What with the economy and all...

[kstotes]

So to diverge from residency talk for a moment... background: I am financially ******ed. An IRA is a warring group in Belfast. A 401k sounds like some new version of a commitment form. I'm fairly confident in my post-residency career's ability to provide for my family financially. However, I'm hearing dozens of different views on what we should be doing with our money as residents until such a time. "Build up your 401k" "Put it all in a Roth IRA" "Convert it to pound sterling and put it in a shoebox" "Go on a Black Friday shopping spree" (pretty sure that last one was from a manic patient... zinnngg!!!). I tried sifting through the info in other forums and just got more confused.

Here's the questions:

1. Given a residents salary, roughly $1250-ish a paycheck as an intern, does money need to be put away, should accruing student loan interest be paid, should I pay someone to tell me how to spend my money (seriously that's what it comes down to)

2. Does anyone have a good piece of literature that can help the financially naive learn about this stuff without having to break out the dictionary too many times (I'm seeing the episode of the Simpsons where Homer progressively pulls out easier and easier books on financial information, finally using the dictionary)

3. Should I just call this guy?

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[mgdsh]

lol

I don't have any sources to recommend for you, but some pretty sound advice for the current juncture:

- Save your money, even a high yield savings account will do

- If you really insist on buying something at the current time, new threads or a new car would make the most sense (if you've held off on either of these 2 over the last few years, you can get some fantastic deals right now, especially if you're willing to bargain with them).

- I would not even consider putting $$ into the market or buying a new house.

 

[masterofmonkeys]

dave ramsey rocks. Lol.

Pay down your student debt as fast as possible. Look for consolidation opportunities. With the prime rate practically negative, paying 6+ percent in interest is just plain ugly (thank you congress &*$#***** for that you scumbags). Years ago when student loan interest was low it didn't make sense to pay it back that fast, now with it at practically mortgage levels it DOES make sense.

There are stlll decent investments to be made. Nothing shockingly awesome, but I am actually still in the black on a relatively conservative but also (formerly) decent yielding equity income account.

Best bet right now is to start putting away money and round about Q2 2009 look for a good place to dump it, IMO.

 

[whopper]

http://money.cnn.com/retirement/

Read the above site.

If you have a good interest rate, I would pay off your student debt at a very slow rate. Remember, its tax deductible, & probably one of the best historical interest rates for the past few decades.

Obviously pay off the debt with the highest amount of interest first.

Some places of employment are willing to help pay off debt as part of their hiring packages.

 

[wolfvgang22]

I completely agree with the above two posts. Aggressively pay off whatever has the highest interest rate first, be it credit card, student loan, car loan, whatever. Then invest. I plan on doing both concurrently, aggressively paying off debt and investing more slowly then becoming much more aggressive as I have more disposable income later due to less debt.
I think "high yield savings account" is a myth these days. I believe in long term investments instead.

I agree now is a good time to buy if you have any capital so long as your investments are longer term. The economy is not going to stay bad forever, and stocks are cheaper right now and one could realize a very good return if you invest wisely and wait 10+ years. I'm not convinced that this is the second great depression anyway, but even if it is it won't last more than a decade or so.

Real estate in some areas is cheap, and the population is not going to shrink but grow in most places. Real estate seems a little more sheltered from inflation than some other investments, particularly right now with decent interest rates still available for the moment. For most new residents that probably means now is a good time to buy a house. In 4 or 5 years you would likely make a profit in selling the property in my opinion. Sure, I've seen some residents having difficulty selling now, but that will change in 5 years I think.

 

[whopper]

The way the economy is going, I could be very very wrong, so take my advice with a grain of salt.

My current investment stategy is buying stock of companies that have good stability & high dividends.

Savings accounts are giving a measly 1-3%. However GE & FTE have good dividends & both are considered stable. GE has assured investors several times that they will keep the dividend.

A dividend paying 10% sure beats a savings account paying 1%. And odds are (at least IMHO) that stocks will rise dramatically, though it may take several months. I don't know if we've already hit bottom, but I suspect we may have or will soon.

However in this market, no one can truly tell. The problem with trying to detect a market bottom is you can only tell where the bottom is after its already hit, and after the dust settles. Jim Cramer gave the best advice. Take any money out of the market that you know you will need in the next 5 years. Only put money into the market or keep it in there if you are able to keep it there for years.

I'm not convinced that this is the second great depression anyway, but even if it is it won't last more than a decade or so.

Well the economy can go dramatically worse if the big 3 car companies go bankrupt.
Money Magazine (this month-Nov) had a great article on trying to gauge when the economy would start improving. They gave a speculative hypothetical end of the 2nd quarter of 2009 as when the economy would start getting better. However they also mentioned that by then, people will still be in the funk & might not realize the economy would be improving (Remember, several indicators of improvement are based on the past quarter's results), that this was their speculation--they could be wrong, and that there's still wildcards in the equation that could make the economy tank far worse than they're speculating. E.g. they brought up a possible war with Iran as a factor for making the economy tank far worse than they're expecting.

But if they're right, the time to start thinking of buying a lot of stocks may be in the 2nd quarter of 2009. It may also be possible that Obama's announced plans may inject enough market confidence to push us past the bottom.

Another factor to consider, though this is probably over 5 years away is the eventual reality check all of us will face when social security cannot be further supported using the smoke & mirrors that are currently keeping it floating. When that day happens, there is a risk of a real depression on an order making our current woes laughable.

http://finance.yahoo.com/expert/article/richricher/124339

I believe somewhere between today and 2020, the system will break. We're on the eve of financial destruction, and that's why it's in gold I trust. I'd rather be a victor than a victim