Recommendations for building a nest egg?

[pharm B]

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So I know I have approximately two years of pre-requisites to finish, starting in the Fall. My girlfriend (possible future fiance) and I have talked about it, and we're trying to figure out the best way to utilize the money we save between now and matriculation.

As I figure it, we'll end up with about $10k in a savings account, but I know that means it won't even keep up with inflation. Does anyone here have a recommendation for a short-term (two year) investment?

 

[pdlaw2000]

I would say to stay away from the stock market for now, at least until after the election. Of course you don't want it sitting around, I would look a ING or HSBC online for information on thier money markets and savings accounts, they seem to offer better rates of returns for savings accounts. I would also suggest suzie ormans book, it was written for women, but it has a lot of good information in it.

I would also stay away from Dave Ramsey, he's a hack who works for the Credit Card and collection industry.

I opened a ING orange savings and share builder account, I am investing in penny stocks, sort of a little hobby now, but so far I'm returning about 18%, I got into some small alternative fuel and energy stocks between 24 cents and 50 cents a share, and they are doing very well now even on the bad days on wall street. I would not recommend this to anyone who's not willing to lose what they invest, it is riskey.

This is a better idea than what I did for my last year in law school and the bar exam prep time, which was go to the casino, it served its purpose, but I got real luckey alot.

 

[nontrdgsbuiucmd]

This is pretty much within my area of expertise, (not what I do daily, mind you)

I'd concur w/counselor, stock market is really only for 5+ year investment, even then no one should be 100% into stock unless they have very high risk tolerance.

Bonds too would be unwise as the value of the bond can fluctuate greatly depending on interest rates and anticipated changes to interest rates.

If it were me, I'd check into savings account rates at banks that don't have branches (why earn lower interest to pay the branch manager's salary?) and possibly credit unions, which have tax advantages & therefore can offer higher rates, I've also heard good things about ING Orange for a savings account. Keep in mind that no one will guarantee any rate above maybe 6% (if that high) although I've seen a few rates around 4.5% depending on the balance in the account. Anything higher, and you're accepting some risk.

 

[alpha62]

I would say to stay away from the stock market for now, at least until after the election. Of course you don't want it sitting around, I would look a ING or HSBC online for information on thier money markets and savings accounts, they seem to offer better rates of returns for savings accounts. I would also suggest suzie ormans book, it was written for women, but it has a lot of good information in it.

I would also stay away from Dave Ramsey, he's a hack who works for the Credit Card and collection industry.

I opened a ING orange savings and share builder account, I am investing in penny stocks, sort of a little hobby now, but so far I'm returning about 18%, I got into some small alternative fuel and energy stocks between 24 cents and 50 cents a share, and they are doing very well now even on the bad days on wall street. I would not recommend this to anyone who's not willing to lose what they invest, it is riskey.

This is a better idea than what I did for my last year in law school and the bar exam prep time, which was go to the casino, it served its purpose, but I got real luckey alot.

I disagree completely. Dave Ramsey isn't a hack for the credit card company. Suzie Orman is. She's got a deal with FICO.

Dave's advice: sell your new car, buy a clunker while you are in school. Live on rice and beans. Rent, don't own for now. I don't think you've ever listened to Dave because he regularly refers to collection agency as " scum "

Dave's advice is watch what rich people do. The average millionaire drives a car that's 2-3 years old. Warren Buffett is rich. He does not advise penny stocks. go ahead and buy a penny stock and not only do you risk watching it decrease in value, but drop off the trading board completely.

Warren buffet recommends simple index funds. I've got my money tied up in some CD right now and I could kick myself for it. They're paying about 2.5 % in the next six months and many people are predicting the Index will increase up to 30% in the recovery period.

Try watching the movie " Maxed Out " Cut your debt. Suze is in bed with FICO ( and that's probably the only man she's ever come close to being in bed with in her entire life if you know what I mean)

Index funds with Vanguard. Their expense ratio's are low.

Also, I don't know what your health insurance is going to be like in school, but health savings accounts aren't bad either. they're a nice tax break and the proceeds are not taxable.

check out www.hsabank.com You can get a debit card with it, then pay for birth control pills with it while in school, because I sure as hell don't recommend starting or adding to a family until you've been in this business 5 years.

You've probably seen by now, most poor people bred themselves into poverty.

 

[crazydiamond]

Alpha has some great advice.

