Monthly Resident Budget

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RosieQ

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With all the threads about student loans and finance I thought it would be really instructive to post my monthly budget as a resident and get some feedback, as well as see what others are doing (if willing to share).

4 year residency

Current Monthly Pretax Salary: $4980 (higher than most residencies but includes a housing stipend due to higher cost of living)

Pretax retirement mandatory deduction $383 per month
Pretax 403b voluntary contribution- $300 per month

($3500 +/- $50 approx monthly post tax, post retirement contribution income)

Post tax Roth-IRA contribution- $458 per month to max out the $5500 per year
Housing- $1100 per month rent including utilities, live with 2 roommates
Food- $700 per month. Food is important to me, and this includes a few wine memberships and a lot of eating out. Can cut this down to about $200 per month if things get tight but haven't needed to as I'm meeting my budget goals so far.
Car- $440 per month financed. Splurged a bit post med school and really wanted one. Not the most frugal decision overall but I figured that if I could afford it from a cash flow perspective then I shouldn't worry too much.
Car expenses - $124 per month insurance, $150 gas, $50 misc expenses (parking, tolls etc)
Disability insurance- $61 per month, for $1500 monthly coverage...a small policy with guaranteed purchase to $7500 monthly at current rate post graduation. I could get more but figured that this would cover all student loans and I don't have any fixed expenses or dependents yet. I'd max this out and get life insurance if I were to get married, but a house etc.
Misc entertainment and clothes/personal purchases- $200

Remaining in budget $217

Remaining towards savings account, usually actually $400-600 per month but not always as I usually don't max out the food/wine and entertainment/clothes budget

Notably absent: Student loans...now paid off thanks to very generous scholarships in med school, working 3 jobs during med school and extra medical/non medical employment during residency. No parental help though I acknowledge that I both got lucky and worked like a crazy person too. Now directing that extra income into a brokerage account that I have in low cost index funds and a smaller portion aggressively invested in individual stocks more because I think it's fun than because I think I have a gift for beating the market. I would cut back on some of the above expenses to free up an appropriate IBR payment amount plus a little extra if I had the usual student loan payment though. Plan to allocate this money for a house down payment 1-2 years post residency.

I have posted a fair amount on SDN and wanted to stay anonymous for this more personal post hence the new username.

A few of my favorite budget/finance resources:
http://whitecoatinvestor.com/new-to-the-blog-start-here/
http://www.emp.com/wealth-management-videos
http://www.iwillteachyoutoberich.com/automate-your-personal-finances/
Members don't see this ad.
 
Are you a current resident or future resident?
Have you put money aside for board prep, exams, licensing fees for end of residency? Some things to think about and start putting back early.
What about renter's insurance?
 
So jelly you got no student loans! I would love to see other resident's breakdown, hopefully something more realistic that includes student loan repayment (I'm curious how that fits in with the resident salary).
 
I'm super confused about the purpose of this thread... not what I expected to see from the subject line. The OP is posting the experience of maybe 5% of AMG residents out there without crushing student debt in residency. Perhaps the OP doesn't intend so, but it just comes off like a giant gloat fest.

There's nothing special to discuss about a resident's budget if you don't have student loans, it's just like any other job that pays $50-60k.

Congrats on the $440/mo luxury car, housing stipend and the wine membership?
 
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My wife and I are both residents. We decided to not game the system and just pay the standard 10-year payment. We had $240,000 of debt combined, so that's a $2700 monthly payment.

We have about $6600 per month after taxes. After paying off loans, that leaves about $3900 for all other expenses, including rent/mortgage.

The trick to paying off loans during residency is to do residency at a low cost area and have a super low mortgage. Our house is $140,000, so our monthly payment is about $650. We also get some tax benefit from the mortgage interest deduction which covers property tax. Since we live in a super cheap area, this house is actually not a rat hole. We also have two very old but reliable Japanese cars, so have very low car insurance and no car payments.

It's doable. Not fun, but doable.

The older I get, the more I realize how good the Boomers had it (homes under $120k throughout the country, little to no educational debt, salaries not much lower than today), and how much they have screwed up this country and squandered our national wealth.
 
