New Dual Physican Couple

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

New Dual Physican Couple

Post by Toasterthief »

My wife and I are about to get married and I have some questions about the best way to save. We're both in our early/mid 30s and just beginning medical practice. We're both in academics with a relatively low salary for our respective fields and limited investment options (no mega backdoor Roth, etc).

Income: 650k combined
Current retirement savings: Me: 75k Her: 80k
My investments are currently in Vanguard with a 4-fund portfolio split between my employer account, Roth, taxable account, and HSA. She has a fidelity account from a previous employer and an account with Prudential. Her investments were "helpfully" selected by Prudential and in funds that have relatively high ERs (I'll be changing this).

Our plan is to save 20% of our income (120k per year) for retirement and pay down our medical school loans ASAP (especially one of hers at 8.75%). My question is how to best allocate that 120k of savings per year. Should I just keep it simple and put it all in to Roth/Employer/taxable accounts? Is there anything we should do instead?
jehovasfitness
Posts: 553
Joined: Mon Jan 22, 2018 1:26 pm

Re: New Dual Physican Couple

Post by jehovasfitness »

Details on loan amounts?
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

Mine:
14393 5.46%
186364 6.51 (government loan, eligible for forgiveness in 4 more years)
12997 3.5%

Hers:
25347 8.75% (The loan I want to take care of before the new year)
66434 6.55 (The loan after)
201418 6.5 (Technically eligible for forgiveness, but she didn't start the process in residency/fellowship...shame)
deltaneutral83
Posts: 2455
Joined: Tue Mar 07, 2017 3:25 pm

Re: New Dual Physican Couple

Post by deltaneutral83 »

Toasterthief wrote: Mon Oct 01, 2018 2:33 pm Mine:
14393 5.46%
186364 6.51 (government loan, eligible for forgiveness in 4 more years)
12997 3.5%

Hers:
25347 8.75% (The loan I want to take care of before the new year)
66434 6.55 (The loan after)
201418 6.5 (Technically eligible for forgiveness, but she didn't start the process in residency/fellowship...shame)
That is a boatload of debt at 6.5% and higher. Investing up to the match and then killing the debt is a fine strategy. In fact, I'd love to be getting a guaranteed 6.5% rate of return on my investments for the next few years and call it a day.
bgf
Posts: 2085
Joined: Fri Nov 10, 2017 8:35 am

Re: New Dual Physican Couple

Post by bgf »

Toasterthief wrote: Mon Oct 01, 2018 2:33 pm Mine:
14393 5.46%
186364 6.51 (government loan, eligible for forgiveness in 4 more years)
12997 3.5%

Hers:
25347 8.75% (The loan I want to take care of before the new year)
66434 6.55 (The loan after)
201418 6.5 (Technically eligible for forgiveness, but she didn't start the process in residency/fellowship...shame)
i would say that beyond any match that you get, you should pay off all loans above 6%. the 5.46% is negotiable, though you should probably just pay that one off too. don't worry about paying off the 3.5% before investing.

the reason is simple. these returns are risk free. you may get 6+% in the market or you may not. either way though, the only reason you'll be earning that excess return, if you get it at all, is because of the risk you are taking. with your loans, you'll be earning over 6% with a certainty.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
MiddleOfTheRoad
Posts: 393
Joined: Fri Jul 21, 2017 11:19 am

Re: New Dual Physican Couple

Post by MiddleOfTheRoad »

At those rates for the loans, pay off all debts first before even thinking about investing. Unless the market drops 30-50% then I would consider putting half the money towards investing in a taxable account.
User avatar
Toons
Posts: 14467
Joined: Fri Nov 21, 2008 9:20 am
Location: Hills of Tennessee

Re: New Dual Physican Couple

Post by Toons »

pay down our medical school loans ASAP

With laser like focus

:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
User avatar
Nate79
Posts: 9373
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: New Dual Physican Couple

Post by Nate79 »

Toons wrote: Mon Oct 01, 2018 2:52 pm pay down our medical school loans ASAP

With laser like focus

:happy
+1000

1. Invest up to the match
2. Pay off loans (2 years)
3. Keep budget extremely low - don't get docitus.
4. Get all proper insurance in place and make sure you stay away from the permanent life insurance scam products.
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

Thanks everyone, I guess the last few years of the market have made me think that investing may be the better route as long as the loans are below 7-8% or so. It sounds like everyone is unanimous in agreeing to pay off her med school debt ASAP?
jehovasfitness
Posts: 553
Joined: Mon Jan 22, 2018 1:26 pm

Re: New Dual Physican Couple

Post by jehovasfitness »

I'd pay off those loans beyond the match yes.