Do you have anything saved up at all? Retirement?

I, personally, have some money in a money market account. I'm getting ready to put some more money in an ING Orange account, since it earns more interest than my credit union offers (which is higher than most bank). I also have a Roth IRA and am currently contributing the max. But I am working now, so I can do that. I want to build it up as much as possible now, in anticipation of me not being able to contribute much, or any, once I get into school.

So my recommendation is to put your money in a high-interest saving account and open an IRA and contribute as much as you can. The sooner you do it, the better, thanks to the magic of compounding interest.

 

[pdlaw2000]

If you think that you are going to need the money during school, stay away from IRA's as there can be penalties if you need the money in a pinch during school, have gone through law school and working full time, I can tell you that things do come up, like a car problems, heat/ac/water heater issues, it always seems to happen at the worst possible time, that’s life, but with the additional pressures of school, it seems like someone is out to get you. So avoid anything that will tie your money up, with early withdrawal penalties.

Try to enter school debt free, as much a possible. And use that student loan money wisely. While in Law School, I negotiated with my land lord for cheaper rent if I paid him for 4 months at a time, and in my last year, I cashed in some bonds I had from the military, and paid him Sept. - May up front, at a rate of $600.00 a month for a $920 a month apartment, a lot of cash now is better then a little along the way.


By the way, FICO is not a creditor, a bank or a collection agency, Dave Ramsey is a yearly keynote or other speaker at the annual "scum" collection company convention, he speaks at that convention every year, just check utube. He calls them scum, but always tells the callers to send their money to them.

 

[ManualEvac]

I disagree completely. Dave Ramsey isn't a hack for the credit card company. Suzie Orman is. She's got a deal with FICO.

Dave's advice: sell your new car, buy a clunker while you are in school. Live on rice and beans. Rent, don't own for now. I don't think you've ever listened to Dave because he regularly refers to collection agency as " scum "

Dave's advice is watch what rich people do. The average millionaire drives a car that's 2-3 years old. Warren Buffett is rich. He does not advise penny stocks. go ahead and buy a penny stock and not only do you risk watching it decrease in value, but drop off the trading board completely.

Warren buffet recommends simple index funds. I've got my money tied up in some CD right now and I could kick myself for it. They're paying about 2.5 % in the next six months and many people are predicting the Index will increase up to 30% in the recovery period.

Try watching the movie " Maxed Out " Cut your debt. Suze is in bed with FICO ( and that's probably the only man she's ever come close to being in bed with in her entire life if you know what I mean)

Index funds with Vanguard. Their expense ratio's are low.

Also, I don't know what your health insurance is going to be like in school, but health savings accounts aren't bad either. they're a nice tax break and the proceeds are not taxable.

check out www.hsabank.com You can get a debit card with it, then pay for birth control pills with it while in school, because I sure as hell don't recommend starting or adding to a family until you've been in this business 5 years.

You've probably seen by now, most poor people bred themselves into poverty.

This is excellent advice all around. I am the owner of a small business and have learned much of this the hard way, and now am doing quite well. Wish I would have read this advice 10 years ago. Index funds are a bargain right now, too. Buy low, and watch your money grow significantly in the next 5-10 years.👍

 

[crazydiamond]

IRAs may tie up some money now, but if you have it then I still advise starting one. I don't advise contributing to it if you can't contribute to savings too, but if you can do both simultaneously, then I think that's ideal. Things come up, sure, but if you wait 10 years to start saving you're going to be the loser in the end. And things always come up. If you wait until they don't, you'll never save a dime. Of course, the idea is to not take any money out, so be sure to start savings as well.

Here's a good blog article by a practicing physician on the topic of retirement planning -- and the fact that many physicians fail to do so. http://www.ruraldoctoring.com/2008/06/meconomics-part-5.html

 

[nontrdgsbuiucmd]

I agree mostly with the recommendations above, DEPENDING on the time frame.

Speaking as an investment advisor, if my client were 25 yrs old, earning, what, 45,000 per year or so as a entry level professional, anticipated raises around 5% per year, then yes, I would advise maxing out employer 401K, if that's not available go IRA, I believe at that income bracket one could go Roth IRA too (pay taxes now rather than at retirement). Investment advisors always say save more, spend less, yadda yadda. By the way, if I were directing the investment, they'd go into Fortune 500/Wilshire 4500 index funds definitely. Vanguard/Janus have some really low expense ratio funds. If one likes to play it dangerously, drop 5% of the portfolio into whatever seems interesting; that's little enough where there's a limit to the loss possible.

