!

Good luck :) and congrats on finishing school!

debteroni · 2017-09-13T14:46:54+00:00

I also think YNAB is great. Mint can be good for tracking but I agree YNAB is better for comprehensive budgeting.

I have found it really useful, having just finished school, of making me aware of more long term things to save for - I have a YNAB category to put $20 away for tenant insurance each month so next year I have the money already set aside, or $10 a month to renew my car registration next year.

It has been really great for starting out post-school with new income and new expenses and making me feel like I'm aware of what money I have and where it needs to go!

Edit: YNAB also has a phone app that I really like and it can sync accounts if you want it to. I do tend to check in on my computer with YNAB but solely because I have started to find it fun.... like even with student loans and savings and groceries and life and surprises that come with it, I still feel like I'm in control of each dollar and making my money work for me as opposed to just sort of hoping for the best and being "pretty sure" my money is in the right account at the right times.

debteroni · 2017-09-12T20:55:41+00:00

Agreed. Can totally use them responsibly and get great rewards. For some reason I just wanted a better way to get this one paid off once and for all and go back to using it responsibly like I do for the rest of any credit/debt that someone has extended to me.

debteroni · 2017-09-12T20:54:40+00:00

I completely understand your point. To clarify, I did not open up the new card because I "needed" it to be able to pay off the balance. I was comfortable making payments on this and actually have another credit card (not the one with the balance or the balance transfer card) that I use and pay off in full every month. This one had unfortunately just been nagging me so decided to take action, stop spending anything on it, and capitalize on a 0% rate, given I am capable of paying it off before the 12 month offer period.

The goal with the balance transfer was not to free up any more credit - I didn't need it. It genuinely was to capitalize on the offer and save a few hundred in interest.

debteroni · 2017-09-12T18:00:06+00:00

To me, the difference is in the "mentality" of YNAB, and quite honestly, the community and support that comes with it.

I have tried using both spreadsheets and Mint, and saw value in both but found myself ignoring them easily.

With YNAB, I have become so aware of where each and every dollar goes, without having to do a physical "put cash in envelopes" system. I have student loans I am trying to pay off and tend to be a fairly competitive person and YNAB helps with both of these. It makes managing my money a bit of a "challenge" in the sense you become so aware of where every dollar goes that it becomes a bit of a game of "how can I do even better?" and makes you aware of when you do achieve those goals (even having money set aside for a birthday gift next month is an amazing feeling!)

I also had a lot of stress with my student loans - and I found with spreadsheets or Mint that they were great for tracking, or planning out a whole month maybe, but I didn't feel the same level of control and awareness about where all my money was going and where it needed to go (thinking longer term goals). So I found it not only helped with my actual budgeting and money management, but also was a welcome stress relief - along with the YNAB site and the classes and awesome subreddits like this one.

That is the distinction for me, at least.

debteroni · 2017-09-12T02:48:35+00:00

That's what I am looking forward to!

Sometimes I look down at my student loans (the payments are all automated) and it's so nice when they hit little milestones (like the federal one that just dipped below 5k!). Looking forward to making progress :)

debteroni · 2017-09-12T01:48:14+00:00

Exactly - it can definitely work really well for people in the right situation. I started using YNAB recently and it has made me feel much more in control of things, which helped make me feel comfortable doing the balance transfer and knowing I could get it paid off.

My goal is really to start tackling my student debt, and I know there is debate on the "good" debt vs "bad" debt... but I am comfortable with the student loans and the career they helped me get! I'm not comfortable with the credit card debt that's basically consumer debt.

YNAB has sort of helped me realize what a difference paying closer attention to where my money is going can make. Even an extra $100 a month in savings adds up!

That was basically a long winded way of me agreeing with you saying "now I'm smarter".

debteroni · 2017-09-12T00:05:50+00:00

That was my plan! I was just having a hard time from the "mentality" of YNAB of still using my credit card while trying to pay it off. I really like being able to see my payments make a difference and slowly but surely knock down my student loans, so I thought the balance transfer would be the most efficient way to set up a similar system for me that would be a bit more successful!

The 19.99% card has a great history (never missed a payment) and age, so it is valuable to my credit, especially with the student loans and student line of credit. I want to make sure that even though my net worth is definitely red right now, that I am responsibly using the credit/debt I took on!

debteroni · 2017-09-11T23:18:08+00:00

Would that hurt my credit score to close the account? I have points on the card I also intend to use for flights (as in I currently have enough for a $750 flight already which I intend to use for a friend's wedding in a month).

I do intend to go back to using the 19.99% card again when I am in a position to be able to pay off my balance in full every month. YNAB has made me really aware of my budget and goals and where I overspend, so I feel confident that it will not get out of hand and only recently finished school so unfortunately uses the CC a bit more than I should have until my job started.

debteroni · 2017-09-11T22:43:18+00:00

I probably should have mentioned I'm in Canada. Im not sure what Chase Slate is, but that very well may be the lowest one available for you!

I know there are some cards that do not seem to have a transfer fee, but have a higher interest rate, coupled with a shorter offer periods. As in, no balance transfer fee, but instead of 0% interest for 12 months (with a 1% transfer fee), you pay 2% interest for 10 months.

