Anything you wish you knew before starting repayment?

[OrionGrad]

Our IBR payments the first year of residency (which were based on our taxes from while DH was in med school, so not making any income) were incredibly low. So in our case, we were paying very, very little each month and the government was waiving the unpaid interest on our subsidized loans. To not do IBR that first year (in our particular situation) would have been like throwing away money.

[MAPPLEBUM]

I highly suggest reading the Bogleheads Guide to Investing and perhaps the White Coat Investor blog. I've been making finances/investing research a kind of hobby these last couple months so the main principles I've come up with for my husband (who's a PGY2) and I is centered around the phrase "Don't put all of your eggs in one basket." If you have significant debt like we do the natural tendency is to want to focus all of your attention on paying off debt as soon as possible. The reality, however, is if you have over 100k in debt and your combined salaries are still under 6 figures you won't be able to make significant progress in your loans until he finishes training. I found it very helpful to just finally admit that we will be in some kind of debt for most of our lives. Why? Because once we start making that significant progress in our loans we'll most likely be at a point where we'll want to buy a house. You want to start creating a vision for the next 50 years of your life now, trying to forecast your needs and desires.

Our principles based around "don't put all your eggs in one basket" are

1. Of course, if you carry a credit card balance pay that off ASAP
2. Pay as much in loans as you can while being able to save each month for retirement. Even if your investments don't earn 8% a year it's
a good habit to be disciplined in retirement planning now.
3. Take advantage of being in the lower tax bracket by opening a Roth IRA in both of your names and capping it out each year.
4. If you don't have a rainy day fund, put set money aside each month for that.
5. This is lifelong planning so don't try to turn yourself into too much of an ascetic. Residency is tough, and for the sake of your relationship you may need to
save each month for that yearly vacation or the road bike you've always wanted. Trust me, residency will call upon the last dregs of your patience and his energy, and our
vacations are always reminders of our love together and who we are as a couple.


Goodluck!

[DrBandMe]

His school offers sessions with financial planners near graduation and they also offer a course in the last class session to offer advice and info on transitioning to residency. They talk about relocation loans, loan repayment, budgeting, work/life balance, and lots of other topics relevant to the process of moving from a student to an MD. I feel confident in my budgeting skills after years of working through paying off debts from my first marriage and investments but I always want more info to be certain we're taking care of us for the long run. He too often seems to be caught up with the short term and how much interest we're accruing daily. I hope we can come to an understanding that we need to live as well as pay off debts so that debt cannot control us.

[Vishenka69]

I second the Bogleheads and White Coat Investor. I still remember the pre-graduation meeting regarding loan repayment at DH's medschool. Most of the newly minted doctors' reaction was, "I have loans? What am I supposed to do with them?"

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[Cleave]

Holy cow-- they really didn't realize they had loans??? Wow.

I second the Bogleheads and White Coat Investor. I still remember the pre-graduation meeting regarding loan repayment at DH's medschool. Most of the newly minted doctors' reaction was, "I have loans? What am I supposed to do with them?"

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[The White Coat Investor]

I I've been making finances/investing research a kind of hobby these last couple months so the main principles I've come up with for my husband (who's a PGY2) and I is centered around the phrase "Don't put all of your eggs in one basket."

That's a great hobby. And at least one member of a relationship should take that up as a hobby. It doesn't even have to be a lifelong hobby. Just for a year or two. The first few (good) things you learn about finance and investing are so high-yield and pay such high dividends it is the best second job and the most valuable investment you'll ever have. Too bad the law of diminishing returns kicks in eventually. At a certain point, you realize you're giving a lot more than you're getting out of interacting with others on the subject. But that's okay too.

[MAPPLEBUM]

That's a great hobby. And at least one member of a relationship should take that up as a hobby. It doesn't even have to be a lifelong hobby. Just for a year or two. The first few (good) things you learn about finance and investing are so high-yield and pay such high dividends it is the best second job and the most valuable investment you'll ever have. Too bad the law of diminishing returns kicks in eventually. At a certain point, you realize you're giving a lot more than you're getting out of interacting with others on the subject. But that's okay too.

either you, my FIL or Bogleheads told me to read one good finance book a year. I might have to read it 3x to understand, but hey! That's what wives are for.