But that's not Op's question. I'd argue the most relevant two questions are:

1) what GUARANTEED rate could one earn in an IRA/retirement fund versus
2) what would one pay for student loans?

Sure, maybe a retirement fund could earn 12%. Or maybe it could earn 1%. But if one chooses to have money in a retirement fund while incurring student loan interest at 7%, is that a wise choice? A really detailed analysis would require taking into account that student loan interest (I believe completely) does not accumulate while one is in school. Part of this would likely come down to comfort having the debt too; I'd rather have lower debt & lower assets, others might feel more comfortable with retirement savings & higher student loans.

If the goal is to save for 2 years before using the money for school, I'd challenge any reader to find a serious investment article recommending stocks; those're intended for long term holds.

 

[alpha62]

If you think that you are going to need the money during school, stay away from IRA's as there can be penalties if you need the money in a pinch during school, have gone through law school and working full time, I can tell you that things do come up, like a car problems, heat/ac/water heater issues, it always seems to happen at the worst possible time, that’s life, but with the additional pressures of school, it seems like someone is out to get you. So avoid anything that will tie your money up, with early withdrawal penalties.

Try to enter school debt free, as much a possible. And use that student loan money wisely. While in Law School, I negotiated with my land lord for cheaper rent if I paid him for 4 months at a time, and in my last year, I cashed in some bonds I had from the military, and paid him Sept. - May up front, at a rate of $600.00 a month for a $920 a month apartment, a lot of cash now is better then a little along the way.


By the way, FICO is not a creditor, a bank or a collection agency, Dave Ramsey is a yearly keynote or other speaker at the annual "scum" collection company convention, he speaks at that convention every year, just check utube. He calls them scum, but always tells the callers to send their money to them.

Again I disagree. What dave tells people is to simply pay people what you owe them, but do it on YOUR terms, not theirs.

When you graduate, go into practice, and pts owe you money or you can't pay the nurses or even buy toliet paper for the office, Dave Ramsey might very well be your best friend.

While I agree school is not the time to pimp your IRA, buying index ETFs doesn't seem like a bad deal, because they are so liquid and the expense ratios are practically nill.

The intrest rates on saving sucks right now. Market right now, gotta be close to bottom. They'll be a recovery starting before the establishment is aware of it, just like there will be the start of a recession before anybody admits to it.

 

[alpha62]

I agree mostly with the recommendations above, DEPENDING on the time frame.

Speaking as an investment advisor, if my client were 25 yrs old, earning, what, 45,000 per year or so as a entry level professional, anticipated raises around 5% per year, then yes, I would advise maxing out employer 401K, if that's not available go IRA, I believe at that income bracket one could go Roth IRA too (pay taxes now rather than at retirement). Investment advisors always say save more, spend less, yadda yadda. By the way, if I were directing the investment, they'd go into Fortune 500/Wilshire 4500 index funds definitely. Vanguard/Janus have some really low expense ratio funds. If one likes to play it dangerously, drop 5% of the portfolio into whatever seems interesting; that's little enough where there's a limit to the loss possible.

But that's not Op's question. I'd argue the most relevant two questions are:

1) what GUARANTEED rate could one earn in an IRA/retirement fund versus
2) what would one pay for student loans?

Sure, maybe a retirement fund could earn 12%. Or maybe it could earn 1%. But if one chooses to have money in a retirement fund while incurring student loan interest at 7%, is that a wise choice? A really detailed analysis would require taking into account that student loan interest (I believe completely) does not accumulate while one is in school. Part of this would likely come down to comfort having the debt too; I'd rather have lower debt & lower assets, others might feel more comfortable with retirement savings & higher student loans.

If the goal is to save for 2 years before using the money for school, I'd challenge any reader to find a serious investment article recommending stocks; those're intended for long term holds.

this is a little off topic, but I'm in a beef right now with my employer. He wants to go with some 401K manager that has funds with nothing under 1.5% expense ratio and this chump wants to charge us more and more every years as the asset base builds ? What the hell is that ?

I countered with a simple Vanguard 401K plan and find a CPA in town that can manage this ( a 5 man group) for a negoiated flat rate.

