What to do with hard earned savings???

[dvishh]

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I am going to be a junior for undergrad this year and I have 14,000 dollars saved up. Does anyone have any suggestions of what I should do with it other than keeping it in my savings account? I plan on using it pay of my subsidized loans after I am done with undergrad.

 

[sh0rtstop34]

I am going to be a junior for undergrad this year and I have 14,000 dollars saved up. Does anyone have any suggestions of what I should do with it other than keeping it in my savings account? I plan on using it pay of my subsidized loans after I am done with undergrad.

Invest in a secure IRA…you can put in up to 5 grand a year, it will ultimately go towards your retirement OR you can pull it out early penalty free for education…not a bad idea to get some fast interest

 

[pathologyDO]

I am going to be a junior for undergrad this year and I have 14,000 dollars saved up. Does anyone have any suggestions of what I should do with it other than keeping it in my savings account? I plan on using it pay of my subsidized loans after I am done with undergrad.

I have a $10K inheritance coming in soon, and I am an incoming OMS1. What I plan on doing is putting it into a savings account, and keeping it for emergencies. Lets say your car goes to hell and you need a new one? Decide to get married, get engaged, go on vacation during M1/M2 summer, etc? You may thank yourself for keeping that money saved away.

Maybe use half for tuition and save the other $7K for emergencies?

 

[BABSstudent]

I am going to be a junior for undergrad this year and I have 14,000 dollars saved up. Does anyone have any suggestions of what I should do with it other than keeping it in my savings account? I plan on using it pay of my subsidized loans after I am done with undergrad.

Become a lifetime donor on SDN?

Or you could buy some stock if you want.

 

[ericksonj15]

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[dvishh]

Does being allowed to pull it out early for free for education apply to most IRA"s?

 

[LuciusVorenus]

I am going to be a junior for undergrad this year and I have 14,000 dollars saved up. Does anyone have any suggestions of what I should do with it other than keeping it in my savings account? I plan on using it pay of my subsidized loans after I am done with undergrad.

Save it for interviews 😉

 

[pathologyDO]

Does being allowed to pull it out early for free for education apply to most IRA"s?

BTW,

With roth IRAs, you can only contribute $5K per year as mentioned, however, that is ONLY if you worked that year. I other words, you can put in $1 into a roth IRA for every $1 made that year, up to $5k.

 

[gimghoul]

Go someplace cool.

 

[sh0rtstop34]

Does being allowed to pull it out early for free for education apply to most IRA"s?

I believe so…but you should check the logistics before you do anything with such a substantial amount of money…I know I can with mine, and that's exactly what I plan to do with med school

 

[Gauss44]

I am going to be a junior for undergrad this year and I have 14,000 dollars saved up. Does anyone have any suggestions of what I should do with it other than keeping it in my savings account? I plan on using it pay of my subsidized loans after I am done with undergrad.

1. Put it in a Roth IRA. Within that Roth IRA, probably put it in a mutual fund or ETF. Maybe check with a financial adviser (who is NOT on commission) to recommend a well diversified one. (Diversified so you are almost certain to earn, and very unlikely to lose money.)

AND

2. Ask Bogleheads: http://www.bogleheads.org/

 

[sh0rtstop34]

BTW,

With roth IRAs, you can only contribute $5K per year as mentioned, however, that is ONLY if you worked that year. I other words, you can put in $1 into a roth IRA for every $1 made that year, up to $5k.

Yes very true…it has to be earned and taxed money

 

[sh0rtstop34]

1. Put it in a Roth IRA. Within that Roth IRA, probably put it in a mutual fund or ETF. Maybe check with a financial adviser (who is NOT on commission) to recommend a well diversified one. (Diversified so you are almost certain to earn, and very unlikely to lose money.)

AND

2. Ask Bogleheads: http://www.bogleheads.org/

Fidelity is usually pretty good IMO

 

[pathologyDO]

1. Put it in a Roth IRA. Within that Roth IRA, probably put it in a mutual fund or ETF. Maybe check with a financial adviser (who is NOT on commission) to recommend a well diversified one. (Diversified so you are almost certain to earn, and very unlikely to lose money.)

