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please review newbie WCI, end of PGY-1

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  • please review newbie WCI, end of PGY-1

    Hello, newbie almost end of PGY1 here who has recently read WCI book and want to make sure I am on the right track. I think this subforum is the appropriate place to post this?
    - No student loans to pay back, no current debt, 28 years old, single, in Texas. The plan is to do a heme/onc fellowship.
    - PGY1 take-home income after taxes/benefits is $3776/month. Expenses are approximately 1300 a month for rent/CC.
    - Maxed out Roth IRA for 2019 - 6K ( 1/2 split between Vanguard US and International Index Funds)
    - Plan to max out Roth IRA for 2020 - 6K (weekly contributions, probably will be 3/4 US index funds, 1/4 International Index Funds)
    - My employer offers non-matched Roth 403b option and a HSA account which I am recently considering to contribute towards as I have $2400 monthly that is accumulating in my checking account.
    - My plan is to start contributing $1400 a month towards the non-matched Roth 403B starting with the next paycheck although now I am reading that an HSA account would be better as it is triple tax-protected? What are your thoughts/advice regarding this matter? Anything you would do differently? Am I spending too much of my income on rothIRA/403b? (almost 50%)
    The big expenses I see coming up are signing up for Step3. PGY-2 will have a modest bump in salary as well.
    Thank you all for your help!

  • #2
    Yes, hop on the Roth wagon now, but max out HSA first as long as you plan to:
    • Invest the balance appropriately,
    • Save your qualified medical receipts religiously, and
    • Don't touch the account until retirement (no matter when that happens)
    One point of clarification on a statement I don't understand: is your employer retirement account a plan with no matches that has a Roth component or a plan with matches, just not on Roth contributions? I think you mean the first, not the second.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Yes, you are correct - its a retirement account with no matches that has a Roth component. Thank you for your advice.

      Comment


      • #4
        Um, you're doing great. Consider spending more money? I'd probably just use taxable over Roth 401k for flexibility once you've maxed HSA and Roth. Maybe one day you'll want to buy a house or interview for fellowship and flexibility is good to have.

        Only other recommendation is to have disability insurance and an emergency fund.

        Comment


        • #5
          Originally posted by wa2106 View Post
          Um, you're doing great. Consider spending more money? I'd probably just use taxable over Roth 401k for flexibility once you've maxed HSA and Roth. Maybe one day you'll want to buy a house or interview for fellowship and flexibility is good to have.

          Only other recommendation is to have disability insurance and an emergency fund.
          Yeah, that's a good point. I have about $7000 saved up for emergency fund and disability insurance through our residency program.
          Wouldn't a taxable 401k have similar penalties when I withdraw from the account for house/fellowship interviews?

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          • #6
            Originally posted by skuggs13 View Post

            Yeah, that's a good point. I have about $7000 saved up for emergency fund and disability insurance through our residency program.
            Wouldn't a taxable 401k have similar penalties when I withdraw from the account for house/fellowship interviews?
            Taxable is slang for a brokerage account; i.e. not tax-advantaged but also no penalties for withdrawal. Only caveat is if you know for sure you're going to be using money for interviews in 1-2 years then use high-yield savings acct or money market account not stocks because you don't want to expose money you need within 5 years to significant risk.

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            • #7
              Originally posted by skuggs13 View Post
              Hello, newbie almost end of PGY1 here who has recently read WCI book and want to make sure I am on the right track. I think this subforum is the appropriate place to post this?
              - No student loans to pay back, no current debt, 28 years old, single, in Texas. The plan is to do a heme/onc fellowship.
              - PGY1 take-home income after taxes/benefits is $3776/month. Expenses are approximately 1300 a month for rent/CC.
              - Maxed out Roth IRA for 2019 - 6K ( 1/2 split between Vanguard US and International Index Funds)
              - Plan to max out Roth IRA for 2020 - 6K (weekly contributions, probably will be 3/4 US index funds, 1/4 International Index Funds)
              - My employer offers non-matched Roth 403b option and a HSA account which I am recently considering to contribute towards as I have $2400 monthly that is accumulating in my checking account.
              - My plan is to start contributing $1400 a month towards the non-matched Roth 403B starting with the next paycheck although now I am reading that an HSA account would be better as it is triple tax-protected? What are your thoughts/advice regarding this matter? Anything you would do differently? Am I spending too much of my income on rothIRA/403b? (almost 50%)
              The big expenses I see coming up are signing up for Step3. PGY-2 will have a modest bump in salary as well.
              Thank you all for your help!
              would do 20% to retirement. resident makes ~55-60K.
              so 6K rIRA.
              3.5K HSA.
              2.5 to r403.

              rest save as cash/taxable for spending.