Be wary of company 401Ks, I agree max them out, it's free money on the match, but if it gets eaten up by the scum bag manager getting kickbacks from the fund company, you'll be working for him, not you.

Don't be afraid to speak up at your office, because when you're 65, you'll wish you would have grown some balls when you were 35.

Most of the old people I work on say it's not what they accumulated in life, it's the regret of not taking chances and speaking up at the time.

 

[pharm B]

Sorry I took so long to respond to all these posts. Thanks everyone for replying!

I have a few thousand saved in the military's Thrift Savings Plan that I was planning on rolling over into an IRA for long-term investment. I have a few more floating around in Tax Liens.

I just want to maximize the amount of "cash in hand" my girlfriend (possible wife) and I have when I actually enter med school. She'll be working while I'm there, but we've never relied on only one income.

But I'll definitely take into account everything mentioned in this thread!

 

[crazydiamond]

But that's not Op's question. I'd argue the most relevant two questions are:

1) what GUARANTEED rate could one earn in an IRA/retirement fund versus
2) what would one pay for student loans?

Sure, maybe a retirement fund could earn 12%. Or maybe it could earn 1%. But if one chooses to have money in a retirement fund while incurring student loan interest at 7%, is that a wise choice? A really detailed analysis would require taking into account that student loan interest (I believe completely) does not accumulate while one is in school. Part of this would likely come down to comfort having the debt too; I'd rather have lower debt & lower assets, others might feel more comfortable with retirement savings & higher student loans.

It depends on the loan. The loan I've had to take out for this fall, in order to finally finish my graduate degree, is unsubsidized. I get charged interest from day 1 (thankfully all I need is a couple thousand!). Those who meet the income requirements, though, may be able to secure subsidized Stafford loans and not have to worry about interest until out of school.

Comfort level really does come down to it. I know me, personally, I'd rather at least start a retirement account now (I'm 28) so that whatever little I do put into it can compound while I'm in school and not contributing. But I've also not been borrowing money while I've been contributing, either.

I think another major factor is discipline. I can put tons of money away in a non-retirement account and not touch it, but many people cannot. If you constantly pull a little bit out here and there, as things come up, it's easy to piss away the entire savings in a short period of time. You've got to at least pay your savings back, but ideally put back even more. With an IRA, the imposed penalties for early withdrawal might be necessary to keep the non-disciplined person from squandering away their money. Instead of thinking you need something and taking it out of savings, you instead learn to adjust your lifestyle to make do with less.

 

[pdlaw2000]

I think that some have missed the point that the OP was asking about, if I understand correctly, he was looking for a way to build a little nest egg to help him get through school, not through his golden years. Of course most non-trads are thinking about their retirement, but if your worried about retirement now is not the time to consider taking on student loan debt to go through med school. Bottom line is, a nest egg to help get through school should be accessable without incurring tax penalties, the last thing a STUDENT needs is a large federal tax due on April 15th.

Having already gone through a professional school as a non-trad, and incurring over $150,000 in student loan debt and paying most of it off in 8 years, I can tell you that once most students barrow through the first 2 years of school, they will barrow for the last two.

In todays economy, building a nest egg is more about killing yourself with 2 and 3 jobs when your not in school during pre-med, (I agree with Dave Ramsey there, sort of), your biggest worry is not what investments to make to make money, it is where to put the money so you don't lose your money through stock market crashes, advisor fees, loads, and taxes.

And, having built a solo-practice over 8 years, I know all to well about clients who don't want to pay, who pay with bad checks, and those who pay 20 bucks a month for years. I only wish my current indsutry had "insurance" to cover some of the costs, but it does not. I managed to pay off my loans the "dave ramsely way" suffering, working my practice by day, bar tending at night, delivering pizza's, and generaly doing anything to generate a penny towards paying off school loans, the only nest egg you have is you willingness to work. I agree that if you have a $100 to put towards a 12% student loan, or a 8% IRA, the smart thing to do is to pay off the loan.

 

[kami333]

A couple things:

Personally I wouldn't recommend HSABank, there HSAs with better interest rates and less fees (such as Alliant CU)

Dave Ramsey gives some good advice but don't take it as gospel. A lot of his advice is psychological and aimed at people who may have less than perfect self discipline (his snowball method of paying off debt for example).

While generally it is a good idea to pay out of pocket instead of taking out loans, you have to remember that education debt is generally discharged on death or disability. If you have family and are the sole income earner, it might be prudent to take that into consideration vs raiding all your savings.

