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(MS2) Tips on gaining financial independence and my overall financial situation

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  • (MS2) Tips on gaining financial independence and my overall financial situation

    Hi everyone, I'm new here! I am a rising second-year medical student who recently discovered WCI, among other finance sites, and am trying to slowly build my own financial literacy. I wanted to present my current financial situation and ask about what good next steps for me would be during medical school, once I enter residency, and after I finish residency.

    I was fortunate enough to enter medical school with no undergraduate or other debt thanks to my parents, who are also very kindly paying for my living expenses right now. As for tuition, I am borrowing a total of about $80,000 from my parents at no interest, and the rest of my tuition is/will be paid by federal direct unsubsidized loans, with the following distribution:

    • 2016: $20,000

    • 2017: $20,000

    • 2018: ~$40,500 (estimated; basically, whatever the maximum amount for direct unsubsidized loans will be)

    • 2019: ~$40,500 (again, estimated)

    • Estimated total at graduation in 2020: $121,000, not including interest

    Right now I am completely dependent on my parents financially. My bank and credit card accounts are all held jointly under my and my mother's name, and because I have never had a job, I have no retirement accounts or other long-term savings or investments. I have a good relationship with my parents, but the lack of independence worries me a little. I realize that I am very lucky to have my parents paying for so much of my education, and I am very grateful for that. However, I don't know if there is anything I should do especially once I become a resident and have to start paying off my debt with my own income.

    Is there anything I should do or change right now regarding my financial situation? How can I set myself up for financial independence when I enter residency? When I have a resident's income (or even before?), what should I put money toward first regarding long-term financial planning: emergency fund, loan repayment, retirement, or something else?

  • #2
    your total amount of debt is not so vast as to be disabling.

    i know it is not exactly what you are asking for, and i sound like a broken record, but the absolute best thing you can do for your financial situation and overall happiness is to figure out what clinically will make you happiest and absolutely kill USMLEs.  Worrying about the things you can affect right now beyond being careful with spending is easy to say and hard to do but you have this opportunity thanks to your parents and situation and good decisions you have already made.

    you are going to need money to interview.  you are going to need some spending money so it is really hard to do more than just spend wisely.

    good luck!

    congrats on finishing m1 and avoiding depression!



    • #3
      Congrats. Your debt is lower than most posters. Continue to have a good relationship with your parents and all will be ok over time.  Right now Avoid credit card debt  and lifestyle inflation .


      • #4
        As the mom of two boys who are independent adults, I just have to have to say that I admire your attitude toward your parents and your overall situation. You are not feeling entitled, but grateful. I believe your parents have done a good job of raising you and it is paying off.

        As for what you should change, that is really a conversation you should have with your parents. They need to be aware of your beliefs and cognizant of the responsibility you feel to be independent of their support. Based on what you shared with us, I believe they will want to help you along this path to self-sufficiency, hard as it may be for them to let go, and you will all be the better for it.

        As for your debt, if and when your parents cut off the life support, you will be able to figure out the next steps if you continue to read this site and ask questions. Your debt is not overwhelming and quite manageable if you spend and save wisely. I'm assuming you are single with no children, which makes it quite possible to do. Put a minimal budget together and follow it as if you have no safety net - and you should do just fine. If you need assistance, I recommend Carl Richards' book, The One Page Financial Plan

        My best wishes to you and God bless.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


        • #5
          Right, find your passion and follow it and the rest is easy. You wil not starve in medicine no matter what you do. But don't pick your specialty based on income. Pick the thing you love and you'll find it much easier to become financially independent. I'm in one of the lowest paid specialties but the money comes easy for me because I love what I do and I'm very efficient when I do it.

          I would suggest you get a credit card in your name only and cancel all the cards with your mom. You're an adult and shouldn't share cards with any adult you're not married to. Same with the bank accounts.

          If you are really worried about independence you should refinance those parent held loans and get private loans. But there's a cost to doing so in the form of higher interest rates and whether the cost is worth it depends on how much you value independence.

          You should save at least 20% beginning with your first real paycheck. Until then, live like a student.


          • #6
            Did someone say Financial Independence?

            You'll be in better financial shape than most of your classmates, which is great!

            I agree with FIREshrink on getting a credit card of your own -- it's good to establish credit. Just be sure to pay it in full every month. Get a rewards card, preferably one with a signup bonus worth hundreds of dollars -- check out the Mad Fientist's list.

            Next year, when you're an MS3 thinking about your future specialty, consider the impact of various specialties on you ability to achieve FI -- there are many other considerations, obviously. The best job is one you'll never want to leave, but to assumeyou're going to find it is a bit Pollyannaish.

            Once you're an attending, live on half.

            Good luck!





            • #7
              You're fine at this rate.  Keep going in the right direction with minimizing debts and minimizing your standard of living.  The two biggest things that kill us imo are excessive debt and lifestyle creep.

              The most important thing for you over the next 3 years should be to get through school with the best possible scores and least possible burnout.  If money matters a lot to you, and imo it's perfectly fine if it does, then you do need to take that into consideration when considering which specialty to apply to for match.

              This is also probably going to mean taking a vacation every now and then to take care of yourself, and interview season will bring some expenditures with planes, hotels, etc (you may need every interview you can get to guarantee matching, but this varies greatly), but continue not to borrow hardly any more than you need after accounting for a cushion.


              • #8

                You should save at least 20% beginning with your first real paycheck. Until then, live like a student.
                Click to expand...

                This.  The fact you're on this site is a good sign!


                • #9
                  1. Minimize current expenditures (cost of living i.e. - rent, daily lunches, dinners out and going to bars) - no need to go to the extreme but don't think that spending $100 at a restaurant or bar is OK just because your classmates are doing it, you can have just as much fun on much less. Don't skimp on uworld or anything that would adversely affect your STEP scores/ interviews/ ability to match to the specialty of your choice.

                  2. As others have said, do as well as you can on STEP 1/ 3rd year grades to match into the most competitive specialty that you want (probably should be #1 - see POF above/ MGMA survey for options).

                  When in residency:

                  3. Establish a basic emergency fund, among non-MDs this is commonly considered 10k, you would probably be OK with 5K as long as you don't do anything stupid in residency.

                  4. Max out your Roth, 100% stock vanguard ETF IMO

                  5. Put all remaining residency cash into your loans if you aren't doing PSLF - which you probably shouldn't judging by your loan burden and if you followed #1 and #2. Look into private refinance options if they are available at your D/E ratio

                  6. Live like a med student while in residency and a resident while an attending


                  • #10
                    Assuming your unsubsidized federal loans are 6.8% or whatever they are now, your best bet is to minimize the loans you take out, and pay back what you can as a resident. I wouldn't worry about saving anything yet beyond funds for an emergency/residency interviews when the time comes, because taking out less in loans is a guaranteed 6.8% return- tough to beat!

                    Totally agree with advice of others above- once you are a resident start the roth, and assuming you won't do PSLF throw any extra money at the loans.

                    Don't pick a specialty only based on money, it needs to be something you actually enjoy otherwise you'll burn out before you're through residency. If you fall in love with a lower-paying specialty just realize that you will need to be in a lower cost-of-living area to make up for it to achieve FI.