medical student needs beginner's financial advice

**disneysteve** · 01-14-2011, 02:06 PM

Welcome. Just so you know, there are a few doctors who hang out here. I'm one of them - family practice for nearly 18 years now. So I can not only give general financial advice, I can speak from personal experience having gone through the same thing you are dealing with now.

Right now, while you are still in school and not earning anything, the best advice I can give you is to live as frugally as possible and limit your educational borrowing as much as you possibly can. You won't appreciate the benefit of that now but trust me, you'll appreciate it later.

What to do with whatever money you do have right now? Parking it in a high-yield money market account is just fine.

The other major advice is to not catch doctoritis. Once you do start earning money, you must resist the urge to make up for lost time and treat yourself to all of the things you've deprived yourself of like a nice car, fancy clothes, electronics, travel, entertainment events, etc.

**dczech09** · 01-15-2011, 07:41 AM

A good portion of everyone on this forum is a Dave Ramsey fan. His most recent, and probably most popular book is The Total Money Makeover. I personally have the audiobook since it works better with my lifestyle and have listened to it probably a dozen times over the past year. I always learn something new from it which is cool. I would recommend going to a book store and buying either the paperbook or audiobook (whichever works best for you).

Another good book that has great insights is The Millionaire Next Door. These books will provide some great insights on how behavior is really the key to mastering your finances.

**disneysteve** · 01-15-2011, 08:23 AM

Originally posted by dczech09 View Post

A good portion of everyone on this forum is a Dave Ramsey fan.

I'm not so sure that's true, but reading his book will teach you some useful stuff.

Suze Orman is another good one. She wrote "Young, Fabulous and Broke" a while back. That might be a good one. An oldie but goody is "The Wealthy Barber" by David Chilton (I think that's the name).

**kork13** · 01-15-2011, 03:44 PM

Originally posted by dczech09 View Post

Another good book that has great insights is The Millionaire Next Door. These books will provide some great insights on how behavior is really the key to mastering your finances.

Millionnaire Next Door is a great book, and actually was the first financial book I read that got me started on the moderately successful path I'm on now. It talks alot about the general way of thinking behind building and maintaining wealth (as opposed to outward demonstrations of high income).

Another book I learned alot from isn't brought up on these forums alot, but the Wall Street Journal's Complete Personal Finance Guidebook by Jeff Opdyke is very good, and discusses everything "personal finance" in an instructional manner. It talks about the basics of stocks, bonds, investments, insurance, planning, retirement, budgeting, saving, and pretty much any topic you might consider valuable for a financial newbie.

As for the topics that you mentioned you'll be asking about: Bring it on.

Seriously though, everybody here is great about answering questions, and you'll get a wide variety of opinions and ideas. Any of us that have been here a while are still around because we're happy to help.

**DebbieL** · 01-15-2011, 04:39 PM

NOT a Dave Ramsey fan here. Not at all. I did enjoy The Millionaire Next Door book that others have mentioned. It was a bit of an eye opener at the time.

**elessar78** · 01-24-2011, 12:06 PM

Let's cut to the chase all

When you start making money...

Emergency fund 3-8 months worth of expenses (depending on your guru)
Resist the urge to borrow money (don't be in debt)
Spend less than you make each month
Set aside a portion of each paycheck AUTOMATICALLY (10% depending on who you read/listen to)
Harness the power of compounding interest.

Those are basically the foundation principles. It can get way more complex, but it doesn't have to be. Many, many people making modest incomes have lived very satisfying lives and created impressive net worths using the above principles.

**disneysteve** · 01-24-2011, 12:22 PM

Originally posted by elessar78 View Post

Let's cut to the chase all

When you start making money...

Emergency fund 3-8 months worth of expenses (depending on your guru)
Resist the urge to borrow money (don't be in debt)
Spend less than you make each month
Set aside a portion of each paycheck AUTOMATICALLY (10% depending on who you read/listen to)
Harness the power of compounding interest.

A couple of others rules of thumb to follow that will help avoid getting into trouble:

Spend no more than 2.5-3 times income for your home and have a monthly payment no more than 28% of your monthly income.
Pay cash for cars. If you must borrow, take a loan no more than 36 months long with a payment no more than 10% of your monthly income.
The one edit I'd make to the above advice is that the savings figure should be 20%, not 10%. You may not be able to swing that from day one, but that should be your goal (or better).