Retirement accounts are not included in FAFSA, and for Roth IRAs you can make early withdrawals in some cases without penalty (such as buying a house).

Best FDIC insured interest rates are currently at around 5.8% for rewards checking (have direct deposit, make a certain number of debit transactions per month, etc some hoops to jump through), much better than what ING is offering (even my Wamu savings is higher than ING). If you are in the military you may want to consider joining (and keeping an account) USAA, they have pretty good rates and products even though they are kind of sucking right now.

Opening an Individual Development Account might also be a good bet if you qualify, they are matched savings account that help people with low incomes afford homes or education (aka med school), though they are restricted to the state you open them in. I'm on route for saving $1500, they'll match at 1:3 so if I get into my state school that's $6000 off my multi-hundred thousand dollar loans.

 

[crazydiamond]

I completely understood his intent. I just think that it's unlikely that he'll be able to save enough money over the next two years to make an appreciable dent in med school costs. Unless, of course, he already has high income employment already or he busts his ass over the next two years. The latter I don't necessarily recommend because now's the time kick ass in school and not burn yourself out. Who wants to start med school burnt out and suffering from lack of sleep and poor eating?

pdlaw, I understand you paid off nearly $150,000 in 8 years and I applaud you for that. So let's assume that the OPs debt load upon completing med school is this same amount -- and he also busts his ass paying it off. That means that he's wasted the next 18 years, critical time to put a little away for retirement. By then it's too little too late. My point is that he should put some (and yes, only some) in a retirement account now, and let it sit for the remainder 16 years. Upon finishing residency he can bust his ass and pay off the loans in a short period of time, meanwhile that few thousand will be considerably more.

BTW, my Stafford unsubsidized loan that I just got last week is running 6.8%. Not nearly as low as it used to be, but a far cry from 12% too. I'd agree with paying the higher interest rate debt first if the loan had already been taken out. But it's not -- still at least 2 years down the road -- so unless he can really make a huge dent in his projected costs, I say the money has better uses at the moment.

 

[alpha62]

I think that some have missed the point that the OP was asking about, if I understand correctly, he was looking for a way to build a little nest egg to help him get through school, not through his golden years. Of course most non-trads are thinking about their retirement, but if your worried about retirement now is not the time to consider taking on student loan debt to go through med school. Bottom line is, a nest egg to help get through school should be accessable without incurring tax penalties, the last thing a STUDENT needs is a large federal tax due on April 15th.

Having already gone through a professional school as a non-trad, and incurring over $150,000 in student loan debt and paying most of it off in 8 years, I can tell you that once most students barrow through the first 2 years of school, they will barrow for the last two.

In todays economy, building a nest egg is more about killing yourself with 2 and 3 jobs when your not in school during pre-med, (I agree with Dave Ramsey there, sort of), your biggest worry is not what investments to make to make money, it is where to put the money so you don't lose your money through stock market crashes, advisor fees, loads, and taxes.

And, having built a solo-practice over 8 years, I know all to well about clients who don't want to pay, who pay with bad checks, and those who pay 20 bucks a month for years. I only wish my current indsutry had "insurance" to cover some of the costs, but it does not. I managed to pay off my loans the "dave ramsely way" suffering, working my practice by day, bar tending at night, delivering pizza's, and generaly doing anything to generate a penny towards paying off school loans, the only nest egg you have is you willingness to work. I agree that if you have a $100 to put towards a 12% student loan, or a 8% IRA, the smart thing to do is to pay off the loan.

Myth: debt is a lever to build wealth
Reality: debt is for bankers, it keeps them in a job

 

[alpha62]

A couple things:

Personally I wouldn't recommend HSABank, there HSAs with better interest rates and less fees (such as Alliant CU)

Dave Ramsey gives some good advice but don't take it as gospel. A lot of his advice is psychological and aimed at people who may have less than perfect self discipline (his snowball method of paying off debt for example).

While generally it is a good idea to pay out of pocket instead of taking out loans, you have to remember that education debt is generally discharged on death or disability. If you have family and are the sole income earner, it might be prudent to take that into consideration vs raiding all your savings.

Retirement accounts are not included in FAFSA, and for Roth IRAs you can make early withdrawals in some cases without penalty (such as buying a house).

