Personal finance strategies for success david dahlen director of student financial aid registrar
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Personal Finance: Strategies for Success David Dahlen Director of Student Financial Aid/Registrar. Overview. Goals for this portion of the evening: Present an organized overview of some financial issues faced by physicians Suggest appropriate resources to aid in decision making

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Personal finance strategies for success david dahlen director of student financial aid registrar

Personal Finance: Strategies for SuccessDavid DahlenDirector of Student Financial Aid/Registrar


Overview

Overview

  • Goals for this portion of the evening:

    • Present an organized overview of some financial issues faced by physicians

    • Suggest appropriate resources to aid in decision making

    • Seek out trusted resources to help you plan and monitor your finances


Overview1

Overview

  • What this talk is NOT:

    • An investment seminar

    • A primer on insurance

    • A “how to get the best mortgage” talk

    • A sales pitch ~ I am not here to sell anything

    • A “we’re going to cover everything you need to know” talk


Physician financial timeline

Physician financial timeline:

  • Debt management

    • Home ownership

      • College Planning

        • Investment Planning

        • Retirement Planning

Medical School

Residency

Consulting Staff

Retirement


Educational debt know you debt know your options

Educational Debtknow you debt – know your options


Types of loans

Types of loans

Subsidized Loans: no cost to borrower during grace and deferment periods

- Federal Subsidized Stafford

- Federal Subsidized Direct

- Primary Care Loans (PCL)

- Loans for Disadvantaged Students (LDS)

- some institutional loans

Unsubsidized Loans: loans which accrue interest from disbursement

- Federal Unsubsidized Stafford

- Federal Unsubsidized Direct

- most private loans (in-school and residency/relocation loans)

- some institutional loans


Deferment and forbearance

Deferment and Forbearance

  • Both options suspend payment for a set period of time if certain conditions are met.

    • Deferment

    • Interest that accrues is paid on behalf of the borrower (subsidized loans only)

    • Forbearance

    • The student is responsible for interest that accrues on the loan (subsidized and unsubsidized loans)


Two new programs

Two New Programs

  • Income Based Repayment

    • Monthly payments are driven off of income rather than amount borrowed, interest rate and loan term.

  • Public Service Loan Forgiveness

    • Portions of loans can be forgiven after making 10 years of payments.

  • Please contact me!

    • Simply not enough time to explain in detail in this setting by I am happy to visit with you!


Planning for the future college savings plans

Planning for the future:College Savings Plans


Saving for college

Saving for College

  • Education IRA (Coverdell Account)

  • Uniform Gift to Minors Act (UGMA)

    • also known as:

    • Unified Transfer to Minors Act (UTMA) Minnesota

  • 529 Plans


Education ira coverdell accounts

Education IRA (Coverdell Accounts)

  • Similar to a Roth IRA: Non-deductible contributions grow tax free

  • Allows you to save money for your children’s educational costs

  • $2,000 per year per child maximum contribution

  • Funds can be used for primary or secondary school as well as post-secondary expenses

  • Is controlled by the student when they turn 18


Ugma and utma

UGMA and UTMA

  • Allow parents/grandparents to save for their children

  • Tax Free until “earnings” are over $750 in one year

  • Each parent can contribute up to $13,000 per year without the “gift tax” ($26,000 maximum)

  • No income limitations

  • Child gets “legal” control later…depending on the state (21 in MN; 18 in other states)

  • Can use the money now or later for many things … not just educational costs


529 plans

529 Plans

  • State sponsored savings plan for educational costs

  • Each State has a plan and you can choose any plan … regardless of where you live

  • Investments grow “tax free” … distributions for qualifying costs are tax free (no sunset clause)

  • Donor retains control

  • Funds must be used for educational cost for the beneficiary

  • Funds can be transferred to another beneficiary

  • Financial turmoil has led to some solvency issues with some of these program. Be a good consumer.


Personal financial management for physicians

Personal financial management for physicians

Understand and maintain your credit history


Credit scores

Credit Scores

10%

10%

35%

15%

30%

MYFICO.COM


Credit scores1

Credit Scores

29%

20%

16%

11%

11%

7%

6%


Plan to invest

Plan to Invest

  • Know yourself:

    • Understand your OBJECTIVES

    • Understand your TIMELINE

    • Understand your RISK TOLERANCE

  • Just do it! (by paying yourself first)

  • Use trusted financial experts


Planning to invest

Planning to Invest

  • Risk vs. Reward

  • Asset Allocation

    • Liquidity of assets

  • Tax implications

    • Taxable

    • Tax deferred

    • Tax free

  • Re-balancing your portfolio


Planning to invest options

Planning to Invest: Options

Least risk but lowest returns

  • Savings, CD’s, Treasuries

  • Money Market Accounts

  • Mutual funds

    • Index funds

  • Stocks

  • Bonds

  • Real Estate

  • Others (Commodities)

Most risk but higher returns


Planning for retirement

Planning for Retirement

  • Pension

    • Defined Benefit vs. Defined Contribution

  • Tax Deferred Accounts:

    • 401-K/403-B Plans

  • Take advantage of the time value of money (compounding interest)


Planning for retirement time value of money

Planning for Retirement: Time value of money


Final thoughts

Final Thoughts…...

Next steps:

  • Begin the planning now

    • Identify your goals and objectives

    • Calculate your net worth

      • Assets – Liabilities = Net Worth

    • Set up a budget and pay yourself first

      • mint.com

  • Get help: Identify a professional partner as soon as possible

  • Get Started!


Final thoughts1

Final Thoughts

  • Start early

  • Make it automatic

  • Keep it simple

    • Don’t try to “time” the market

    • Don’t try to pick the winners

  • Keep long-term goals in mind

  • Ultimately - get some expert advice


Helpful links

Helpful Links

  • National Student Loan Data System: Details on your loans

    • http://www.nslds.ed.gov/

  • AAMC: General Financial Planning

    http://www.aamc.org/programs/first/


More links

More Links

  • Debt management

    • www.bankrate.com

    • www.myfico.com

  • Personal Finance

    • www.smartmoney.com

    • www.fool.com

  • College Planning

    • www.collegeboard.com

    • www.savingforcollege.com


Internet resources

Internet Resources

  • Obtaining credit histories:

    • www.equifax.com

    • www.experian.com

    • www.tuc.com


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