Click by Click Banner Match!

Banner Match has arrived. As of July 1st 2016, you can sign up at the fidelity website @ https://nb.fidelity.com/public/nb/401k/home. If you have already worked at UAHN starting July 1st 2015, you are eligible to get the 4% Banner match for PGY’s. Here’s the step by step on signing  up for 401k to get the the Banner Match.  Additionally, if you had already started a 403b or a 457 while with UAHN, you already have an account and you can just log in.

All the red arrows in the pictures below means “click here.”

Step I. Sign In or Register if you are new to fidelity (i.e. you did not have a fidelity account for 403b or 457 from prior).

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Step II. click on 401k.

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Step III. Click on contributions so you can designate how much per paycheck you want to contribute to your 401k.

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Step IV. Click on contribution amount.

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Step V.  Specify the % in pre-tax portion and post tax/Roth portion.

I put 4% pre-tax because Banner requires pre-tax from me to match me 4% pretax from them.

I put the rest All in post-tax so that I can pay cheap taxes today and my principle investment today gets to grow tax free and withdrawn later tax free.

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Step VI. Click on investments. You can compare the 19 choices Banner set up with fidelity for us. Check out their return rates. I red-boxed the highest return rates. Then click on fees to see how much each investment option cost you.

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Step VII. I red-boxed the lowest fees. I personally have no interest in funds/investment costing greater than 0.5%. But that’s a personal choice. I know fee is a guaranteed way to lose money while return rate is a Not guaranteed way to make money. So I find my personal balance between return rate and fees/costs.

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Step VIII. Banner has selected a default investment fund for us. If you don’t like it, (I don’t because the fees are way higher than I like), you can change it.

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Step IX. Click “change investment elections.”

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Step X. I like DIY finance. If you do too, click select funds.

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Step XI. You can make your own portfolio. Super easy, put the % next to the type of fund you like. There are 19 choices which you can compare and contrast in step VI-VII. Then you can designate what % of your 401k you want in which fund. Notice in general, the Ready Mix investment options come with higher fees. They are like ready mix salads. Core investment options demand lower fees as you are in charge of assembling a salad from vegetables you select. I like the latter, more control yet cheaper.

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Whala you are all set!

Comment below if you have questions, please. your questions/our discussions can help others.

I can’t respond to texts, emails, and social media messages, because it’s overwhelming and it’s not fun to answer the same questions repeatedly 😉

MEET PETE

Recently a reader reached out to me for custom advice. I am always glad to help whenever I can, and so although our discussion was tailored for his unique situation, I thought I would share it here to potentially benefit others, perhaps it will jumpstart another young doctor in training thinking more comprehensively about their debt management!

 

 

He is a COM class of 2016 graduate who will be starting residency (with internship) this July

 

He is unmarried and owes $228k in federal student loans

 

His two primary options are to:

 

do Income Based Repayment (IBR) for the next 6 years (1 intern, 4 radiology, 1 fellowship) and get a job at the non-profit organization for 4 years so the leftover amount will be forgiven after 10 years with PSLF

 

OR

 

do IBR for 6 years, switch to standard payment for 2-3 years to aggressively pay off the loan completely

 

He is leaning towards the latter as he wishes to avoid long term payment

 

When he reached out to me, his main questions were 1) Do I have to consider the consolidation or refinance or loans? And 2) For people who are not sure whether they will go into private (for profit) practice or non-profit, which loan payment (IBR, PAYE, RePAYE) is the most appropriate during the 6 years of residency training and after?

 

 

Initially I referred him to some of my posts that dissect PSLF at greater length. In short I advised him that as there are more opportunities and better pay in private practice, it makes more sense to not count on PSLF. At which point his options are:

 

  1. Refinance with DRB or LinkCapital, which can be done here:
  2. IBR
  3. PAYE
  4. REPAYE

 

It is free to apply to DRB and receive a quote. He (and others) could potentially be quoted the best interest rate AND the smallest amount of monthly payments for the amount owed. (DRB only requires $100/month throughout 6 years in pgy radiology training + 6 months after fellowship completion). This option provides the most cash flow out of the four.

 

Cash flow matters because of the time value of money.

 

DRB will refinance MS4s with contract in hand. Upon approval, you can start saving interest on your student loan while everyone else is just letting their loans grow… 9 months of 3% interest savings on 200k is $4,500 interest saved. You can funnel your savings into higher return investments or use it pay down your debt further for guaranteed return in further interest savings.

 

For someone who isn’t interested in the extra cash flow made available by refinancing, and is instead interested in PSLF, the easiest approach is to go to https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action and start plugging in numbers. The website will generate different monthly payment amounts given options 2-4.

 

My advice is to run a few different incomes that may apply:

 

Payment is based on prior year tax return:
2015 tax return is small as MS4→this gives your payment as PGY1.
2016 tax return is half pgy1 income→this gives your payment as PGY2.
2017 tax return is half pgy1, half pgy2 income→this gives your payment as PGY3.
2018 tax return is half pgy2, half pgy3 income→this gives your payment as PGY4.
So for most pgy1 their federal payments are ~$0; most single pgy2+ start making a couple hundred dollar payments on IDR.

