It’s Payday At Last
I finally received my first paycheck and it feels sooooooo good to finally have an income again. Everyone with the group went though the same payment delay and it seemed that they were all excited for me that I’m finally received my first paycheck. When the coworkers reminisced about their time waiting for their first paycheck, we started to talk about retirement and our contributions. I was shocked how few people were taking full advantage of the retirement plan. The company I work for has a generous retirement plan that if I maxed out, means that a physician can contribute around $54,000 per year (including profit sharing). Many of the older guys are taking advantage of the plan but the newer hires are overwhelmingly not.
The number one reason why the younger doctors with the group are not contributing to the retirement plan is that many have a large amount of student loan debt. Two of the doctors with the group informed me that they have over $400,000 in loans and feel that the can not afford to contribute to retirement with that degree of student loans. One of these doctors not only has student loans approaching half a million dollars but also bought a house for half a million dollars within the past year! At 6.8% APR the student debt loan would cost them $4,603 per month over a period of 10 years with $152,385 paid in interest! I advised these people in my group that they might want to consider entering into one of the repayment plans that can lead to some level of loan forgiveness. Since their financial situation is not really my business I left it at that. That discussion will be for another day.
How did my first check get spent?
- $4,000 for loan payment and payback my dad for his short term loan
- $1,600 rent
- $2,300 retirement
- The rest included taxes and other things such as food, etc.
Since my last post described how I used my entire emergency fund, the obvious next step is to rebuild an emergency fund. I figure that in the next 2 months I should easily build up a 6 month emergency fund since my monthly expenses are quite minimal and I am expecting a bonus at the end of the year. Once I have my emergency fund built back up, I then plan on contributing $2,500 a month towards my student loans. Paying at this rate equals a pay off date of about 3 years from now for my student loans. I could drag it out longer but since the money is backed by one of my family members CD’s I would prefer to free their money up earlier rather than later. It feels good to start getting my feet back on the ground and I’m looking forward to getting back into my hobbies, which includes reading more about personal finance, investing, and retirement.
I know that my last several posts have focused solely on my personal financial situation with little focus on other areas and I promise that my subsequent posts will be a little more diversified. I figured it would be nice to give everyone an update as to how things are going financially and how I’m finally starting to get my feet on the ground. Have a great weekend!
5 thoughts on “It’s Payday At Last”
Congratulations on that first paycheck. Always a nice moment, especially when you spend it the way you spent it. I wish I could contribute $54,000 to my retirement account!
Congrats on the paycheck! I know the feeling. I had to wait for my first paycheck as well, but not as long as you did. It’s great that you’ll be able to replenish your emergency fund in the next two months.
My group has a similar 401k profit sharing plan which I am maxing out. Hopefully you’ll be be able to as well. Given our tax bracket as physicians, that would equate to a good amount of tax savings.
Congrats. You are well on your way to FI. “Living like a Resident” for a few extra years made a huge difference in my life. We loosened our belts (financially) but very, very, slowly and I’m glad now.
Congratulations to you. Sad to hear the level of debt that some of the new grads are coming out with.
Thank you! I agree that it is very sad but seems to be common that many of the new physicians in my group have more than 300k in student loans.