How I Prepare for Holiday Spending (and avoid credit card debt)

Now that the weather has started to cool and fall is almost over, the holiday season will be here before we realize it. While the winter holidays can be a joyful time full of new memories with loved ones, it can also be a source of stress and financial dismay. Many of us spend more money during the holiday season than other times of the year and it is this increase in spending that has the potential to negate all the progress we’ve made in previous months. In order to avoid credit card debt and maintain my financial goals I prepped for the holiday season by doing 4 things:

1. Look at how much money I spent in previous years. If I’m being completely honest, this is one of the first years I’ve gotten the courage to actually make and stick to a budget. In previous years I’d just buy what I felt I needed or wanted at the time and charge the extra on my credit card. Clearly this isn’t a winning strategy for financial success. In order to keep myself from making the same mistakes, I first needed to examine my spending. I looked back at old bank statements to see exactly how much I spent on gifts, travel, etc. Having a starting point for how much I spent last year helps me as I start thinking of areas where I can cut back and potentially save money this year.  

2. Estimate how much money I will spend this year. Once I have a starting point, I can then group my spending by category and anticipate how much I plan to spend this year. For example, last year I spent Christmas in Florida and had to factor in the cost of travel. This year I’m staying in my current city of Atlanta, so I know I’ll save some money this year on transportation. Last year I bought gifts for everyone in my immediate family and for a few cousins. This year I plan to do the same thing but may alter the amount I spend on each gift. As I continue to go through various categories of holiday spending (travel, decorations, gifts, food, clothes) I can determine a minimum and maximum amount I anticipate spending this year.

3. Create a savings account for holiday spending. Once I determine the max amount I plan to spend, I can then start planning accordingly. In previous years, I would run low on cash and be forced to buy things on credit. This year, I plan to avoid getting into debt by having saved up money ahead of time. About 4 months ago I started putting aside money into a “holiday spending savings account.” Since I know I’d be tempted to spend it on other things, I had the money automatically withdrawn from my main checking account so that I wouldn’t notice it was gone. I now have a nice little “nest egg” of money I can spend during the holidays without feeling guilty. It’s not a large sum, but it’s enough to keep me from racking up debt this holiday season.

4. Decide to stick to my budget and refuse to buy things on credit. As most financial gurus will attest: our financial status tends to be directly correlated to our habits. In order to put myself in a better position financially, I needed to alter my behavior and mindset around money. Instead of looking at credit cards as another way to access money and purchase things I can’t afford, I now view them as a monthly bill that must be completely paid off every 30 days. In other words, I try to not charge things on my credit card that I can’t afford to also pay for in cash. This shift in mindset has prevented me from accumulating credit card debt and helped me better prepare for holiday expenses.

Tell me, what ways do you prepare for the holiday season? What things do you do to minimize/avoid credit card debt during the holidays?

5 Ways I Maintain Some Work-Life Balance

One of the best things we can do for our careers is make sure we have work-life balance. Sometimes we can be so eager to “lean-in” and lead at our jobs that we fail to carve out time for family and life at home. While this may seem trivial, having balance between our personal lives and our professional careers can increase productivity and overall life satisfaction. As a resident physician who can work up to 80 hours a week, this can be challenging to accomplish. Here are some ways I’ve tried to muster more balance in my life:

1. Limit meetings and emails to business hours. As an ambitious medical professional who loves medicine, research, and health policy I am quite involved at work. There are several committees and organizations I’ve joined and numerous projects that require me to collaborate with other doctors. While these things bring me joy, they can consume my life if I’m not careful. One of the ways I’ve tried to handle this is by limiting in-person meetings and responding to emails during business hours. I might have to bend this rule on occasion for time-sensitive items, but for the most part I try to restrain from sending or answering work-related emails after 7pm. If I need to speak to someone on the weekend, I try to do it Saturday mornings so that I can have at least a day and half where I don’t have to worry about work.

