Getting your finances in order after residency

The AMA recently published a bullet point listing of basic do’s and don’ts for young doctors going out into practice.

The recommendation to avoid or eliminate credit card debt needs to emphasized. I could easily count with two hands the number of classmates in my medical school who overtly carry credit card debt. As a potential high income earner, you are targeted by credit card companies because you have good credit and are approved easily for loans.

Additionally, here are some soft recommendations for the new grads as well:

  1. Be careful about buying a new house when you get your first job. Now that your income has increased significantly, it is easy to increase your expenses as well.  You don’t want to buy more house that you can afford. If you job does not work out and you have to relocate, you will be stuck with a huge mortgage as well.
  2. Add to that Roth IRA. You want to diversify. Pre and post-tax investments.
  3. Do your homework before committing to a financial advisor. Watch out insurance salesmen. While you need to be adequately insured, make sure what investment vehicles that you truly need before you buy. I’ve been pitched whole life insurance several times before. It might make sense for some people, but it certainly does not if you have $400,000 in student loans that you need to repay or if you have credit card debt.

Any other suggestions or questions? Sound out below!

 

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