Mini’s College Fund, 529: Intro Part II

Broker

Broker Sold 529 plans:

In addition to fees mentioned in the prior post, you pay even more fees with broker-sold 529 plans.

Personally, I will not go through a broker, but I’ve included information for completion’s sake.

Additional fees that reduces your investment return in 529 include:

  • a “load” is a commission to your broker for selling the college savings plan to you.
  • an annual distribution fee (similar to the “12b 1 fee” charged by some mutual funds) of between 0.25% and 1.00% of your investment.
  • Many broker-sold 529 plans offer more than one class of share with different fees and expenses. Here are some key characteristics of the most common 529 plan share classes sold by brokers to their customers:
* Class A shares typically impose a front-end sales load. Front-end sales loads reduce the amount of your investment. For example, let’s say you have $1,000 and want to invest in a college savings plan with a 5% front-end load. The $50 sales load you must pay is deducted from your $1,000, and the remaining $950 is invested in the college savings plan. Class A shares usually have a lower annual distribution fee and lower overall annual expenses than other 529 share classes. In addition, your front-end load may be reduced if you invest above certain threshold amounts – this is known as a breakpoint discount. These discounts do not apply to investments in Class B or Class C shares.
* Class B shares typically do not have a front-end sales load. Instead, they may charge a fee when you withdraw money from an investment option, known as a deferred sales charge or “back-end load.” A common back-end load is the “contingent deferred sales charge” or “contingent deferred sales load” (also known as a “CDSC” or “CDSL”). The amount of this load will depend on how long you hold your investment and typically decreases to zero if you hold your investment long enough. Class B shares typically impose a higher annual distribution fee and higher overall annual expenses than Class A shares. Class B shares usually convert automatically to Class A shares if you hold your shares long enough. Be careful when investing in Class B shares.  If the beneficiary uses the money within a few years after purchasing Class B shares, you will almost always pay a contingent deferred sales charge or load in addition to higher annual fees and expenses.
* Class C shares might have an annual distribution fee, other annual expenses, and either a front- or back-end sales load. But the front- or back-end load for Class C shares tends to be lower than for Class A or Class B shares, respectively. Class C shares typically impose a higher annual distribution fee and higher overall annual expenses than Class A shares, but, unlike Class B shares, generally do not convert to another class over time. If you are a long-term investor, Class C shares may be more expensive than investing in Class A or Class B shares.

Ways to minimize 529 plan fees:

Direct-Sold 529 is the obvious choice to minimize costs and maximize returns.

  • You buy directly from the plan’s sponsor or program manager without going through a broker. This way you avoid all the middle-man fees such as sales fees from broker-sold plans.
  • Check out College Savings Plan Network list of 529’s with links to most 529 plan websites.

If you insist on getting Broker-Sold 529, you may reduce the front-end load for purchasing Class A shares by investing above certain threshold amounts. Ask your broker how to qualify for these “breakpoint discounts.”

Restrictions of a 529 plan:

  • You can only withdraw your investment in a 529 plan for eligible college expenses without incurring taxes and penalties.
  • Limited investment options.
  • Under current tax law, an account holder is only permitted to change his or her investment option once annually.
  • Additional limitations will likely apply to any 529 plan you may be considering.

Before you invest in a 529 plan, you should read the plan’s offering circular to make sure that you understand and are comfortable with any plan limitations.

529 impacts on financial aid eligibility:

529 generally reduce a student’s eligibility to for need-based financial aid. Beginning July 1, 2006, assets held in pre-paid tuition plans and college savings plans are treated as parental assets in the calculation of the expected family contribution toward college costs.

Questions to ask before investing in a 529 plan:

* Is the plan direct sold? (i.e. available directly from the state or plan sponsor)
* What fees are charged by the plan? How much of my investment goes to compensating my broker? How can I get the fees waived or reduced?
* What are the plan’s withdrawal restrictions? What types of college expenses are covered by the plan? Which colleges and universities participate in the plan?
* What types of investment options are offered by the plan? How long are contributions held before being invested?
* Does the plan offer special benefits for state residents? Would I be better off investing in my state’s plan or another plan? Does my state’s plan offer tax advantages or other benefits for investment in the plan it sponsors? If my state’s plan charges higher fees than another state’s plan, do the tax advantages or other benefits offered by my state outweigh the benefit of investing in another state’s less expensive plan?
* What limitations apply to the plan? When can an account holder change investment options, switch beneficiaries, or transfer ownership of the account to another account holder?
* Who is the program manager? When does the program manager’s current management contract expire? How has the plan performed in the past?