And not that anyone can predict but if my money was on a deep drop within 2 years... well. It kind of is lol
Therapist Investor
Posts: 233
Joined: Sun Apr 15, 2018 8:57 pm

Re: New Dual Physican Couple

Post by Therapist Investor »

Toasterthief wrote: Mon Oct 01, 2018 2:59 pm Thanks everyone, I guess the last few years of the market have made me think that investing may be the better route as long as the loans are below 7-8% or so. It sounds like everyone is unanimous in agreeing to pay off her med school debt ASAP?
You should check out the White Coat Investor. Both the blog at https://www.whitecoatinvestor.com and the book. There is tons of financial advice that I think you'll find useful.
"Get what you can, and what you get hold, 'Tis the stone that will turn all your lead into gold." | -Benjamin Franklin
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

SelfEmployed123 wrote: Mon Oct 01, 2018 3:05 pm
Toasterthief wrote: Mon Oct 01, 2018 2:59 pm Thanks everyone, I guess the last few years of the market have made me think that investing may be the better route as long as the loans are below 7-8% or so. It sounds like everyone is unanimous in agreeing to pay off her med school debt ASAP?
You should check out the White Coat Investor. Both the blog at https://www.whitecoatinvestor.com and the book. There is tons of financial advice that I think you'll find useful.
Thanks, I read WCI quite a bit (although his political views coming through gets annoying).
User avatar
bligh
Posts: 1533
Joined: Wed Jul 27, 2016 9:13 pm

Re: New Dual Physican Couple

Post by bligh »

Toasterthief wrote: Mon Oct 01, 2018 2:59 pm Thanks everyone, I guess the last few years of the market have made me think that investing may be the better route as long as the loans are below 7-8% or so. It sounds like everyone is unanimous in agreeing to pay off her med school debt ASAP?
Yes. I would max out the pretax/tax advantaged first, but after that every penny would go towards paying off the student loans. Nothing in taxable except for a small cash reserve... I would also hold off any lifestyle inflation until those loans were paid off.
User avatar
goodenyou
Posts: 3602
Joined: Sun Jan 31, 2010 10:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: New Dual Physican Couple

Post by goodenyou »

Pay off loans ASAP. If I added correctly, you have $500,000 of loans between the two of you. You won’t find many jobs that you can find that will afford you the ability to pay them off. Many things can happen. I wouldn’t compound my indebtedness with anything else at this time. You don’t want to be in a deep hole ”betting on the come”, especially in today’s medical financial environment. I was there 25 years ago. Best thing I ever did was to hammer away my debt. I had much more clarity of thought and feeling of freedom after they were all paid off. Stay away from stupid doctor schemes.
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
Carol88888
Posts: 711
Joined: Wed Jan 24, 2018 1:24 am

Re: New Dual Physican Couple

Post by Carol88888 »

I'd keep it really simple and put all of the $120,000 into either the S&P 500 or the total stock market index ETF, VTI. You can't lose with either of these. Forget bonds. You are young enough to ride out the swings.

And congratulations on the income. It can make you really wealthy down the road.
Clemblack
Posts: 112
Joined: Sun Jan 21, 2018 12:19 pm

Re: New Dual Physican Couple

Post by Clemblack »

Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: New Dual Physican Couple

Post by Duckie »

Clemblack wrote:Why is OP's occupation relevant?
New doctors often have massive amounts of debt but have (or will soon have) very high incomes. They are also targets of financial salesmen.
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
To explain why we're in our early 30s with massive debt and insignificant retirement savings?
Clemblack
Posts: 112
Joined: Sun Jan 21, 2018 12:19 pm

Re: New Dual Physican Couple

Post by Clemblack »

Toasterthief wrote: Mon Oct 01, 2018 6:00 pm
Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
To explain why we're in our early 30s with massive debt and insignificant retirement savings?

Your post is titled "New Dual Physician Couple," and it doesn't mention "massive debt." I'm still not sure why the occupation would be relevant, and I simply pointed out that it's interesting that physicians seem to have a tendency to mention what they do for a living.
jehovasfitness
Posts: 553
Joined: Mon Jan 22, 2018 1:26 pm

Re: New Dual Physican Couple

Post by jehovasfitness »

Toasterthief wrote: Mon Oct 01, 2018 6:00 pm
Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
To explain why we're in our early 30s with massive debt and insignificant retirement savings?
That would have been my guess.

