Dr. Sarah Chen sat in her small apartment at 2 AM, residency schedule sprawled across her coffee table, calculator in hand. With six months until graduation, she was finally ready to face something she’d been avoiding for years: her complete financial picture. Between medical school loans, a lingering credit card balance from a car repair emergency, and the auto loan on her Ford, she realized she had never actually added it all up. The number was daunting, but something shifted that night. For the first time since medical school orientation, she felt like she could actually see a path forward.
If you’re finishing residency or fellowship, you’re probably in a similar spot. The attending salary is on the horizon, and it’s time to get strategic about your debt. Let’s talk about how to approach this transition without the financial jargon or judgment.
Why the Transition From Residency to Attending Life Is a Critical Debt Window
Here’s the thing about the transition from training to practice: your income is about to jump significantly. For most physicians, we’re talking about doubling or even tripling your take-home pay within a few months. This is your golden window of opportunity.
Think about it this way: right now, you’ve been surviving on a resident or fellow salary. You’ve learned to live lean, split groceries with roommates, and make your own coffee. Your brain has already adjusted to this lifestyle. When that first attending paycheck hits your account, you’ll have a choice: let your spending inflate to match your new income, or maintain your current lifestyle for just a little longer while you tackle your debt strategically.
The Debt Inventory: Know What You’re Working With
Before you can make a plan, you need to see the full picture. Set aside 2 hours this weekend and make a complete list:
Student Loans
- Write down each loan separately
- Note whether it’s federal or private
- Record the interest rate for each
- Check if it says “Direct” in the title (this matters for loan forgiveness)
Credit Cards
- List each card and its balance
- Note the APR (interest rate) for each
- Identify which ones are costing you the most (outstanding, recurring balances)
Auto Loans
- Current balance
- Interest rate
- Monthly payment
- Payoff Date
Other Debts
- Personal loans, medical debt, anything else
Don’t judge yourself while you’re doing this. You’re not the first doctor to have debt, and you certainly won’t be the last. The average medical school debt alone is over $200,000, and that doesn’t include the financial gymnastics of getting through training.
Strategy 1: The High-Interest Attack
Here’s a simple truth: credit card debt is like a leak in your boat. It doesn’t matter how much water you’re bailing if you don’t plug the hole first.
Credit cards typically charge between 13-25% annual interest, compounded daily. That means every day you carry a balance, you’re paying interest on your interest. It’s expensive, and it needs to be your top priority.
Your Action Plan:
- Target any debt over 10% interest first
- Make minimum payments on everything else
- Put every extra dollar toward the highest interest rate debt
- Once that’s gone, roll that payment amount to the next highest rate
Consider this: if you have $5,000 in credit card debt at 20% APR, you’re paying about $1,000 per year just in interest. That’s money that could be building your emergency fund or boosting your retirement savings instead.
Quick Win Strategy: If you have good credit, look into a 0% balance transfer card. This can buy you 12-18 months to pay down the balance without additional interest piling on. Just make sure you have a plan to pay it off before the promotional period ends.
Strategy 2: Student Loan Decision Time
Student loans are trickier because you have options, and the right choice depends on your specific situation.
Public Service Loan Forgiveness (PSLF): If you’re staying in academic medicine or working for a non-profit hospital, PSLF could save you hundreds of thousands of dollars. Here’s what matters:
- Your loans need to say “Direct” in the title
- You need to make 120 qualifying payments (10 years total)
- You must work full-time for a qualifying employer
- Your residency years can count toward those 120 payments if your loans and repayment plan qualify.
If you’re going the PSLF route, your strategy is simple: pay as little as possible while maximizing forgiveness. That means enrolling in the SAVE plan, which bases your payment on your income and family size, and often results in lower monthly payments than other programs. *Student loan repayment plans are in flux. Make sure to look up the most current options.
Not doing PSLF? Then your goal is to pay off the loans as efficiently as possible. Focus on the highest interest rate loans first. Private loans typically have higher rates than federal loans, so tackle those aggressively.
A Real Example: Dr. Marcus graduated residency with $250,000 in federal loans. He took a job at a non-profit hospital and enrolled in PSLF with the SAVE plan. His monthly payment during residency was under $200. As a new attending making $300,000, his payment increased to about $1,800 per month. But after making payments for 7 more years (he already had 3 years of credit from residency), his remaining balance of over $180,000 was forgiven, tax-free. Total paid: roughly $80,000. Total forgiven: $170,000.
Compare that to his co-resident who went into private practice and refinanced her loans for a lower interest rate. She paid $3,000 per month for seven years and paid off all $250,000, plus about $35,000 in interest. Both made the right choice for their career paths.
Strategy 3: The Six-Month Sprint
Here’s my recommendation for your first six months as an attending: treat it like a financial boot camp. You’ve already proven you can live on a resident salary. Give yourself just six more months at roughly the same spending level.
Month 1-2: Adjust to your new schedule and income. Set up automatic payments for all your debts.
Month 3-4: Throw everything extra at high-interest debt. Can you clear out those credit cards?
Month 5-6: Start building your emergency fund while maintaining aggressive payments on remaining high-interest debt.
This doesn’t mean you can’t enjoy your life. Go to dinner. Take a weekend trip. But resist the new car, the luxury apartment, and the expensive watch. Those things will still be there in six months, but your opportunity to eliminate high-interest debt while you’re still in “resident mode” won’t be.
What About Car Loans?
Auto loans usually fall somewhere in the middle of the interest rate spectrum, typically 3-7%. They’re secured by the vehicle, which means lower rates than credit cards but higher than mortgages.
Don’t rush to pay off a car loan if it has a low interest rate (under 4-5%). Your money might work harder for you in retirement accounts. But if your car loan is above 6%, consider it high-priority debt and tackle it early.
The Mindset Shift
Dr. Chen, the resident from our opening story, did something smart after her 2 AM accounting session. She didn’t just make a spreadsheet; she made a vision board. On one side, she wrote her current debts. On the other, she wrote what she’d do once they were gone: “Sleep without money stress,” “Take Mom on vacation,” “Buy a house without anxiety.”
That vision kept her motivated during her first six months as an attending. Every time she was tempted by lifestyle creep, she looked at that board. Eighteen months after starting her attending job, she paid off the last of her credit cards and started building real wealth.
Your Assignment This Week
Don’t wait until graduation. Start now:
- Make your complete debt inventory this weekend
- Calculate your total debt-to-income snapshot (total debt divided by annual income)
- Research whether you qualify for PSLF
- Check your credit card interest rates
- Make a plan for the first six months after you start your attending job
The transition from training to practice is exciting, terrifying, and full of opportunity. Your debt doesn’t define you, but your plan to address it will shape your financial future for years to come.
You’ve already done the hard part: you made it through medical school and training. This is just another challenge, and you’re absolutely capable of conquering it.
Ready to learn more about preparing financially for your transition to practice? Check out our Bridge Loan program, designed specifically to help new attendings manage the financial gap between training and practice.
