The Journey Man Posted March 25, 2009 Report Share Posted March 25, 2009 I'm seeing some fears from Canadians attending US schools regarding their financial situation. I posted earlier that with some sound financial education/planning, you should be well off in the LONG RUN. This will be a long post, so bear with me. If you don't want to read, skip to the summary at the end. I'll be attending Wayne State (the most expensive US school), so hopefully this post can shed some light that it IS possible to be financially well off and even build wealth in the LONG run. My main keys are as follows: 1. Be willing to live frugally (not cheap, but just question every expense you have and ask yourself, do you REALLY need it or do you want it). This is key, because every little bit adds up to a lot, especially in the long run. Learn to appreciate the simple things in life. Some of the best things in life are indeed free. 2. Plan, plan and plan some more. Have self discipline to stick to the plan. 3. Get in touch with a good accountant (your parents can help you with this hopefully) Here is my financial breakdown in school: Wayne State tuition + books + fees = ~ 60, 000 USD Cost of living: - buying a small condo in Windsor (very cheap these days) --> with taxes + interest from LOC and condo fees = ~ 400/mo. - internet (no TV) = ~ 50/mo. --> no cell phone either, use internet to call ppl. Im just going to grab a small pay as you go card for emergencies. - car: im going to try figure out to live w/o one, but if i do, im trying to get a hybrid (very cheap on gas) --> with insurance, maintenance + gas = ~ 400/mo. - food : im going to try to smuggle as much as i can from my parents fridge and can do a lot of budget grocery --> $100/mo. - miscellaneous : random stuff comes up + you may want to go out once in a while even if you live frugal --> $ 150/mo TOTAL: ~ $1100/mo. Sources of income: - Research assistanship: coming from continuing research from my Masters on the weekends part-time --> $700/mo - Parents donation: $600/mo. TOTAL: ~ $1300/mo. --> NET : $200/mo. that goes directly into a high interest online savings account. Try not to live off credit if you can, itll save you $$ at the end. If you can live without a car, GREAT!. I certainly will try as itll probably save me ~ 300/mo. I'm going to save 200/mo. with interest for a couple years. (23 yrs old - 24 yrs old) M1-M2: Estimated debt from loans = 140, 000 CDN M2 summer: get married - Paid by parents from both sides: from 200/mo. for 2yr savings should be around ~ 5000 --> use it for honeymoon/vacation. M3: Estimated debt = 270, 000 CDN. Spouses income (~ 45K predicted after income tax) used to pay off their school debt (not much) and living expenses : remember, live frugal. M4: Estimated debt = 320, 000 CDN. Spouse will contribute some to debt + save. Again, live frugal and you should have some saving left over. M4 summer: take vacation with ~ $5000 M4 summer: sell condo - if i make a profit, GREAT! If not, then i want to break even. I suspect the economy will pick up after 4 yrs and price will go up too so I hope for some profit. If I do make any, I will directly put that $$ in an index fund or even ETF (exchange-traded fund). PGY1-PGY5 (age 27-32): Depending on the dollar, I may try to do it in Canada or the States. If the CDN dollar is greater significantly less than the US, I'll do it in US. I have a spouse that will be earning income, so this will be an advantage over some single people, so we will attempt to live as frugal as possible and live off one person's income. Total earnings as resident : ~ 250, 000 after taxes. Pay off as much as possible of my debt. 1st YR (age 33): average salary ~200K. With a good accountant, you can deduct a lot of taxes, especially if you have loans to pay. Again, we'll try to live off my spouses income and pay off the rest of my debt (i will have lots of interest on the debt) with my salary. 2nd YR-6th (34-38): live frugal, save as much as i can by living off my spouses income. It might be difficult for some with children around this age, but it IS doable. Just try not keep up with Jones' or give into social pressures. Hide savings in things like municipal bonds whose interest is tax free and or tax-free savings account when invested in index funds. Savings at age 38 should be ~ 1 million. 7th YR - 11th YR (age 39-43): live frugal, save. Same thing. Invest 1 million into building real estate (if conditions are good) and I should make at least 500K - 1 mil in profit back. No capital gains income tax if this is the only house on your name. Save income I generate as a physician. I should have roughly > 2 million in assets. 12th YR - 16th (age 44-48): work part-time. Spouse can retire if she likes). Take it easy, you've been living frugal and working for a long time. Invest the $$ you saved in real estate again. Live off your income alone. Should generate 500K - 1 mil again. Invest of what you should have 3 million in savings/assets. Use 1 million to pay off/buy a nice house/condo for yourself. You've earned it. Use 2 million to put into municipal bonds/index funds/high interest savings account. You should generate 100K tax free without doing anything. age 49: retire, or do whatever or work part time. Paid off house, passive income + a few more holdings. No need to really work if you didnt want to. Summary: - Live frugal, put savings into smart investments (index funds, ETFs, high interest savings accounts, municipal bonds) - Building real estate can be very lucrative, just scope out the right market - Its scary to be planning this far ahead for some at such young ages, but those who plan and plan some more win. Just look at millionaires you came from nothing. - If you make > 200K, you will retire faster if you are self disciplined. If you make less, obviously, it will take longer. If your spouse makes good money, then obviously you both can retire earlier as well. - At the end of the day, if you're smart and you plan, you can retire early with a lake side condo/house and yacht when you're in your 40s. Hopefully this can eliminate some fears of students. Building wealth and paying off your debt is a long term thing. But you can definitely be wealthy, retire early AND pay off your debt. Remember this is just my situation and my plan. You can try to look at your situation and compare it to my plan and see if its feasible. I just wanted to post my plan in hopes that people can see that it's alright. In fact, going to a US school might be preferrable as you will force yourself to learn more about finances, about living on a budget which will help you long term. For tips on living frugal, just search the internet. You'll finds tons of stuff. For inspiration on living frugal, read about Warren Buffet. If you've read this far, thanks for reading! Link to comment Share on other sites More sharing options...
silvermen85 Posted March 25, 2009 Report Share Posted March 25, 2009 Well, looks like you have your whole life planned out in front of you. For me I guess I'll take the live a life that is not planned rather than plan a life that you might not be able to live path. Link to comment Share on other sites More sharing options...
