While we now have a discussion on debt, anyone want to share what their savings strategies are? Have you managed to save for a house, put away for kids college or your retirement. Any advice for others?
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President, MomMD<br />Connecting Women in Medicine - Welcome all physicians, resident physicians, medical students and premedical students!
1. We have a map of where we want to go, financially. That means we know how much we want to end up with for college savings, retirement, and emergency funds, and how much we need to put away monthly at various yields to get there.
2. We chose where we live carefully and live relatively inexpensively, but well. Our base budget, including college/retirement savings and student loan payments, is about $3400 per month -- even with nearly $700 per month for health insurance coverage. That means we have a smallish house, one car, and $200-$300 each per month in pocket money. But we live in a safe, friendly community where we can walk, bike, or bus to downtown/school/work/shopping, and the public schools are very good. The housing costs are also low relative to the rest of the country; our 3br, detached house cost under $150K. And good health insurance is easy to come by here. One thing we don't scrimp on is food. We have excellent local organic veg/meat/dairy farms here and a co-op that's connected to the Slow Food movement. We pay a little extra for food, spend the time to cook a few times a week, and live well that way.
3. We've never used daycare or nannies, and we have careers that allow that flexibility. Our daughter's in a morning playgroup co-op that costs $14/mo plus 2.5 hours of work a week, and beyond that my husband takes care of her while I'm working (I did the same when he was working).
4. We pay ourselves first -- savings get paid before other bills, except mortgages. And if we have extra money in a month, it goes right into savings, not into our pockets.
5. My husband's got a very good 403(b) match, and contributes the max. I do the same in mine, though because my salary's much lower, we also fund an IRA for me.
6. We follow a fairly conservative savings/investment strategy: Build up cash first, then less liquid stable securities like US govt bonds and CDs, then more aggressive investments. And investment education is a continuous process -- learning about companies, industries, markets, investment products, brokerages, etc.
It's working pretty well so far. Since '02, we've paid for our wedding, bought a house, had a child, paid off $5K school debt and $3K credit card debt, and taken a couple of trips/vacations. Even so, on an income of about $60K/yr, we've saved/invested around $60K (that reflects my husband's 403(b) match; out of net income we've saved around $40K). It hasn't been any hardship. Our income will probably drop somewhat now that my husband's on disability, but it looks like we'll be able to keep saving and avoid touching the emergency funds.
I think most of this comes down to savings/investment discipline plus the willingness to live where we do, which is admittedly far from any exciting night life, beach weekends, and titans of finance and power. And it's really cold here in winter. If we were miserable or frustrated in our careers here, it probably wouldn't be worth it -- but for us, it happens to work out fine.
Gee, I hope this doesn't sound like an ad. While laying the foundation to prepare me for the medical field, (even though I don't feel that lucky and keep wishing they'd lay me off)I guess i AM pretty lucky to work as a designer for TIAA-CREF.
This is great! I have about 30K USD in student loans from undergrad/one year of grad school...plus about 10K CDN from going back to do my pre-reqs...I'm going to go to PA/grad/med school...and my significant other is in medical school..eeek!
We've recently figured out how to save more than 10K/year--fix our living situation! My bf and I more or less live togther, and his parents live in the same city. His parents have finished their basement into a little apartment for him (it's really popular here for people to rent out their basements as mortgage helpers), and I am going to move into a house two of his classmates are renting. Of course I have tons of stuff, and his parents are being kind enough to let me store everything in their attic. I'm also welcome there anytime, and we've talked about it not being a step back in our relationship but being a sensible step for our future. He's in 3rd year now, so who knows where will be in a couple years. We figure we might as well save some money now and pay down my loans.