Starting life at null

[fmresident12]

Stage of Life: 4th year medical student

Social Situation: 26 and 29 yo 4th year medical student couple, US citizens, US allopathic students. No dependents. Both declared Family Medicine. No plans on kids until end of residency

Annual Income:0 but should be $100,000-110,000/year starting in July. Options to moonlight 2nd and 3rd years

Net Worth:0

Tax Bracket:0

State of residence: will change come March

Insurance Policies: student health, no disability, no life. Will have full benefits in residency. low disability and life options.

Debts: 0, no student, credit, or any other.

Assets: 2 cars paid off, 2007 toyota with 129,000 miles, 2006 toyota 189,000 miles, furniture

 

So I began reading this site last year and devoured everything in it and then read many of the recommended books. Now that my fiancé and I will be graduating and getting married in May I thought I would ask for general financial advice going into residency. Like it says above we have no savings however we also have no debt. We plan on being in residency 3-4 years and then returning to her rural hometown that has an extremely low cost of living and practicing full scope FM. Her father is in agriculture and mine is a construction forman. We both come from very frugal families that saved for our education and we both had full ride academic scholarships for undergrad. We used our education funds to make it through our state medical school without debt. What advice would you give outside of starting an emergency fund, maxing out our retirement plan, keeping our cars, and not buying a house in residency if you were starting with a blank slate?

[wideopenspaces]

I'm pretty sure you've got it all figured out. Strong work and congrats on the upcoming marriage! Consider life insurance once you have kids and if you can get DI in residency I'd go ahead and do that as well.

[ENT Doc]

Write an investor policy statement together. Roth for both of you. Invest in low cost index funds per your asset allocation. Get disability and life insurance in residency.

You two are doing an absolutely perfect job so far. Congratulations on your success. Your family must be very proud. And don't sell your net worth short - those cars are worth at least a few grand.

[WallStreetPhysician]

You're in great financial shape. Consider term life and own-occupation disability insurance in residency. I would probably avoid moonlighting unless you think it will make you a better doctor -- you're in such a great financial position that your free time is better spent enjoying life rather than making a few extra dollars that you'll likely not need.

-WSP

[pulmdoc]

Congratulations! Starting residency debt-free is huge, and being emotionally invested in personal finance is even bigger.

Financial to-do list for residency:

1) find out if you are eligible for employer retirement accounts (401k or 403b) and if so, contribute at least up to amount of match.

2) open and fund Roth IRA's.

3) get own-occ disability insurance.

4) get term life insurance

5) have some emergency fund saved up for things like car repairs

Moonlighting is optional in your situation. It can be wonderful experience and good money, but make sure you and your fiancee have time to spend with each other as well.

[fmresident12]

Thanks for the advice. 1 question I have is how much life and disability insurance? Most programs we've interviewed at have 1/3 salary of disability and 50,000 for life. Term Life insurance I question as we have no dependents but I know it is cheap and would be comforted knowing my soon to be wife would have a nest egg if something were to happen to me. We plan on getting better disability insurance than the hospital offers. Most residency's have either a 403b and some have 401k with 3% match. with this said we still plan on picking the residency we see training us best and dealing with whatever benefits they have.

Another question we have is how much in an emergency fund? I've read 3-6 months expenses which would probably be 5-10,000. However we know we want to return to her home town and buy a house so should we treat our emergency fund as emergency and future house down payment in an ally account or have separate accounts? If separate accounts what do we invest our downpayment in? The down payment savings of course comes after we've maxed out our Roth and other retirement accounts at least up to the match or more.

[Peds]

1) term life whenever. easily get 1mm

2) disability can grab right before xition to attending/fellow

3) depending on available plans yes either 401k/403b and Roth IRA.

4) EF keep separate. pick a # you are comfortable with.

5) down payment/new car/vacation fund can be in anything you want. cash/CDs/bonds if not far away, riskier assets if further away or can come up with more money. just stick with cash right now until you get your feet wet.

[Hatton]

Congrats on your success. You are way ahead of most posters. I think disability insurance is very important.  Life insurance is less importAnt than disability since your spouse works and you have no kids yet.

[White.Beard.Doc]

Nice job, you are the 1% among your med student peers.  Net worth of zero with 2 medical degrees and residency starting is a pretty fantastic place to be.

And it sounds like you have armed yourselves with good financial knowledge to boot.  Careful financial decisions over time will lead to a high degree of financial security and the ability to practice medicine the way that you want to practice.

[Gamma Knives]

I think you have all the finances down. I would say do what you can to enjoy residency. Take a vacation between graduation and residency starting. I'm not saying go crazy but you can make some memories that will last a lifetime without breaking the bank. I don't regret any money I have spent on travel with friends and family (and I certainly can't say that about many things I have purchased).

[CM]

You don't seem to need much help. Congrats.

Some posters recommended life insurance, but not sure why you would need that before kids.

I would not moonlight. You will be busy enough, and you have zero need for the extra funds. Take advantage of whatever down time you have. You'll make plenty of money later.

 

[fmresident12]

Thanks again. We are so thankful for our families because without them we would not be in this position and they have taught us the value of hard work and living frugally. @Gamma Knives we are planning on an extended honeymoon after the wedding using some of the last money I have saved from working on a farm back home every summer (except this past summer) and my education savings (Caribbean and Gulf Coast honeymoon).

I know our retirement investment options will depend on our residency but how aggressive would you be? 100% stock index funds distributed among large, small, growth, international maybe a REIT. Or stick to the standard 100-age stock and bond allocation?

[Peds]

Only you can answer that. Although I don't recommend extremes (ie 100/0, and 0/100).

[pulmdoc]

hatton1 wrote:

Congrats on your success. You are way ahead of most posters. I think disability insurance is very important.  Life insurance is less importAnt than disability since your spouse works and you have no kids yet.

Click to expand...

Agree, if it's a choice between good disability insurance and life insurance for a 2-doc, no-debt, no-kids couple, I would definitely go for disability insurance.  Waiting to buy life insurance until kids is not unreasonable.

[ACN]

1. Contribute to your 401k match at min

2. 5500 * 2 in Roth IRAs

3. Get disability insurance

4. Contribute to your 401k max (if possible)

4a. Enjoy being debt free and travel on vacation and don't contribute as much to your 401k. (this is blasphemy on this website, but realistically, depending on your COL, your take home will be around ~$70k for the both of you.  You might not have enough disposable income to contribute $47k to retirement per year, so enjoy a little)