How to reduce expenses
As students we have been consuming and accumulating debt. Some of us have upwards of 300k of debt. People that have completed a different path will have started to earn sooner contributing to wealth building and they probably have less debt.
Once we complete medical school granted we have been able to secure a residency position we actually start to earn an income. I would highly recommend maximizing your retirement account and moonlighting during residency if you are in good standing. Most residents earn about 40k to 60k depending on specialty. With call and other obligations this is about $20 an hour. You are cheap labor for a facility and the government pays for it in the United States.
In order to reduce expenses you must identify and track your spending. Credit cards make this more challenging because it is not the same as handing over cash to someone. Some people only use cash in person to help them avoid unnecessary spending. Similarly a casino has you place money on a card or gives you tokens to play with. This is just a way to distance you from thinking that this is money. That makes you more likely to spend.
Examples of expenses:
If you have credit card debt eliminate it now
Rent or mortgage
Electric
Gas
Vehicle
Insurance
Internet
Cable
Parking
Grocery
Entertainment
Restaurants
Medical expenses
Medical malpractice
Medical memberships
Medical license
DEA fee
CMEs
Student loan
Travel
Other
After identifying them, usually the highest is rent or the mortgage. Moving to a less expensive place could be done or area nearby with less property tax. Do you need to have a vehicle? Cutting that depreciating asset could be helpful. Most cars don’t increase in value excluding a collector item. Do you need cable? I personally cut that years ago. You could take lunch to work. This saves about 1k a year. You could reduce restaurants that you go to or go to cheaper ones. Refinance that student loan to a smaller payment and rate. A side job may cover the medical license and DEA. Check out thriftytraveler and nextvaca for deals on flights. We have saved thousands on flights. Shopping at a less expensive grocery store such as Aldi can help.
At the end of all this what does this do for you? You would have an easier time saving money for whatever you need it to do. If you want to max out retirement each year you can. If you want to travel more often you can. If you want to become independent of employment you can. It is all about gaining financial freedom.
Example:
You decided to save 1k per year bringing lunch to work. With that 1k you invested in a mutual fund that yields 20% per year. Each year you make $200 on that and it compounds on itself. You would double the initial investment within 5 years.
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