 

I find it is best to project the different monthly payment amounts long-term to see how they will affect your overall financial wellbeing (does it limit your ability to contribute to Roth IRA or take advantage of company employer match for retirement etc) before deciding whether to stick with federal payment options or to refinance.

 

Of the federal repayment options, Repaye makes the most sense because there’s a 50% interest subsidy on the difference between your Repaye payment and your monthly-accrued interest. I would also sign up for PSLF immediately so I can start in on the 120 payments.

 

 

The above constitutes our initial exchange that I reformatted so other readers can follow along more easily. Our discussion continued after in pretty standard Q&A format so I will reproduce those unaltered in the upcoming posts.

DWM Grand Rounds #1: Doc-to-Doc on Personal Finance

Title:

Doc-to-Doc on Personal Finance & Physician Support Initiative

 

Highlights:

  1. Student loan management
  2. Public Service Loan Forgiveness
  3. Maximize Tax Efficiency/ Investment Return
  4. Physician Support Initiative P.S.I.

 

Date & Time:                                                              Location:

July 6th, 2016 12-1 pm                                                 COM 2117

 

Presenter:

The mission of Dr. Wise Money is to assist the highly educated (& frequently heavily indebted) individuals maximize the power of TIME & cash flow to achieve financial freedom.
The mission of Dr. Wise Money is to assist the highly educated (& frequently heavily indebted) individuals maximize the power of TIME & cash flow to achieve financial freedom.

As Dr. Wise Money (DWM) achieves her financial goals of purchasing a home (MS4), paying off her student loans (PGY1), refinancing her home (PGY1), maxing out retirement savings (PGY2), & now closing on her second home, and on track to becoming retirement-eligible in 7 years (3 years after fellowship completion), she writes about & gives talks on personal finance for doctors, assisting her colleagues to achieve financial success.

DMW is featured by websites including Physician’s Money Digest, Physician Financial Success Podcast, White Coat Investor and Non-Clinical Doctors. You are encouraged to join “30-day Mindful Financial Practice with DWM” @ Dr WiseMoney YouTube Channel.

Through her blog https://www.drwisemoney.com/, Amanda shares ideas and experiences on how to achieve financial goals efficiently.

 

How I Take Charge of My 375k Student Loan

The following is a Q&A guest post from a good friend of mine, who wishes to be anonymous. We have no financial relationship to disclose.

Here’s a list of great lenders to refinance your student loans with. (Note: by using the link, you will be supporting my website and getting a cash bonus yourself upon loan closure.)

 

  1. Prior to refinancing with DRB, what payment plan were you on for your fed loans? What was your monthly payment requirement?

 

Prior to refinancing my loans they were through the Federal government.  At that time I was doing income based repayment with a payment plan of $443 a month.

 

  1. What are the amounts of your student loans and their respective interest rates and lengths of terms? (For example, private bank loan at 8% fixed rate to be paid off in five years)

 

My loan total was around $375,000 with a 6.75% rate over a 30 year repayment plan.

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One of the strongest lenders with lots of funds, quicker closing and best rates. Apply here and get the DWM reader bonus!

 

  1. Why did you refinance your student loans at the beginning of pgy4, instead of waiting to see if you can qualify for public service loan forgiveness?

 

I refinanced because I wanted to start taking action towards my loans.  With the 6.75% my interest per month was near $2000. It would be very difficult to pay any amount above this much interest; in other words, I was watching my loan balance ballooning over time.

 

I didn’t feel that loan forgiveness was the best option for me because I didn’t want my job selection to be limited.  I didn’t want to stress about finding a place that qualified for the forgiveness program.  Plus I want to aggressively pay my loans off once I become an attending and not prolong the payment period to 10 years when I believe I can pay them off in 7.  I agree with you that since no one can guarantee they CAN find a forgiveness-eligible job immediately after finishing training, it is definitely possible that people will make IBR payments more than 10 years total.

 

  1. What additional information, other than the initial online application did DRB request from you?

 

DRB only requested my tax forms from the prior year, some income verification forms and a 45 day payoff from the company they were going to buy the loan from.  It was a very smooth process and their customer service is amazing.  Never a long wait and they are always happy to answer your questions.

Dr. Wise Money Image - DRB

Apply to DRB by clicking here, you will get $300 cash bonus and WCW will get a referral fee when you sign your contract. Win-win!

 

  1. What refinancing options did DRB offer?

The options I received from them were:

 

10 15 20
Rate* Fixed 5.65% 6.00% 6.25%
Variable 4.01% 4.26% 4.46%

*These rates include the 0.25% discount with monthly automatic debit.

  1. What interest rate and length of term did you refinance to?

 

10 year fixed 5.65%.