More information:

Offering Circulars for 529 Plans. Often called a “disclosure statement,” “disclosure document,” or “program description,” the offering circular will have detailed information about investment options, tax benefits and consequences, fees and expenses, financial aid, limitations, risks, and other specific information relating to the 529 plan. Most 529 plans post their offering circulars on publicly available websites. The National Association of State Treasurers created the College Savings Plan Network which provides links to most 529 plan websites.

Additional Information About Underlying Mutual Funds. You may want to find more about a mutual fund included in a college savings plan investment option. Additional information about a mutual fund is available in its prospectus, statement of additional information, and semiannual and annual report. Offering circulars for college savings plans often indicate how you can obtain these documents from the plan manager for no charge. You can also review these documents on the SEC’s EDGAR database.

Investment Adviser Public Disclosure Website. Many college savings plans’ program managers are registered investment advisers. You can find more about investment advisers through the Investment Adviser Public Disclosure website. On the website, you can search for an investment adviser and view the Form ADV of the adviser. Form ADV contains information about an investment adviser and its business operations as well as disclosure about certain disciplinary events involving the adviser and its key personnel.

Broker-Dealer Public Disclosure Website. You can find more about a broker through FINRA’s BrokerCheck website. On the website, you can search for any disciplinary sanctions against your broker, as well as information about his or her professional background and registration and licensing status.

Other Online Resources. You can learn more about 529 plans and other college saving options on FINRA’s Smart Saving for College website. The website contains links to other helpful sites, including the College Savings Plan Network and the Internal Revenue Service’s Publication 970 (Tax Benefits for Higher Education). FINRA’s investor alert on 529 plans also provides valuable information for investors.

To Learn More:

  1. 529 Plans: Questions and Answers (IRS)
  2. An Introduction to 529 Plans (U.S. SECURITIES AND EXCHANGE COMMISSION)
  3. 529 fee study
  4. IRS Publication 970: Tax Benefits for Education
  5. Utah Educational Savings Plan
  6. 529-plan-contribution-deadlines-for-state-tax-benefits
  7. The Experts: Are 529 Plans the Right Choice for All Families Saving to Send Their Kids to College?

Q&A with Dr. Unger M.D. Radiologist-Inventor-Entrepreneur

I’ve had the honor and pleasure to interview Dr. Unger M.D., an outstanding research radiologist-inventor-entrepreneur after destroying the long list of study on ultrasound service. He has a wonderful wife, 4 successful children, 3 companies, and over 113 issued US patents. As most physicians tend to think inside-the-box and play it safe, Dr. Unger’s ingenuity and passion about his medical inventions, his success and contribution to the society can inspire us all to be bolder and more adventurous with our professional endeavors.

Dr. Unger has founded three biotech companies. His first company, ImaRx Pharmaceutical, developed 3 FDA approved drugs and was acquired by DuPont yielding a > 20x ROI. Dr. Unger’s second company, ImaRx Therapeutics, went public and performed clinical trials in a pioneering new technology to treat stroke. Dr. Unger co-founded NuvOx, in-licensed the core patents and obtained ownership of the regulatory documents for NuvOx key product. Dr. Unger is inventor on 113 issued US patents. He is a board-certified radiologist and has an appointment as professor of radiology and biomedical engineering at the University of Arizona.

What were your most formative years? 

I went to Davis high school in Davis California, and I was the senior class president for both semesters. I did some fundraising for the high school when I was a student. One of the best things that I ever did was to start the Davis high school ski team. I was on the ski team and got a lot of parental support. One of my best friends helped me form the ski team.

Our ski team is still in existence and now win’s the entire state of California.

I had a bunch of jobs when I was a high school student. I went to UC Berkeley and I started to major in architecture and was in the college of architecture for actually three years but then I change to major in economics. Then, I had to do my pre-med so it took me five years to finish college.

In college, I was captain of the ski team and I raced in the United States Ski Association. I went to medical school at UC San Francisco, where I was in the medical student medical scientist training program which was a degree with distinction but was not a PhD.

