Budgeting help

[wonderbread12]

No meaningful financial advice help at my school so I was hoping to get some advice from those who have done it or have been successful on how to budget PGy1 resident salary and beyond

120k loans -- mostly medical school and all federal without any grad plus loans

Assuming 51k resident salary which I would expect to see 80% after taxes leaving ~41k, how much should go towards disability, life insurance, retirement, etc?

Any thoughts if I should go the way of forbearance or another type of repayment plan?

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[BoardingDoc]

Any thoughts if I should go the way of forbearance or another type of repayment plan?

Ok, so you clearly haven't done any research on this yet. What you are asking for is very general advice of which there is a ton freely available online.

Check out WCIs page for some useful tips: http://whitecoatinvestor.com/
Get your head around very basic finance over at personalfinance.reddit.com (specifically, read this: https://www.reddit.com/r/personalfinance/wiki/commontopics)

If you have specific questions after doing some reading, cmon back.

 

[link2swim06]

You are over-estimating your after tax income. Try this tool and select, that you are paid annually and it will give you a rough idea. http://www.adp.com/tools-and-resour...l-calculators/salary-paycheck-calculator.aspx

If your employer offers a retirement match, take it! Otherwise you are ignoring free money. Make sure of course your residency is long enough to make the vesting requirements.

Life insurance may be offered at a cheap rate through your employer. Your amount of life insurance should be based on whether you have dependents (spouse and kids?).

 

[The White Coat Investor]

No meaningful financial advice help at my school so I was hoping to get some advice from those who have done it or have been successful on how to budget PGy1 resident salary and beyond

120k loans -- mostly medical school and all federal without any grad plus loans

Assuming 51k resident salary which I would expect to see 80% after taxes leaving ~41k, how much should go towards disability, life insurance, retirement, etc?

Any thoughts if I should go the way of forbearance or another type of repayment plan?

Pretty typical for a medical school. Most med students get taught nothing and what is taught isn't taught by someone who knows much about it. Good job keeping your loans to just $120K. That's awesome.

You need a student loan plan, that'll be the trickiest part. PSLF vs pay them off. Low payments during residency vs minimizing interest. Those are the two big things to wrestle with. Once you can decide those two things, easier to give advice.

The budget itself? That part's pretty easy. You need DI. If someone else depends on you, you need LI. It's not based on a percentage of your income, it's based on your needs. Regarding retirement, if you can get any employer match and max out a Roth IRA in residency, I think you're doing very well. But the truth is if you can just avoid taking out more debt during residency, you'll do just fine.

 

[wonderbread12]

Ok, so you clearly haven't done any research on this yet. What you are asking for is very general advice of which there is a ton freely available online.

Check out WCIs page for some useful tips: http://whitecoatinvestor.com/
Get your head around very basic finance over at personalfinance.reddit.com (specifically, read this: https://www.reddit.com/r/personalfinance/wiki/commontopics)

If you have specific questions after doing some reading, cmon back.

Thanks for the links. Some specific questions below if you don't mind taking the time to lend your thoughts!

You are over-estimating your after tax income. Try this tool and select, that you are paid annually and it will give you a rough idea. http://www.adp.com/tools-and-resour...l-calculators/salary-paycheck-calculator.aspx

If your employer offers a retirement match, take it! Otherwise you are ignoring free money. Make sure of course your residency is long enough to make the vesting requirements.

Life insurance may be offered at a cheap rate through your employer. Your amount of life insurance should be based on whether you have dependents (spouse and kids?).

Did not realize how little my take home income becomes. thanks for sharing that, definitely helps with the budgeting!

Pretty typical for a medical school. Most med students get taught nothing and what is taught isn't taught by someone who knows much about it. Good job keeping your loans to just $120K. That's awesome.

You need a student loan plan, that'll be the trickiest part. PSLF vs pay them off. Low payments during residency vs minimizing interest. Those are the two big things to wrestle with. Once you can decide those two things, easier to give advice.

The budget itself? That part's pretty easy. You need DI. If someone else depends on you, you need LI. It's not based on a percentage of your income, it's based on your needs. Regarding retirement, if you can get any employer match and max out a Roth IRA in residency, I think you're doing very well. But the truth is if you can just avoid taking out more debt during residency, you'll do just fine.

Thanks for all the info on your site -- very helpful!

I do have a spouse who made income (roughly 55k) so from what I can gather this makes RePAYE not a desired option for me.
This leaves IBR vs PAYE and then what to do afterwards. My plan was to file taxes separately so that my income will essentially give me the lowest repayment plan possible during residency.