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ortho11111 said:
I'm super confused about the purpose of this thread... not what I expected to see from the subject line. The OP is posting the experience of maybe 5% of AMG residents out there without crushing student debt in residency. Perhaps the OP doesn't intend so, but it just comes off like a giant gloat fest.

There's nothing special to discuss about a resident's budget if you don't have student loans, it's just like any other job that pays $50-60k.

Congrats on the $440/mo luxury car, housing stipend and the wine membership?
Click to expand...

I disagree. Even having student loans (though state school so less than most), it's a valuable insight into retirement contributions, disability insurance and overall what your monthly takehome will look like as a resident. You can adjust the budget to have fewer luxury cars and more student loan repayment.

Maybe you knew how much disability insurance and pre-tax retirement contributions were as a resident (as well as the maximum Roth contribution), but I sure as hell didn't.

OP: Thanks. For those of us starting residency in a few months (hopefully, ha), this was really helpful.
 
naus said:
My wife and I are both residents. We decided to not game the system and just pay the standard 10-year payment. We had $240,000 of debt combined, so that's a $2700 monthly payment.
Click to expand...

Despite what you may think you made a very poor financial decision and demonstrates your lack of understanding of how student loans work.

There is NO REASON not to do PAYE or IBR during residency! There is absolutely no penalty for overpaying so you are welcome to send them as much money as you want every month BUT the amount you are required to send is way less. So if for some reason there's an emergency or you want to splurge on something one month you can adjust your loan payments as you want as long as you make the income based payment. In the same scenario if you are doing standard repayment you may have to rack up credit card debt in the case of an emergency.

As for income based payments you may be able to get $0 repayment for the first year, ~$150/month the second year and ~$450/month every subsequent year.

IMO there comes a time when you need to stop sacrificing quality of life. By the time you're in residency you are guaranteed that you will be able to make up any lost ground on student loan payments once you're an attending. So as a resident you should be able to have the same quality of life as any other 20-something making $45-65k/year ...just more sleep deprived with less free time.
 
MeatTornado said:
Despite what you may think you made a very poor financial decision and demonstrates your lack of understanding of how student loans work.

There is NO REASON not to do PAYE or IBR during residency! There is absolutely no penalty for overpaying so you are welcome to send them as much money as you want every month BUT the amount you are required to send is way less. So if for some reason there's an emergency or you want to splurge on something one month you can adjust your loan payments as you want as long as you make the income based payment. In the same scenario if you are doing standard repayment you may have to rack up credit card debt in the case of an emergency.

As for income based payments you may be able to get $0 repayment for the first year, ~$150/month the second year and ~$450/month every subsequent year.

IMO there comes a time when you need to stop sacrificing quality of life. By the time you're in residency you are guaranteed that you will be able to make up any lost ground on student loan payments once you're an attending. So as a resident you should be able to have the same quality of life as any other 20-something making $45-65k/year ...just more sleep deprived with less free time.
Click to expand...

Ugh... I AM on the IBR program. I just pay $2700 a month anyway, because I can and don't know what else to do with the money sitting in my bank since I'm too busy in residency to spend it anyway. The only thing I can think of paying more for is a newer car, and really, I don't need a new car just now. Which is kind of the point, if you have money sitting around it's always easy to use it up, even when you really don't need it.

But your making IBR/PAYE sound like these payment plans are God's gift to doctors is laughable and totally misleading to naive medical students. Your much touted $0 monthly payment over the course of a 5-year surgical residency plus 1 year fellowship means your interest would have more than quadrupled.

Let me do the math for you at 6.5% interest:
$240k loan has $87k of interest if I pay $2700 a month for 10 years.
$240k loan has $290k of interest if I pay $0 a month for the first 6 years while I'm in residency/fellowship, and then pay the $2700/mo for the remainder. IBR fortunately does not capitalize interest while you have partial financial hardship.

How many BMW 5-series can you buy for $200k? Remember, we're talking just 6 years of sacrifice while you're mostly in the hospital anyway eating cafeteria food and your car is sitting in the hospital garage. You're also in a higher tax bracket when you repay with doctor incomes, and the longer you drag this out the more your repayment is going to conflict with other obligations such as child care and saving for retirement/college.
 