I did not finish the program because my research advisor would not let me take an elective in Spain which I wanted to do. I finished my research project. While in medical school, I did the Iron Man Triathlon world championships in Hawaii and that’s why I went into Radiology because it turned out that several of the radiologists on the faculty at UC San Francisco had also done the Iron Man Triathlon.

How did your education at UC Berkeley and UCSF contribute to your success as a physician-entrepreneur-inventor? 

At UC San Francisco, I did research on antibodies and learned how to do laboratory techniques.  With my major in economics I knew something about business opportunities. I actually started a business in college in imports.

I was always trying to do some jobs and to make money in high school and even before high school.

When I went to Mallinckrodt Institute of Radiology at Washington University St. Louis, it was a new time for MRI and I started to make MRI contrast agents.  I later made different kinds of contrast agents and my ultrasound contrast agent took off and became a success.

When did you open your first company?  How did that go? 

I applied for my first patent I think in 1988 and I then founded my first company in 1990. I got a small business innovation research (SBIR) grant which helped with forming the company and my father made a seed investment. The first company made three FDA approved contrast agents and DuPont bought the company

 

How about your second and third companies?  

The second company was, in a way, a continuation of the first company because I was able to retain certain assets in the transaction with DuPont. The second company went public but was ultimately not successful.  My third company was founded in 2008 and is currently conducting clinical trials of a new technology that safely reverses hypoxia. We have programs in brain cancer, sickle cell disease and stroke.

What are top 3 pieces of advice for young physician entrepreneur? 

Well, be passionate about what you’re doing. If you’re not passionate about it, don’t do it.

If people say it’s a dumb idea, don’t pay attention to them.  You have to do your own research; you cannot be dissuaded by others because if something is easy, someone else would’ve done it already.

If you are doing something that is high tech and innovative, learn about SBIR grants. It is a great way to get seed capital for your venture.

 

What are top 3 pieces of advice for young physician regarding personal finance? 

Never buy a depreciating asset on credit. For example, if you are going to buy a car, pay cash.

If you can’t afford to pay cash for that car or other depreciating asset, then you should buy something cheaper.

Only purchase things on credit that you believe are going to become an appreciating asset.

Other than real estate and my own ventures, I only do index funds and bonds. I think if you’re trying to play and outperform the stock market, you are going to lose unless that is your job.  And if you’re focused on that, then you’re not going to be in a very good position to help society by advancing your knowledge and skills in medicine.

 

What are top 3 pieces of advice for work life balance? 

Well you should be passionate about your other activities and hobbies and interests.

If you’re not, then I think you’re missing out.

If you’re passionate about the other things, then you have to be able to find time to do them.  Work should be fun but you should have lots of fun with the other things you love doing.

 

What are top 3 pieces of advice for parenting? 

I’ve been very fortunate to be married to the same woman for 36 years. I think it’d be very difficult to be a single parent. Your children are actually more important than your job.  So you have to keep the high-priority and try to work with your spouse together.

You can learn more about Dr. Unger’s current company NuvoxPharma here.

Misery to Joyfulness… Life as PGY (1 is infinitely better than 0)

I started radiology residency full of hopes and dreams on July 1st, 2015. I thought radiologists are the happiest and nerdiest bunches of doctors in the whole hospital. Sipping coffee, listening to Pandora station in a precisely dimmed room (dark enough to optimally visualize the beautiful PACS images, yet just enough light to not stumble on everything in the reading room), enlightening the medical world with diagnostic acumen from the shadows and Brownian motions of another human being’s physical body…

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Mini’s new piece of empowerment from her summer at Toscana Art Studio.

The truth this, radiologists struggle with keeping up with the imaging study list that seems endless and self propagating.  We limit our bathroom breaks by Not drinking water or eating all day.  We politely answer the constant & relentless phone calls from the ED, the hospital wards, & the clinic, asking “Did you read that study yet?” “When can you read the study?”

I went from walking 6 miles daily seeing patients throughout the hospital as a preliminary intern, to barely walking a quarter mile during a 10 hour continuous work day as a PGY2 radiology resident. Sedentary life style is proven to be as bad as smoking tobacco as risks for developing peripheral artery disease. So the train rack CTA (vascular study) I’m reading now… could be me one day.

transform

 

The worst of it all is the constant feeling of inadequacy, the vast amount of knowledge a practicing radiologist is expected to master is unfathomable to my small little mind. I thought was high functioning student when I posted a high USMLE score with only studying 1 hour/day maximum during MS1/2 while working 2 jobs and raising Mini Wise Money. The level of confidence I had in my ability to learn and apply knowledge was annihilated just a few weeks into first year radiology residency.

