29 yo resident doc married need personal finance/investing advice

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boomie53
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29 yo resident doc married need personal finance/investing advice

Post by boomie53 » Mon Jan 14, 2019 12:09 am

Hi all,

Thank you in advance for reading this. In summary, I am married to a neurology resident and we live in LA right now for the next 3.5-4.5 years then plan to move back to Oregon. We have a lot of debt, however, we are saving, making good combined income, and hopefully will continue to do so. Any advice on how much we should be investing in our 403bs/Roths versus paying off MBA/Med School loans would be greatly appreciated. We don't have an emergency fund and haven't started saving up for a home yet.

Background:
Emergency funds: None
Debt: School loans $313k (more detail below), 2 Car Loans $3.3k (0% interest), $16.8k (3.99% interest)
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 7.25% State
State of Residence: CA
Age: Her 28 / Him 29
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 25% of stocks

Net Income:
total $8,893.13 / month - Increases about 3-4% annually
Wife –$2963.10/bimonthly (12% raise in 2019)
Husband -$1,519.87/bimonthly
Expenses - Including any contributions to assets listed below

Gross Income:
Wife - $107,779 annually at a health system company
Husband - $54,000 annually

Debt:
Rent: $2745/mo
Groceries: Averaging $900
Restaurant: Averaging $300
Bars: Averaging $75
Misc. Shopping: Averaging $600
Sports & Fitness (Golf, Tennis): Averaging $400
Auto Loan Payment: $735 (for Subaru & VW)
Auto Insurance: $250
Gas: $150
Internet: $66
Mobile Phone: $50
Power Bill: $40
Utilities: $75

Car Loans:
[Subaru Car: $3,320.92 principal
o contributing $365/monthly (no interest on car loan)
VW Car: $16,810.69 principal balance
o contributing $365.09/monthly (3.99% interest) – 10 payments made, 50 payments remaining.

Student Loans
• Wife’s MBA Student Loans: contributing $585.83/monthly (5.96% interest)
o Capitalized interest $4,630.53 as of 1/6/19
o Outstanding principal balance $45,884.04
o 10-year payment plan

• **Husband’s Medical School Loans: (10 loans interest range 5.16-6.95%)**
o Contribute minimum for PAYE $522.09
o Principal Balance: $268,564.52
o Unpaid Interest: $23,047.75 as of 1/6/19
o Total Balance: $291,612.27
o If loan forgiveness plan, PAYE works out, we’ll pay 10 percent of your income for 10 years, and then it’s forgiven.
 Neurology resident $50k salary
• Pay loans 4 years at 5k = $20k
 Neurologist starting $250k salary
• Pays $25k for 6 years = $150,000
 Loan Forgiveness Income Driven Repayment – He would pay $170,000 total instead of $300,000.

Assets:
Emergency Fund: I haven’t started one.
Vacation Fund: I haven’t started one.
Checking Account: Fluctuates between $3000-$8000

Investments: ~ $15,101.34
- ROTH IRA $5,733
- Kaiser ROTH $4,953
- 403b $4,415

Husband's ROTH IRA: $4,826
• Currently contributes per paycheck
• 100% in KP Retirement Path 2055 FundKPRIX
Wife’s 403b: $4,415 as 1/6/19
• $ 3,733.45 403b Retirement Plan/$681.72 Health System Defined Contribution Plan)
• Contributing 6% of pre-taxed income - $222.38/per paycheck - $444.77/month (6% of pre-tax income $3,706.40)
• Company Match 3%
• 100% in 4709 Vanguard Instit Tgt Ret 2055 F Inst
Wife’s ROTH IRA: $5,732.87
• Cash & Cash Investments: $959.99 (16.75% of account)
• Market Value: $4,772.88 (83.25% of account)
• Contributing $458/month by automatically investing in the following:
o $100 - Schwab International Index Fund® SWISX (17%)
o $158 - Schwab® S&P 500 Index Fund SWPPX (23%)
o $100 - Schwab Small-Cap Index Fund® SWSSX (15%)
o $100 - T. Rowe Price U.S. Bond Enhanced Index Fund PBDIX (21%)
o Not currently investing - BlackRock Advantage Small Cap Core Fund Investor A Shares BDSAX (2%)


Questions:
1. Is it more important to max out our Roth IRAs than to pay off student debt?