Question: how do you keep short/mid term savings (for specific purposes) separate? For instance, the afore mentioned "Fellowship Expenses" fund, which will be tapped into +2 years. As I said on another thread I'm considering taking out a bond fund for it but haven't yet talked to accountant brother. Thoughts? I also have a fund for a purchase I'll make in 2-5 years just sitting a bank account. The low/no interest doesn't bother me too much but it is a bit tempting to spend it on something else! CD?

[The White Coat Investor]

either you, my FIL or Bogleheads told me to read one good finance book a year. I might have to read it 3x to understand, but hey! That's what wives are for.

Question: how do you keep short/mid term savings (for specific purposes) separate? For instance, the afore mentioned "Fellowship Expenses" fund, which will be tapped into +2 years. As I said on another thread I'm considering taking out a bond fund for it but haven't yet talked to accountant brother. Thoughts? I also have a fund for a purchase I'll make in 2-5 years just sitting a bank account. The low/no interest doesn't bother me too much but it is a bit tempting to spend it on something else! CD?

There are many right answers to this question. My short term savings and my emergency fund is all in a high interest savings account at Ally Bank. It pays something like 0.9% per year. It isn't much, but it's very liquid and very safe. Having that money safe allows me to take significant risks with long-term savings like retirement and college funding. That fund includes my state taxes due in April, my federal taxes due at the end of the quarter, my charitable contributions for the year, my emergency fund, my car fund, my allowance fund, my wife's allowance fund (we've always had money we can spend without the other's approval), our vacation fund etc. I keep track of what's what on a spreadsheet, but it's all in one account. I suppose we could always raid one fund to bolster another, but you can do that even if you have the money in separate bank accounts/CDs.

If you know you won't spend that money for at least 2 years, a 2 year CD is a good choice. That pays about 1.4% these days. After 2 years, you can put it into a savings account. Nothing wrong with a bond fund either, but I'd probably try to match the duration of the fund to the expected time you'll be saving. Keep in mind you can lose money in a bond fund, unlike a CD.

If losing half of the money isn't a big deal, and growing it is really important, then you could consider a balanced or even a 100% equity fund. But keep in mind you may go to need that money in 2 years and half of it might not be there.

If you're not sure you'll actually even use the money in teh short term, then investing it inside a Roth IRA or spousal Roth IRA you're not otherwise maxing out can be a good step. You can always withdraw the contributions tax and penalty free. Withdrawal restrictions are only on earnings, and even those are relatively easy to get around.

[MAPPLEBUM]

There are many right answers to this question. My short term savings and my emergency fund is all in a high interest savings account at Ally Bank. It pays something like 0.9% per year. It isn't much, but it's very liquid and very safe. Having that money safe allows me to take significant risks with long-term savings like retirement and college funding. That fund includes my state taxes due in April, my federal taxes due at the end of the quarter, my charitable contributions for the year, my emergency fund, my car fund, my allowance fund, my wife's allowance fund (we've always had money we can spend without the other's approval), our vacation fund etc. I keep track of what's what on a spreadsheet, but it's all in one account. I suppose we could always raid one fund to bolster another, but you can do that even if you have the money in separate bank accounts/CDs.

If you know you won't spend that money for at least 2 years, a 2 year CD is a good choice. That pays about 1.4% these days. After 2 years, you can put it into a savings account. Nothing wrong with a bond fund either, but I'd probably try to match the duration of the fund to the expected time you'll be saving. Keep in mind you can lose money in a bond fund, unlike a CD.

If losing half of the money isn't a big deal, and growing it is really important, then you could consider a balanced or even a 100% equity fund. But keep in mind you may go to need that money in 2 years and half of it might not be there.

If you're not sure you'll actually even use the money in teh short term, then investing it inside a Roth IRA or spousal Roth IRA you're not otherwise maxing out can be a good step. You can always withdraw the contributions tax and penalty free. Withdrawal restrictions are only on earnings, and even those are relatively easy to get around.

This is great information, thank you! I am still a bit immature so the further out of sight/mind it is the less likely I'll want to spend. That fund I'm considering putting in a CD or bond fund I haven't contributed to successfully in months. I'll add to it for a few months and then spend. No good!