One of my initial concerns in location of residency training was the cost. A metropolitan area like New York City and San Francisco comes with a hefty cost of living price tag. Do I want to pay $800 a month for a 2 bedroom gated condominium with swimming pool and tennis courts in Augusta, Georgia, or $2000 a month for a closet in Manhattan? While you should probably focus more on the quality of program and location in residency training, an extra $1200 a month in savings can be applied to important use (like repaying loans).

In retrospect, the cost differential isn’t as significant as I initially thought; the salaries are usually somewhat proportional to cost of living. One of my friends training in Boston ended up with similar funds as I did, simply because he had a higher salary and did not have a car to maintain. He’s now moving to Los Angeles, which is a sprawling freeway wasteland with traditionally crappy resident salaries.

I gave the salary issue a more quantitative analysis, and indeed it holds true to a certain extent. Take, for instance, the medicine residency program at St. Luke’s-Roosevelt Medical Center in NYC. For 2009, the PGY-2 salary is $58,463.  A subsidized studio runs about $1,600/month near the hospital. Wilmer Eye Institute in Baltimore pays its PGY-2 residents $44,192. An apartment in Baltimore away from the ghetto will cost at least $1,000 a month. The nearly $14,000 annual salary difference in NYC ought to cover the extra housing costs and hefty city taxes. In addition, you’d have to maintain a car in Baltimore.

But wait, you’re comparing a Yugo to a Rolls-Royce! Indeed, higher profile academic centers will still draw residents despite being in a seedy location and offering a lousy benefits package. It actually depends on the city.  MEEI offers a PGY-2 salary of approximately $52,000. Doheny offers a PGY-2 salary of $48,000, but a PGY-3 receives an extra $5,000 annually.

Ultimately, the end result is negligible. Instead, you should ask yourself whether you can tolerate living in a cramped apartment instead of a suburban home with a yard. Can you handle living in Utah if you typically spend your Friday nights at the bar? Or can you handle waiting in line for hours in Central Park to play tennis (don’t forget to buy a public tennis pass, or you’ll be fined!)?

economy, misc life, money

As a continuation of my previous entry, I’m going to review four online savings accounts: Etrade, INGDirect, HSBCDirect, and EmigrantDirect. As I mentioned before, stashing your hard earned cash in an online money market account can help add a couple extra bucks to your savings without risk.

Etrade

Etrade offers full-brokerage accounts in addition to the standard money market account. This means that you can open IRAs and stock portfolio accounts all under one convenient interface. For the longest time, Etrade has offered comparable interest rates to that of other online accounts. At the time of this writing, however, the savings account rate is a measly 0.95%. This rate is still 3-4x what your regular bank (Citibank, Chase, Bank of America) would offer. The redeeming qualities of Etrade include its slick interface and expedient transfers. The web interface is neatly organized according to the type of account you have with them. The monthly account summaries are simple to interpret; you’d be surprised how confusing some bank statements are. Account transfers on Etrade are FAST. Accounts are credited by the evening after you make the transfer, although you may not necessarily be able to draft funds immediately. Your balance begins accruing interest the day you make the deposit. Withdrawing funds directly from Etrade is also convenient; they offer an ATM debit card that is valid at any U.S. ATM machine. Etrade does not have an surcharges on ATM use, and they will reimburse any fees incurred from the other end as well. Overall, Etrade Bank is a good deal. Read more…

economy economy, life, money

Whether you’re a medical resident hoping to make millions out of residency or a computer programmer in a stagnant company, it’s still probably wise to stay atuned to the economy. As a physician in training, I’ve noticed a wide range of economic sense in my peers. Some of us anticipate a fat six-figure salary out of training, and live as if we did (The average hourly rate of a medical resident is equivalent to that of an In-n-Out burger boy). That’s perfectly fine if you’re independently wealthy or have a spouse supplementing your income. The rest of us live somewhere in the middle. Those of us in this medium range will probably have a couple hundred bucks lying around every month leftover from our paychecks. How can we maximize these unspent dollars?

While you can invest this excess green in the stock market, bonds, mutual funds, or any other venture that might promise huge returns, I find that this is impractical for the majority of us for a number of reasons:

1. Unless you had a career prior to medical school, the amount you’d be able to invest off of a resident’s salary is not sufficient to offset any transaction fees, no matter how little your broker charges. Scottrade used to charge $8 per trade. If you’re putting green into the market monthly, you’re incurring a minimum of $96 a year in commission. Try to make that back in this bear market.
2. If you’re working 80 hours a week, you have no time to research your investments. If you’re already economically savvy, go for it. Most of us need to sleep or study for our job.
3. You might actually need the extra cash sometime. You can’t pull out your money in a pinch if it’s invested in the market.

The alternative to investing it is a no-brainer: stash it in the bank. Which bank? The short answer is an online bank. Current interest rates are a pittance, and most banks with a physical branch offer <0.50% rates on their savings accounts. Online banks offer slightly better rates, and are nearly as convenient if you can coordinate them appropriately. There are dozens to choose from, and most of them are generally reliable. Etrade and INGDirect are two institutions that offer online banking.  Stay tuned for my upcoming review of my experiences with various online banks.

economy economy, life, money