2. Set expectations with patients/clients. As a primary care physician my job is to help manage a majority of the patient’s medical problems. This means I am constantly ordering labs, interpreting tests, and communicating with patients about a variety of different issues. At my residency program we even have a secure “patient portal” through which patients can send me messages, receive their test results, and ask me questions. While many patients love this system, it can lead to increased stress for physicians like myself. I am not given additional compensation for using the portal and often have to spend my “off-time” messaging patients and answering questions which reduces the quality time I have at home with my family. In order to achieve some sort of balance, I set expectations with my patients on the first visit. They know they can ask me questions on the portal but the response time will be 24-48 hours. All emergencies must go to an entirely different system. I will send test results but if patients have in-depth questions or medical concerns, they should schedule an in-person visit so that we can thoroughly address their problems. Setting these expectations make things clear for patients and allows me to live in the moment at home with fewer distractions.  

3. Have a reset day (or ½ a day) each week. Sometimes work can get so busy that everything else gets delayed. The dishes pile up, laundry isn’t folded, and the fridge starts to empty out. In order to minimize these times as much as possible, I schedule a reset day (or half a day) each week. For me, that day is usually Sunday. I get up, grab coffee and try to write blogs or articles for my website. I then get dressed and go to church. When the service ends, I go grocery shopping and come home to do laundry, sip a glass of wine, and watch a movie on Netflix. When the movie ends, I start to cook and meal prep for the week and usually end my day by reading part of book. This may sound trivial and basic but this is my reset day. For me, writing blogs is therapeutic and going to church helps me gain more optimism for my week ahead. The movie helps me relax and reading a book allows me to gain insight on things and temporarily escape from the stresses of my own life. This reset day is a must.

4. Maintain good personal health habits. The busier we get the easier it can be to forget about our own health. If we aren’t careful we can find ourselves constantly eating out, barely exercising, and mentally exhausted. To prevent this from occurring, I’ve tried my best to maintain good personal health habits. Before the week even starts, I take a look at my schedule and pinpoint days and times I might be able to fit in a run at the gym or a workout in my apartment. I spend the first 10 minutes of each day reading a small devotional and saying positive affirmations to begin my day as optimistic as possible. Lastly, I try to meal prep on weekends and prepare foods that are minimally processed with least 2 fruits/vegetables so that I ensure I’m getting most the nutrients I need to function at my best.

5. Schedule time with family and friends. As a person who loves to be social and interact with those I love on a consistent basis, I try to schedule time with my family and friends. At least once a month I try to have a Sunday dinner with my parents. Every other week, I spend time with my brothers either watching a football game or going to some sporting event. I even schedule time with my girl friends to go out to a movie or some social event in the city every few weeks. Since work can be demanding, I have to schedule time or it simply won’t happen. This means planning ahead and keeping things organized on my phone calendar.

Tell me, what are some things you do to maintain work-life balance in your career?

Quick Guide For Managing Loans, Insurances, and Budgets

Of note, this article was originally published on Doximity’s Op-Med for resident physicians.

As resident physicians who work crazy hours, we have a lot on our plate. With so many competing responsibilities, it can be difficult to balance our personal lives with our careers and some things may inevitably fall by the wayside. While there are many things we can put off for another month or even another year, our finances shouldn’t be one of them. Here’s a financial check list of three things you must do to make sure you’re on the right track: 

Have a concrete plan for your student loans

Figuring out what to do with your student loans can seem a bit overwhelming. Here are a few steps to help you navigate through the madness.

1. Decide whether or not to consolidate or refinance your loans. Consolidation is when you combine all your loans into one giant loan and this can usually be done through the federal government. Refinancing is when you combine your loans with a private company outside of the federal government. Refinancing your loans usually allows you to get a lower interest rate on which can save you money over time but it makes you ineligible for several government loan forgiveness programs like public service loan forgiveness (PSLF). Since I’m enrolled in PSLF, I chose to consolidate my loans through the government instead of refinancing them with a private company.