Cause if I'm just reading a couple makes 650k and have half million on student loans, while I may assume they're doctors. It at least satisfies curiosity
WanderingDoc
Posts: 1341
Joined: Sat Aug 05, 2017 8:21 pm

Re: New Dual Physican Couple

Post by WanderingDoc »

Toasterthief wrote: Mon Oct 01, 2018 2:33 pm Mine:
14393 5.46%
186364 6.51 (government loan, eligible for forgiveness in 4 more years)
12997 3.5%

Hers:
25347 8.75% (The loan I want to take care of before the new year)
66434 6.55 (The loan after)
201418 6.5 (Technically eligible for forgiveness, but she didn't start the process in residency/fellowship...shame)
Your wife's loans are brutal, $300K at > 6.5%. I would pay those off before doing any investing. How confident are you that you can get a 7% return year after year investing in the market?
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.
WanderingDoc
Posts: 1341
Joined: Sat Aug 05, 2017 8:21 pm

Re: New Dual Physican Couple

Post by WanderingDoc »

Clemblack wrote: Mon Oct 01, 2018 6:08 pm
Toasterthief wrote: Mon Oct 01, 2018 6:00 pm
Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
To explain why we're in our early 30s with massive debt and insignificant retirement savings?

Your post is titled "New Dual Physician Couple," and it doesn't mention "massive debt." I'm still not sure why the occupation would be relevant, and I simply pointed out that it's interesting that physicians seem to have a tendency to mention what they do for a living.
Thats because it tends to consume ones identity. I went out of my way to specifically during residency to have travel, languages, dating, real estate, fitness >>> medicine. I always answer the phone at the hospital with my first name and people think its weird? I dunno. For a long time I've thought it strange that physicians are obsessed with their vocation.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 11:25 am

Re: New Dual Physican Couple

Post by PFInterest »

Toasterthief wrote: Mon Oct 01, 2018 2:28 pm My wife and I are about to get married and I have some questions about the best way to save. We're both in our early/mid 30s and just beginning medical practice. We're both in academics with a relatively low salary for our respective fields and limited investment options (no mega backdoor Roth, etc).

Income: 650k combined
Current retirement savings: Me: 75k Her: 80k
My investments are currently in Vanguard with a 4-fund portfolio split between my employer account, Roth, taxable account, and HSA. She has a fidelity account from a previous employer and an account with Prudential. Her investments were "helpfully" selected by Prudential and in funds that have relatively high ERs (I'll be changing this).

Our plan is to save 20% of our income (120k per year) for retirement and pay down our medical school loans ASAP (especially one of hers at 8.75%). My question is how to best allocate that 120k of savings per year. Should I just keep it simple and put it all in to Roth/Employer/taxable accounts? Is there anything we should do instead?
Anything not a part of PSLF needs to be refinanced and attacked.
20% for retirement is fine. But if you are doing 2x employer accounts HSA and backdoor rIRA maybe stop there and attack loans next.
Life insurance, disability, etc
lazylarry
Posts: 515
Joined: Sat Apr 04, 2015 10:35 pm
Contact:

Re: New Dual Physican Couple

Post by lazylarry »

Toasterthief wrote: Mon Oct 01, 2018 2:28 pm My wife and I are about to get married and I have some questions about the best way to save. We're both in our early/mid 30s and just beginning medical practice. We're both in academics with a relatively low salary for our respective fields and limited investment options (no mega backdoor Roth, etc).
It does strike me a little odd that you're in an academic center with limited investment options. I'd just double check this. For instance, I picked a random "smaller" medical center - Kansas university and even they have a roth 403b. apologize to anyone from Kansas, no offense intended. A watered down spd is available:
http://www.kumc.edu/human-resources/ben ... plans.html
But basically, many places will have roth 403b which you then later convert to roth ira. You can call plan to double check this is doable. I would call a few times, as sometimes the plan's reps can be less than knowledgable.

