Friday, July 13, 2012
401K to IRA - Check!
A little while back I quit my job. Yesterday, I finally finalized my 401K transfer, rolling it into an IRA so I don't have to pay any nasty taxes on it yet. Whoop whoop! Being a responsible, currently unemployed (yikes!), premedical adult is very interesting at times, forcing you to learn all about budgeting, investment options, financial and governmental policies, laws, growth strategies, etc. When you think about it, not only do doctors have to know a lot about medicine and the human body, they also have to know how to manage money really well. In looking through some of the seminars planned for our orientation week, several of them are going to be about budget planning and debt management.
MSU CHM is an averagely-priced med school - which puts the recommended student budget (including tuition and all living costs) and the subsequent loan recommendation right around $48,766 for this first year. It goes up each year after that, and does not include the summer semester or any months off. Assuming a student borrows another $10,000 to cover the summer semesters (and an average of $50,000 for the other Fall-Spring academic sequences), this reaches a total expense of around $240,000 for four years as an average in-state med student. When you bump up the cost for out-of-staters to $85,000 ($70,000 normal term plus $15,000 for summers), you see a four-year cost of $340,000. I don't care who you are, you need to be able to manage money well and come up with a budget plan to be able to effectively pay off debt like this.
Fortunately, I've been coming up with budgets and devising loan repayment plans for a while now. I didn't make boatloads of money at my previous job, and Wife has yet to work a full-time position since we've been married. With both of us going back to school for new careers, we have had to come up with some pretty interesting plans and strategies for paying all the bills while also keeping food on the table. These experiences and the lessons we've learned from them will definitely come in handy in the years ahead...
As far as advice for anyone out there who is getting ready to attempt something similar, all I can say is do your best to live like a college student. And not the crazy ones that go out and spend all their money on booze or clothes or concerts. Live like the nerdy ones who spend their evenings playing Mario Kart after doing research in a basement lab all day and think that a crazy night out involves driving barefoot to Little Caesar's to pick up your once-a-month $5.55 large because you're too cheap to splurge the $8 plus delivery fee on Papa John's.
Use coupons when you go to the store.
Save your money and buy quality stuff so you don't have to replace it when it breaks in a year. Living frugally doesn't always mean having only cheap stuff. A lot of the time, being frugal just means not buying a lot of stuff all the time, but rather saving up to buy quality necessities that will last you a long time.
All that being said, our modus operandi will probably change quite a bit as we begin the next phase of life. Wife and I won't be living under the same roof for the next year, so we won't be buying groceries the same way, planning meals out, etc. For me, there will be more time spent eating out (Subway, Zoup, etc.) because I won't have the time (or the culinary know-how) to plan all my meals out. Luckily, there's (loan) money in the budget to compensate for this.
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