2. Pick a repayment plan that you can afford. If you have federal student loans, you will be automatically enrolled into the standard repayment plan. This plan may require a higher monthly payment than you can afford. If this is the case for you, as it was for me, switch into one of the income driven repayment plans that cap your student loan payment at 10-15% of your discretionary income.

3. Sign up for public service loan forgiveness if your residency qualifies. Enrolling into the program isn’t binding and may give you the chance to get tens of thousands of dollars in student loans forgiven, tax free. Take five minutes out of your day and submit the form to officially enroll, if your resident program meets the qualifications.

Make sure you have insurance

Many of us didn’t think much about insurance in medical school. We probably had health insurance from our parents or our schools and didn’t worry about anything else. Now that we’re out in the “real world,” here are three things to do to make sure we are thoroughly protected in residency: 

1. Verify that you have medical insurance. Even though most of us are young and healthy, we still need health insurance. Whether it’s for yearly checkups, acute illnesses, the birth of a baby, prescriptions, or unforeseen injuries, we have to make sure we’re protected and have an affordable way to cover these costs. As residents, most of us should get free or low-cost coverage through our programs. Just make sure you’re enrolled.

2. Get disability insurance. After taking out loans and spending most of our 20s in school, let’s make sure that our income is protected. If we get in an accident, are diagnosed with an illness, or simply have an injury that prevents us from working to our full capacity, disability insurance will kick in and give us money to replace the income we may have lost. Group disability insurance policies through our residencies usually don’t have enough coverage or adequate protection. I purchased an individual specialty-specific disability insurance policy that will pay out $4,000 a month if I am unable to work at 100% capacity as a resident. The policy will increase and pay out $12,000 a month when I become an attending.

3. Decide if you need life insurance. Life insurance pays money to our families if we were to pass away. While many of us have a life expectancy well into the 80s, life can be unpredictable. If something were to happen to us, we’d want to make sure our family was taken care of. As a resident, many of us have a small life insurance policy from our employers, but if you have a spouse or kids who depend on your income, that group policy may not be enough. You may need to purchase additional term life insurance.

Create a monthly spending plan

As resident physicians, life is much different now than it was when we were medical students. Instead of getting one lump sum of money each semester, we now get paid on a consistent basis. In order to make sure we’re not spending too much money and are actually saving a decent amount for emergencies, paying down debt, retirement, and vacations, it’s imperative that we implement a spending plan. I categorize my spending into 3 buckets: 

1. Things I need to buy, which are necessities like rent, bills, and food.

2. Things I want to buy, which are discretionary entertainment expenses like concert tickets, movies, books, meals at restaurants, or clothes.

3. Things I should buy, which are investments I make to increase my net worth whether that’s by paying down debt, saving money into a separate account, or investing toward retirement.

Simply allot a percentage of your check to each of these three buckets to make sure you’re living within your means and making responsible spending choices. 

To summarize, getting your finances in order doesn’t have to be difficult. Have a concrete plan for your student loans by deciding whether or not to consolidate or refinance your loans, enrolling into an affordable repayment plan, and signing up for PSLF. Next, make sure you have all the insurance you need like medical insurance, disability insurance, and life insurance. Lastly, create a spending plan to ensure that you’re paying your bills, increasing your net worth, and investing in your own self-care. 

6 Affordable Ways to Practice Self-Care

As a doctor who works up to 80 hours a week, self-care is a must. In order for me to thrive in my career, it’s imperative that I avoid burnout by practicing good mental health. Since I’m still in residency and haven’t started making the “big bucks” just yet, I need to do this on a budget. Here are six affordable ways I practice self-care:

1. Prioritize “Me” Time. A few nights a week, I disconnect from social media, forgo optional meetings, and put my phone away to have time by myself. Sometimes I read a few chapters in a book, watch a movie on Netflix, or go for a run on the treadmill. Regardless of the method, this “me” time allows me to let my guard down and gives me a chance to recoup any energy I might have lost during the work day. Plus, it’s completely free.

