Real Life Financial Planning for the New Physician

[SuzySunshine]

One thing the book does say about your emergency fund is that you could stagger it in CDs so that you get a little more interest then a regular savings account but still have access to it as you need it.

[alison]

The interest rates on CDs are so minimal right now that they really aren't a big difference to the high-interest savings account that we have... .90%

[Vishenka69]

We were told that the savings have to reflect how your disability is structured. DH gets some basic one from work after 90 days and then our private one kicks in after 180. We have 3 months worth of basic expenses in a savings account. I agree that right now CDs don't give you a high interest rate than regular savings account.

[SuzySunshine]

Right now, nothing gives you a good interest rate

[scrub-jay]

Right now, nothing gives you a good interest rate

The only high interest rates left are student loans!

[SoonerTexan]

How much info is there in the book for someone at our stage? We've been think a lot lately about what we need to do financially as loan time is coming up again and while we used to pretty much rely on subsidized loans, they are going away this year.

[SuzySunshine]

This one isn't really but the other one I have started but not finished addresses every stage.

[niener]

Just finished the book this evening (its fairly short). Will give a more thorough review tomorrow but to ST, it has a few tidbits you may find helpful but overall no its not really geared towards someone in your stage of training. I'd say it's more appropriate for late stages of residency/ early stages of post-training.

[TulipsAndSunscreen]

Does anyone have any good book recommendations for the medical school or early residency stage?

Most of what I can find online is for single residents which obviously doesn't apply to us. Also, many assume a non-working spouse which also doesn't apply to us. It's so tough to know what to do with loans, etc. since I have an income and plan to keep working at least for a year or two until we get settled into our new location. I don't want to make any stupid mistakes as we start residency that commit us to a bad repayment plan or lock us into me having to work for all of residency (maybe I will, maybe I won't).

[corn poffi]

I have a really dumb question. Other than loans, is there a reason physician finances are so different than normal people's? I know they're often idiots with their money, but I guess I'm wondering what other differences there would be. His residency program pays pretty well, so maybe I'm just clueless as to how bad residency could be financially.

[ladymoreta]

I think the main differences are handling the large amount of debt and figuring out how to catch up on retirement/college savings, since most don't contribute to those until after residency. Plus, lots of doctors' are set up like small businesses, rather than just being on a payroll, so that makes taxes more complicated.


Laurie

[SuzySunshine]

I think the main differences are handling the large amount of debt and figuring out how to catch up on retirement/college savings, since most don't contribute to those until after residency. Plus, lots of doctors' are set up like small businesses, rather than just being on a payroll, so that makes taxes more complicated.

This is pretty much what one of the books keeps hammering. You're behind on savings because you've penny pinched through training and your debt to income ratio is ridiculous. It also talks about how doctors can be easy marks because they are so career focused they don't take the time to learn the finances behind things and when someone approaches them with a business opportunity they don't know how to really analyze it or what to invest in. In the book that I haven't finished yet the guy goes as far as hiring someone to buy and negotiate cars for him because he feels people try to milk doctors for every penny they can get because they think they're rolling in cash.

I have to agree with that. I am very careful about how I frame what DH does when it comes to finances. When it is to my advantage I will tell people what type of a physician he is, when its not I won't. The last few weeks have been very interesting getting pre-approved for our mortgage, etc.

[corn poffi]

Thanks, I am kind of clueless. We are incredibly fortunate in our financial situation, so we both tend to tune out when people talk about debt, etc., so I'm often wondering if we're doing something wrong! I never really thought about the retirement thing. That's something we both need to start saving more for. Now that I think of it, I think I'm gonna open a retirement fund for next week. I've been working for 7 years and don't have one! And I think doctors are the dumb ones. Sheesh.

[alison]

There's a section in the blog that C posted that's called "why doctors aren't rich."

If we had known what we know now, we wouldn't have bought a house right after training. We would have saved for the 20% down.

A big part of why I think doctors overspend is due to entitlement. It can range from "hooray, we're done" spending to buying a house/car/furniture that you can now afford, but shouldn't buy!

[houseelf]

Most individuals outside of medicine have more gradual income increases that they wrap their brains around over many years. Conversely, most physicians go from working class poor to upper middle class within a 24 hour period upon leaving training. In many cases, the training mindset is "Hold the Line!" or even just survival in some cases. Upon finishing residency, the physician then faces a salary that appears big but there are weird tax, insurance, practice buy ins, and retro retirement savings to think about. After years of financially scrimping they are given a deceptively high appearing income. All of the sudden a medical family has to switch their brains off of survival/hold the line mode to now budget proactively for the long term. It takes awhile to assimilate to this.