Of course, this doesn't matter until you finish paying down that debt
My profile: https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=86026 | Virtua lBogleheads® Blog: https://virtualbogleheads.wordpress.com/
LocusCoeruleus
Posts: 67
Joined: Wed May 24, 2017 10:00 pm

Re: New Dual Physican Couple

Post by LocusCoeruleus »

Toasterthief wrote: Mon Oct 01, 2018 2:33 pm Mine:
14393 5.46%
186364 6.51 (government loan, eligible for forgiveness in 4 more years)
12997 3.5%

Hers:
25347 8.75% (The loan I want to take care of before the new year)
66434 6.55 (The loan after)
201418 6.5 (Technically eligible for forgiveness, but she didn't start the process in residency/fellowship...shame)
I am the lone dissent in saying don’t payoff the 6.5% fed loan if you are on track, that is ECF’d for PSLF with fedloan and have 4 years left and plan to stay academic or remain with an eligible employer. I say this despite the recent 99% rejection headline. The loan forgiveness will be tax free. Hopefully someone will crunch the numbers to prove it. If you are not certified at fedloan, keep in mind they are a cess pool of incompetence. Betty is not on your side. The neutering of cfpb student loans ombudsmen certainly does not help. So when you login to my fedloan and the months are off, think twice, cut once.
jhwkr542
Posts: 56
Joined: Tue Jun 28, 2016 9:51 pm

Re: New Dual Physican Couple

Post by jhwkr542 »

Please, please, please ignore some of the above commenters. Do not forgo tax deferred space to pay down those debts. You refinance those student loans that aren't pslf eligible/weren't paid on during residency to a fixed rate around 4%. You max out your tax deferred space, which includes 403b/401k/457b, backdoor Roth IRA, and HSA (as applicable). After these are maxed, then ignore taxable to start hammering away at those loans. With that salary, it should be no problem to do all of this.
wxl31
Posts: 73
Joined: Sat Jun 15, 2013 6:52 am

Re: New Dual Physican Couple

Post by wxl31 »

What I would do:

Income: $650k
Assume 1/3 lost to taxes: $215k
Remaining: $435k
Costs to live like a resident for another year: $50k
Remaining: $385k
401k+backdoor Roth x 2: $18500 * x 2 + $5500 *2 = $48k
Remaining: $337k
Kill off every loan except the one eligible for forgiveness: $320k
Leftover: $17k --> spend on insurance, then splurge

Should be debt-free in 1, or at most, 2 years. Once loans are gone, redirect the funds to the usual sequence with retirement savings (401k's to match, HSA, backdoor Roth, 401k to max, after-tax 401k rolled over to Roth IRA if available, taxable) and feel free to splurge a lot more.
WanderingDoc
Posts: 1341
Joined: Sat Aug 05, 2017 8:21 pm

Re: New Dual Physican Couple

Post by WanderingDoc »

wxl31 wrote: Tue Oct 02, 2018 12:36 am What I would do:

Income: $650k
Assume 1/3 lost to taxes: $215k
Remaining: $435k
Costs to live like a resident for another year: $50k
Remaining: $385k
401k+backdoor Roth x 2: $18500 * x 2 + $5500 *2 = $48k
Remaining: $337k
Kill off every loan except the one eligible for forgiveness: $320k
Leftover: $17k --> spend on insurance, then splurge

Should be debt-free in 1, or at most, 2 years. Once loans are gone, redirect the funds to the usual sequence with retirement savings (401k's to match, HSA, backdoor Roth, 401k to max, after-tax 401k rolled over to Roth IRA if available, taxable) and feel free to splurge a lot more.
Not gonna happen. This isn't extreme early retirement or money mustache forum.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.
Nissanzx1
Posts: 605
Joined: Wed Jul 18, 2018 11:13 pm

Re: New Dual Physican Couple

Post by Nissanzx1 »

Good news is in two years you can be close to debt free. That would be the greatest gift you could give yourself/your spouse.

There will be plenty of time in the market for you to be millionaires many times over if you can save later.

Right now the house is on fire. Call the fire department, don't use a garden hose. Live like a college student until these loans are settled. BMW/Porsche/Vacations/Rolex's have to wait for now. Time to pay the pipers.
somekevinguy
Posts: 202
Joined: Mon Jan 16, 2017 8:23 pm

Re: New Dual Physican Couple

Post by somekevinguy »

jhwkr542 wrote: Mon Oct 01, 2018 11:43 pm Please, please, please ignore some of the above commenters. Do not forgo tax deferred space to pay down those debts. You refinance those student loans that aren't pslf eligible/weren't paid on during residency to a fixed rate around 4%. You max out your tax deferred space, which includes 403b/401k/457b, backdoor Roth IRA, and HSA (as applicable). After these are maxed, then ignore taxable to start hammering away at those loans. With that salary, it should be no problem to do all of this.