2. Schedule “Self-care” days. Along with “me” time, I also have at least one “self-care” day each month. During these days I usually treat myself to a pedicure at the nail salon or get a massage at the spa. I also catch up on some personal grooming or schedule an appointment at the hair salon and zone out as someone else washes and styles my hair. When the weather permits, I’ll spend the afternoon reading a book by the pool or going for a walk in the park. These self-care days help me relax and are affordable things I fit into my monthly budget.

3. Have a “Ladies Night” As a self-proclaimed “social butterfly,” I love hanging out with my friends. Unfortunately, my work schedule as a physician doesn’t allow me much time for that. When I was a medical student, I would have a “wine night, ladies’ night” once or twice a month. We’d grab a couple bottles of Trader Joe’s wine and listen to music or watch a movie on Netflix. Now that I’m a doctor, it’s a little more challenging to schedule but I’ve tried other ways to make it work. Every few weeks on one of my day’s off, I make plans with some of girlfriends to go out to movie or a bar. Usually this is some free or relatively inexpensive meetup since we are also trying to stay within a budget, but scheduling time to dance or hangout with my girlfriends is definitely something I look forward to each month.

4. Indulge in “Simple Pleasures.” Sometimes am so exhausted that I barely want to leave my house, let alone socialize with others. During these nights, I find it helpful to ‘indulge in the simple pleasures” or find little things that will make me happy in the most trying of circumstances or stressful days. For me, that’s having glass of red wine with a piece of dark chocolate, taking a bubble bath with ocean sounds in the background, or even watching a cheesy Hallmark movie with freshly baked chocolate chip cookies. Before I started residency, I wrote down a list of 30 simple pleasures that make me happy and I indulge in one of these things on the days or nights I feel the most stressed.

5. Do an “Activity of the Month.” About 90% of my days consist of eating, sleeping and working, but every now and then I try to change things up a bit. When I finally get a full day off, which can be rare as a resident physician, I try to make them count. Once a month my friends and I plan an “activity of the month.” One month we all went to a Korean Sauna, in July we went to one of the city’s young professional social events, next month we’re planning to go horseback riding. These things are quite affordable, and we often use Groupon for discounts. Knowing I have a fun activity planned with friends helps me get through the week and gives me something to look forward to during those long hospital shifts.

6. ”Recharge” with people you love. Even with my self-care days, me-time, simple pleasures, and activity of the month, I can still feel drained. It is during these occasions, that I do other things to help me recharge. Usually this involves spending time with people I love. I’ll call my best friends in other states, watch a football game with my brothers or make time to have Sunday dinner with my parents. Whether you spend time with a significant other, see family, or talk to friends, sometimes the best way to practice self-care is to be around those we love. 

Tell me, what affordable ways do you practice self-care?

5 Pro Tips I'd Give My Younger Self:

1. Realize personal finance is important. Despite what we may have been told about our careers and future high incomes, how we manage our money now matters a lot more than we may think. A lot of us are falling into a danger zone of being okay with rapidly accumulating student loans, credit card debt, and never-ending car payments which is a very VERY scary place to be.

   How we spend our money today, can drastically alter our quality of life a few years from now. The last thing you want to do is be in your mid-40s still complaining about the student loan debt your friends and family forgot you had, picking up extra shifts at a job you hate to avoid racking up even more credit card debt than you already have. DO BETTER.

2. Figure out how much you spend each month. I cannot stress how much my life changed when I actually set down and tried to create a monthly budget. Regardless of how “simple” it is, I can tell you that 90% of my med school classmates didn’t have one.

