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Financial Suggestions for Newly Married Medical Student

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  • Financial Suggestions for Newly Married Medical Student

    Hey everybody,

    I have been a casual WCI podcast listener and forum lurker for about a year. I have some new changes to my financial situation so I was hoping to get some advice from the community. I am a 3rd year medical student who recently got married. My wife and I (in our young 20s) are in the process of combining our finances and it seemed like a good time to make any adjustments or start new habits that will lead us to a financially successful future. I believe we already have some goods habits in place. We do our best to balance saving for our future and enjoying the present. We both use to budget.

    My finances: I currently have about 117K in student loans and 10k in savings split between a PNC checking account and ally savings account. For the past 3 years I have lived off of loans only and save a small portions each year for an emergency fund. Over the past 3 years, my living expenses has averaged 1572/month. I own my car (an early 2000s that is not aging gracefully), rent an apartment with my wife, and have no credit card debt. I have no other assets. I use PNC as my bank and I have credit cards through PNC and USAA.

    My wife's finances: My wife has been working for 3 years after college and earns about 42k before taxes, has 27k in savings, 534 dollars in a roth 401k, 1.3k in an ellevest account, a 290 car payment (3 years of payments remaining). She has no credit card debt or student loan debt. She uses PNC as her bank and has a Discover credit card. She puts 3% of her monthly paycheck into her retirement account, ~700 dollars a month into a savings account, and ~1700/month for living expenses.

    Our plan: Our current plan is to open an ally savings account in both of our names for an emergency fund of 20k; a common checking account; and then have two separate checking accounts, each in our own name for personal spending money that would be taken from the common checking account. The remaining 17k of our savings would go into her roth 401k. The 1.3k would remain in the ellevest. Otherwise, the rest of our spending and saving would continue unchanged.

    My questions:
    1. How much money would be an appropriate emergency fund?
    2. How much should we be contributing/thinking about retirement funds moving forward?
    3. We are debating getting new credit cards, is there any advantage to having separate cards vs two authorized users. Is there a preferred card for our situation? (Interviews will be this winter for me)
    4. Is there anything we should keep in mind when filing taxes together this year?
    5. Any suggestions you have for us/Are we asking the right questions?

    I appreciate any help in advance. I'm excited to be a member of the community!

  • #2
    It is really fantastic that you started doing this early. You will have a real leg up going forward.

    Emergency fund of three months spending would be more than enough while you still have student debt.

    I would try to maximize as much Roth space as you can and put the rest towards keeping your loans to a minimum.

    I will let others weigh in on credit cards because I do not have any strong opinions but I don't think any fiddle faddle with them is really going to budge the needle too much.

    If you are doing your taxes yourself make sure you're receiving any education credits since your wife is working and you are paying tuition.

    Best of luck!


    • #3
      So I was you. I got married third year to a teacher who earned about 40k. I had student loan debt, she didn’t. I’m now 18 months out of training, debt free, reliable cars, 100k in retirement, 100k (and growing monthly) in house downpayment fund and 30k in an emergency fund.

      First, combine your finances. It will simplify your life and improve your marriage. You’re right to want to do this in spite of what some people say. Being on the same page is a good thing for your marriage.

      Don’t play the credit card reward game, you have too much to lose. Best case scenario, you might get a few hundred to a few thousand in benefits. Worst case, you get sloppy and thousands behind. I have a couple CCs now, but I’m an attending and my financial life is simple.

      I wouldn’t be saving much of anything for retirement. I’m probably a dissenting voice in this respect, because there’s no right answer. I believe in being debt free and the power of focus.

      Learn to live on a budget.

      An emergency fund should be 3-6mo expenses +/-. You have way too much and a car payment. It’s also hard to justify a big EF if you have debt.

      You’re in a good position, just focus.

