Becoming Debt Smart

Apr 8, 2022

The pandemic has made it clear that healthcare professionals are the nation’s caretakers. You work long hours and in stressful situations just for the chance to help someone else. But who’s taking care of you?

Healthcare professionals & debt

A majority of workers — 52% to be precise— say they are constantly stressed about their finances, but then you as a healthcare professional have the additional burden of high stress and burnout. The stigma around discussing money challenges is real — but avoiding the topic can keep you from seeking help when you need it the most.

The likely cause of your financial stress? Debt. 

Everyone thinks working in healthcare equals a high-paying, stable job. But only you know just how much debt you take on to get there. You likely graduated with large amounts of student loan debt, only to then bring in a relatively low income during your early years, turning to credit cards to cover your expenses. 

‍Combine these two factors together and you get a high-income, high-debt situation: On average, one-third of your income goes towards debt payments. 

‍Debt makes it almost impossible to move forward in life. Almost one in three healthcare professionals delayed saving for retirement, 18% said they delayed buying a home, and 15% said they delayed getting married and having kids — all because of their debt. 

So if you are among the 70% of healthcare professionals carrying debt, how do you get out of the debt trap?

Let’s break down three simple things you should know to change your relationship with debt to eventually eliminate debt and start building wealth. 

  1. Know the difference between “good” debt and “bad” debt

  2. Understand that debt affects your credit score but not all debt affects it equally

  3. Recognize that credit card debt is the worst form of debt

1. What is good debt and bad debt?

Debt comes in many forms, and isn’t created equal. 

‍You’ve probably heard of “good” debt and “bad” debt. But whether debt is good or bad depends mostly on how you use the money. Student loans are often considered “good” debt, as they will typically lead to higher-paying jobs. A common example of “bad” debt is credit card debt, since the debt is used to buy things that don’t appreciate in value. But at the end of the day, debt is debt, and debt doesn’t come free. 

‍When you take out any loan, you’ll typically be charged an interest rate, which is what the lender charges you for borrowing the money. The higher the interest rate, the more you’ll pay over the course of your loan. Even a small percentage difference can vastly impact the amount you owe. 

‍APR, short for annual percentage rate, is the cost of borrowing money with your credit card. If you don’t pay off your balance by your card’s due date, your card company can charge you interest on the unpaid amount. 

‍How do interest rates work in action? For example, if you borrowed $200,000 in student loans at the average 5.28% interest rate and paid it off in 10 years, you would pay $257,855 in total over the course of your loan — almost $60,000 of that would be just in interest. 

‍As a simple rule of thumb, consider debt that has an APR less than 6% to be “good” debt. This could be student loans, mortgages, auto loans. We would suggest paying them according to the payment terms. In turn, your focus should be on paying off “bad” debt.

‍“Bad” debt is anything that is over that 6% APR. They are wealth killers and you typically should pay them off as quickly as you can.

2. How debt affects your credit score:

‍Debt doesn’t just affect your monthly budget — it has a direct impact on your credit score, a number that plays a huge role in determining your financial health. 

There are a number of factors that go into your credit score. But the biggest factor is something called credit utilization, or how much debt you’re carrying each month. If your monthly credit card and student loan payments take up too large a percentage of your income, you may not qualify for a mortgage or other important loans. 

‍Not all your debt affects your scores the same way. Credit card debt specifically is the worst — the higher your credit card balances, the more it hurts your credit score. 

‍Lower credit scores also often mean higher interest rates for future loans. What’s more, you may pay more for homeowners and auto insurance, or may not qualify for a specific credit card. Some employers even run a credit check before offering you a job. 

‍Basically — your credit score dictates much of your livelihood. And in such a high-stress, time-consuming job, the last thing you want to be thinking about is that nine-digit number.

3. Credit card is the worst kind of debt: 

‍Credit card debt is the worst kind of debt, especially for healthcare professionals. Credit cards come with very high interest rates — in some cases up to 25-30% — and carrying a balance on your credit card can add hundreds (or thousands) of dollars in interest to your bill over time. It’s one of the easiest ways for healthcare professionals to fall into a debt cycle. 

 In fact, 13% of graduating medical students carry an average of $5,000 in credit card debt. This rises while in training, with 26% of physicians carrying credit card debt. 

Dealing with debt as a healthcare professional

‍Now that you understand how your debt works and where it comes from, it’s time to make a plan to pay it down.  

‍Where can healthcare professionals get help with their debt? 

‍Most financial institutions build debt products for an average consumer, and don’t take into account the specific financial situation many healthcare workers find themselves in. And because you have debt, by default they charge you above average interest rate or dont qualify you for a consolidation loan, even though you are a lot more responsible with money than an average consumer.

‍And that is why Plannery exists.

Plannery designed a debt consolidation product exclusively to help busy healthcare professionals eliminate debt quickly and efficiently. We know that your credit score is not a true representation of how you responsibly handle money. So we offer below-market rates you can’t find anywhere else, with an APR that is sometimes 50% lower than competitors. 

Join our growing community.

1 Million


Healthcare workers helped.

Loaned to pay off expensive debt.

Join our growing community.

1 Million


Healthcare workers helped.

Loaned to pay off expensive debt.
© 2022 Plannery. All rights reserved.