 

  1. Why did you choose fixed interest rate over variable interest rate?

 

I choose a fixed rate because I didn’t trust the market right now and the potential for the interest rates to increase over the next couple years.  If I could start paying off the loans aggressively now, I would have considered variable.  But the reality is I won’t be able to do that till 3 years from now.

 

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Apply to Common Bond by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

  1. Does refinancing your student loans to lower interest rate change how you direct your cash flow? For instance, are you redirecting the difference between your pre-refinance payment and post-refinance payment towards retirement savings?

 

I’m using that extra money to invest in a Roth IRA and 401K, something I haven’t had the opportunity to do before refinancing my student loans.

 

  1. What were the pros and cons you considered prior to signing your refinancing contract?

 

The benefit of DRB was the lower interest rate, which will save me money in the long run.  Additionally, benefits of their service was only paying $100 per month instead of the $443 I was originally paying.  They also don’t capitalize your accumulated interest until you finish fellowship, instead of capitalizing every year like most other companies.

 

  1. DRB advertises a wide range of interest rate from 2.13% to 7%. Why isn’t your interest rate lower than 5.65%?

 

Answer by DWM:

4 major factors determine the interest rate: variable vs. fixed, length of term, debt-to-income ratio, as well as supply and demand of these student loan refinancing opportunities. In general, fixed, longer term, higher debt-to-income ratio, and smaller supply of these refinancing opportunities lead to a higher interest rate.

 

Upon finishing training, he can refinance his student loan again, where at least 3 of 4 factors would have improved: shorter term (7 year instead of 10), lower debt-to-income ratio, and many more companies refinance attending doctors than the current 2 refinancing PGY’s. When the companies compete for his business, he gets to choose the best interest rate/term.

How I Accelerated My Student Loan Payoff

  • I charge all my expanses that are chargeable onto my credit cards and funnel my (limited) cash flow towards debts with interests. There are lots of variation in terms what can be charged on a credit card. Some people’s circumstances even allow them to pay for rent on credit card. For example, before medical school, I would pay my landlord by buying whatever she needs on my credit card, including gas, grocery etc. This takes a little more effort than just writing a check. In my current situation (written in year 2015), I will buy grocery gift cards in the 1000’s of dollars (for 6 months to 1 year because there’s once a year 10% discount on gift cards)… and pay my electricity 1 year in advance. Funneling this way, often gets me NEGATIVE 1-5% interest for 1-1.5 years. That makes my savings for paying down my student loan even higher. but there’s a limit to this.
  • this 2nd method usually allows for more aggressive pay down of a higher interest debt. balance transfer checks. the cheapest balance transfer checks i got was with travelocity american express at 1% transaction fee for 0% APR for a year. So by writing a check of 15k towards a debt at higher interest (at least point for me, it would be my 3.375% mortgage), I would be saving 2.275% for the next 12 months. the balance transfer transaction fee is charged up front, just be sure that if your limit is 15k, that you write a check in the amount lower than the limit enough to pay for the fee or the check may not go through or worst still they charge a fee of some sort (over limit fee. i have never gotten a fee before, cuz always err on the safe side).
  • some banks allow you open a new checking account by funding with your credit cards. You need to be very cautious with this. You need to know that the action of FUNDING is equivalent to a PURCHASE, not a CASH advance. The big difference between how the act of funding a new bank account when processed by your credit card company is that purchase will bring you CASH BACK (if your card has cash back features), but cash advance will charge you interest @ 20-30% starting the day the transaction posts. So this method ONLY works if your credit card company processes your funding a banking account as a Purchase.
209x209_SoFi_SLR_Doctor
One of the strongest lenders with lots of funds, quickest closing and best rates. Apply here and get the DWM reader bonus!

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Apply to Earnest by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

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Apply to Common Bond by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

One of the only 2 companies that will refinance residents and fellows (PGY income) during training. The other companies only refinance a typical attending (high income) with typical student loan burden.

Dr. Wise Money Image - DRB

Apply to DRB by clicking here, you will get $300 cash bonus and DWM will get a referral fee when you sign your contract. Win-win!

Email drwisemoney@gmail.com to get personal referral & $200 bonus when your loan closes. DWM gets a referral bonus too.
Email [email protected] to get personal referral & $200 bonus when your loan closes. DWM gets a referral bonus too.

DWM readers:

You get $300 bonus when your student loan refinancing closes with DRB, Earnest, or CommonBond when you apply from this site.

Click above to start your application, and you will get this bonus and support this website at the same time (I get a referral fee after you sign your contract.)

Note – you must click the “APPLY NOW” button after clicking on the link above.  If you navigate away from the DWM link, your participation will not be tracked.  If you would like to explore the site before applying, I recommend you do so in a separate tab.

To get First Republic Bank $200 bonus, you need to email [email protected] for personal referral so the banker can track and credit your application when your loan closes.

Read more about how refinancing student loan saves you money here.