Here are my questions at the moment given my upcoming 3yr EM residency:
1) Between IBR and PAYE, I'm thinking that PAYE will be my best bet after I consolidate all of my federal loans (I do not have private loans). If I go this route, how much of an actual impact will negative amortization be with estimated 6% interest rate after consolidation?
2) Does IBR or PAYE offer to subsidize the interest that accrues with $0 to minimal payments while in the program?
3) Ive tried various loan projection websites but they ultimately do not fully paint the picture for me. I'm wondering where I would go after 3 yrs of PAYE during residency? Would there be any benefit to doing PSLF given my current loan amount or would it be best to transition to a "pay your loans back as fast as you" type of plan? My hospital is a 501(c)3 so I would have 7 additional years of working at a nonprofit.
4) If I do fellowship will this simply be another year of PAYE at a higher monthly payment or does this mess things up?

Thank you in advance for any input!

 

[jgauger]

Thanks for the links. Some specific questions below if you don't mind taking the time to lend your thoughts!



Did not realize how little my take home income becomes. thanks for sharing that, definitely helps with the budgeting!



Thanks for all the info on your site -- very helpful!

I do have a spouse who made income (roughly 55k) so from what I can gather this makes RePAYE not a desired option for me.
This leaves IBR vs PAYE and then what to do afterwards. My plan was to file taxes separately so that my income will essentially give me the lowest repayment plan possible during residency.

Here are my questions at the moment given my upcoming 3yr EM residency:
1) Between IBR and PAYE, I'm thinking that PAYE will be my best bet after I consolidate all of my federal loans (I do not have private loans). If I go this route, how much of an actual impact will negative amortization be with estimated 6% interest rate after consolidation?
2) Does IBR or PAYE offer to subsidize the interest that accrues with $0 to minimal payments while in the program?
3) Ive tried various loan projection websites but they ultimately do not fully paint the picture for me. I'm wondering where I would go after 3 yrs of PAYE during residency? Would there be any benefit to doing PSLF given my current loan amount or would it be best to transition to a "pay your loans back as fast as you" type of plan? My hospital is a 501(c)3 so I would have 7 additional years of working at a nonprofit.
4) If I do fellowship will this simply be another year of PAYE at a higher monthly payment or does this mess things up?

Thank you in advance for any input!

I think we're in a similar situation (Spouses make about same, also a soon to be pgy-1), so I'll tell you my thoughts. I've run the numbers for myself, but you can do it yourself with a little bit of Excel knowledge. Negative amortization after 3 years of PAYE payments on 120K @ 6% should add about 15K to the balance (135K after 3 years) if I did the math right.

Why consolidate? They round your interest rate up a little if you do that.

PAYE and filing separately should be best option for you if you want PSLF. If not, RePAYE vs refinancing is your decision. Some refi companies offer $100/mo payments, but the interest rate may be higher than RePAYE with the subsidy.

IBR/PAYE do not have a subsidy.

After 3 years of PAYE, you would either refinance and pay them off within a few years or go work for a 501c3, pay the minimum under whichever plan works best, and pursue PSLF. That decision is yours to make.

A fellowship is one more year towards PSLF, doesn't change anything else. Others can correct me if I'm wrong.

 

[The White Coat Investor]

Thanks for the links. Some specific questions below if you don't mind taking the time to lend your thoughts!



Did not realize how little my take home income becomes. thanks for sharing that, definitely helps with the budgeting!



Thanks for all the info on your site -- very helpful!

I do have a spouse who made income (roughly 55k) so from what I can gather this makes RePAYE not a desired option for me.
This leaves IBR vs PAYE and then what to do afterwards. My plan was to file taxes separately so that my income will essentially give me the lowest repayment plan possible during residency.

Here are my questions at the moment given my upcoming 3yr EM residency:
1) Between IBR and PAYE, I'm thinking that PAYE will be my best bet after I consolidate all of my federal loans (I do not have private loans). If I go this route, how much of an actual impact will negative amortization be with estimated 6% interest rate after consolidation?
2) Does IBR or PAYE offer to subsidize the interest that accrues with $0 to minimal payments while in the program?
3) Ive tried various loan projection websites but they ultimately do not fully paint the picture for me. I'm wondering where I would go after 3 yrs of PAYE during residency? Would there be any benefit to doing PSLF given my current loan amount or would it be best to transition to a "pay your loans back as fast as you" type of plan? My hospital is a 501(c)3 so I would have 7 additional years of working at a nonprofit.
4) If I do fellowship will this simply be another year of PAYE at a higher monthly payment or does this mess things up?

Thank you in advance for any input!

1. If you qualify for PAYE, it is almost always better than IBR. The amount of negative amortization depends on how big your payments are. For example, if you have $200K of loans at 6%, then the interest on that is $12K a year, or $1K a month. If your payments are $250 a month, then you get $750 a month of negative amortization.
2. No.
3. If you go work for a 501(c)3 after residency, you should go for PSLF. If you don't, refinance and pay them off. Either way, plan to live a lifestyle similar to what you lived as a resident for 2-5 years after residency.
4. No, it's like another year of residency. So it's great if you're going for PSLF I suppose.