Contrary what my ex-co-interns who are now PGY2 medicine residents (peeps I love) believe, I was pretty down in spite of the 7-5pm & most weekends off schedule of PGY2 radiology resident.

I was miserable.

beauty

 

 

However, my misery turned into joyfulness, without a discrete dark-vs.-light switch in time or space, a few weeks ago (I wrote this near the end of PGY2.)

When I realized that I do know a little bit about radiology. Just enough so that I could build my fund of knowledge up from. Having gone through the various sub-specialty rotations in radiology the first round (where every day I felt absolutely inadequate and idiotic), and now returning to some of them a 2nd round, I feel different! It’s as if my eyes are opened for the first time, and I’m starting to see…

Before starting radiology residency, I wonder why the training is so long, 6 years including internship and fellowship. Now, I have no doubt that I need the full 6 years to learn the basics of radiology and become an effective radiologist.

 

My professional transformation from misery to joyfulness may parallel
someone else’s financial transformation from defeat to success.

What I’m trying to say is, a little (of anything, especially knowledge) goes a long way. 

1 is infinitely larger than 0.

We all got to start somewhere.

Having gone through PGY1 rads and learning simply how to utter sounds, see things, communicate findings like a new born, I can relate to those who find finances unfamiliar and cold.

I’ve reached out and been sought out to assist my peers, my attendings even, and other outside of work in personal finance. However, I sense the powerlessness many people feel in financial matters. I am saddened and sometimes discouraged by their dismay and how overwhelmed they feel. Frequent comments I hear are:

  • “I never paid attention to money. I feel like a financial dummy.”
  • “I have no idea where to start.”
  • “My family told me I’m a total failure when it comes to money.”
  • “I don’t trust banks with loans/interest rate deals – reminds me of vampires asking for permission to come into your house at night. They have their own interests in mind, not yours.”
  • “I’ll just pay someone else to take care of my money for me.”
  • “I’ll just deal with this when I get my first attending paycheck.”
  • “I don’t worry about it. I’ll make so much money* in a few years, I can fix everything then.”

*Brand new radiologists in private practice on partnership track usually makes 250-275k to start… that’s not that much money if you have 400k of student loan, house payment, no retirement savings, no college funds, a few credit card with revolving balances… and you are in your late 30’s. Starting today to build your financial fitness is the best way to tackle even the worst financial disasters.

My dear esteemed colleagues:

I’ve come realized that doctors are the least cared for & barely-supported professionals.

It behooves us to band together and help one another out.

May my humble efforts in blogging financial literacy & effective monetary decisions

assist you to get on solid financial grounds.

Let’s ascend this ladder together in all aspects of our lives, be it

intellectual, professional, physical, psychological, spiritual or financial…

i can do this

 

  • Share your insights, ideas, & questions to help one another out.
  • What and how can I do better as a blogger and colleague to help?
  • Is there anything in particular you want to learn about?

Feel free to comment below.

If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle. All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

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Mini started dabbling in Manga from her YouTube learning sessions and self study.

 

 

Financial Heroes: Josh Mettle, Real Estate Guru/ Mortgage Loan Specialist

Since joining the FI (Financial Independence) community, every day I’m discovering more awesome blogs and individuals to learn from. So I decided to start a series of guest posts under the “Financial Hero Series.” I got the idea from PoF’s Christopher Guest Post. (PoF is full of great ideas; I like following his footsteps 🙂 You can check out my Christopher Guest post on PoF here.

This series features  amazing personal finance masters and financial professionals whom I admire and look up to. Each hero will answer a set of questions from me and sometimes add their own Q&A. I’ll publish this series of posts once every few weeks.
Today, I’m honored and excited to spotlight Josh Mettle who podcasts at Physician Financial Success. Josh was resolved to become the best mortgage officer after a horrific experience with a bad one when he was working on purchasing a rental property. And indeed, he turn out pretty awesome, very knowledgeable and personable. I’m sure you will find lots money and life pearls from his responses to my questions below.

What do you do for a living?
Author, podcast host, real estate owner/manager, and mortgage loan officer

Why do you blog?
As I began to serve dentists, physicians, and other medical professionals, I quickly realized they were among my most financially strapped clients. Sure they had decent income coming in each month, but they also had nearly as much money going out, year after year, I was seeing many clients make very little progress towards escaping the rat race.

