How to avoid lines-of-credit pitfalls in med school and residency

How to avoid lines-of-credit pitfalls
in med school and residency
line of credit can
provide you with the
funding you need for a
costly medical school
education and subsequent
residency program. But its
ultimate value to you as a
physician is determined by how
well you manage its use as a
student and resident.
Educate yourself
Opt for a financial adviser
who has experience with the
medical profession, and under-
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stands each of its stages and
its specific requirements. Once
you’ve chosen an adviser, make
use of his or her skills as a key
financial-planning resource.
Ask questions about the scope
of the line of credit, the specific
details and the implications of
every related decision.
If used responsibly, a line
of credit is “good debt” that
will help you navigate medical
school as successfully as you
can on the road to becoming a
Plan effectively
Be upfront about your
financial situation. That way,
your adviser can help you
formulate a realistic budget,
determine the ultimate size of
the line of credit, set spending
limits and plan for how to pay
it back.
MD recommends that you
and your adviser implement
an extensive cash-flow analysis
in the early stages to prepare
a monthly and annual budget
and subsequently update the
process each year. This cashflow analysis should cover
every aspect of a student’s
spending: education costs
including fees, study tools
and resources; professional
expenses including training,
national and provincial membership fees and dues; and
all living expenses, including
housing, food, entertainment
and miscellaneous items.
Medical students and residents should also include in
their general budget “big picture” outlays, such as: a “cushion” for unexpected events
(enough to cover three months
of living expenses), Canadian
Resident Matching Service fees
($10,000) and moving costs
Maintain discipline
and spend wisely
Once an accurate cash-flow
analysis is done and realistic
monthly and annual budgets
are established, it’s a matter
of remaining disciplined. MD
recommends that medical
students who have a line of
credit should live within their
means and avoid spending on
unnecessary or luxury items at
this stage. The ultimate goal
is to graduate from medical
school, move on to a successful residency and qualify as a
Depending on the line of
credit’s specific features, students and residents should
also consider using a line of
credit like a bank account, as
it reduces the overall balance
of the credit line and thus
minimizes interest charges.
MD recommends that students and residents opt for a
line of credit with a capitalized
interest component.
This type of account holds
a suitable amount of funds
intended for upcoming interest payments. The advantage
of this is that the interest is
continued on • page 22
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14-07-28 11:24 AM
Lines of credit can
relieve some stress
while training, but
require planning
and discipline
to use them wisely
Seeking out a financial
advisor with experience in
the medical field is a good
move for young learners as
they build their career.
As with any debt incursion,
the potential pitfalls that can
stem from a line of credit are
numerous and can have negative implications for a physician’s career and professional
development in the medium
to long term. Substantial debt
and a bad credit record can
affect everything from a physician’s future job opportunities
to the ability to acquire, incorporate or establish a medical
practice, among other things.
Given that medical students
and residents are focused
primarily on their studies and
training, the ideal approach is
to opt for a line of credit that
has a built-in safety system—
that is, one that sets limits on
annual increments to allow for
a steady drawdown of funds.
Here are guidelines from
MD Physician Services (MD), a
Canadian Medical Associationowned financial management
organization, to help students
and residents effectively manage a line of credit:
AUGUST 12, 2014
A moral lapse in Canadian medical history
plot of a
movie: The
CIA funds
a doctor
Dr. Cameron to experiment on
mentally ill
patients, secretly developing
techniques that would form
the basis of a torture manual.
Yet this is the true story of Dr.
from • page 20
expensed over time, which
eliminates the potential stress
of having to regularly transfer
funds to cover interest charges.
Missing these payments would
affect a student’s or resident’s
credit rating.
Also consider a line of credit
Donald Ewen Cameron, the
Scottish-born, LSD-dosing
shock doctor who conducted
this work as the head of McGill
University’s Allan Memorial
Institute during the late 1950s
and early ’60s. Dr. Cameron
was a world-renowned psychiatrist who believed mental
illness was the result of “poor
mothering” which fostered the
development of “incorrect”
behaviours. His research
investigated the possibility of
where you’ll be able to defer
payments on interest and principal until 12 months after you
finish residency.
And ensure that the line
of credit allows you to pay off
some or all of the balance at
any time.
An MD Student and Resi-
“de-patterning” his patients so
these “incorrect” brain pathways could be re-wired. While
funded partly by Ottawa, Dr.
Cameron’s work was part of a
CIA-sponsored initiative known
as MK-ULTRA Subproject 68.
Later dubbed “the mind control
studies” in the media, the aim
was to devise methods for
controlling human behaviour,
and they culminated in the
production of the KUBARK
Counterintelligence Interroga-
dent Line of Credit, managed
by National Bank, is focused
exclusively on trainee physicians in Canada. You can borrow up to $250,000 to the end
of residency in flexible annual
increments. MD has advisers who specialize in working
with students and residents to
C-01 Conferences/symposia
tion manual in 1963.
Dr. Cameron conducted
experiments on 53 unwitting patients—many of whom
were later diagnosed with
schizophrenia—using extreme
forms of sensory deprivation,
frequent electroshock therapy
and LSD. In some cases, the
subjects were rendered docile
and amnesic, and, having
reverted to this child-like state,
they needed to relearn basic
functions such as speaking,
eating or using a toilet.
In the 1980s, years after
Dr. Cameron’s death in 1967,
victims of his experimentation began to speak out about
their experiences, and lawsuits followed. In response,
in 1992 the Canadian govern­
ment set up the Allan Memorial
Institute Depatterned Persons
Assistance Plan, awarding
$100,000 to each of Dr. Cameron’s former patients.
—Tristan Bronca
ensure they are well-equipped
to manage this line of credit
by providing a clear, strategic
framework to plan, administer
and monitor your finances.
For more information on
the MD and National Bank
Student and Resident Line of
Credit, go to
personal-banking/medicalstudents-residents/ or call
Daniel Labonté is vice-president
of national practice & advice
member experience with MD
Physician Services in Ottawa.
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