Real Life Financial Planning for the New Physician

[SuzySunshine]

Hey gang, MissMartini had recommended this i another thread but I thought it deserved its own.

I bought it and another one and read this one in about 2 nights. It's been VERY helpful as we prepare for the financial mess that is post-training but I think it would also be VERY helpful for everyone, starting in med school even.

I highly recommend it.

http://www.amazon.com/Real-Life-Fina.../dp/0314916318

[MissCrabette]

If you don't mind sharing, what's the other book you read? Thanks for posting.

[SuzySunshine]

I'm still reading the other one, its much longer but nicely summarized at the end of each chapter. But I can't really give a review of it yet.

But its the 2nd edition of:
http://www.amazon.com/Physicians-Gui.../dp/1603275436

[ides]

Im thinking of getting this book. I'm a little put off by the price though.

[SuzySunshine]

I was to at first but after reading it I am confident it is something I will hang onto and refer back to often

[niener]

I actually ordered it as well with a gift card I had a bit of money left on. Just came yesterday, so I'll check back in when I finish reading it, probably over the next day or two.

Just ordered it. Thanks for the recommendation. DH and I have much to learn and I want to have an idea what our financial advisor is talking about (when we find one).

[alison]

Thanks, C, for posting all of this stuff! I think you've got everyone scrambling to these books and blog!

What are your goals for an emergency fund? Suze Orman says 8 months, our adviser says 6 months (and also says that not all 6 months has to be immediately available, but shouldn't be locked into any investments). If your car breaks down or your roof needs a repair, you aren't going to need that much. And luckily for physicians, in an emergency, I think finding new employment shouldn't take 8 months...

What do you all think?

ETA: I realize that this is more for the post-training crowd. Don't mean to exclude anyone!

[JaneDoe]

Thanks for the rec. I just purchased the book. I missed the SS's post about the financial blog Alison referred to. Would someone mind linking me to it.

Regarding an emergency fund, our accountant has recommended three months worth. She reasons that we would most likely need to dip into the emergency stash in the event Dh becomes disabled. Disability insurance doesn't start paying until 90 days following disability, thus the need for three months worth in savings. Perhaps her recommendation of three months was tailored to Dh because his job is VERY stable. He is an equal share owner so Dh would have to do something horrendous to lose his job and even then the other partners would have to buy him out. I've heard many financial planners say 6 months worth so I was a little surprised by our accountant's recommendation of three months. Her reasoning does make sense to me, though.

[SuzySunshine]

That is a good question on the emergency fund. The book also recommends 3 months and that should be of expenses not income.

This is the blog http://whitecoatinvestor.com/

[Auspicious]

Disability insurance doesn't start paying until 90 days following disability, thus the need for three months worth in savings.

You can get this set to 180 days and then it's cheaper (that's what we just did). And then, yes, of course, you'll need more in your emergency fund.

And luckily for physicians, in an emergency, I think finding new employment shouldn't take 8 months...

And this is exactly why I've been planning to build up a year's worth. Ha ha ha! *sob* *sob*

My thinking on the emergency fund is if you don't use it you get to keep it--it's not a gamble like insurance. So go aggressive. Save save save.

[SuzySunshine]

That is a good point Julie and I was just looking at DH's contract - it pays him for 90 days due to an illness, I wonder if we should kick our disability back to 180 days...and whether or not an illness is the same as a disability...

[alison]

3 would be cutting it a little too close for my comfort level, but I can see the logic in it. I just don't think having 6 to 8 months readily available makes sense, when you'll never need the whole chunk, and you can at least benefit from a better interest rate if part of the fund is kept elsewhere (if and when interest rates ever go up again).

[Auspicious]

It's a good point about not needing the whole thing immediately accessible. We haven't gotten to that point yet--at six months out we're still building the thing.

[spotty_dog]

We keep an amount in cash that we should be able to live off of for 6 months minimum, up to a year if we are careful enough. It's in a savings account so it's earning at least a modicum of interest, and I'd say we're more comfortable being able to access the full amount at any time vs. having it tied up in stocks or CDs or certainly anything less liquid.