As we become aware of how the time value of $ works against us (student loan interest), we will also learn about how it works for us.
After refinancing your student loan, not only do you enjoy paying off an overall smaller student debt but also re-directing freed up cash flow to build your net worth more effectively.
If you have not refinanced your student loan and are quite sure that you are not going for PSLF, please do so now (interest rate is rising.)
The following slides suggest where you can put your limited PGY dollars to work most effectively for you. My current employer Banner offers 4% for retirement contribution, I highly recommend that you find out about and take full advantage of your company match. Instant 100% return through a employer match, on however small an investment, goes a long way.
Since Banner offers 4% annual salary match to residents/fellows, a pgy2 can get approximately 2k match for 2k contribution. To claim all the 2k Banner offers, PGY needs to redirect $5.5/day of cash flow towards retirement savings.
*So cut the daily Starbucks Latte out and get the hospital coffee instead (free with our meal cards), you will have 40k more in retirement.
The following slides explain why I recommend ROTH (post-tax) contribution over traditional (pre-tax) contribution /taxable brokerage accounts.
Why I don’t recommend buying MORE clothes with our limited PGY dollars.
- Where are you putting your PGY dollars?
- After you see the impact of time value of money, how would you re-direct your cash flow?
- Looking back to years in medical school, how would you have used your “borrowed” cash differently?