Best FDIC insured interest rates are currently at around 5.8% for rewards checking (have direct deposit, make a certain number of debit transactions per month, etc some hoops to jump through), much better than what ING is offering (even my Wamu savings is higher than ING). If you are in the military you may want to consider joining (and keeping an account) USAA, they have pretty good rates and products even though they are kind of sucking right now.

Opening an Individual Development Account might also be a good bet if you qualify, they are matched savings account that help people with low incomes afford homes or education (aka med school), though they are restricted to the state you open them in. I'm on route for saving $1500, they'll match at 1:3 so if I get into my state school that's $6000 off my multi-hundred thousand dollar loans.

if there is a better deal than HSA bank, I'm all over it. Thanks.
I went with HSA bank, because the more you contibute, the less the fees are and eventually, they get down to about 12 dollars a year.

My concern with locking at 5% intrest rate in a CD with some outfits, is I think they're wanting 24 months committment or some ridiculous thing like that.

There is a bill working it's way through the senate ( may have passed already) that will require 3rd party review of dispersement of your own money. That will certainly raise fees for everybody.

I liked HSA because you can use your HSA to invest. Their funds are discounted by waiving the loads with expense ratios under 1%.

If you were to take a portion of your HSA and put it in index fund right now, that seems like a good deal. I think at age 60 the funds convert to something like an IRA and you can then use the money for anything other than medical expense.

 

[pharm B]

I should explain that I'll be attending med school at a public university in Texas (knock on wood). Because I'm a veteran, tuition and fees at a public institution are waived for me.

I'm just trying to soften the blow for my girlfriend and I when we arrive in town. I've heard people take out student loans just to live off of, and I'd like to minimize that. I figure if we can set aside some money now, and she works while I'm in school, we can minimize the debt I incur in school.

 

[scottyT]

...Because I'm a veteran...

I'd like to chime in here that HSA is not an option for you if you decide to use VA services in the future. It's a pretty silly, obscure rule that I encountered when I was shopping for health plans. They consider the VA as an "alternate insurer" that does not qualify as an HDHP plan.

from US Treasury HSA FAQ

I am a Veteran, can I have an HSA?
If you have received any health benefits from the Veterans Administration or one of their facilities, including prescription drugs, in the last three months, you are not eligible for an HSA.

I’m active-duty military and have Tricare coverage, can I have an HSA?
At this time, Tricare does not offer an HDHP options so you are not eligible for an HSA.

I calculated my likelihood of being hospitalized in the next few years and decided that VA is a better option. I now carry a cheap private insurance plan to cover any VA deductibles I encounter, between the two I'm perfectly covered and it's very cheap.

Make sure to look into enrolling with the VA when you get out of the military. Their healthcare was ideal for me when I went to college. Although you might have long waits for specialty care, it's free to very low cost and you are covered in case of something major.

 

[pdlaw2000]

Texas, free college for Vets, I'm a disabled vet, I'm in the wrong state.

PDLAW is packing his stuff today.

BTW - If your trying to figure your future student loan payments, you need to look at the interest rate for the consolidated loans, as most will consolidate after your done with your program, then enter the income contingent program that ties your payment to your income, my initial payments on $153,000.00 was $85.00 a month. Thats the min., you can pay more if you can afford it.

Being self employed I was able to keep the min. payment low, and made some large payments as the money came in, but if I was cash strapped for a month, I could get buy with the $85.00.

The problem with HSA's is, its a government program, so who knows what it will be like from year to year. Look into the student health insurance via your school, I personally get all of my care at the VA, but pay for private insurance for the wife and kids, in Michigan it costs about $10,000 a year, but here in Florida its down to $6,000 a year.

Debt can create wealth, if you use it right, I think that my $153,000 in student loan debt served me well, it has produced well over 2 million (gross) in the last 8 years, not a bad venture and I could not have made it through school without them.

I also agree, but dave ramesey would disagree with me, that you should put some away every month into some sort of IRA, but you cannot count that as your nest egg for school, I also agree that most will allow you to buy a house penalty free, but not tax free, but who the hell is thinking about buying a house and going to med school at the same time?

 

[crazydiamond]

The nice thing about a Roth IRA, though, is that you can pull out some money as long as it's not over the amount you've contributed. This will count as an ordinary distribution and not subject to taxes since you've already paid taxes on it. If you pull out more money than you've contributed, you're subject to paying income tax on the difference.