[Wow, you are one of the few people who are not doctors and yet know the financial plight that medical professionals face.]

Why is your blog awesome?
Physician Financial Success is awesome because our guests are awesome! Our guests are incredibly diverse and have interesting perspectives on life, money, and financial success. The goal is to challenge conventional thinking, teach our listeners something new or blow up a sacred cow if humanly possible, all while having a little fun and a few laughs.

[You can listen to DWM’s podcast on Josh’s Physician Financial Success here.]

How many days left until you obtain financial independence?
Well that is a great question. If I were to answer that according to my goal of financial independence when I was 25 then that day is today. My mother and I currently own and operate about 100 positive cash flowing rental properties and if I wanted to, I could stop my day job today. But who wants to do that? If you do, it’s time to change what you are doing on a day to day basis. Maybe that doesn’t mean you stop practicing medicine all together, but rather practice with a less rigorous schedule, travel and practice where needed most, serve a mission, there’s a million ways to trade your medical education and willingness to serve for sustenance to survive. It’s up to each of us every day to figure out how we can best add value to the world while making progress towards the future vision of one’s self. That’s what fulfillment is, it’s making progress towards whom YOU want to be one day, never forget this journey is a game to be played, to win, to be enjoyed for all its ups and downs.

[I had to highlight and italicize this part “how we can best add value to the world while making progress towards the future vision of one’s self.” I can’t agree more!-DWM]

Any sage advice on money and marriage?
Marriage, kids, investing, health, your vocation, they all take work, they are all hard, and you will need to find your way around the obstacles before you find your ultimate success. Stay balanced, stay focused, stay the course, and don’t allow yourself to chase all that glitters.

What are the top 5 things you’d tell your younger self?
1. Be patient, investing is like an ultra-marathon and you don’t need to sprint to get started, just get started.
2. Invest automatically. Figure out how much you want to save and automatically have it debited from your checking to your investments every two weeks. This is my #1 regret for not starting sooner.
3. Never invest more than 5 to 10% of your capital in any one investment, no matter how much you’re in love with the idea.
4. Steer clear of areas you know nothing about, or at least start super slow with 1 to 3% of your savings until you have learned a few things about the industry.
5. Invest for cash flow as well as capital appreciation. For me, this was buying rental properties that I could fix up, raise the rents, and bank the cash flow forever. My strategy is not buy and hold, its buy, hold, die, and pass on to the next generation. Once you are clear about your strategy, it makes deciding on what you should buy very simple.

What is the #1 money mistakes you’ve made that want your readers to avoid?
Making large trades based on emotions, tips, or a whim. When the juices are boiling, like when the excitement you feel when you are test driving a new car, that’s when to practice extreme position sizing, put one foot in at a time, let the emotions settle, learn as you go, you can always add more to the investment idea as you go along.

What are the 3 most important money lessons you teach your kid(s)?
1. Invest automatically, start young building the habit regardless of the amount
2. Invest for the long game, you don’t need to hit home runs to win long-term
3. Always have cash available for the downturn, the next one is coming right around the corner!

What are the 5 smartest money move you’ve made in your life?
1. Buy and hold cash flow positive real estate, by time I retire I will own 100 + free and clear rental units, regardless how long I live, I will never outlive my savings and hopefully neither will my children.
2. Subscribe to multiple financial newsletters, find bulls, bears, gold bugs, and macro trend economists to help you shape your view of the world. Stay balances in your vision of the world and work to understand where each is coming from and find validity in their views.
3. Get used to holding cash and not being 100% invested. This is really hard, try doing nothing with your cash for 12 months, it’s insanely hard to resist doing something. I’ve watched 2 massive real estate and equities sell offs in my adult life, I now keep a portion of my investment funds liquid for that day when tech, real estate, high yield bonds, or any other asset class implodes.

[Totally interesting idea. I’m used to investing 100% of my cash in index funds, using credit card balance transfer checks with 0% interest free promotional periods ranging 15-21 months for those market dip, jump in and buy like crazy moments.-DWM]
4. Not getting divorced… This one might sound odd, but nothing derails financial success like divorce. Why not spend a couple thousand a year on the love of your life, spoil them, do something outrageous – borderline foolish, I promise it will cost less than divorce!
5. Spending freely on organic foods, vitamins, fitness memberships, and equipment. Against the grain I know, but ask yourself what is money? Money is freedom. Freedom to do what you want, when you want, and how you want. What good is that if you are diseased, dying or living less than optimally? Nada, it’s worthless, so I spend freely on anything I think can give me a physical edge or gain.

