Financially illiterate first year med student looking for advice

[Skibadger]

Hi,

I'm new to this forum but have been reading some of the articles here for a few months and I really want to make sure I'm being smart financially and making the right decisions. Right now I am living with my fiancee and we are getting married this next summer. I will pay about 40k in tuition this year and 20k every year after that (starting next year my fiancee will have been an employee at the hospital for over a year and I will get half off tuition.) The interest on my loan I took out this year is 6%. So I am looking at finishing med school with about 100k in debt and I plan to try to make payments on the interest throughout school. My fiancee makes about 50k a year and pays for most of our expenses, she is currently putting money into the hospitals 403b plan and meets their match, I think it is a 4% match. We pay 1600 a month in rent, I wish we could find something cheaper but we live in a HCOL area and with our dog we are in the perfect place. Between the two of us we have about 30k saved up that is currently just sitting in our checking accounts. My question is what should we do with the money just sitting there? From reading this blog it seems we probably have enough for an emergency fund so our next step should be to open a roth ira and max that out. I'm not eligible for a roth ira because im just a student so just she would start one. Is vanguard the best place to open an account with? What should we invest in? From my limited knowledge it looks like the total market index fund is the best option? Really just looking for some advice to make sure we are on the right track.

[LizOB]

Investing in a roth (with total stock market index, or anything else) might make you a lot of money. You may also lose money. Impossible to know, especially in the short term.

On the other hand, every dollar you DON'T take out in loans saves you a guaranteed 6%. Your fiancee should get the 403b match, keep an emergency fund so you don't wrack up credit card debt in event of a major expense, and any other savings should go towards paying tuition.

Start the roths and ramp up the 403b contributions in residency

[WallStreetPhysician]

Skibadger wrote:

y fiancee makes about 50k a year and pays for most of our expenses, she is currently putting money into the hospitals 403b plan and meets their match, I think it is a 4% match. We pay 1600 a month in rent, I wish we could find something cheaper but we live in a HCOL area and with our dog we are in the perfect place. Between the two of us we have about 30k saved up that is currently just sitting in our checking accounts. My question is what should we do with the money just sitting there? From reading this blog it seems we probably have e

Click to expand...

Welcome to the forums. I think you're on the right track. Have an emergency fund of 3-6 months of living expenses, then contribute to her 403b to get the match, then contribute to an Roth IRA (more flexibility than the 403b). I agree that it would make most sense for her to start a Roth IRA, although there are spousal IRAs that she can contribute in your name even if you don't make any income.

Vanguard is an excellent choice. The best single-fund option is VTSAX if you can contribute more than 10,000 to get the lowest expenses; otherwise VTI is the best stock ETF version which has the same fees as VTSAX.

Keep on reading WCI and other physician finance blogs, and you'll be way ahead of your peers. Good luck!

-WSP