   As a med student life was so stressful studying for organ systems tests, clinical rotation exams, or Step 1 of the US Medical Licensing Exam that you barely have time to wash dishes, let alone try to understand finance. Most of my us just filled out a FAFSA form each year and magically received money from the government that covered our tuition and basic living expenses. We’d pay our rent, buy the food we wanted, and then realize we’re suddenly broke when the semester was about to end and our account balance dwindled. We’d sweat it out for a month trying to make ends meet, then fill out another finance form (aka FAFSA) and “magically” more money appeared in our bank account. Rinse. Wash. Repeat.

   No one told me not to over-spend my loan money on the post-board exam vacation I felt I deserved. No one stressed the importance of resisting the urge to “treat yo’self” during happy hour or a colleague’s birthday dinner.

   I am not saying you can’t do these things, but I want to stress making a budget because I’d bet that most graduate students and young professionals have no idea how much money they are actually spending each month. I know I didn’t. I mean I knew I was broke because I kept filling out loan applications every year, but I honestly couldn’t tell you my overall loan balance. Heck, I couldn’t even tell you my debit card balance. Don’t be as naïve as I was, DO BETTER.

3. Minimize the interest rates on the loans you have. The money you borrow now will cost you much more in the future. Let that sink in. The higher the interest rate, the more money you will pay back later. When you borrow $30,000 for school, you pay back closer to $40,000 later (assuming a 7% interest rate that you pay back over 10 years). That’s $10,000 extra you’re paying just in interest.

   You can minimize this by not borrowing as much in the first place and by lowering the interest rate on the loans you currently have. If you have credit card debt, simply call your bank and ask if they can lower the interest rate on your credit card. Yes, it really is that easy.

4. Spend less! We all want to look good, feel well, and vacation like a champ. Trust me I get it. I get envious when I see the Instagram photos of my med school classmates or work colleagues taking another extravagant vacation I cannot afford. It’s hard not to let the positive balance in my bank account distract me from the big fat NEGATIVE sitting in front of my net worth.

   As a med student, the student loan money sitting in my debit account was fictitious. It tricked me into believing I was richer than I was or that I can afford things I knew I couldn’t. When I finally had to face the big fat loan balance alongside my car payment and expanding credit card debt, I realized I needed to make a change.

   I knew I didn’t have much self-discipline so I had to stay far away from the malls. I deleted the text alerts of new “sales” from my favorite clothing stores, resisted the urge to buy a new outfit for weekend outings, and started cooking more meals at home. Before I knew it, I had changed my spending habits and paid off my car.

5. Practice self-discipline and delayed gratification. For the love of God and all things man please break your expensive habits. Mine was wine and lots of it. I liked it red, aged, and expensive. It just tasted better. But man was it costing me.

   I was spending at least $15 a week on wine, which doesn’t sound like much but when spread that across 52 weeks a year that amounts to $780. I mean I was spending nearly $800 on alcohol! This was going to cost me closer to $1000 when I paid it all back, since I was buying the wine with my student loan money. What a waste.

   Every year for Lent I tried to give it up and the day Lent ended I picked back up the habit. Don’t be me. Curve your habits. Do not waste money you don’t have on things you don’t need. Granted there is a balance, but graduate school is not the time to be treating yo’self to wine and fancy dinners every other week. Face it. We aren’t rich…yet. Quit pretending you have more money than you actually do. Practice self-discipline so you can get out of debt and start building your net worth.

Tell me, what ways have you started practicing self-discipline? What things are you going to try to spend less on this month?

6 Life Hacks To Start Saving More Money

As a busy young professional who aims to be fiscally responsible and money savvy, I realized I needed to change my habits. Here are 6 habits I changed to save more money:

1. Pre-plan restaurant outings. When I get invited to eat out with friends, I show up a lot more prepared. Instead of getting there and being shocked by the price, I take a look at the menu online before I arrive and come up with a maximum dollar amount I want to spend. If I know I don’t want to spend more than $25, then I’ll think twice before I order another round of drinks or that extra appetizer I know I don’t really need. I spend less money if I set a limit for myself beforehand. 