AND

2. Ask Bogleheads: http://www.bogleheads.org/

Yes but he cannot put more than $5K into the roth IRA, and that is only IF he worked and made $5K in wages that year. So unless he makes $5K by working next year, he cannot add anything left over after depositing the maximum this year. At least that is my understanding.

 

[sh0rtstop34]

Yes but he cannot put more than $5K into the roth IRA, and that is only IF he worked and made $5K in wages that year. So unless he makes $5K by working next year, he cannot add anything left over after depositing the maximum this year. At least that is my understanding.

That is true… I did misgauge that, since Op has 14k, I believe he missed his window if it was earned money from passed years and can now only add a max of 5k this ear, of he earned a total of 5k or more…my bad

 

[Gauss44]

Yes but he cannot put more than $5K into the roth IRA, and that is only IF he worked and made $5K in wages that year. So unless he makes $5K by working next year, he cannot add anything left over after depositing the maximum this year. At least that is my understanding.

Preliminarily, check with Bogleheads on that. Confirm with the company you invest with.

 

[pathologyDO]

That is true… I did misgauge that, since Op has 14k, I believe he missed his window if it was earned money from passed years and can now only add a max of 5k this ear, of he earned a total of 5k or more…my bad

Still though, adding $5K of it into a roth IRA (if applicable) would be a good decision! The rest could be saved for paying off undergrad loans and for the application cycle as others have mentioned. App season can get expensive quick

 

[sh0rtstop34]

Still though, adding $5K of it into a roth IRA (if applicable) would be a good decision! The rest could be saved for paying off undergrad loans and for the application cycle as others have mentioned. App season can get expensive quick

Absolutely! Put in as much as you can each year... I'm up to almost 20k in my IRA and it grows quick!

As for the application costs they are expensive…2k for MCAT (prep and test), 800 for primary and about 2k for secondaries. It adds up very quick and this doesn't include interviews lol…can't wait for tuition and room and board

 

[dvishh]

Thanks. I should be able to put in about $3000 dollars into a Roth IRA this year since this is all I have earned, but I still have a lot of money left over. Should I consider putting it into a 3 year CD or take the risk and put it into a mutual fund? The three year CD would only make me around $200 before tax assuming I put the full $14,000.

 

[ericksonj15]

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[sh0rtstop34]

You have no idea. I just got my first med school bill in the mail the other day and almost had a heart attack when reality set in.

The scary thing is, the 20k I've put away over the last 4 years will maybe cover my MS1 room and board…then comes the next 220k of debt…wooh!

 

[dvishh]

Theoretically Is being in medical school with 14,000 in savings good enough to get through it without parent support? assuming that you are living well within yourmeans.

 

[pathologyDO]

Thanks. I should be able to put in about $3000 dollars into a Roth IRA this year since this is all I have earned, but I still have a lot of money left over. Should I consider putting it into a 3 year CD or take the risk and put it into a mutual fund? The three year CD would only make me around $200 before tax assuming I put the full $14,000.

I wouldn't. CD's have very low interest rates right now, and even with $11K, you wont get much of anything. That fact coupled with early withdrawal penalties make it pointless IMO. I would keep it in a savings account so that it is easily liquidated without penalties given the situation arises where you need the cash (for instance, medical school app season and interviews).

Another option is a money market account. There are ones with 2% interest rates through Discover right now I believe, and you have a certain amount of withdrawals you can take out monthly, much like a savings account. But ya still gotta be careful. Sometimes they penalize you for leaving less than a certain amount in the account... but the good news is that you can easily liquidate some funds without compromising your interest gains (albeit they're still not great interest gains).

 

[pathologyDO]

Theoretically Is being in medical school with 14,000 in savings good enough to get through it without parent support? assuming that you are living well within yourmeans.

no, my school recommends $20k living expenses pear year. If you tried hard you could probably get away with one years living expenses on your savings. This of course is a value that changes regionally. Med school is an expensive venture, that is for sure.