This exactly. Especially if you’re in academics and at an income of 650. Max out tax deferred space and backdoor Roth x2. PSLF all that is eligible. Refi everything else and pay it off super aggressively. Live like a resident for a few years and you’ll be done in no time. We were in a similar spot a few years ago- dual physician couple, similar income, slightly lower debt burden and by living like residents, were able to pay off all the debts and build significantly toward FIRE-ability.
User avatar
randomizer
Posts: 1547
Joined: Sun Jul 06, 2014 3:46 pm

Re: New Dual Physican Couple

Post by randomizer »

Yes, keep it simple, I'd say. You'll obviously be ok with your incomes as long as you don't let your spending (and debt) get out of control. There's no reason why you shouldn't be able to retire with 5m or 10m quite easily, so there's no need to optimize everything to the limit. Focus on enjoying your life and your work and don't let investing become the center of everything.
87.5:12.5, EM tilt — HODL the course!
BlueCable
Posts: 465
Joined: Fri Jun 17, 2016 9:20 am

Re: New Dual Physican Couple

Post by BlueCable »

Have you looked into refinancing with SoFi or DRB or similar? My wife's rates dropped from like 6.8% to around 3.25%.

I also encourage you to use all tax-advantaged space possible, even while paying your loans. We did not do this during my wife's training and we regret it.
User avatar
goodenyou
Posts: 3602
Joined: Sun Jan 31, 2010 10:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: New Dual Physican Couple

Post by goodenyou »

Clemblack wrote: Mon Oct 01, 2018 6:08 pm
Toasterthief wrote: Mon Oct 01, 2018 6:00 pm
Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
To explain why we're in our early 30s with massive debt and insignificant retirement savings?

Your post is titled "New Dual Physician Couple," and it doesn't mention "massive debt." I'm still not sure why the occupation would be relevant, and I simply pointed out that it's interesting that physicians seem to have a tendency to mention what they do for a living.
Physician employment is not as vulnerable to market fluctuations as other professions. People get sick in good economies and bad economies. Therefore, I may make a different recommendation to someone in a different profession that may be subject to job insecurity. Otherwise, investing and debt strategies should be the same. You could also take the position that some doctors are self-absorbed, self-aggrandizing, narcissistic and overly excited about their accomplishments. It's all in your own perspective. It is why WCI is popular and a "safe space" for doctors.
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
Jack FFR1846
Posts: 18502
Joined: Tue Dec 31, 2013 6:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: New Dual Physican Couple

Post by Jack FFR1846 »

It makes sense to mention dual physician as the source of the "relatively low" $650k/year income. It eliminates my thoughts that he's talking about only himself, as a new engineer making the typical $65k a year first year salary. You know....decimal place shift by mistake.

Only on Bogleheads can $650k and "relatively low" be said together and be taken seriously.
Bogle: Smart Beta is stupid
FireProof
Posts: 960
Joined: Thu May 05, 2011 12:15 pm

Re: New Dual Physican Couple

Post by FireProof »

Clemblack wrote: Mon Oct 01, 2018 6:08 pm
Toasterthief wrote: Mon Oct 01, 2018 6:00 pm
Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
To explain why we're in our early 30s with massive debt and insignificant retirement savings?

Your post is titled "New Dual Physician Couple," and it doesn't mention "massive debt." I'm still not sure why the occupation would be relevant, and I simply pointed out that it's interesting that physicians seem to have a tendency to mention what they do for a living.
Different risk and career trajectories. For a lawyer, 325k/year may be peak earnings, followed by large salary reductions upon moving to a more lifestyle type job. For an entrepreneur or a saleseman, earnings may be very irregular. If an engineer had a massively negative net worth in his thirties, that would be a major red flag for pending habits, and would be important to address. If he were a cryptocurrency speculator or professional poker player, he may have an appetite for risk and desire to beat the game that could prove harmful for equity investing.

Specificity also brings connection - other physicians will be attracted to help a fellow schmuck who's just taken it in the teeth for the last decade, and gets 6% debt as a reward.
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

Thanks for the advice everyone.
lazylarry wrote: Mon Oct 01, 2018 8:59 pm
Toasterthief wrote: Mon Oct 01, 2018 2:28 pm My wife and I are about to get married and I have some questions about the best way to save. We're both in our early/mid 30s and just beginning medical practice. We're both in academics with a relatively low salary for our respective fields and limited investment options (no mega backdoor Roth, etc).
It does strike me a little odd that you're in an academic center with limited investment options. I'd just double check this. For instance, I picked a random "smaller" medical center - Kansas university and even they have a roth 403b. apologize to anyone from Kansas, no offense intended. A watered down spd is available:
http://www.kumc.edu/human-resources/ben ... plans.html
But basically, many places will have roth 403b which you then later convert to roth ira. You can call plan to double check this is doable. I would call a few times, as sometimes the plan's reps can be less than knowledgable.