2. Decrease the amount of times I go to the mall. Most people who know me, know that I loveeeeee to shop at Express. They have cute business casual clothes for young professionals and quality dresses for an occasional night out. As a med student I could never seem to resist their sales and if things were magically 40% off, I usually bought up the whole store. Since I knew I couldn’t curb my self-control, I did something even better. I refused to let myself walk by the store. In fact, I decreased trips to the mall altogether.  I now only go to the mall once a month for make up and any other personal grooming things. Since my self-control wasn’t the best I had to avoid putting myself in situations that constantly tested my limits.

3. Remove text alerts from clothing stores. If you know me, you know I love a good sale. Getting a sale price for a quality item is something that brings me immense joy. Anytime I got a text alert from one of my favorite stores notifying me of a sale it was hard to resist. When I realized I wanted to start spending less money, I changed this practice. I turned off the text alerts to my phone and send the sale notifications to an email address I didn’t check as often. That way, when I actually needed to buy something from the store, I still had access to valuable coupons, but was no longer inundated with them every couple days via text message.

4. Drink less alcohol. I’m not addicted to any drinks and don’t particularly care for hard liquor, like many young professionals I know, I love wine. Something about a glass of red wine after dinner alleviates my stress and makes me feel like a success. Unfortunately, this craving for wine was costing me a lot of money. Drinks were overpriced at bars and weekly wine bottles were starting to add up. In an effort to spend less money and lower my grocery bill I deceased my wine intake and started drinking less wine

5. Purchase things in cash. A couple years ago I noticed that I spent less money when I purchased things in cash versus when I bought things with a debit or credit card. When I swipe for a payment it can seem a bit passive. There is something about physically seeing the money leave my hands actually makes me want to spend less. Anytime I pay in cash I question whether I really need what I’m about to purchase. With a debit card, I typically don’t have that doubt check system into place.

6. Take advantage of free  and low cost entertainment. When I was a med student on a large college campus and even now as a resident in an urban city, there are tons of affordable entertainment options, especially on Friday nights. Instead of paying to go out somewhere, my friends and I decided to go to some of the free things. Our med school college campus had a bowling alley that was free on Fridays. Occasionally, they had art and painting classes that were also free. Sometimes we would even go to sporting men’s football games or women’s gymnastics meets which were relatively affordable as well. During the warmer months, we could rent Kayaks on the lake or do a movie night with popcorn at someone’s home in the winter. Either way, these affordable sources of entertainment were saving me money.

What do you think of these habits? Are there one or two life hacks from above that you could start adopting in your own life?

How to pay off your loans: Debt Snowball vs Debt Avalanche

Those of us who took out student loans for school or weren’t as diligent about our finances in our younger years, may have accumulated some debt. Now that we have started our careers and are trying to follow a budget, one of the things on our to-do-list is paying off debt (or at least making payments towards it). When it comes to paying down debt, there are 2 main ways to do it: the debt snowball and the debt avalanche.

Debt Snowball:  

With the debt snowball method, you organize your debt by the amount you owe on each loan and prioritize paying off the loan with the smallest amount first. One you pay off the loan with the smallest amount, you use the money you were putting towards that loan and stack it onto what you were paying on the next highest loan until you pay that one off too. You keep stacking payments and paying off loans until all of your debt is gone.

Example of the Debt Snowball:

Let’s say you owed $5,000 on a credit card, had $20,000 left on your car loan, and $40,000 in school loans. With the debt snowball method, you would prioritize paying off the credit card debt first, then the car loan, then your student loans. Specifically speaking, you would make the minimum amounts on all loans (say $100 each) and any leftover money you have (say $500) would go towards the smallest loan (in this case it would be your $5,000 credit card debt). Once you pay off the credit card debt, you would stack the money that went to that debt onto the next highest loan, which in this example is the $20,000 you still owe on your car. Once you pay off the car loan, you would take the money you were paying on that loan and add it to what you were already paying towards your $40,000 student loans. With the debt snowball, you end up stacking money on each payment as you pay off each debt (like you creating a snowball that stacks ice as it rolls).

