The most common concern for the majority of new grad therapists is how to manage their massive student loan debt after graduate school. With tuition prices steadily increasing and therapists’ wages staying relatively stagnant, this is a valid concern and growing problem among all allied health professions.
Most students focus on ways to increase their income with various options including: working home health, pursuing a career in travel therapy, working as a PRN therapist in addition to a full time job, and starting a cash based clinic. These are all wonderful options, but they only affect one side of the cash flow equation. The larger the gap between income and expenses, the more money that you can put toward paying down your student loans more quickly.
The expense side of the equation is what I want to focus on. In this article I focus on five ways you can keep more of your hard earned money in your pocket and allocate it to paying down student debt.
Five Ways to Reduce Expenses
Reduce housing costs by moving to a cheaper area or having roommates.
Housing costs are one of the biggest expenses for most new grad therapists. Finding a place to live in a cheaper area is a great way to reduce this cost and is completely feasible for a therapist.
Rural areas with very low housing costs are often underserved areas that are desperate for healthcare workers. This is a double win for those that are willing to move to these areas, because in addition to lower housing costs, the facilities are often willing to pay more.
I have traveled to several wonderful rural areas in my career and have found cheap housing as well as high paying jobs. Often these places are only a couple hours outside of bigger cities so still plenty to do and see on the weekends.
If moving is not an option for you, then consider splitting housing costs with a roommate or two. If you can find a professional coworker that you’re friends with, not only can this save you money, but it can also be a very enjoyable living arrangement.
For those with families, it may not be as feasible, but for a single individual straight out of school, this can be a powerful tool for saving money and quickly paying down debt.
Combine having a roommate with moving to a lower cost of living area and you’re well on your way to student debt freedom.
Avoid paying for cable or satellite TV.
There are so many low cost alternatives to cable these days that it’s hard to imagine that cable companies will be able to continue charging absurd prices for much longer, but while they are you should do your best to avoid them.
Cable companies charge customers an average of $85/month, with satellite providers charging even more than that. Getting a digital antenna to pick up local channels combined with a cheap subscription service like Netflix, Hulu, or YouTube TV can be a great alternative that provides less fluff for a much better price.
Put that extra $70+/month toward your student loans instead of in the pocket of cable or satellite providers.
Avoid buying a new car.
After finishing grad school and getting your first real job, there is an urge to reward yourself for all the hard work you put in. That is a wonderful idea, but don’t let that reward be a brand new car with big monthly payments.
There is a great market of used cars that are only a few years old and still in great shape for half the cost or less of a new car. The monthly savings combined with cheaper car insurance on a used car can easily add up to a couple hundred dollars per month or more.
A new car will depreciate 60% on average in the first five years! That means the true cost of new car ownership is much more than just the monthly payment since you’ll only be able to sell it for a fraction of what you paid for it after a few years.
This depreciation slows significantly after the five year mark, so buying a car that is around five years old with relatively low mileage is ideal for keeping costs lower and diverting more money toward your loans.
Use a prepaid cell phone carrier instead of an expensive postpaid plan
As with the cable companies above, many of the big cell phone companies continue to charge outrageous amounts for services that can be matched by discount carriers at a much lower rate.
The average postpaid monthly cell phone bill in the United States is currently $73. There are prepaid carriers that are offering unlimited plans for much less than that, even half or less in some cases.
Check out carriers like: Straight Talk, Total Wireless, Republic Wireless, and Google’s Project Fi to find a cheaper plan that still fits your wireless needs. Direct that extra money saved toward your debt for a quicker path to debt freedom.
Utilize credit cards wisely to reap the benefits of cashback without paying interest.
Credit cards are almost always painted in a negative light and for good reason. The interest rates charged by credit card companies is absurd and should always be avoided.
It is possible to get the benefits of credit cards without paying a penny in interest if you use them the right way. I have used various rewards credit cards for almost every purchase I’ve made (where possible of course) in the past 10 years.
During that time, I’ve gotten a minimum of 1% cashback on every dollar spent but have averaged much closer to 3% cashback by optimizing the cards I use in each place. In addition to the cashback on every dollar spent, sign-up bonuses on rewards cards can add up quickly and lead to significant savings over time.
Even without optimizing your spending with multiple cards or getting huge rewards from sign-up bonuses, it’s very easy to sign up for a basic card with no annual fee, like the Chase Freedom Unlimited, that provides 1.5% cashback on every dollar you spend.
Use the card on all your normal daily purchases, set up autopay to pay off the balance in full each month to avoid any interest charges, and enjoy the extra money in your pocket!
Turn that cashback straight into an extra student loan payment at the end of the year to finish them quicker.
Recent, current, and future therapy graduates will almost all have to deal with some amount of student loan debt. Creating the biggest gap possible between your income and expenses is the quickest way to make progress toward your goal of debt freedom. Do everything you reasonably can to increase your income by taking higher paying jobs or working extra hours, but don’t forget about the other side of the equation, expenses. Use as many of the five tips above as possible for your situation to decrease your expenses, and you’ll be rid of that debt burden in no time!
Thanks for reading, and feel free to reach out to me with any questions on my sites listed below or in the comments section.
About the author: Jared Casazza has been a traveling the country as a physical therapist for a little over three years since graduating in 2015. He travels with his girlfriend, Whitney, who is also a physical therapist, and the majority of their time traveling has been in a fifth wheel camper. He writes about travel therapy, domestic and international travel, as well as personal finance and investing on his blog “Fifth Wheel Physical Therapist,” and he helps mentor new travel therapists on the site “Travel Therapy Mentor.”