Of course, this doesn't matter until you finish paying down that debt
My job offers a fairly generous match, however unfortunately doesn't allow for any other other space. I double check with the Vanguard rep again this year, but I'm fairly sure that's the case. I'll look in to her job a bit more as well.

Thanks for the advice everyone. To summarize, does this sound reasonable:

1. Consolidate her major (200k, 6.5%) loan at a lower interest rate.
2. Pay off her 25k, 8% loan now.
3. Contribute to our retirement plans to max out our matches, backdoor Roth, and at a minimum, to the 401k limit.
4. Pay off her 60k, 6.5% loan ASAP.
5. Pay off her 200k loan ASAP.
6. Pay off my 15k, 5.5% loan
7. Stay on course to get my loan debt forgiven via PSLF (I've been submitting yearly employment verification forms which have been fine).
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 11:25 am

Re: New Dual Physican Couple

Post by PFInterest »

Toasterthief wrote: Tue Oct 02, 2018 9:43 am Thanks for the advice everyone.
lazylarry wrote: Mon Oct 01, 2018 8:59 pm
Toasterthief wrote: Mon Oct 01, 2018 2:28 pm My wife and I are about to get married and I have some questions about the best way to save. We're both in our early/mid 30s and just beginning medical practice. We're both in academics with a relatively low salary for our respective fields and limited investment options (no mega backdoor Roth, etc).
It does strike me a little odd that you're in an academic center with limited investment options. I'd just double check this. For instance, I picked a random "smaller" medical center - Kansas university and even they have a roth 403b. apologize to anyone from Kansas, no offense intended. A watered down spd is available:
http://www.kumc.edu/human-resources/ben ... plans.html
But basically, many places will have roth 403b which you then later convert to roth ira. You can call plan to double check this is doable. I would call a few times, as sometimes the plan's reps can be less than knowledgable.

Of course, this doesn't matter until you finish paying down that debt
My job offers a fairly generous match, however unfortunately doesn't allow for any other other space. I double check with the Vanguard rep again this year, but I'm fairly sure that's the case. I'll look in to her job a bit more as well.

Thanks for the advice everyone. To summarize, does this sound reasonable:

1. Consolidate her major (200k, 6.5%) loan at a lower interest rate.
2. Pay off her 25k, 8% loan now.
3. Contribute to our retirement plans to max out our matches, backdoor Roth, and at a minimum, to the 401k limit.
4. Pay off her 60k, 6.5% loan ASAP.
5. Pay off her 200k loan ASAP.
6. Pay off my 15k, 5.5% loan
7. Stay on course to get my loan debt forgiven via PSLF (I've been submitting yearly employment verification forms which have been fine).
sounds good.
Childay
Posts: 76
Joined: Wed Jan 25, 2012 10:07 pm

Re: New Dual Physican Couple

Post by Childay »

Toasterthief wrote: Tue Oct 02, 2018 9:43 am Thanks for the advice everyone.
lazylarry wrote: Mon Oct 01, 2018 8:59 pm
Toasterthief wrote: Mon Oct 01, 2018 2:28 pm My wife and I are about to get married and I have some questions about the best way to save. We're both in our early/mid 30s and just beginning medical practice. We're both in academics with a relatively low salary for our respective fields and limited investment options (no mega backdoor Roth, etc).
It does strike me a little odd that you're in an academic center with limited investment options. I'd just double check this. For instance, I picked a random "smaller" medical center - Kansas university and even they have a roth 403b. apologize to anyone from Kansas, no offense intended. A watered down spd is available:
http://www.kumc.edu/human-resources/ben ... plans.html
But basically, many places will have roth 403b which you then later convert to roth ira. You can call plan to double check this is doable. I would call a few times, as sometimes the plan's reps can be less than knowledgable.

Of course, this doesn't matter until you finish paying down that debt
My job offers a fairly generous match, however unfortunately doesn't allow for any other other space. I double check with the Vanguard rep again this year, but I'm fairly sure that's the case. I'll look in to her job a bit more as well.