Why the Debt Snowball works:

Paying off debt is mental. When you see yourself pay off the small loan, you may be even more encouraged to pay off the larger loans and more likely to eventually eliminate all your debt. The disadvantage of this method is that paying off loans with the smallest amounts first may cost you more money overall (since there may be other loans with higher interest rates). Despite this disadvantage, there are many advocates of the debt snowball method. Supporters of the debt snowball say that most people don’t end up paying off all of their debt because they get discouraged along the way. However, when they see themselves pay off one of their loans, they are more likely to pay off additional loans and eliminate their debt altogether. Thier point? People may pay more money overall with the debt snowball method, but they will eventually get it all paid off.

Debt Avalanche:

With the debt avalanche method, you organize your debt by the interest rate on each loan, (not by the amount you owe on each loan). You prioritize paying off the loan with the highest interest rate first (even if you have other loans of smaller amounts).  

Example of the Debt Avalanche:

If you had the same loans from the previous example: $5,000 from your credit card with a 15% interest rate, $20,000 from your car loan with an 5% interest rate, and $40,000 in student loans with an 8% interest rate, then you would organize your loans by their interest rates and prioritize paying off the loan with the largest interest rate first. In this case, you would pay off the $5,000 loan, then the $40,000 loan, and end with the $20,000 loan (as if you are an avalanche that starts at the top of mountain and increases in speed as it travels downward).

Why the Debt Avalanche works:

The advantage of this method is that you end up paying less money overall because you get rid of loans with higher interest rates first. The disadvantage of this method is that oftentimes the loans with the highest interest rates are some of our larger loans. Thus, it may take awhile to actually pay the loan off. It may be harder to feel as though you are making progress towards debt repayment since paying off that first loan could take years. Many people may lose their zeal for paying off debt and get tempted to use that money for other things. Nevertheless, many financial advisors still recommend the debt avalanche for people who are dedicated to becoming debt-free, since it saves them hundreds, if not thousands, of dollars in the long-run.

Which method is better?    

It depends. There are pros and cons to each method so you should choose the method you think you can stick to the best. If you know you are the type of person who needs to see small victories to stay encouraged along the way to becoming debt-free, then perhaps the debt snowball method is right for you. If you are the type of person who is more diligent about paying off debt, doesn’t rely on small victories, and has fully committed to paying off debt in the shortest amount of time, then perhaps you would do well with the debt avalanche method. I myself, have used each of these methods in the past and they both have worked well. For example, I used the snowball method when paying off my car note and credit card bills. I then used the debt avalanche method when paying my student loans.

Which method do you think would work best for you?

Resident Physicians: 6 Questions To Ask Yourself Before You Spend Your First Paycheck

I originally published this article on Doximity’s “Op-Med" tailored for medical doctors. Check it out below:

As resident physicians, we work a ton! Fortunately, it’s not all in vain. Unlike our life as medical students, we finally get paid! But before we spend all the money from our first checks and start treating ourselves to over-priced dinners, let’s stop and think things through. Despite the temptation to spend what we have and wait for the next check to appear, let’s set some financial goals and create a spending plan.

Since everyone’s priorities may differ, it’s important to tailor your spending plan to your own individual needs. As you think about getting your finances in order, you must first determine what’s most important to you by answering these 6 questions:  

1. Do you have an emergency fund? Those of us who are just entering the workforce may not have started saving money just yet. However, building up an emergency fund is something we all may want to prioritize sooner rather than later. If our car breaks down or a family member gets sick, money in this fund gives us the means to pay for these events without relying on a credit card or accumulating debt. Although the amount of money in this fund may vary from person to person, having anywhere from $1,000 to 3 months of expenses is a decent starting point. 