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MeatTornado said:
As for income based payments you may be able to get $0 repayment for the first year, ~$150/month the second year and ~$450/month every subsequent year.
Click to expand...

Unfortunately the days of that are mostly over. When you apply for IBR you have to certify that your previous year's tax return accurately reflects your current income. So using a $0 tax return rom 4th year and your 1/2 yearly salary from intern year won't work. While some service representatives may say it's ok if the amounts are different (I got many different answers when I asked what I should do), if you want to be eligible for loan forgiveness then it's probably best to play it safe and not lie on a government form (even though some of the representatives told me it was OK, it still sounded and felt like lying to me). For all we know, if loan forgiveness does stick around, your tax records (from the following year) may be cross-referenced with your IBR applications, to make sure you didn't game the system. Honestly I don't know if they'd bother unless PSLF sticks around and you're getting a quarter-million dollar payout, but I think it's best to just play it safe.

The one legal "loophole" is to consolidate, or apply to consolidate (you can apply in June for a Dec consolidation), right after you graduate (you can't apply to consolidate until your loans are no longer in in-school status), as you fill out the IBR application at that time for the consolidated loans. And since you'd be applying before starting your residency your salary would presumably still be $0. So you could get $0 payments for that first year that way. But I don't think that's worth the hassle--now you've got one big loan with an interest rate that gets rounded up and you've lost the ability to pay off higher-interest rate loans selectively, so for people with any GradPlus loans it'll end up costing you more.

I definitely agree about being in IBR and just making payments over the top--ideally towards highest-rate loans first, though some people prefer to pay off the smallest loans first.
 
anyone care to post an example budget for the more average resident..... annual income in the high 40ks with ibr student loan payments ?
 
I'll jump in as well. 2 resident household with 220k total debt.

Biweekly income 3000 after tax and 4% retirement contribution (max employer match level) = roughly 6500/month

Mortgage + utilities = 1250
PAYE student loan payment = 700 minimum, have been averaging 2500/month
Car payment = 320
Food + entertainment/dining out = 600
Insurance + gas = 200
Misc: (cost of vacations, medical/dental bills, unexpected repairs, etc) = 600

Total = ~3700 with minimum loan payments, extra going to loans and savings.

It's easy to live a nice lifestyle even with loans in a place with a moderate cost of living. Having a 2 income household obviously helps given expenses aren't doubled with 2 people, though the second loan payment hurts.

Everyone should definitely enter an income based repayment program. Firstly for the flexibility it allows for. I can easily afford the 10y payment now, will that be the case if I have kids during residency? Probably not. Secondly, no one has mentioned the benefit of selectively paying down loans. Many people who graduated at my time have loans at 6.8 and 5.4% as well as a mix of subsidized and unsub loans. Your mandatory payment gets divided to all those loans. With discretionary (extra) payments you can pick which loans you pay down. So by having a lower mandatory payment and paying more on my own I am selectively paying down my higher interest loans and unsub loans (subsidized loans don't accrue interest for the first year of residency) and thus lower the total interest paid. Finally there is the prospect of pslf, though I view that as a pipe dream.
 
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I'm bumping this thread as residency is coming up and I'm trying to get an idea how much I should aim to pay towards rent next year (starting with kids in high COL area). Thanks to those who have already shared and would anyone else be able to give a budget breakdown?


Also, I think that it's very useful to get these detailed breakdowns and criticising people just for being in an enviable financial position simply discourages posting in general.
 
Monthly income is about $3300, post tax

$1250 goes to rent
~$150 towards utilities (water, electricity, Internet)
$450 towards Roth IRA
~$500 towards student loans
~$80 towards phone
~$250 towards food
~$150 entertainment/miscellaneous
~$100 car expenses
~$60 towards insurance or health expenses

Leaves me with about $300 in excess, which I either put towards my emergency fund (usual balance is $7500), or towards my vacations, or use it to help out a friend. The emergency fund I was able to get by saving the amount of my loan payments during my grace period (after I paid off moving expenses), then dumping my tax return into it. This year, my tax return is going to loans.
 