What are 3 things you’d do if money is no object?
1. Delta has this cool flight ticket called the Around The World Ticket, it allows you to fly anywhere around the world, unlimited stops for a month or two. I’m not sure on the details, but I’m sure I want to do it! How sick would that be, traveling the globe with 15 or 20 stops in between? Winning!
2. I would hire more coaches, I would really love a nutritionist, a relationship/love coach, a guitar coach, a surfing coach, I would work hard on getting better at more cool stuff.
3. Spend more time with my kids!

When did you first start contributing to your own Roth IRA?
19 and I’ve never missed a year since.

[That’s awesome, I didn’t start funding my Roth IRA until age 30. That’s why I’m starting Mini Wise Money’s Roth today at an age of 8.-DWM]

When did your child first contribute to his/her Roth IRA?
I’m currently not… Didn’t know I could start them one before they are 18, Google tells me I was wrong about that. I just penned an email to my CPA about the pros and cons.

[Let me know what you find out in terms of the pros and cons. I’ve researched and only found pros so far :)-DWM]

What does financial independence mean to you?
1. Never having to think about money
2. Being able to do WHATEVER I want, WHENEVER I want

Any questions you want to ask and answer to lend more insight to our readers?
I think this idea of starting an IRA for kids is an awesome idea, would love to know more. Thanks for bringing it to my attention 🙂

[You can certainly open Roth IRA for kids, as long as they can demonstrate earned income. Learn more here. -DWM]

If you are looking to purchase home, Josh is one of the best home mortgage officers. You can find out more about his services here.

physician-home-loans-at-fimc

Why Physician Home Loans Fail ebook  Read this eBook Josh generously made available to you.

16 Ways to Minimize Debt in Medical School

This post is inspired by a MS3 who wrote me, wondering how she could minimize debt while not having a job in medical school.

 

Hi! I just started reading your posts and they are very helpful. I am a student at Touro [tuition is about 45-50k/year-DWM] in my 3rd year and I have been trying to be smarter with my money for the last 10 years, but since I’ve always been in school or making minimum wage, I didn’t know how that was possible. When I became solely dependent on loans is when I learned the motto of paying yourself first. Since I do not have any income to pay myself first, do you have some advice on what I can do now while I still rely entirely on loans for money? I already accepted this year’s loan, but I know for next year to pay it on a credit card first. Do you have any other tips for what I can do or a link to a blog for people like me who are still in med school?  Thank you!

 

– MS3 with 80-100k cost of attendance every year in med school.

 

Here are things that help me minimize debt  as MS1-4.

 

  1. Delay and minimize taking out student loans.

 

Think of student loan and the financial aid officers as your last resort. They should be, with the high interest rate and the ridiculous loan origination fee.

 

Use credit cards 0% interest rate promotional periods for all your purchases (including your 50k tuition) whenever you can.

 

Borrow personal loans at lower interest rate. Write up a contract and make it official. Business is business. No need to mix personal and business. But a personal loan at 3% interest rate is a lot better than a federal loan at 6-10%. And this could be totally win win as you know you will definitely pay the loan back and it offers the personal lender a much higher rate of return than a CD would.

 

  1. Use credit card rewards.

 

Use credit card rewards for travels, for food, for books. I like the cash back feature.  Find ways to maximize cash back. Check this out. You can totally stretch your dollar when you use credit cards mindfully and responsibly.

 

  1. Cook for yourself.

 

Don’t eat out. It’s expensive today, cost your health, and expensive for your future in medical bills. Cooking is relaxing and helps you care for your basic needs. Make time for it, it’s definitely worth it. You can even set up a rotation chef schedule with your friends and buddies in med school and cook for one another.

 

  1. Exercise in the free school (though sometimes maybe crappy) gym.

 

Don’t spend money on gym. Find ways to build your exercise into your daily routine. Before or after class, between classes, hop on the tread mill at your school (my school offered a small, though a bit dingy gym, hey its free!).

