Welcome to the first seminar:

1. Welcome to the first seminar: MONEY TALKS BUDGETING presented by the Financial Aid Office and the Medical Alumni Association

2. How to build your budget • Make a list of all of your resources • Make a list of all of your expenses • Software may help: MS Money, Quicken, Excel… • Use a website like mint.com • Build non-monthly expenses into your monthly plan • Gifts, car maintenance, insurance, taxes, books, boards, etc

3. Resources First, make a list of all of your resources for medical school. • Help from family: parents, grandparents, aunts, uncles, siblings • Personal or spouse income • Personal savings • Scholarships: • Need-based school scholarship (must qualify each year) • Non-need-based scholarships (school and outside): • www.finaid.org • www.fastweb.com • Hampton Roads Community Foundation • Beware of scholarship search sites that make you pay! • Service-based scholarships • Loans: • Federal loans • School loan (must qualify each year)

4. Loans • School loan • Need-based, must qualify each year • No interest while in school or grace period • Fixed 5% interest, must pay INTEREST-ONLY during residency • Federal loans • Subsidized Loans • 6.8% fixed interest rate • No interest while in school or grace period • $8500 maximum every year • Unsubsidized Loans • 6.8% fixed interest rate • Interest starts accruing immediately after disbursement • Maximum listed in your financial aid award letter • Graduate PLUS Loan – Loan of last resort • Not included on your award letter, you must contact your counselor • Can make up difference between aid and Cost of Attendance

5. Expenses Make a list of all of your monthly and non-monthly expenses. Make sure to include SAVINGS. Not sure about your expenses? Keep track for a few months – keep all of your receipts, credit/bank card statements, ATM receipts, etc. Find a way that works for you: use your debit or credit card for all purchases (be careful!), keep all your receipts in your wallet, use a website like mint.com, or keep track in your PDA as you spend money. Make sure you don’t forget expenses that only come up once or twice a year: taxes, car insurance, Christmas and birthday gifts, health insurance, books, board fees, security deposits, etc.

6. Your Cost of Attendance Budget includes: • Tuition & fees: $37,880 for in-state, $48,874 for out-of-state for 10/11 • Health insurance: $2,151 • Books and supplies: $1,025 • Instruments: $900 • Living expenses: $1648/month for 10 months (August – June) • For example: $800 rent & utilities (including internet) • $250 transportation • $300 food and household supplies • $50 savings • $248 personal & miscellaneous (clothes, recreation, copays, haircuts, gifts, pets, alcohol, etc)

7. Budgeting on Financial Aid • One rule: Live as cheaply as possible. Monitor your spending closely during the month – at least until being frugal is a habit! • If your personal expenses are less than the Cost of Attendance: • Great! Only borrow what you really need. • If you need more money later, you can always request more loans. • If your personal expenses are more than the Cost of Attendance: • Look for creative resources: money from your parents, a part-time • job, or family loans. • The best solution is to find a way to reduce your expenses. • Reducing your debt now will allow you more income later: • Spending an extra $200/month in school will increase your student loan payment by $110/month for 10 years after you graduate, and cost you over $13,000 to repay. If you stretch your payments out to 25 years, that $200/month could cost you $20,000.

8. If you are borrowing, your budget will determine how much loan money you need to request. Add up all of your necessary expenses, then compare that to your resources. For example: Expenses: $48,874 tuition & fees $0 health insurance (on parent plan) $1500 books/supplies/instruments $700 misc (car taxes/insurance, gifts) Monthly costs (for 10 months): $450 rent $165 utilities (half of: $80 electricity, $70 phone/DSL, $50 cable, $30 water; and $50 cell phone) $200 groceries $50 household supplies $75 car insurance $50 gas $100 eating out $150 misc (recreation, clothes, copays, etc) $1,240 total/month x 10 months = $12,400 Total Expenses for the year: $63,474 Resources: $5000 from parents $1000 from savings $2000 outside scholarship $8500 subsidized loan $17,000 school scholarship $10,000 school loan $43,500 total resources so far This student can borrow up to $31,932 in unsubsidized loans. Should she?

9. Building a non-aid budget If you are not on financial aid and have a fixed amount of income, you should take the sum of your resources, subtract your fixed costs, and what’s left is discretionary: recreation, personal/miscellaneous, etc. Example: Student is married and parents are paying tuition. Spouse’s take-home: $2300/month (after taxes, health insurance, etc) Fixed expenses: $100 savings $850 rent $300 utilities ($90 electric, $30 water/sewer, $130 CenturyLink, $50 cable) $250 car payment $90 car insurance $150 gas/maintenance $250 groceries $75 household supplies $150 non-monthly expenses $2215 This leaves $85/month for discretionary spending – is that enough?

