Do you have a financial goal by the end of residency?

[Call Me Dr.]

I'm curious - do you have a specific financial goal to reach by the end of residency (or fellowship)?

I've been talking to folks, lots don't have any specific goals at all. Some have goals like "to save up enough to pay for my board exam" or "to afford to take a vacation between residency and starting work". I had a goal to pay off my private student loans by the end of residency. By the end of fellowship, I wanted to achieve net worth zero.

Do you have specific financial goals, or are you just getting by until you get a bigger paycheck?

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[WinslowPringle]

Specific goal for end of residency: pay 60% of my loans (plus interest) + fully fund our retirement accounts each year + keep emergency fund at current level.

 

[sazerac]

Keep my wife from buying more house than we can afford.

 

[Call Me Dr.]

Specific goal for end of residency: pay 60% of my loans (plus interest) + fully fund our retirement accounts each year + keep emergency fund at current level.

WinslowPringle, those are fantastic goals! Just curious - how did you decide on 60% of loans?

 

[WinslowPringle]

WinslowPringle, those are fantastic goals! Just curious - how did you decide on 60% of loans?

It's an estimate, granted; will refine after match day. Based it on: projected income (self + SO); COL/budget; length of residency program; and current loans, rates and payment plans available.

 

[QofQuimica]

My goal was to save 15-20% of my income each year toward retirement and an emergency fund of six months' living expenses (both of which I did). Beyond that, I just wanted to survive residency.

It's good to have goals for your finances. But in the long run, as a trainee, your future earning power is your biggest asset, not your residency stipend. So my advice to all of you who are still students and residents is to make sure you buy some good individual disability insurance before you graduate.

 

[James Martin]

Specific goal for end of residency: pay 60% of my loans (plus interest) + fully fund our retirement accounts each year + keep emergency fund at current level.

I have also same financial plans.

1) Pay off my debt
2) Build six month emergency fund
3) Investment in real estate
4) Put 15% of my pretax income away for the long-term

 

[Call Me Dr.]

my advice to all of you who are still students and residents is to make sure you buy some good individual disability insurance before you graduate

I am so glad that my medical school taught us about the importance of disability insurance and hooked us up with a great plan. I've seen a senior faculty member struggling with a new disability that prevented work and having to pay bills before their crappy policy finally kicked in!

 

[Call Me Dr.]

3) Investment in real estate

Interesting! Are you investing in a primary home? or are you investing in a rental property or REIT?

 

[WinslowPringle]

... make sure you buy some good individual disability insurance before you graduate.

Great point.

Any comments (anyone) on purchasing individual DI while a med student and increasing it when a resident vs purchasing it through a group plan when in residency?

 

[Call Me Dr.]

The earlier you buy in, the better your rates will be long-term. I purchased individual disability insurance (arranged through my med school) when I graduated med school. Many residency group plans are not specialty-specific or gender neutral. They also may have prolonged waiting periods before they kick in. If you have student loan debt or dependents, they're rarely an adequate amount or type of coverage.
White Coat Investor has a good series on disability insurance. Here's a couple posts to start with:
http://whitecoatinvestor.com/disability-insurance-introduction/
http://whitecoatinvestor.com/does-own-occupation-really-matter-with-disability-insurance/

 

[CliveStaples]

Well, I may only still be a student, but I am working on a financial checklist for my anticipated residency.

1) Save a minimum of 20% of my gross income, beginning with any match on my 401(k) or 403(b), Roth IRA contributions, an emergency fund of 6 months expenses (of which my Roth contributions are the first pieces, though I will save enough later so that I don't need to consider the Roth a part of the emergency fund), and then fill up 401(k) or 403(b) space as much as I can afford. Ideally I would like to try and get my savings rate up to 25%, but I will be satisfied with a 20% floor.

2) Purchase a term life insurance policy. (how much depends on what I can afford; thankfully it's cheap)

3) Purchase own occupation disability insurance.

4) Any money left over? (lol no) Start saving some pennies for a down payment on a house; but no buying one until I'm a year into a job post-residency.

 

[WinslowPringle]

The earlier you buy in, the better your rates will be long-term. I purchased individual disability insurance (arranged through my med school) when I graduated med school. Many residency group plans are not specialty-specific or gender neutral. They also may have prolonged waiting periods before they kick in. If you have student loan debt or dependents, they're rarely an adequate amount or type of coverage.
White Coat Investor has a good series on disability insurance. Here's a couple posts to start with:
http://whitecoatinvestor.com/disability-insurance-introduction/
http://whitecoatinvestor.com/does-own-occupation-really-matter-with-disability-insurance/

Thanks! Yeah, I read and enjoyed the WCI 6 part series and the guest posts on comparing DI....
Several of the residency programs I've interviewed with, though, had reasonably good DI (but most had the bare-bones group policies and a few didn't specify any arrangements). Started looking in January, so was out of the AMA enrollment period; plus several of the med student plans I saw would only cover ~1-2k/month and didn't have a future increase option rider. At this point, I'm planning to wait until Match Day before purchasing anything. Just confused about any hidden benefits to buying it while occupational class is more under medical student vs what it would be as a resident (if that makes sense).

 

[The White Coat Investor]

There's only so much you can do as a resident, especially if you're in the "monstrous" student loan category. The real bang for your buck is in continuing to live your resident lifestyle for 2-5 years after residency completion.

That said, making Roth contributions, buying term life and disability insurance, getting an emergency fund, getting a written financial plan etc are all good things to do as a resident. I think we had a fairly low 5 figure net worth upon residency completion, and that was with the military picking up the tab for med school and minimal undergraduate debt. My hat is off to anyone who can even tread water on their student loans during residency, much less start paying them down. 7% of $300K is $21K a year in interest alone.