As the old Chinese Proverb says, "The best time to plant a tree was 20 years ago. The second best time is now!" During training most are not exactly flush with cash. However we have found that with solid cash flow management and adhering to a strict budget, most residents and fellows can identify opportunities to save, invest or even start paying off student loans! Not to mention there are powerful planning strategies available to you now that very likely won't be available to you later. After all, who's ever complained about starting a financial plan too early?
Maybe..maybe not. While the financial planning community does a good job at leading the public to think planning is some complex and sophisticated process, it's really not. If you understand the essentials of a sound financial plan you could do it yourself. You could! However, the question really is do you have the time, energy, and resources to go at it alone? Most physicians in training say "I barely have enough time to sleep or enough energy to get to the gym!" This is why most residents and fellows, who want to begin planning, engage the services of a financial professional whom they know they can turn to and whom they can trust.
The primary role of a good financial planner at any stage is to be an educator, not a seller. While consulting with literally hundreds of physicians in training over the years we have found a common thread: nobody has ever really taken the time to truly educate you or your colleagues about money. You've told us you are sick of being sold to and solicited; tired of being bombarded by all of the financial planning firms across the country and feeling like a target. These new physicians have repeatedly told us you don't want that, you don't have time for that...You just want to learn! This is precisely what your expectation should be of the right financial planner for you. Just be aware of the "wolf in sheep's clothing."
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Why not now? While you are not making the "big bucks" yet, you have already put in way too much time, effort, energy and money to see your hopes and dreams of being a physician and the financial opportunities that come with it, slip away. The proactive approach to protection planning is to do it NOW with the flexibility to enhance it later.
We know what you're thinking..."I don't make a ton of money now; what can I protect?" We at White Coat think there is plenty to protect: your income, your future income, and your assets (big or small). As stated earlier it's not so much about protecting your current income (though a $50,000 salary is nothing to sneeze at) as it is to prepare proactively for the stratospheric leap in your future income potential. Think about it. One day soon you are going to see your income increase exponentially! Do you know that while being a resident or fellow you have the opportunity to protect, right now, much more than your $50,000 salary?!? An opportunity like this only exists in the medical profession. At White Coat, we have a saying: "Do it first! Do it right!"
To defer or not defer, that is the question. You likely have the engrained answer of defer. However, it's important that you recognize the consequences of doing so. Remember that it may not only be the loan amount you're deferring, but also the interest. For example: a $200,000 loan at 6.5% interest could grow to almost $260,000 in 4 years...and over $300,000 in 7! That's a lot of money getting passed down the line that will also limit your wealth building potential for years! So it's important that you understand your debt elimination options now and get started ASAP.
The first step in proactive student loan planning is to get organized. To do that, find ALL of your loans! Then it's time to get educated on all of the options that may be available: scholarships, loan forgiveness programs, loan repayment programs, etc. All of these will influence your life choices. If you begin making payments now, no matter how small, you will be in a better position at the end of training than if you didn't. Something is always better than nothing!