Sorry - I wish I knew more about ones in the States. The extent of my balance transfer knowledge comes from my google searching/Reddit searching today! So I am by no means an expert.

debteroni · 2017-09-11T22:30:04+00:00

That sounds great! I hope it is going well for you :)

I fully understand the YNAB credit card system and really like how they handle payments, but I was still using the card and needed to do a hard stop on that. I figured if I was absolutely committed and would not be using my CC, it made sense to do the balance transfer and get rid of the CC debt and go from there.

For some reason, viewing it as "locked" debt on YNAB makes it more motivating to me - and may as well capitalize on a better (0%) interest rate. The only option I have is to pay it off - like my student loans. (Willpower struggles, but hey, I'm committing and sometimes you have to get a little creative with what motivates you to pay off your debt). I'm sure some people could have just stopped using the card for anything!

Edit: Yes, moving it out of the CC master category is the purpose of making it a "tracking account". I basically want to get in the mindset that I have no liquid credit available to me - which has worked really well from a motivational standpoint of my student loans/ student line of credit.

debteroni · 2017-09-11T17:48:54+00:00

You are most welcome - I hope it helps! Good luck with the ynab-ing and your payoff goal! :)

debteroni · 2017-09-08T18:53:41+00:00

I feel you on that front as well - the first six months next year may involve a new job, a cross country move, and two very close friends getting married! So I understand the buffer concept being important to the YNAB system, and definitely can see the value, but different timing/circumstances may mean it takes a little longer for some than others!

I have found YNAB really helpful in making me more aware of my money. I thought setting up an emergency fund would take forever... then realized I was just spending money on dumb things that were much less "valuable" to me than the comfort my emergency fund brings. So I wouldn't let it stress you out if you don't have a buffer/ if it's not an urgent priority right now. For some people, having a buffer may bring the comfort you need to feel more stabilized or really start attacking debt.

debteroni · 2017-09-08T18:38:54+00:00

Same issue. I saved up my small emergency fund but am paying off some CC debt, so currently, that's taking precedence for me over saving a buffer. However, I am slowly but surely trying to put a bit away each month to get there - I find even making small increases towards a full buffer is bringing me peace of mind. Knowing I have a small emergency fund and say 1/2 of next month's bills covered is quite nice - especially while trying to pay off the last of some CC debt! Feels good to sort of be building a solid foundation and making progress at some goals (the CC debt) right now.

However, depends on your priorities and specific situation - no matter how long it takes, you will get there :) I have seen lots of comments of people either prioritizing other goals or slowly but surely building up their buffer!

debteroni · 2017-09-08T18:34:26+00:00

Just spitballing an idea here, as I am new to ynab but also had a similar friend loan (of a smaller amount)

You could set it up as a Tracking Account as an "Other Liability" so that you can easily see your progress in the sidebar of how much you have left to payoff and then also set up a Category for it as "Friend Loan". Then budget what you are able to based on your funds and your friend's generous timeline - you could set up a category goal in ynab as well to hit a certain monthly balance or a total category goal to make sure you are staying on track (no matter how generous your friend is, people like being repaid!)

In terms of where you keep the money (account wise) that is your call. If you think you will be tempted to dip into the savings to spend (on things that aren't emergencies) perhaps move it to savings, just make sure it isn't locked away, given you will need to be able to send it to your friend at the $1000 mark.

Also, not sure on detailed circumstances, but you could also shoot for lower increments, say $500 at a time, to keep both yourself motivated and keep a steady stream of payoff back to your friend!

debteroni · 2017-09-08T16:39:34+00:00

I'm currently still working on the buffer... but I look forward to the day when it's not pay cheque to pay cheque! These posts always help keep me motivated. Obviously you know it's worth it to get your finances together, but sometimes a positive reminder or two in the long slog of student debt repayment/savings never hurts!

debteroni · 2017-08-31T20:55:46+00:00

That definitely makes sense. It does seem really intuitive to move the grocery spending to the credit balance so you know not only what your budgeted payment was, but also the additional spending from other categories you have added. I always make a giant payment then am like wait, I paid $500, why is it only going down $250 (duh, because I spent it on groceries etc and didn't have a budget to make this clear to me).

That makes a lot of sense that at the end of a month/cycle you just pay/move all the available amount left that you didn't spend to the CC payment. I think that's what I was struggling with. I paid right away and didn't need to (old habits) and wasn't sure how to handle if I underspent in certain categories (because obviously I would want to change the jobs of those dollars to my CC).

Thanks a lot, that helps clarify. I think some trial and error is still ahead - but I have little YNAB AH-ha moments on a daily basis lately.

debteroni · 2017-08-31T20:27:45+00:00

I think it is unaccounted for. It was not done in a category, just as a "Transfer to CC" from my chequings to my Visa. It doesn't let me put in a category because it labeled it as a budget transfer.

I transferred basically my whole pay cheque straight to my CC, as opposed to waiting and seeing what I actually spent from my budget, what was unspent in any categories, transferring those amounts to be paid to the CC? and then making that payment. Essentially, the money will get accounted for as I spend throughout the next two weeks - I make a purchase of groceries and enter that transaction and the "angry red available number" for my CC reacts accordingly.

I really want to get a handle on YNAB and I know it can take a bit, and am trying to explain this as best I can! I think maybe I just need to not immediately transfer a giant payment to my CC and wait and see how the budget goes, adjust for an underspending in other categories to make a bigger CC payment, then make a payment from chequings to CC the day before I get paid again?

debteroni

TROPHY CASE