10. Real World Budgeting • Pay yourself first • Choose an amount and make it automatic • Remember the debt-to-income guidelines • 28% maximum for housing (including taxes and insurance) • $100,000 income = $2300/month max for housing • In Charlottesville, that’s approximately a $300,000 house • 36% max overall • $100,000 income = $670/month in other debts • Large student loans will increase your overall DTI • Take your projected debt to www.finaid.org and figure out what your monthly payments are going to be • Eliminate debt asap • Two methods: highest-rate first, snowball • Have a plan for raises and bonuses

11. Okay, I have a budget. Now what? • Stick to it! Especially when you first start living on a budget, keep track of your expenses carefully. Check weekly to see how you’re doing. • Tell your friends! It’s very hard to live on a budget without help from friends and family. • Organize low-cost activities with your friends • Participate in meal-sharing with your roommates • Don’t panic! If you overspend one month, look for ways to save money and get back on track the next month.

12. The Psychology of Budgeting • Beware of “keeping up with the Joneses” • Remember, the Joneses are broke. • This problem will get worse when you’re a doctor • Don’t be overly optimistic • Be realistic about needs vs. wants • Establish a waiting period • Watch your language. Getting a good deal is not “saving” money. • Find a way to trick yourself into (real) saving: • Deposit savings automatically • Save your change • Save what you get from coupons

13. Saving Pay yourself first! It never works to just “save what’s left.” Students should always have either a small emergency fund, or financial aid available, in case unexpected expenses come up. Students need to plan for the summer! In the “real world,” you need at least four types of savings: • “Life happens” • Emergency fund (at least 3-6 months of living expenses) • Retirement • The get-rich money You may also need college savings or other goal-oriented savings (kids, house, car, caring for family members, etc).

14. Saving Don’t settle for the interest rates offered by your local bank! • Sample interest rates, as of 10/13/10, for savings accounts (no/low minimum balance): • SunTrust local branch: 0.05% • Bank of America local branch: 0.05% • Wachovia local branch: 0.05% • UVA Credit Union: .40% • Capital One: 0.1%, or 1.35% with $1,000+ • Emigrant Direct: 1.0% • ING Direct: 1.1% • Discover: 1.35% • Look into any organization that you belong to – USAA, a credit union, ask your parents!

15. Local grocery tips Harris Teeter • 5% student discount – link your student ID to your VIC card • Double coupons up to 99 cents • Circular in store, Wed. Daily Progress, or www.harristeeter.com Kroger • 5% student discount – link your student ID to your Kroger card • Double coupons up to 50 cents • Circular in store, Sunday paper, or www.kroger.com Giant • Circular in store, Wed. paper (effective Friday), or www.giantfood.com • Double coupons up to 99 cents Food Lion • Circular in store, Wed. paper, or www.foodlion.com • Coupons redeemed at face value

16. Local household expense tips • K-Mart • Circular in store and in the Sunday paper • Wal-Mart • Sam’s Club • $40 annual membership fee (can be used by two people!), a Collegiate membership gets you a free $15 gift card • Refer a friend, and get a $10 gift card! • Target • Bed Bath & Beyond • Accepts their coupons past the expiration date! Sign up at www.bedbathandbeyond.com • Big Lots • Circular in Wednesday or Thursday paper

17. Local food deals These are just a few of the deals! Check www.cvilledrinkspecials.com.

18. Local drink deals These deals change constantly! Ask your favorite bartender, and go during happy hour if possible. Or drink at home!

19. Other tips • Ask about student discounts and discount cards everywhere. • Don’t be loyal. Shop around for banks, credit cards, insurance, utilities, etc. Call periodically and threaten to cancel your service. • Use a credit card that gives you cash back or points, and auto-pay your utilities with that card. But be careful! • Discounts using Cav Advantage - www.virginia.edu/cavalieradvantage • Talk to the 4th-years! • Websites to check out: • www.frugalliving.tv – specifically, www.frugalliving.tv/free-stuff/birthday-freebies.html for birthday freebies • Mom sites are great for tips and coupons: www.momsneedtoknow.com and www.moneysavingmom.com • Slickdeals.net

20. Other tips • Free entertainment in Charlottesville: • Fridays after 5:00 – free concerts • First Fridays – free art shows • Lots of local bands – come see Dr. Martindale on Friday! • Hiking trails/parks • Make use of your resources as a student • $3 movies at Cinematheque (Newcomb Hall basement) • Free recreational facilities, football games • Cheap/free entertainment: Rotunda Sing, Tom Deluca, speakers, art shows - check the UVA Student calendar • Find the University Programs Council on Facebook or check their website. • Free movie rentals at UVA library (and local libraries) • Student Health • Other tips on your handout

21. The Financial Aid Office • We have an open-door policy – feel free to drop by anytime with questions or concerns. We can help with: • making a budget • comparing loan offers • figuring out how much loan money to take out • financial decisions (for example, using savings vs. taking out loans) • financial emergencies Dennis (A-H) Margaret (I-R) Nancy (S-Z)