Simply put this is the fairest I have seen: http://img.gawkerassets.com/img/1920cazcf1fxzpng/original.png

Two important things:
1. Pay yourself first (i.e budget to save money in Roth/401k or pay off high interest debt)
2. Money is meant to be used to ensure you do things you enjoy. Spend money on things you like, do not needlessly waste on things you don't.

Remember to calculate for Federal, State, and possibly city/township taxes. Take advantage of PAYE/IBR/PSLF.
 
Regardless of the breakdown everyone should max out their IRA so they get the max employer match. It's free money and unless you sign up you are literally leaving thousands of dollars on the table.
 
link2swim06 said:
Regardless of the breakdown everyone should max out their IRA so they get the max employer match. It's free money and unless you sign up you are literally leaving thousands of dollars on the table.
Click to expand...
A) If you're getting an employer match, it's not an IRA. It's a 401(k) or a 403(b).
B) The majority of residency programs do not offer an employer match.
C) To max out a 401(k)/403(b) contributions, you have to put up 18,000/year in.

If your program does offer a match, it would make sense to do whatever you can to put as much money in to max out the match. That said, if your program somehow magically matches up to the maximum of $18k a year, most residents can't afford to take advantage of it.

If your program doesn't offer a match but you are planning on saving for retirement anyway (which is a very reasonable thing to do), putting up to $5500 of post-tax money a year into a Roth IRA would be better than using your 401(k)/403(b). If you max a Roth and still have additional $$, then you can consider the pre-tax accounts vs debt paydown vs just regular savings in a bank account or a taxable one.
 
Raryn said:
A) If you're getting an employer match, it's not an IRA. It's a 401(k) or a 403(b).
B) The majority of residency programs do not offer an employer match.
C) To max out a 401(k)/403(b) contributions, you have to put up 18,000/year in.

If your program does offer a match, it would make sense to do whatever you can to put as much money in to max out the match. That said, if your program somehow magically matches up to the maximum of $18k a year, most residents can't afford to take advantage of it.

If your program doesn't offer a match but you are planning on saving for retirement anyway (which is a very reasonable thing to do), putting up to $5500 of post-tax money a year into a Roth IRA would be better than using your 401(k)/403(b). If you max a Roth and still have additional $$, then you can consider the pre-tax accounts vs debt paydown vs just regular savings in a bank account or a taxable one.
Click to expand...

To your point B, I've seen some programs on the interview trail that have a match, but it does not vest until 5 years employment, which requires getting a job in the same hospital system post residency.
 
I don't know how some of y'all are putting money into 401k even if the program matches (mine doesn't)
Half my monthly salary goes to rent and the other half for COL and emergency expenses. Good for some of y'all.
 
Doctor4Life1769 said:
I don't know how some of y'all are putting money into 401k even if the program matches (mine doesn't)
Half my monthly salary goes to rent and the other half for COL and emergency expenses. Good for some of y'all.
Click to expand...

You can easily set aside $100 per month for a Roth IRA. You won't max it out, but you will be better off than you were.

If you can't afford $100 a month into a retirement account on even a pgy-1 salary, you need to rethink your spending. There is something in there, be it eating out all the time, buying clothes, gadgets, etc., subscription services. Sometimes if your car is so bad it requires constant repair, it even makes sense to sell it and buy a new (used) car that doesn't have all the problems you're having.
 
dyeguy21 said:
You can easily set aside $100 per month for a Roth IRA. You won't max it out, but you will be better off than you were.

If you can't afford $100 a month into a retirement account on even a pgy-1 salary, you need to rethink your spending. There is something in there, be it eating out all the time, buying clothes, gadgets, etc., subscription services. Sometimes if your car is so bad it requires constant repair, it even makes sense to sell it and buy a new (used) car that doesn't have all the problems you're having.
Click to expand...

If he's in one of the crazy COL cities (SF, NYC), he might actually be unable to to afford to put money aside without compromising a reasonable quality of life.
 