 

[ericksonj15]

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[dvishh]

Can you take out a loan for living expenses in medical school? I do not think my parents will give me any money after undergrad. I will most likely have my undergrad loans payed off with 14,000 in my savings account. Will I be able to pull it through? or should I rethink my career choice?

 

[ericksonj15]

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[pathologyDO]

Before you decide on spending your savings all on MS1 costs, try to set up a spread sheet with some variables calculating your debt and interest accrued depending where you allocate your savings money. I'm in the same position with a decent amount of money saved up and my dad is a financial advisor, so we created a spreadsheet to run a few scenarios. I originally planned on dumping all my savings into tuition the first year, but it looks like this would only save me a a few thousand bucks when everything is said and done, and I wouldn't have any liquidity in the case of an emergency. I've decided to use my money to pay down interest during school instead. I understand everyone's financial situation will be different, but just some food for thought.

1) Exactly;

and 2) paying interest is not something I had considered. Great idea

 

[dvishh]

My parents can not afford to give me money after undergrad. I want to be able to support myself.

 

[LuciusVorenus]

My parents can not afford to give me money after undergrad. I want to be able to support myself.

Loans cover everything for med school though, so you're supporting yourself either way. Paying off 14K in med school loans is probably not worth it imo seeing as just how much a single semester of med school costs. It's better to just keep it in a savings account and use for emergencies or to have fun.

 

[sh0rtstop34]

My parents can not afford to give me money after undergrad. I want to be able to support myself.

Not many parents can…the same goes for me, which puts me in a situation where I am unfamiliar with loans and aid since my parents put me through undergraduate. I need help now planning out how to maximize my savings to minimize my medical school debt and paying as little interest as possible

 

[LuciusVorenus]

Not many parents can…the same goes for me, which puts me in a situation where I am unfamiliar with loans and aid since my parents put me through undergraduate. I need help now planning out how to maximize my savings to minimize my medical school debt and paying as little interest as possible

You can pay off the interest while you're in school so that the interest doesn't keep building up on itself. Not much you can do other than that short of paying off the actual principal, which would be really hard unless you have A LOT of money saved up.

 

[sh0rtstop34]

You can pay off the interest while you're in school so that the interest doesn't keep building up on itself. Not much you can do other than that short of paying off the actual principal, which would be really hard unless you have A LOT of money saved up.

Again, I am unfamiliar with loans, but don't they only start compiling interest after medical school? This was my impression but I guess it could depend on the type of loan…again really new at this loan business

 

[ericksonj15]

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[LuciusVorenus]

Again, I am unfamiliar with loans, but don't they only start compiling interest after medical school? This was my impression but I guess it could depend on the type of loan…again really new at this loan business

I'd just like to point out that interest doesn't compound while you are in school with the federal loans, rather it accrues and capitalizes once you enter repayment (which may not be until during or after residency depending what path you take.) However, in theory if you paid off all of your interest during school, it would prevent interest from being applied to the 20-30K in interest which you could rack up as a med student.

Maybe it's different for medical school loans, but I am pretty sure graduate loans are unsubsidized now, meaning that the government will no longer pay off the interest while you are in school. Some undergraduate loans ARE subsidized meaning they don't accrue interest while you're enrolled.

 

[LuciusVorenus]

Found it:

"Direct Stafford Loans: The Department of Education offers unsubsidized Stafford loans for graduate/professional students that have better interest rates and loan terms than many private loans. Stafford loans for graduate/professional students have a fixed 6.8 percent interest rate. Students are not required to make payments while in school, but interest accrues on unsubsidized Stafford loans during that period. Unsubsidized Stafford loans for Health Professions Students are limited to $40,500 annually. The Budget Control Act of 2011 (BCA, P.L. 112-25) eliminated subsidized Stafford loan for graduate/professional students, which will increase repayment for medical students between $10,000 and $20,000 over the life of their loans.

On April 14, 2008, the Department of Education (ED) issued a Dear Colleague letter (GEN-08-04) that raises the combined aggregate Stafford loan limit for certain health professions students (including medical students) from $189,125 to $224,000. This increase in unsubsidized Stafford loans will allow medical students to borrow at a 6.8 percent interest rate, avoiding higher rates under the GradPLUS and private loans. The increase comes in response to a September 4, 2007, AAMC-coordinated sign-on letter from almost 60 health professions organizations to then Secretary of Education Margaret Spellings. The Secretary originally announced the Department's decision in a February 2008 letter to AAMC President and CEO Darrel G. Kirch, M.D."