**buildmybudget** · 01-24-2011, 05:49 PM

Like everyone else has suggested, you need to find the best way to maximize your income and minimize your expenses. The only way to reach your financial goals though is to be able to see where you are headed financially. You need to be able to see how much extra income you have each month, how long it will take you to pay off your debts, how much you can allocate to savings thereafter and so on.

Use a pencil and paper and map out your monthly income and expenses and take into account the periodic expenses that will pop up in the next year. Work backwards to figure out how much you can save each month towards your debts or down payment on a house and then implement the plan. The key to reaching your goals is to be able to see where you are headed financially.

**elessar78** · 01-25-2011, 04:53 AM

Originally posted by buildmybudget View Post

Like everyone else has suggested, you need to find the best way to maximize your income and minimize your expenses. The only way to reach your financial goals though is to be able to see where you are headed financially. You need to be able to see how much extra income you have each month, how long it will take you to pay off your debts, how much you can allocate to savings thereafter and so on.

Use a pencil and paper and map out your monthly income and expenses and take into account the periodic expenses that will pop up in the next year. Work backwards to figure out how much you can save each month towards your debts or down payment on a house and then implement the plan. The key to reaching your goals is to be able to see where you are headed financially.

More importantly, SET A GOAL(S). Then learn/map out how to achieve those goals. Learn to look at what life will be like down the road. 10 years, 20 years, 40 years, 70 years(?!). It can be easy to just look at your life right now and base your goals on your needs/wants at this stage. But life, earning power, and financial needs are different single, married, with kids, empty nest, retired.

**littleroc02us** · 01-25-2011, 05:26 AM

Although I'm not a doctor I can still offer some good advice. Your going into a great career with great potential for a high income. My advice for you is to live as cheaply as possible with attempting to pay for as much of your schooling as possible whether it be from using savings, getting scholarships, and working grants. Plus don't most medical schools pay you for doing work as a resident or fellows? By reducing as much debt as possible it will make paying them off easier when your pulling in a good salary. I wouldn't even think about buying a house for a long time until your completely debt free.

**disneysteve** · 01-25-2011, 06:12 AM

Originally posted by littleroc02us View Post

Plus don't most medical schools pay you for doing work as a resident or fellows?

I wouldn't even think about buying a house for a long time until your completely debt free.

Residency happens after medical school, not during, so any money earned during that time isn't of any help in actually paying for school.

I can't advise waiting until you are debt-free to buy a house. I certainly didn't. I graduated med school in 1990, finished residency in 1993 and bought a house in 1994. But we bought something modest - we paid 142K when our joint income was 85K. After a few years, income was up to 130K and the home payment was (and still is) a relatively small amount relative to our income. I paid off my student loans of about 102K in 12 years. It would have been faster but I switched jobs after 7 years, was unemployed for a few months and my new job started as part-time and took a couple of years to get back to what I had been earning previously.

So I don't think you need to be debt-free to buy a home, but you need to have a good plan to repay everything and you need to buy something well within the bounds of what you can afford.

**littleroc02us** · 01-25-2011, 06:39 AM

Originally posted by disneysteve View Post

Residency happens after medical school, not during, so any money earned during that time isn't of any help in actually paying for school.

Why not a job then or take longer to finish medical school while working at the same time. When I was going to college, I was working full time 12 hour shifts for 3 days and an internal at Gillete Childrens hospital as a medical photographer to help pay for school.

**disneysteve** · 01-25-2011, 06:44 AM

Originally posted by littleroc02us View Post

Why not a job then or take longer to finish medical school while working at the same time.

Working during school is certainly an option, though it is easier during the first two years that are classroom-based. It gets more complicated the second two years that are clinic-based and sometimes involve travel but if you can find a flexible job, it can certainly be done.

Taking longer to finish med school isn't as simple as doing the same with college. You can't really be a part-time medical student or just take a few credits per semester or night classes or anything like that. It is pretty much an all or nothing proposition.

**facebookdigg123** · 01-25-2011, 03:30 PM

just wondering disneysteve, what kind of doctor are you?

medical student needs beginner's financial advice