 

  1. If you have kids, build a childcare swap team/ support.

 

Build a community where you, your partner are in the rotating schedule to care for the collective children. It’s surprising how it seems to be easier to take of 5 kids instead of 1 at times. Kids socialize and entertain one another and you might even be able to study while they entertain one another, keeping one eye on supervising them.

 

 

Tutoring is one of the most amazing way to study, and you can make money too. If you are MS3, tutor USMLE1 or MCAT content/ test strategies. That way you are reviewing materials pertinent to you and making some money. I get a wonderful sense of fulfilment and tremendous help with my bills in med school tutoring.

 

  1. Start getting paid for what you already do anyways.

 

There are work study jobs. Don’t pass those up. You can work in the library and spend most of your time studying, while getting paid 15/hour. You can also find your favorite professor with whom you’d like to do research with, set up work study with him/her and start advancing science and medicine while getting paid! Alternatively, find a non-profit organizations where you love volunteering at and set up an off campus work study job. Get paid while doing what you love. While we pay to do what we love-learn about medicine and doctoring- in medical school, it doesn’t always have to be. Start finding ways to get paid for what you love to do.

 

  1. Make a budget and stick to it.

 

Budget is a means to an end. It’s not limiting, it’s goal-fulfilling. Make one and stick to it. Frequently, you find that you become more creative and can make smaller sequential budgets!

 

  1. Spend some time finding and applying for scholarship.

 

It’s usually worth your time to apply for a scholarship. I especially like those that ask you to write and reflect on sometimes. In the process, not only do you learn about yourself, start getting your residency application essay together, but also you have a chance of getting a couple hundreds to a couple thousands! Why not?

 

  1. Get in the habit of paying your own bills while dining/entertaining with a group.

 

Why hanging out with friends and eating/entertaining out, do not be shy to pay your own bills instead of quietly subsidizing someone else’s expensive habits. If everyone in your group ordered alcoholic beverages, but you didn’t, get your own bill rather than split the bill evenly.

 

  1. Socialize in activities which produce rather than consume.

 

Don’t ever do retail therapy with your friends. Know that if you feel unhappy, shopping will not solve it. Spend time to take care of yourself so that you don’t feel deprived and end up overcompensating with material goods.

 

Instead of hitting the mall or the movie theater, hit the library, go on a hike, or go to the Soup kitchen and serve the homeless. If you have time to shop, you have time to serve and you’d be better of for the latter.

 

  1. Surround yourself in like-minded people.

 

Some people would think that you are too stingy, too frugal, no fun, don’t know how to enjoy life. Distance yourself from those people. It’s hard to share your ideals with those who don’t want to listen or just want to tear you down.

 

I’m sure there are a few if not 50% of your classmates who have some financial awareness of how much that the student loans they live on today would cost them in the end. Join them, hold one another accountable, and encourage one another.

 

  1. Spend 1-2 hours/month to take care of your finances.

 

Set it up correctly in one giant excel sheets so all your bills are paid on time and you know when your 0% promotional APR ends and have plans to pay them off (way in advance) in place.

 

This will pay great dividend for the rest of your life.

 

  1. Increase your financial intelligence by reading and asking questions.

 

Bookmark these resources. When you have a few minutes like waiting for a bus or on the toilet, read up!

https://www.drwisemoney.com/ (my blog, i focus a lot on MS and PGY’s)

http://whitecoatinvestor.com/ (he gives information for docs at all ranges of training, though a bit heavier for after med school grads)

http://www.physicianonfire.com/ (he gives information for docs at all ranges of training, though a bit heavier for after med school grads/attending)

 

Bottom line is financial literacy is universal for everyone. Read today and learn; you’ll never regret it.

 

  1. File your own taxes and use the opportunity to learn.

 

Play with software like turbotax. Saving a penny is frequently better than making 2 more, because in exchange you get more time and time is in the end the most precious resource you have.

 

  1. Apply widely but interview wisely when it comes to Match/ERAS.

 

Last but not least, if you do have some income during med school, which can be great other than financially (it pulls you away from medicine and gives you time to refresh and get a perspective), try to fund your Roth IRA. Assuming you don’t make much as a medical student, the taxes required of you to fund Roth IRA maybe literally zero! You get to put “post-tax” dollars into your Roth IRA, which then can grow tax-free and be withdrawn tax-free in retirement (the principle and earnings.)

This is definitely one thing I regret not doing during my MS years, especially given 2010-2014 enjoyed some of the best stock market return in the last 2 decades.

If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.