So I agree, I wouldn't use it to build a savings for reducing med school debt, but you wouldn't be totally screwed if you needed some money along the way.

 

[alpha62]

I'd like to chime in here that HSA is not an option for you if you decide to use VA services in the future. It's a pretty silly, obscure rule that I encountered when I was shopping for health plans. They consider the VA as an "alternate insurer" that does not qualify as an HDHP plan.

from US Treasury HSA FAQ


I calculated my likelihood of being hospitalized in the next few years and decided that VA is a better option. I now carry a cheap private insurance plan to cover any VA deductibles I encounter, between the two I'm perfectly covered and it's very cheap.

Make sure to look into enrolling with the VA when you get out of the military. Their healthcare was ideal for me when I went to college. Although you might have long waits for specialty care, it's free to very low cost and you are covered in case of something major.

Well there is an " Oh S**t " moment I just had. I've never heard of that and there's nothing on the web site about that.

Another thing I just found pretty crappy is my high deductable insurance carrier was evidently trolling all the major gov't insurers, found out I had VA care and now they're trying to 3rd party bill, which will of course, make my insurance rates go up.

I never sighed release of info for either VA or my insurance carrier to share info. Screw them, If they're going to play that, I'll just drop my HD health care and become a full time ward of the state with the VA if they want to play that game.

 

[spooge]

Snag the most aggressive TSP (12% return last time I checked) and utilive the VA for health and home and the GI bill to trim those pre-med studies. If I were you, I would hit the CC for your first year of classes to save even more money. And yes you will still get into med school with CC credits. The south side of corpus had some very cheap condos. It is a great way to build your portfolio and in a couple of years when it is time to move the market will be coming back. If you do not want to sell it, then rent it to some of the fools training at VT-6 (f.u.n.g.u.s. - RANGERS). Buy that condo cheap and sell high, or rent for the BAH rate. My VA rate was initially 1.7% then it did a massive climb to eventually 2.9% (I will recheck this information - I know it never hit higher than the mid 3's). We bought a home in pcola and paid it off in less than 5 years.

Your focus will be on school. Keep the s h i t as simple as possible. Watch out for those texas loop holes when trying to get that "free" education there. Also, the ING orange is a good plan if you are a constant investor. I would only focus on high interest checking for your monthly needs and the savings and TSP for your disposable.

 

[alpha62]

Well there is an " Oh S**t " moment I just had. I've never heard of that and there's nothing on the web site about that.

Another thing I just found pretty crappy is my high deductable insurance carrier was evidently trolling all the major gov't insurers, found out I had VA care and now they're trying to 3rd party bill, which will of course, make my insurance rates go up.

I never sighed release of info for either VA or my insurance carrier to share info. Screw them, If they're going to play that, I'll just drop my HD health care and become a full time ward of the state with the VA if they want to play that game.

I really appreciated the word on this HSA and VA thing. I checked it out though with the company and my CPA. They said I'm still ok.

One thing that people ought to pay attention to is the politicians on the take are trying to let 3rd Party reviewer get their hands on these funds and charge you a monthly fee to do it. It's H.R. 5719 http://www.opencongress.org/bill/110-h5719/show

It's buried in there somewhere on this bill and it's working it's way through the Senate right now.

 

[pharm B]

Being a veteran and all, do you recommend I actually obtain private insurance (or even through the school) or just use the VA's medical care for everything?

By everything, I mean I'm getting out with no disabilities. Just routine stuff, follow-ups, etc.

 

[scottyT]

I use VA care for everything. I also got out as a young guy with no ailments and it worked perfectly for me. Of course, I see the doctor only frequently enough to not be disenrolled from the system ... YMMV if you have more frequent health needs. The copays are certainly manageable (you are copay exempt if you're service-connected or poor enough) and I have no complaints about the level of care I've received.

The only thing you have to be wary of is if you get hospitalized and wind up at a non-VA facility. If you are not copay exempt, the VA may not pay for that hospital stay, they're not obligated to. Although they usually pay up if you transfer into a VA facility, there is nothing requiring them to pay in this situation. For this reason I now carry private insurance.

The great thing about being double-covered is that the VA can bill your insurer when you receive VA care. If they bill your insurer then they accept anything they receive from them as payment in full and you don't have to make the copay.

FYI, copays, as of 08 are:

$8 - 30 day supply of any medication
$15 - primary care visit
$50 - specialty clinic visit (to include a VA ER visit)