Debt Management and Savings Strategies for Young Medical Residents: Aleandro's Journey in 2025

Aleandro is a determined young physician who took pride in funding his education independently. His parents had set up a small RESP for him as a child, but they never fully funded it due to their limited financial knowledge. In his family, money matters were rarely discussed, and he grew up believing that talking about finances was almost taboo. As a result, when he began struggling financially, he felt embarrassed to seek help or even acknowledge the depth of his financial challenges.

A talented athlete and an exceptional student, Aleandro secured a spot in medical school on his first attempt. However, by the time he reached his first year of residency, his total debt had skyrocketed to over $350,000, including credit card debt and a vehicle loan. While he saw his assets as zero, he overlooked one crucial factor: his dedication and hard work had already secured him a future of financial stability—provided he made the right financial decisions early on.

Taking Control of Debt

Recognizing the need for a plan, Aleandro took a practical approach to tackling his financial situation. He wrote down his total debt on one side of a page and his current assets (zero) on the other. This simple exercise gave him a stark visual of where he stood and where he wanted to be.

His next step was scheduling an appointment with a banker. The banker helped him consolidate his debt by offering a line of credit at a lower interest rate, allowing him to pay off his high-interest credit card and vehicle loan in full. Aleandro made a personal commitment never to take on high-interest debt again.

Additionally, he took advantage of student loan deferrals to temporarily pause some repayments on his low-interest government loans. He then set up a manageable payment plan for his line of credit interest while covering essential living expenses such as food and rent. This left him with only a small amount available for savings, but he made a critical decision: he automated his savings by setting up a monthly transfer to a separate account he wouldn’t touch.

Building a Habit of Saving and Investing

Within ten months, Aleandro had accumulated enough in his savings to open a Tax-Free Savings Account (TFSA). He chose a Canadian high-dividend fund, as he learned that U.S. dividends are subject to withholding tax inside a TFSA (unlike in an RRSP). Understanding that an RRSP is most beneficial when he had a higher income to claim deductions, he decided to defer contributing to an RRSP until after residency.

While his financial plan evolved over time, he stuck to the principle of saving first. Over five years of residency, he gradually increased his monthly savings. Although he still had significant debt by the end of residency, his disciplined approach meant that he had built a financial foundation and a mindset geared toward long-term wealth-building.

Achieving Financial Stability Post-Residency

Fast forward six years into clinical practice, and Aleandro has successfully eliminated his remaining debt. His savings have grown, and he has now added an RRSP to complement his TFSA. Most importantly, he shares financial goals with his partner, embracing a lifestyle centered on financial independence rather than excessive spending.

Key Takeaways for Medical Residents

Aleandro’s journey offers valuable financial lessons for medical residents navigating substantial debt and limited early-career earnings:

✔ Acknowledge Financial Challenges – The first step to financial stability is fully recognizing the extent of your debt and taking proactive steps to address it.

✔ Eliminate High-Interest Debt First – Consolidating high-interest loans through a lower-interest line of credit can significantly reduce financial strain.

✔ Automate and Prioritize Savings – Even small, consistent savings can lead to significant financial security over time.

✔ Leverage Tax-Efficient Investing – Using a TFSA for Canadian dividends and strategically timing RRSP contributions can maximize investment returns and tax benefits.

✔ Financial Independence Over Lifestyle Inflation – Aligning financial goals with a supportive partner and resisting the pressure of extravagant spending leads to long-term stability.

The Bottom Line

Aleandro’s disciplined approach to debt repayment and savings highlights the importance of starting early, staying consistent, and making informed financial decisions. His journey from overwhelming debt to financial independence is a testament to the power of strategic planning, tax-efficient investing, and prioritizing financial security over short-term indulgence.

For young medical residents facing similar financial challenges, Aleandro’s story proves that with the right strategies, financial freedom is within reach.