Wordead said:
If he's in one of the crazy COL cities (SF, NYC), he might actually be unable to to afford to put money aside without compromising a reasonable quality of life.
Click to expand...

$100 shouldn't make or break a "reasonable" quality of life. If you are living that close to the razor's edge of income you will never save money. Your salary will go up, but you will somehow still not save money.
 
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dyeguy21 said:
$100 shouldn't make or break a "reasonable" quality of life. If you are living that close to the razor's edge of income you will never save money. Your salary will go up, but you will somehow still not save money.
Click to expand...

You're kidding me right?
I plan to live at my same apartment and drive the same car.
My income will inc dramatically, my COL will stay the same.
I'm single with no SO and no kids.
I find it important to keep an emergency fund at this time than putting $100/mo into some 401K that isn't even being matched. Putting in $100/mo for a Roth IRA is fine and dandy but again in my opinion, an emergency fund is more important to me at this time. Things happen and you need money available at any time. I'm not burning all my money each month and living close to the razor's edge.
 
Doctor4Life1769 said:
You're kidding me right?
I plan to live at my same apartment and drive the same car.
My income will inc dramatically, my COL will stay the same.
I'm single with no SO and no kids.
I find it important to keep an emergency fund at this time than putting $100/mo into some 401K that isn't even being matched. Putting in $100/mo for a Roth IRA is fine and dandy but again in my opinion, an emergency fund is more important to me at this time. Things happen and you need money available at any time. I'm not burning all my money each month and living close to the razor's edge.
Click to expand...

Then why aren't you putting some money into a Roth? You're losing the most important thing in your favor which is time.

If you are in a residency program and have disability, your emergency fund need not be 9 months. You also don't need to build up a fund all the way, you can parcel out the extra money you have. If you have $500 left over at the end of the month put 100 to Roth and 400 to emergency fund. Don't bother with a 401k if it isn't matched during residency. If you are as you say doing fine, there should be nothing holding you back from putting away a small amount each month and letting time and compound interest do its thing.

Also there are many ways to get at the money in your Roth if you truly need it. It's not something that you lock your money in and can never see again until you turn 59.5 (http://www.obliviousinvestor.com/roth-ira-withdrawal-rules/)

Also, I was getting at the idea that saving money comes easiest when it is an automatic habit. If you get into the groove of "I will do that eventually" when there is nothing holding you back from doing it now...more often than not it won't be done and you'll be kicking yourself at 40 when you could have started it 10-15 years earlier.
 
Maxed out my Roth IRA for 2 years. I'm down a thousand dollars because of the "market correction" over the last few days. Joke's on me.
 
MeatTornado said:
Maxed out my Roth IRA for 2 years. I'm down a thousand dollars because of the "market correction" over the last few days. Joke's on me.
Click to expand...

It's a thousand dollars today, it will eventually go back up. That's the point of putting stuff in early and taking advantage of the 30-40 year time frame you are working with. Markets generally go up over time. If they continue a downward trend and the market crashes...fiat currency won't matter much no matter where you have it.
 
Thats a really good budget, considering you can still save between $400 and $600 a month.
 
naus said:
My wife and I are both residents. We decided to not game the system and just pay the standard 10-year payment. We had $240,000 of debt combined, so that's a $2700 monthly payment.
Click to expand...

I would say that making an effort to reduce overall life-time loan payment is not gaming the system. I would consider it similar to efforts made to minimize taxes. Trust me, we are not gaming the system by doing IBR, its the system that is gaming all of us borrowers with 6.8+% interest rates and with ever increasing tuition that goes straight into pockets of administrators.

Are your loans still with the government? Sounds like you are committed to repay them on your own, have you thought of re-financing them while in residency with DRB or LinkCapital. Then as an attending you can re-finance once again to get an even lower interest rate.
Attendings have been able to refinance for past 2 years and residents have been able to do so only in past year (with DRB and LinkCapital).
More discussion is available on whitecoatinvestor.
http://whitecoatinvestor.com/new-players-in-student-loan-refinancing/
http://whitecoatinvestor.com/student-loan-management-issues/
 
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