[USER]

I’m looking to bounce some ideas off of you guys. I’m 26 married to a SAHM, two kids 1 and 3. I just got accepted into medical school starting at the end of the Summer.

I’m trying to figure out how to best finance the next 4 years without income and 2 years after that with somewhat reduced income.

I have been saving for a while thinking that this may be a possibility. I have about $50,000 in cash and maybe another $20,000 by the time school starts.

I have $71,000 in my TFSA (basically a Roth IRA that I can withdraw from without penalty) invested in index funds, mostly S&P 500.

I have another $50,000 invested in my wife’s TFSA. We’re selling our house to move closer to the medical school. We should net about $142-162,000 from the sale of that.

I’m in the process of buying another house and want to put $100,000 of those proceeds to pay for the mortgage during school and $10-20,000 for a new car (we only have one car now).

I have to get the money out of my name in the next month or so in order to qualify for government student loans (interest free, will be almost completely forgiven when I graduate).

I think I should mostly be able to pay for tuition and living expenses in between government student loans, child tax, and a little bit of work. But that’s assuming I get all the money that I think I will.

I plan on taking out a LOC at a bank for $350,000 with a variable rate interest (2-7% in the past 20 years) just in case.

My question is: do you think I should sell all of my investments and go to cash just for security, and eat opportunity cost knowing that money isn’t going to be an issue after I finish residency?

Or should I leave my money invested in my wife’s name in-between her TFSA and a brokerage account and if I need more money than I had assumed, I would just draw as needed from the LOC.

Thanks for your advice!

[Scott]

3% of people who think their loans will be forgiven actually have them forgiven.. just a heads up. If I was you, I would savagely cut expenses.

No new house, no new car.

And the wife should pick up some part time work. Also, not sure when you last checked loc’s but your looking at 9% + for the foreseeable future.

Just a quick question, what is a child tax? How is that income?

[Frankie]

Congrats on your med school acceptance! Where is the school located? Asking more for cost of living estimate of the area. I would suggest the following.

1. Leave your investments and let them continue to grow over time.

2. Is it possible to rent out your current home and then rent in medical school?

You will likely be moving in 4 years for residency… would your plan again be to buy a home in residency? It just doesn’t seem like you will be in the location very long.

3. Residency pays peanuts and will be at least 3 years in length. The pay increases over time don’t even keep up with inflation so calculate at least 3 years of making a very meager salary during that time.

4. Were you accepted to a medical school near friends or family to help with childcare?

5. I wouldn’t get a second vehicle if you can help it.

Let your wife use the car to shuttle the kids around and spend your time really focusing on school.

6. What do you do for work that you will be able to work part time on top of med school? School is incredible taxing and you will also have two young kids.

While step 1 is now pas/fail, step 2 is still graded and that plus the school you go to plus how many honors/high pass grades you get in your clinical years will make a huge difference in what residency you ultimately match into.

7. This may be a harsh thing to suggest, but could family live with you and your wife to help care for the young kids so that wife can work while you are in school at least?

In 4 years they will be school aged so maybe will be less of an issue.

[Nina]

Definitely rent, don’t buy a home during med school and residency. Interest rates and unexpected costs add up with a home.

Closing costs cut into any benefit of purchase and rule of thumb is at least 5 years in a home to cover those.

I would borrow what you can, as often med school loans are forgiven if you die before they are paid off. That is not a small benefit to a family.

Leaving the money, you have an investments will hopefully offset any interest accrued on loans, and if needed, you could pay them off in bulk when you are done.

However, it also leaves you with some cash for a down payment on a house later on and other emergency financial issues.

[Amanda]

Congrats, have you thought of joining like the Air Force or another military branch?

They would pay for school and living and housing allowance.

That’s what my parents did and I had other friends who paid for med school and law school that way.

[Farre]

Sorry, I mistook who was who in this situation. If you have a stay at home spouse and are going to school, If this is US-based, I would suggest looking at National Health Service Corps.

A few of my friends did that and had most of their schooling/living expenses covered in exchange for 4 years of practice after obtaining a license.

WHO and Medicins Sans Frontiers sometimes offer scholarships, as well (in case international for a few years is okay with the family).

[Emma]

Is it possible to pursue your medical degree in a different country with equivalent standards to the U.S. (such as Germany maybe) and then do your residency here?

I ask because student loan forgiveness is in a really precarious spot right now and you’re kind of subject to the whim of whoever is in office.

Pursing a degree in a different country that has similar standards, but at a much for affordable rate might be better in the long run financially…

A childhood friend of mine’s wife is doing this in Scotland.

[Goss]

Work with an advisor who is familiar with the medical school experience.

A lot of things vary, including where you’re going to school, length of residency, etc.

It’ll be a struggle, for sure, but don’t give up!

[Beate]

This is a fantastic and well-thought-out plan! It sounds like you’ve done a lot of groundwork to make this medical school dream a reality.

Navigating the financial aspects of a career change like this with a young family takes serious consideration, so kudos to you for planning ahead.

It’s smart to be thinking about optimizing your assets to qualify for those interest-free government loans – that’s a significant advantage you definitely want to leverage.

Regarding your question about investments versus cash, it’s a really interesting dilemma with valid points on both sides.

The peace of mind that comes with having a larger cash buffer is understandable, especially with the variable nature of the LOC and the inherent uncertainties of medical school.

However, you’re also right to consider the opportunity cost of pulling everything out of the market, particularly with a long-term horizon in mind.

Perhaps there’s a middle ground to explore that allows you to strategically position your assets to meet the loan requirements while still keeping a portion invested for the long run.

This could involve a more nuanced approach to how you manage your wife’s TFSA and potentially a separate brokerage account in her name.

Given the complexities of your situation – the upcoming house sale, the loan qualification requirements, and your long-term financial goals – it might be beneficial to have a more in-depth conversation about how to structure your assets most effectively.

There are various strategies to consider that could help you achieve your immediate goals without sacrificing long-term growth potential.

Feel free to reach out if you’d like to discuss this in more detail.

I’ve helped others in similar situations navigate these types of financial transitions, and I’d be happy to share some insights that might be specifically relevant to your circumstances.

Best of luck with medical school – it’s a challenging but incredibly rewarding path!

[Juana]

It sounds like you’ve got a solid plan in place, and congratulations on getting into medical school!

Given your situation, it might make sense to leave your investments in place, especially since you’re confident about your long-term financial outlook after residency.

If you need extra funds, you can always access the LOC or withdraw from your wife’s TFSA as needed, but selling everything and going to cash could cost you the opportunity for growth, even with the short-term uncertainty.

It might be best to keep a balance between liquidity and growth potential, and adjust as you go. Just make sure you’re comfortable with the risk of having some money in the market during school.

[Author]

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