What should I do with my earnings between now and EY21?

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Darrow O'Lykos

Hail Libertas! - Medical Student
10+ Year Member
Jul 17, 2014
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I want to start this post by first saying I understand no one here is likely to be a financial expert (and that I will meet with a financial adviser prior to making any concrete decisions), but rather I'm seeking input from other non-trads in similar positions, or from med students, residents, or attendings who were also non-trads going into med school.

I'll be starting med school next summer and have been working professionally for 5 years now, 4 of which have been in a well-paying job in clinical research. I've been living a bit lavishly in my mid-20s, so it's not like have a Scrooge McDuckian vault of savings, but between my retirement account, current savings, and projected earnings between now and next Spring, I'll have a decent amount of money (so long as I frugally put away a lot in savings over the next 10 months before moving to where I'll be attending school). My initial plan this whole time had been to bankroll a grand adventure across the globe for 2-3 months prior to school, but ole' Rona will likely make that highly improbable, even by next Spring.

So the question becomes: what should I do with it in regards to med school?

Fortunately I'll be attending a TX school, so tuition will be insanely cheap and I could afford to pay in cash for probably 2-3 semesters' worth. Obviously I'd still need financial aid to cover other aspects of the COA, but I want to leverage my liquid assets as best I can to minimize the amount of debt I'll be facing coming out of school. Would it be smarter to roll that cash into a down payment on a cheap house (my significant other works in tech and will be making a healthy income while I'm in school and she and I are wanting to begin building equity asap). So long as the equity in whatever we are living in outgains the debt on the interest of the equivalent loans I'd be taking out, that'd be the more prudent course of action right?

Lastly, the retirement account. I KNOW the typical advice is to never touch one's retirement account and to treat it more like something outside of the budget. However, as a state-employee, my retirement account is actual a state-backed annuity, which is gold for long-time state employees. But one of the stipulations of it is that if you end your employment and aren't employed by the state within the subsequent 12 months, your contribution will cease to accrue interest. Kinda sucks as a guy in his 20s, especially one who won't be making contributions to it for the 4 years while I'm in school. I can roll this into an IRA, but again, it seems kinda foolish to have an IRA that I won't be making contributions to while I'm in school and at best will be making pretty marginal returns on its own (we're talking like maybe $20k in there by the time I start school, and at 7% ROI, that's only going to gain like $8k over 4 years). Should I just pay the 10% penalty and taxes on it, take it out, and infuse it into an asset that will accrue value and decrease my living expenses? Or for that matter, use it to pay for part of my education?

The last thing I'll add is that I plan on buying her a ring and proposing, so some chunk of my assets are going to go into that, but I'll still have a healthy amount leftover to work with.

I know this is a unique situation, and unlikely anyone has been in my shoes before, but I'd appreciate any input from some of the sages we have here on SDN.

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Here are some of my suggestions. Fellow non-traditional member here.

1) Recommend paying off as much of your tuition as you can with your savings, assuming your SO is willing to help with living expenses. IMO, you are guaranteed a return with lessening of your debt burden as opposed to banking on continued appreciation of a volatile housing market.
2) Would roll your retirement into a IRA - I would not touch/withdraw the money. Buy low-cost index funds. When I left my previous employer, I kept my 401k in the company account. It was still accruing interest, but I realized late in the game that I was in high cost mutual funds. I regret not rolling it into an IRA earlier. I didn't catch this mistake until after graduating medical school.
3) You don't need a financial advisor, just spend some time reading the White Coat Investor book and doing some research on its FB group.
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I would roll over your IRA or 401k into a Roth IRA. You’ll pay low taxes now and enjoy tax free growth and withdrawals in the future.