Thanks for the advice everyone. To summarize, does this sound reasonable:

1. Consolidate her major (200k, 6.5%) loan at a lower interest rate.
2. Pay off her 25k, 8% loan now.
3. Contribute to our retirement plans to max out our matches, backdoor Roth, and at a minimum, to the 401k limit.
4. Pay off her 60k, 6.5% loan ASAP.
5. Pay off her 200k loan ASAP.
6. Pay off my 15k, 5.5% loan
7. Stay on course to get my loan debt forgiven via PSLF (I've been submitting yearly employment verification forms which have been fine).
8. Refinance all those non PSLF loans, yesterday
JHU ALmuni
Posts: 347
Joined: Tue Jan 20, 2015 11:40 am

Re: New Dual Physican Couple

Post by JHU ALmuni »

Refinance and consolidate your student loans. You should be able to get a lower rate and save few thousands.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 11:25 am

Re: New Dual Physican Couple

Post by PFInterest »

Toasterthief wrote: Mon Oct 01, 2018 3:07 pm Thanks, I read WCI quite a bit (although his political views coming through gets annoying).
interesting. has he been politicizing his blog recently?
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

An update:

- Wife's student loans: 245k down to 66k left at 1.8%
- My student loans: 180k, eligible for PSLF in 3.5 years
- 1 car loan, 22k @ 3%
- Bought a house in January, on a 15 year fixed at 3%
We paid off my wife's 24k student loan, 26k from mine
Our emergency fund is at approximately 60k
We have an extra $100k sitting in a bank, ready to pay off the remainder of her 66k student loan.
Our retirement accounts now sit at approximately $340k between the two of us.

With respect to tax advantaged accounts, we're doing a backdoor Roth IRA, HSA, we're maxing out my 401k (19k + generous 8% match from my employer), her 401k (19k + less generous match), and her institutional 457 (19k), as well. I've also been putting 5k/month in to a taxable account, and may increase this.

I've also opened a solo 401k to put away some extra consulting money, but unfortunately it's going to be relatively little in comparison, and nowhere near the 57k limit. Neither of our employers allow for a "mega backdoor Roth."

My question is whether (if at all?) it might make sense to consider alternative investments with our "extra" money that's currently going in to a taxable account. I've thought about real estate investment, and I'd love to hear people's thoughts here about investment properties. My understanding is that over the long term, the IRR of real estate isn't substantially different than the market as a whole, but I'm open to thinking about alternative investment streams. Syndicated real estate deals seem like something that's probably more reasonable for me to be involved in, but I don't have a great basis for being able to evaluate how good/bad a deal may be. Does anyone have any suggestions?
WWJBDo
Posts: 182
Joined: Mon Aug 20, 2018 9:43 am
Location: California

Re: New Dual Physican Couple

Post by WWJBDo »

That's an impressive achievement. Good for you.

Real estate can be very rewarding financially, with the caveat that it works best in an area that is going to appreciate (not one that has already gone wild) and also that you have the *time* to deal with it. A two physician family (do you have kids?) doesn't have a lot of bandwidth to manage real estate. I have seen very successful real estate development between a physician and another family member who ran everything, but the MD was always on the phone at work over his other business stuff, and the old "Don't mix business and family" adage persists for a reason.

I'd say you are already doing superbly and better is the enemy of good. Give it a little more time to decide, unless you want to go into real estate big time and you live in an area that has not already appreciated.
"It is difficult to get a man to understand something when his salary depends upon his not understanding it." Upton Sinclair
User avatar
goodenyou
Posts: 3602
Joined: Sun Jan 31, 2010 10:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: New Dual Physican Couple

Post by goodenyou »

Don’t complicate your plan. Keep it simple. Pay off your loans ASAP. Continue to live frugally and save in a tax efficient manner. Avoid reaching for yield and making stupid doctor mistakes with investing. Your life and job satisfaction will be better when you are debt free. The clouds on the horizon of medicine are not looking so good.
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
User avatar
Blueskies123
Posts: 737
Joined: Sat Nov 15, 2014 6:18 pm
Location: South Florida

Re: New Dual Physican Couple

Post by Blueskies123 »

In the future you might check out this site:

https://www.whitecoatinvestor.com/

His site focuses on helping medical professions with simialar questions.
If you find yourself in a hole, stop digging
iraconfused
Posts: 99
Joined: Tue Apr 16, 2019 4:05 pm

Re: New Dual Physican Couple

Post by iraconfused »

Just a quick question. If the 2 of you are making $650k per year why are you trying for debt forgiveness? Or are you? You could have all the debt paid off in 3-4 years.
Topic Author
Toasterthief
Posts: 31
Joined: Tue Feb 21, 2017 9:35 am

Re: New Dual Physican Couple

Post by Toasterthief »

WWJBDo wrote: Thu Dec 19, 2019 9:12 am That's an impressive achievement. Good for you.