              Comment


              • #8
                Originally posted by MPMD
                . i don't even agree (sorry Peds) that a resident needs a 20% savings rate.
                thats fine. i actually agree. just figured 20% was going to be more manageable than 50%.

                i tell any resident they need to do their rIRA minimum and if thats all they ever do, they are still successful.

                Comment


                • #9
                  Originally posted by MPMD
                  congrats on thinking about this and doing well.

                  i would start spending more money.

                  you are going to be very rich but frankly these few thousands in residency are not going to be what does it it's going to be your mindset and the tens if not hundreds of thousands/year you'll be saving as an oncologist.

                  residency is hard and fellowship (esp onc) can be harder. don't do monastic self-deprivation unless that's what you like.

                  i would hate to see you come to the end of residency having skipped weekends away, destination weddings, ski trips etc just to have a few extra thousand in your HSA. you have a lot of life/career ahead of you where you won't be so free, healthy, and unencumbered. i don't even agree (sorry Peds) that a resident needs a 20% savings rate.

                  you will likely look back on these years as some of the best of your life. live a little!
                  Thank you for your advice - you make a great point about enjoying a little now. Honestly, it doesn't really feel like a monastic lifestyle at this point, I'm having trouble thinking of things that I really am keeping myself from buying. I'll plan to splurge a little on a nice vacation once this pandemic dies down.

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                  • #10
                    I found it way easier to live cheaply as a resident. Less expectations. And less time. And personally less kids.

                    Anyone who takes the wci lessons to heart in residency is going to have a humongous jump start. Good luck.

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                    • #11
                      Originally posted by MPMD
                      congrats on thinking about this and doing well.

                      i would start spending more money.

                      you are going to be very rich but frankly these few thousands in residency are not going to be what does it it's going to be your mindset and the tens if not hundreds of thousands/year you'll be saving as an oncologist.

                      residency is hard and fellowship (esp onc) can be harder. don't do monastic self-deprivation unless that's what you like.

                      i would hate to see you come to the end of residency having skipped weekends away, destination weddings, ski trips etc just to have a few extra thousand in your HSA. you have a lot of life/career ahead of you where you won't be so free, healthy, and unencumbered. i don't even agree (sorry Peds) that a resident needs a 20% savings rate.

                      you will likely look back on these years as some of the best of your life. live a little!
                      Doesn't need to be a dichotomy, if you're a single person in a LCOL area you can save a ton as a resident and still have lots of fun/ blow money, especially if you have moonlighting available. I have been saving 30-40%, while having a pretty expensive hobby that most on this forum advise against/scoff at.

                      That few thousand a year in an HSA in 30 years or even 40 investing appropriately is going to be a decent chunk of money. I'm with you that it's silly to live like a miser during residency but at the same time a few smaller things you can do now can add up to a lot with compound interest.

                      Originally posted by Peds View Post

                      would do 20% to retirement. resident makes ~55-60K.
                      so 6K rIRA.
                      3.5K HSA.
                      2.5 to r403.

                      rest save as cash/taxable for spending.

                      Why taxable? If they have extra roth space and money to invest, you wouldn't advise them to place it there?

                      Comment


                      • #12
                        Originally posted by Panscan View Post

                        Why taxable? If they have extra roth space and money to invest, you wouldn't advise them to place it there?
                        because i said for spending.

                        Comment


                        • #13
                          Originally posted by Panscan View Post

                          Doesn't need to be a dichotomy, if you're a single person in a LCOL area you can save a ton as a resident and still have lots of fun/ blow money, especially if you have moonlighting available. I have been saving 30-40%, while having a pretty expensive hobby that most on this forum advise against/scoff at.

                          That few thousand a year in an HSA in 30 years or even 40 investing appropriately is going to be a decent chunk of money. I'm with you that it's silly to live like a miser during residency but at the same time a few smaller things you can do now can add up to a lot with compound interest.




                          Why taxable? If they have extra roth space and money to invest, you wouldn't advise them to place it there?
                          Yup, true. I have hobbies that I budget a certain amount to spend on and I don't hesitate to buy the latest toy if it falls within the spending/month. . I think the low cost of living with cheap rent really gives room to save and spend. I shudder at the idea of living in a place like NYC, SF... there is fantastic training available across the country and I hope more medical students take this into account when choosing their program.

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                          • #14
                            You are very far ahead of most new posters. Congrats on no debt! I spent very little as a resident also. You will have more time to spend money as an attending. Anything you save in your youth will compound into an amazing amount of money as you approach retirement. I saw lots of my co-residents being stressed out by credit card debt by trying to live the big doctor lifestyle prior to earning it. I think you are on the right path.

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                            • #15
                              If you can max out Roth IRA and your Roth 401k up to the match every year (if that's an option), that's more than enough for residency.

                              Use the remaining funds for fun, whatever that means for you during these times.

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