The Journey Man Posted March 25, 2009 Author Report Share Posted March 25, 2009 Well, looks like you have your whole life planned out in front of you. For me I guess I'll take the live a life that is not planned rather than plan a life that you might not be able to live path. I understand your point of view, but what I proposed is not a rigorous plan. Obviously there are things that pop up unexpectedly and you make some wrong turns. The whole premise was that with intelligent planning for the immediate and having a financial plan for the future, students will be OK financially. That doesn't mean your life is planned out, for example you don't plan on where you'll live, what you'll be doing as a specialty, what your hobbies will be, academic or private practice etc.. But I'd also like to add, that in the profession that we are going into, for the most of us, we will not be switching jobs every few years or so. Thats just sort of how the career is. That doesn't mean its not rewarding or new, its just that you become a physician, see patients and treat them. So going on this path, you already have 9 years of your life planned out already (med school + residency). Link to comment Share on other sites More sharing options...
a41 Posted March 25, 2009 Report Share Posted March 25, 2009 Just a couple of pointers, the summer after second year is going to be a busy time for you (USMLE Step 1). If you don't have everything booked already, you might want to consider doing that between year 1 and 2...or wait until after 4th year. Also, if you buy a condo in Windsor you're going to be crossing the border a lot at odd hours for your rotations. I could see that getting a bit annoying, especially if you get placed in Ann Arbor for 3rd year. Link to comment Share on other sites More sharing options...
The Journey Man Posted March 25, 2009 Author Report Share Posted March 25, 2009 Just a couple of pointers, the summer after second year is going to be a busy time for you (USMLE Step 1). If you don't have everything booked already, you might want to consider doing that between year 1 and 2...or wait until after 4th year. Also, if you buy a condo in Windsor you're going to be crossing the border a lot at odd hours for your rotations. I could see that getting a bit annoying, especially if you get placed in Ann Arbor for 3rd year. Thanks for the tips a41. I wasn't sure where I would get placed, but depending on where I do and where my fiancee gets work, I might just need to put up with the hassle. If she find work close in Royal Oak or Ann Arbor, the we might just move there for a couple years. We'll see how that goes. Im definitely going to get a hold of a Nexus pass to speed things up at the border. Link to comment Share on other sites More sharing options...
n00b Posted March 25, 2009 Report Share Posted March 25, 2009 lol wow this is intense Link to comment Share on other sites More sharing options...
Kathryn Posted March 25, 2009 Report Share Posted March 25, 2009 I may have missed this, but how are you going to get by without a car if you're crossing the border for school every day? Or are you planning to carpool with another Canadian living in Windsor? Link to comment Share on other sites More sharing options...
n00b Posted March 25, 2009 Report Share Posted March 25, 2009 hop the fence or ride across niagara in a barrel Link to comment Share on other sites More sharing options...
a41 Posted March 25, 2009 Report Share Posted March 25, 2009 hop the fence or ride across niagara in a barrel Err...are you familiar with Ontario geography? Anyways, Windsor Transit actually has a bus route that crosses the border. You could take that. Haha. NEXUS is awesome, I think it's worth it for any Canadian studying in the US (who plans on going back home from time to time). Link to comment Share on other sites More sharing options...
aRnonymous Posted April 1, 2009 Report Share Posted April 1, 2009 Do NOT live in Windsor if you are going to Wayne! Let me repeat that, do NOT live in Windsor! I live in Windsor and I did my undergrad at Wayne State. For four years I drove across the border every single day. Yes, I have a Nexus card, but even so I have to leave an hour before class every day to make sure I'm on time, and I only live 12 minutes from the tunnel. Not to mention, it is very expensive to cross. The toll now is $4 CDN each way. That alone will cost you $160 CDN per month, not to mention cost of your car, gas, etc. Trust me, save yourself the headache and live in the metro Detroit area. There are options if you want to live on campus. I personally prefer the Royal Oak area which is about a 15 minute drive or so from Wayne. Link to comment Share on other sites More sharing options...
a41 Posted April 1, 2009 Report Share Posted April 1, 2009 Do NOT live in Windsor if you are going to Wayne! Let me repeat that, do NOT live in Windsor! I live in Windsor and I did my undergrad at Wayne State. For four years I drove across the border every single day. Yes, I have a Nexus card, but even so I have to leave an hour before class every day to make sure I'm on time, and I only live 12 minutes from the tunnel. Not to mention, it is very expensive to cross. The toll now is $4 CDN each way. That alone will cost you $160 CDN per month, not to mention cost of your car, gas, etc. Trust me, save yourself the headache and live in the metro Detroit area. There are options if you want to live on campus. I personally prefer the Royal Oak area which is about a 15 minute drive or so from Wayne. In med school you have the option of streaming all of your lectures, so you don't even have to cross the border much once Anatomy is over. Link to comment Share on other sites More sharing options...
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