Real estate can be very rewarding financially, with the caveat that it works best in an area that is going to appreciate (not one that has already gone wild) and also that you have the *time* to deal with it. A two physician family (do you have kids?) doesn't have a lot of bandwidth to manage real estate. I have seen very successful real estate development between a physician and another family member who ran everything, but the MD was always on the phone at work over his other business stuff, and the old "Don't mix business and family" adage persists for a reason.

I'd say you are already doing superbly and better is the enemy of good. Give it a little more time to decide, unless you want to go into real estate big time and you live in an area that has not already appreciated.
Thanks. We live in a relatively high COL area (on a coast), and we're thinking of having kids in the next year or two. Neither of us has a ton of extra time to manage a real estate business (and I'm not going to spend a weekend painting), which is why syndication is somewhat attractive.
goodenyou wrote: Thu Dec 19, 2019 9:55 am Don’t complicate your plan. Keep it simple. Pay off your loans ASAP. Continue to live frugally and save in a tax efficient manner. Avoid reaching for yield and making stupid doctor mistakes with investing. Your life and job satisfaction will be better when you are debt free. The clouds on the horizon of medicine are not looking so good.
Fair enough, and that's something I'm taking into account.
iraconfused wrote: Thu Dec 19, 2019 10:17 am Just a quick question. If the 2 of you are making $650k per year why are you trying for debt forgiveness? Or are you? You could have all the debt paid off in 3-4 years.
We aggressively paid off my wife's loans because she didn't consolidate/play the debt forgiveness game the right way. As for why I'm going for forgiveness, at this point, it's stubbornness. :P I've done the calculation and I "only" will come out ahead by about 60k by doing public service loan forgiveness versus refinancing at the currently very attractive rates. Still, one of the reasons I took my current (relatively low paying in comparison to private practice) job was because I could get the debt forgiven.
Broken Man 1999
Posts: 8626
Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, near Champa Bay !

Re: New Dual Physican Couple

Post by Broken Man 1999 »

Very nice progress!

Congrats to you and your wife!

:sharebeer

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
Donethat96
Posts: 118
Joined: Wed Jun 26, 2019 2:22 pm

Re: New Dual Physican Couple

Post by Donethat96 »

I've just read the most recent 20 or so replies. They are almost unanimous in recommending paying off the student loans aggressively. But the OP says he has 183K in loans that are eligible for forgiveness in 4 years. Why pay a nickel more than is required on that loan? What am I missing?
User avatar
neurosphere
Posts: 5205
Joined: Sun Jan 17, 2010 12:55 pm

Re: New Dual Physican Couple

Post by neurosphere »

iraconfused wrote: Thu Dec 19, 2019 10:17 am Just a quick question. If the 2 of you are making $650k per year why are you trying for debt forgiveness? Or are you? You could have all the debt paid off in 3-4 years.
Here's my take when I get asked a version of this question (which is almost daily). Forgiveness is a government subsidy or program just like many others, and if OP is eligible, why not take it? I suspect people would take a home mortgage interest deduction, or a credit for solar panels put on their home, or a tax abatement for X, etc, regardless of income.

I sometimes spend an embarrassingly long amount of time to correctly report and claim $310 in foreign tax credit each year, for example, and will continue to do so regardless of what my "denominator" is, lol.

In this case the OP will have be soon eligible for many thousands of dollars to do what he would do anyway, which is show up to work. :D The situation might be different if he (?) had decided to stay in an eligible job solely for the forgiveness eligibility. I do know some people who feel somewhat guilty taking forgiveness, in which case I advise to donate it to charity, or to give it back to the government later. :D
klondike
Posts: 125
Joined: Thu Jan 10, 2019 5:58 pm

Re: New Dual Physican Couple

Post by klondike »

Clemblack wrote: Mon Oct 01, 2018 5:37 pm Why is OP's occupation relevant?

I've noticed that physicians on this website tend to state their profession. It's interesting to me.
Of course it's relevant. Doctors can find a high pay job anywhere in the country, never get laid off or fired, and generally can work as long as they want to. With such stable, predictable cash flow, they can afford a very aggressive portfolio, i.e 100% equity, especially they are young.
Post Reply