As everyone excitedly talks about holiday plans and we hit the half way mark of first-year radiology training, (overnight calls will be upon us in 6 months), it hits me that 2015 is coming to an end. 2015 has been a big year in many ways and it’s time to reflect on 2015 and welcome 2016.
Milestone #1: March 2015
Started Debt Free Doctor website
Thanks to: med students/ co-residents/ interns/ fellows/ attending/ family and friends who ask questions and share their knowledge in personal finance.
Impact: Some readers refinanced and saved money on their student loans. Others started retirement savings. Others enjoyed credit card rewards.
Lesson learned: Even though this blog does not compensate me in dollars, it rewards me by empowering my colleagues to take charge of their finances. Knowing co-resident is saving 60k in student loan interest because of this blog puts a smile on my face.
Milestone #2: April 2015
Refinance our home from Doctor’s mortgage 4.375% 30 year fixed to conventional mortgage 3.375% 7/1 ARM.
Thanks to: Nana and my sister helping to close the gap between our re-appraised home value and loan balance to bring our loan to value ratio to 80%.
Impact: The 1% reduction in interest lowers my mortgage payment by $160, while increasing my principle payment by $40 monthly. Free up cash flow for retirement savings & increase speed in building equity.
- Not fear the unknown (i.e. adjustable mortgage). As long as the risks are calculated against benefits, one can comfortably take a 7/1 ARM instead of a 30 year fixed mortgage.
- Avoid Doctor’s loan if possible, interest rates are usually much higher than conventional loans.
Milestone #3: May 2015
Thanks to: Credit card companies wanting to carry my student debt at 0% interest to me.
Impact: I have been enjoying guaranteed & tax-free growth of my dollars at 6.8%. (Certainly beats the US stock market performance for year 2015.)
Lesson learned: Paying off high interest debt (interest rate that is close to long term/mature/passive/index fund investment) is one of the best use of your hard earned money.
Milestone #4: December 2015
Maxed out 18k in ROTH 403b and 5.5k in ROTH IRA for year 2015.
Thanks to: Credit cards 0% interest money, frugality, moonlighting, credit card CASH rewards. Grandparents’ gift partially offset childcare expenses.
Impact: This 23k (yes the net growth at this moment is negative due to market corrections) can become $229,497 when I turn 65 (assuming 7% average growth over the next 30+ years).
- Buy retirement nest eggs on sale (ie. pay taxes now and contribute to ROTH/post-tax space and enjoy completely tax-free distribution in retirement.)
- Buy the US stock market (Vanguard total stock market index fund etc.) and hold.
- Passive, low fee, automated monthly contribution.
- Pay my retirement account first before paying anyone else.
- Time value of $. Now, no matter how little, is always better than later.
Smaller milestones include getting a pay raise of ~2k in July 2015 when becoming a pgy2 and converting to the admiral share of Vanguard funds (and receiving a discount in expense ratio), etc…
Financial success, like successes in all dimensions of our lives, is built up from daily and seemingly inconsequential choices and actions driven by what we value.
Milestones are great to look back upon as they remind us how far we’ve come. As Nana always say, don’t forget to celebrate your milestones. I hope we all have achieved some of the goals we set at the beginning of 2015 and are ready to embrace 2016 for all it has to offer.
- What financial milestones have you/ your family surpass this year?
- What helped you achieve your goals?
- What are your 2016 financial goals?
- What did you learn from your 2015 financial decisions?