With the cost of education and higher education continuing to rise, a medical school student can expect to receive a medical degree with an average of $166,750 in medical school debt. The average physician easily clears 6 figures annually, however the long-term effect of outstanding debt can have an ever present and negative impact on his/her financial future.
Some debt is unavoidable and may not be good or bad in the grand scheme of things. As a physician, unless you are from a wealthy family or on scholarship, you may have had to acquire student loans to complete your medical school training, along with practice debt, if you are opening your own practice, as well as personal debt (buying a home, financing a vehicle, etc.) However, whether good or bad, the amount of debt you carry can negatively affect your financial future if not remedied and addressed properly.
Eliminating your debt can have 3 direct impacts on your financial future.
#1. It can improve your credit score. Thirty percent of your FICO score is determined by the amount of money you owe to creditors.
#2. It can lower your interest rate. The more money owed to lenders, the higher your interest rate can be.
#3. Free up money. Eliminating outstanding debt will ultimately free up monies being serviced on debt and interest.
Understanding the optimal pay schedule to pay your debts is key. Banks and lenders have an optimal schedule that works for them which involves overpaying and sending in excessive amounts of interest payments. After all, that’s how they make their money. If there were a faster and easier way to pay off your debts without making the banks more money and without affecting your current standard of living, would you want to know about it? If you were debt free and owed no one, what could you imagine your life to be like?