      If I were in your shoes (which I was), I would do the following: Merge finances yesterday. Set aside 3-5k for an EF. Write a check to pay off the remainder of her car yesterday. Use the remainder of the 40ish K savings to finish med school without more debt. Based on your current debt, that should roughly get you there. Build your budget around ~30k/y. If you want to save, do a Roth IRA in her name. I’d probably just do everything possible to not put any more debt on the pile (that’s what I did). Don’t build your budget around 42k because you’re going to need ~5k for residency interviews and ~5k moving/startup expenses. Fight the urge to buy a house when you start residency. I bought - and it worked out well - but I was lucky! You’ll then make about 50k as a resident and hopefully her salary will be up to 50k as well. If you raise your standard of living to 50k, you then have about a 24-30 month path to being debt free. Then you’re a third year resident and can start saving again for either fellowship interviews or startup expenses with moving again. This will give you the flexibility of letting your wife stay home with little ones if she chooses to do so, let you take whatever job you want (regardless of pay), etc. Now, fast forward and we’re very comfortable tithing, saving 30%+ for retirement and putting several thousand a month plus all moonlighting/incentive pay towards a home downpayment.

      What I described is tough but doable. Good luck. And congrats.
      Last edited by EM-CCM MD; 01-19-2020, 03:50 PM. Reason: Typos


      • Ironcity
        Ironcity commented
        Editing a comment
        I appreciate you taking the time to write out this post! It was nice to catch a glimpse of what we have ahead of us and I like a lot of what you had to say.

    • #4
      "because you’re going to need ~5k for residency interviews and ~5k moving/startup expenses."
      Depending on the locations and number of interviews, this could be shy of the actual. You need to figure this out and start pumping some funds into a high yield account for this.
      It's up to you, I personally don't buy into the two separate checking accounts for spending. I get the independence bit, but well, you are married. If you run short is she going to give you an advance? You get the point. One joint account works fine for many. Personal choice. I hate moving funds from one to another. It's not adding value.


      • #5
        I just want to commend you for the level of detail that you provided in your question. It seems most people have no idea what their actual spending is. In your shoes I think 3 months is ok for an emergency fund. I would get a cash back credit card. Keep it simple. I would concur with trying to minimize the loans with your wife's income.


        • #6
          Get rid of the ellevest stuff immediately. What is the point of that? Waste of fees and you should not be doing taxable stuff.

          Why do you need a 20k e fund?

          Each having your own checking accounts sounds confusing and a PITA.

          Good thought maxing the roth 401k, would max roth IRA first yearly and then use leftover for the 401k.

          Have to look into credit card terms. some have fees for additional authorized users, others don't.


          • Ironcity
            Ironcity commented
            Editing a comment
            The 20k e fund originally came from a 6 month fund for our averaging spending of 3300 per month. I'm now understanding that this is overkill

        • #7
          I was married when I started med school, husband made 40k. So I have been in your shoes. We kept 15k in an emergency fund. We had most of my loans paid off in residency and we were paying for daycare during that time. So I'm sure you can pay yours totally off in residency.

          I'd keep 15k in savings. Pay off her car. Put the rest in retirement or use it to fund the rest of 3rd/4th year. Moving forward she shouldn't be saving 700 a month. That should go to tuition or retirement. Get a card with airline miles to help with residency interview costs.

          Good luck! Y'all are doing great!


          • #8
            We were in a similar boat. Got married after first year of med school and wife was making around 35k.

            i agree with others on Efund for 3-4 months and having a plan for residency interview expenses. Cash flow was tight for us in medical school for us so wouldn’t jump to throw all your extra cash to pay off car or student loans (unless terrible car loan rate) until you have a good plan for residency and moving expenses.

            I personally would try to fund or partially fund a Roth IRA at least for your wife. We were essentially paying no income tax in medical schools with tuition tax credit and it gave us a nice head start. Otherwise try to minimize loans and have some fun. We took a fun trip at the end of fourth year on a budget.

            Once you get to residency if you can live on one of your salaries (which is what we did for the last 5 years), you will have money to fund Roth IRAs and pay down some student loan debt depending on your payoff plans.