So paying off interest is a good idea during school.

 

[ericksonj15]

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[LuciusVorenus]

I agree it is a good idea and that's what I plan to do in my own situation. However, my point is that with the unsubsidized federal loans, while the interest accrues, it doesn't compound while you are a student. In other words, "interest does not build on your interest" as you stated earlier. That only occurs once you enter repayment, which is after medical school, at which point the interest you have left over will get tacked onto your principal and THEN interest will begin to build on your old interest. Sorry if that just made things more confusing,but there are lots of little intricacies to this game

No I totally get it! I actually did not know that. Thanks! 👍

So basically it'll still help in that there won't be anything to tag onto your principal when you enter repayment, right?

 

[ericksonj15]

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[LuciusVorenus]

No problem, I actually just had the pleasure of learning about it this past few weeks as I decided what/how much loans to take out. Yes, in theory it will help that way if you paid off all of your interest during school. However, don't forget that your interest payments will continue to get larger and larger as school goes on if you aren't making any principle payments, and the interest payments will get quite high by years 3 and 4.

I took out loans in undergrad, but I just started reading about them more in depth since I've entered repayment (took a year off). There's so much to learn 🙁

 

[eefen]

It's probably best to set aside enough to cover at least three months of living expenses, more if you can. This is your emergency fund.

Take the rest and save it for your application, interviews, moving to med school, etc.

If, after you get to medical school, you have a comfortable amount left over (not including your emergency fund), you could consider putting $3k in something like a Vanguard target retirement fund (maybe the 2055 one) after opening a Roth IRA with them, if you have at least that much earned income that year.

But I would probably just save it.

If you want to learn about investing, check out some of the resources I mention in this post and read The Boglehead's Guide to Investing.

 

[shootingstar7]

Save it for tuition when the variable interest rates on Grad PLUS loans reach 9.5%

 

[BABSstudent]

Theoretically Is being in medical school with 14,000 in savings good enough to get through it without parent support? assuming that you are living well within yourmeans.

My rent is $900 per month. Add in utilities and internet and it's another $150.

So that $14,000 would last less than a year when you add that up and figure in food. The OP will still have to take out loans to live, even though the OP needs $14,000 less than his/her peers.

 

[LuciusVorenus]

Save it for tuition when the variable interest rates on Grad PLUS loans reach 9.5%

How often do med/dent students actually need grad plus loans? I figured 200K in stafford would be more than enough for 4 years 🙁

Unless you're going somewhere like USC or Vandy of course.

 

[BABSstudent]

How often do med/dent students actually need grad plus loans? I figured 200K in stafford would be more than enough for 4 years 🙁

Unless you're going somewhere like USC or Vandy of course.

Even a state school can cost a lot.

I am looking at $150,000 for all four years from my school without using grad plus loans. Granted, if my fiancée can make enough money then I will just take out money for tuition (no housing or food loan use for me) and that will put it down closer to $105,000.

If you go OOS or to a private school, it's pretty easy to spend a lot since tuition goes up to around $45,000 a year or more. Add in living costs and you are spending quite a bit.

 

[Mr Avante]

1. Forget retirement plans at this point.
2. Forget the stock market and any government bonds at this point.
3. Forget any vacations trip.
4. Save the money.

 

[Strudel19]

1. Forget retirement plans at this point.
2. Forget the stock market and any government bonds at this point.
3. Forget any vacations trip.
4. Save the money.

Agreed 👍

 

[Koalafied]

1. Forget retirement plans at this point.
2. Forget the stock market and any government bonds at this point.
3. Forget any vacations trip.
4. Save the money.

For a moment, it seems like you were about to suggest investing in gold.

 

[LuciusVorenus]

For a moment, it seems like you were about to suggest investing in gold.

 

[Koalafied]

^^ (post #50)