SAVING during residency

[6ft3dr2b]

I was just wondering how feasible it would be to save $1000/month during residency.

Most likely I will be living in NYC and commuting via subway. I have no outstanding loans (no credit cards or car notes). I don't need to live like a star. I don't need cable tv, or fancy restaurants. All I need is my phone and lap top. Overall, I wont be spending much.

I just wanted to hear opinions.

THanks

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[dragonfly99]

If you have no dependents and no car and no student loans, you can definitely save some money. If you were living somewhere cheap, this might be doable.
I think you can save $600/month, but I don't know about $1000.

 

[medicinesux]

You absolutely can save money, even on a resident salary, if you are smart about your cash. There is one resident in my program who is crying poverty- even after working multiple moonlighting shifts. She works like a racehorse. She pays like 2000 a month for a 1 bedroom in the best part of town, shells out 200 a month to park her 400 a month car lease so she can go shopping and eat out 2-3 wk, is it no wonder she lives paycheck to paycheck? In other words, she has to work an extra 10 hr shift EVERY WEEK (or in other words, lose essentially one extra day out of her life every week) just to make up the difference in rent between my place and hers....40 hrs a month TIMES $50 an hr is $2000 which after tax is like 1300. I'm sorry but while I get to sleep in and eat bon bons watching the latest movie on netflix in my humble yet sufficient apt or do whatever else it is that I damn please, she is getting totally owned by the hospital so she can pay off her place which she never has time to live in!

 

[Habeed]

Plus, I bet you are thinking, she could move in with you and you could eat bon bons on the couch together...AND each pay half the rent... But instead, the dumb lady does what she does..

 

[The White Coat Investor]

You can save immense amounts of money if you are properly motivated. The trick is finding the balance between saving "enough" and enjoying your money. You can't take it with you when you go. Let me share an example that may help.

I was a resident from 03-06, and we managed to max out two Roth IRAs nearly every year (spouse only worked one year.) Coming up with $6-8K to save on an income of $40K was pretty tough. Now I put away 4 or 5 times that much without causing myself any hardship at all, and 30% of the money I scrimped by to save disappeared in the recent crash. (Keep in mind that I only make half of what a civilian doc in my field makes too.)

Moral of the story: Don't impoverish yourself as a resident. Be smart, don't run up a bunch of bills, learn to live below your means, take advantage of the Roth IRA, but don't eat nothing but beans and rice just to try to catch up to your friends who started IRAs straight out of college. You'll catch them yet.

 

[zeloc]

I'm easily saving >$1000/month. I use public transportation to work also, have very few expenses except food and monthly rent payments. Don't have any dependents. How much do people generally save during residency? Note: I am doing my residency in a higher-paying state, but the cost of rent is higher too. I am deferring all interest and not paying down any student loans though.

 

[TMP-SMX]

I'm easily saving >$1000/month. I use public transportation to work also, have very few expenses except food and monthly rent payments. Don't have any dependents. How much do people generally save during residency? Note: I am doing my residency in a higher-paying state, but the cost of rent is higher too. I am deferring all interest and not paying down any student loans though.

There you go. The deferment of interest and not making student loan payments (besides forbearance) won't be an option for any of us in the future unfortunately.

 

[doctorloans]

You can definitely save during residency. I'm not sure about $1000, but it wouldn't be impossible. One of the best things I've learned over the years is to pay yourself first. When you get your paycheck, immediately deposit x amount into an online, high-interest money market account (like emigrant direct or ING or whatever). Make sure you don't get a debit card, either. This makes it "hard" to get to your money...

Another thing I do is use cash. I budget everything out each month, and set a strict spending limit for groceries, entertainment, etc. That way, when that money is gone, it's gone. Pretty easy way to control spending.

 

[dragonfly99]

Saving $1000 per month would be impossible for a good number of residents. For someone who has kids and a nonworking spouse, etc. and $600 month student loan payments or something, they just aren't going to have that much money left at the end of the month, no matter how much they scrimp and don't waste in on lattes and dinners out, etc. A lot depends on your family circumstances and where you live - much easier to save money in Arkansas than Manhattan. I could have likely saved $1000/month if I had decided not to pay anything on my student loans during residency, but that would have been foolish.

 

[zeloc]

I actually think it's smart not to pay any loans during residency. The reason is that for unsubsidized loans, the interest does not capitalize until the end of residency if the deferments are done each year in advance of when the interest would capitalize! Therefore there is no benefit to paying it during residency, unless you are trying to get a tax deduction from interest.

 

[TMP-SMX]

I actually think it's smart not to pay any loans during residency. The reason is that for unsubsidized loans, the interest does not capitalize until the end of residency if the deferments are done each year in advance of when the interest would capitalize! Therefore there is no benefit to paying it during residency, unless you are trying to get a tax deduction from interest.

This isn't true anymore. Deferment is gone starting soon. As it stands now though you can make payments without actually entering repayment. Even though now the interest doesn't capitalize, you still have all the interest on the principal amount you take out. So you can make payments of $2500 total to take care of your interest deduction and then make all the other payments toward the principal.

 

[bjackrian]

This isn't true anymore. Deferment is gone starting soon. As it stands now though you can make payments without actually entering repayment. Even though now the interest doesn't capitalize, you still have all the interest on the principal amount you take out. So you can make payments of $2500 total to take care of your interest deduction and then make all the other payments toward the principal.

Where did $2500 come from? Is that the maximum tax deduction or just a number out of the air?

 

[TMP-SMX]

Where did $2500 come from? Is that the maximum tax deduction or just a number out of the air?

Maximum tax deduction.