2. Do you want to be debt free as soon as possible? Some of us are debt-averse. We can’t stand the thought of having a credit card balance and loathe our student loans more than anyone could imagine. Other people are more debt-neutral. They feel that debt was a necessary expense to get to this point in their lives and are in no immediate rush to get rid of it. Regardless of which camp you’re in, it’s important to have a plan. If you are debt-averse, you may want to decrease your living expenses and allot a larger portion of your budget to paying off credit card debt. If you are more debt-neutral you may simply aim to meet the minimum payments on your student loan balance and spend your money on other things.  

3. Do you want to save money for retirement? As young adults out in the workforce, it’s important to think about retirement. No matter how invincible we feel, we likely won’t work for the rest of our lives and will need a plan in place to support ourselves during that time. Although retirement can seem a long way away, we have to start planning for this period as soon as we can. It often takes 20-30 years to accumulate enough money for retirement and as doctors who have spent the majority of our lives in school, we have some catching up to do. While some residents may prioritize paying off debt, providing for their kids, or managing expenses in a high-cost-of-living area, others of us may able to set aside 5-10% of our income for retirement. Although we may be tempted to hold off on retirement savings for a few years, the sooner we start contributing to retirement, the sooner we can allow the magic of compound interest to work in our favor and build our net worth.  

4. Do you want to have money for vacations? As resident physicians we are often over-worked and under paid. I’m in family medicine and even I average around 60 hours per week, so I can only imagine how what life is like for some of you surgeons. Since we work so many hours with so few days off, it’s important for us to take advantage of our vacation time. While laying in bed for a week may sound like heaven on earth, we may actually want to consider taking a trip away from home. In fact, it may be a good idea to prioritize putting a couple hundred bucks a month into a “vacation fund” so that we can afford to travel the world or have a relaxing vacation once or twice a year. Many of our residencies emphasize self-care, saving up for a much-needed vacation may be the perfect idea. 

5. Do you want to live comfortably? As young professionals who have sacrificed most of our 20s to practice medicine, we can get a bit overwhelmed. While self-care for some people may involve an expensive vacation once a year, others of us may need to find more frequent sources of enjoyment, one of which may include our home environment. Instead of saving hundreds of dollars each month to take a vacation, you may instead choose to spend that money living in a nicer place. Or, perhaps you’d rather spend that money on personal massages, monthly concerts, or fancy gym memberships. Regardless of your version of self-care, you must decide how big of a priority it is for you so that you can make room for it in your budget. 

6. Do you want to give money away to others? I know this last question may seem a bit out of place, especially for us residents barely keeping our heads above water, but let me explain. Oddly enough, many people find that they get more enjoyment out of life when they give to others rather than spend money on themselves. It’s as if the act of generosity has a boomerang effect that blesses our own lives as much it does the recipient of our gift(s). For many Christians, this may mean giving 10% of their income to the church as a tithe. For others, it may mean donating to charity, supporting a cause with which they most identify, or perhaps sharing resources with someone less fortunate. Regardless, of your method, you may find that setting aside money to give to others adds more value to your life than you expected.

What am I doing? A little bit of everything. I don’t have an emergency fund, so setting aside at least $1,000 in a savings account is a top priority for me. Since I’m enrolling in a student loan forgiveness program (aka PSLF) I am in no rush to pay them down. However, I do have some credit card debt from my days in graduate school that I plan to pay off as quickly as possible. Once that debt is gone, I’ll start putting 5-10% of my income into my job’s 403b retirement plan. While those are my financial goals for this year, I also have some financial priorities for each month. I set aside a couple hundred bucks for self-care, have a separate vacation fund, and carve out a certain amount for charitable donations. Choosing these financial priorities has made budgeting so much easier and also ensures that I maintain a decent quality of life.

What about you? What are some of your financial goals and monthly priorities?