2. What advice do you have for us on how much we should saving in our late 20s/early 30s?

3. Should the percentage of contributions for small/mid/large cap index funds be changed in HER roth IRA?
Last edited by boomie53 on Tue Jan 15, 2019 3:03 pm, edited 4 times in total.

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Re: 29 yo resident doc married need personal finance/investing advice

Post by LadyGeek » Mon Jan 14, 2019 4:09 pm

Welcome! You have two similar posts. Each post has different information, so we approved both and merged them together to be sure.

Please edit your posts using the "!" in the top-right corner of the post to remove the duplicate content.
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Johnsson
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Johnsson » Mon Jan 14, 2019 6:39 pm

Pay off debt... highest interest rates first of loans that won't be forgiven... Guarantees your return on investment.

How sure are you of medical school loan 'forgiveness'?

Flyer24
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Flyer24 » Mon Jan 14, 2019 11:49 pm

Am I the only one that thinks $1600/ month for food is crazy? Our grocery bill for a family of 4 is half of that. You should cut your food bill in half and put it towards your debt.

Topic Author
boomie53
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Re: 29 yo resident doc married need personal finance/investing advice

Post by boomie53 » Mon Jan 14, 2019 11:55 pm

@flyer That’s a good point, I should have specified that average expense of $1500 includes restaurant, groceries, alcohol and bars.. but that could still be a high amount per month

Sandi_k
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Sandi_k » Tue Jan 15, 2019 12:22 am

boomie53 wrote:
Mon Jan 14, 2019 11:55 pm
@flyer That’s a good point, I should have specified that average expense of $1500 includes restaurant, groceries, alcohol and bars.. but that could still be a high amount per month
Yes, for two people, that's ridiculously high. We live in a HCOL area, and our stats for two are:

- $350 Safeway groceries (includes entertaining, BBQ meat, etc).
- $200 eating out
- $120 BevMo (wine, mixers)
- $200 Costco - all household supplies, some liquor and food, pet food

So that's $870 per month - and we live pretty lavishly in terms of food and beverages in a HCOL area.

4nwestsaylng
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Re: 29 yo resident doc married need personal finance/investing advice

Post by 4nwestsaylng » Tue Jan 15, 2019 12:44 am

I agree that your food/beverage/bar monthly tab is too high.L.A. is not especially expensive in that regard, so you are spending a lot.

Rent is not too high, in fact I would say for a decent area of L.A., one could easily pay $3500 for an apartment, and I am not talking luxury, only location.

Some may criticize this, but I would suggest you visit Dave Ramsey's website www.daveramsey.com to look at some of his basic advice on debt reduction.

You need to pay off the VW over the next year, not 50 payments. That loan is not forgivable clearly,paying it off is an easy 3.99% return on your money.

Hopefully your loan forgiveness program really works, otherwise even at your starting salary of 250k it is going to be tough the first few years in practice.

Best of luck on this!

runner540
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Re: 29 yo resident doc married need personal finance/investing advice

Post by runner540 » Tue Jan 15, 2019 7:18 am

Where are all your other expenses? (Gas for 2 cars, insurance, utilities, health insurance, etc) Do you ever travel or buy clothes? Try doing a full budget, looking back at the last 3/6 months of bank and CC statements. With a tighter budget you can pay off a lot of debt.

Check out the whitecoatinvestor site. https://www.whitecoatinvestor.com/

You're making $160k/year. (Wife just got a raise of $10k?) If I were you, I'd focus on paying off the cars and wife's loans at 6% by the end of 2019, then maxing retirement accounts next year.

Nate79
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Nate79 » Tue Jan 15, 2019 9:38 am

I highly recommend Dave Ramsey in this case. Broke, in debt up to your eyeballs yet have an extremely high food and bar monthly budget. Focus on getting it of debt, live well below your means (rice and beans, no bars).

Flyer24
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Flyer24 » Tue Jan 15, 2019 10:13 am

boomie53 wrote:
Mon Jan 14, 2019 11:55 pm
@flyer That’s a good point, I should have specified that average expense of $1500 includes restaurant, groceries, alcohol and bars.. but that could still be a high amount per month
That is still a crazy amount. You should be focused on paying down that huge debt instead of hitting the bars. You should be living on beans and rice. I highly recommend getting into the Dave Ramsey program. You don’t need investment advice. You have tons of debt and no emergency fund.

SheReadsHere719
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Re: 29 yo resident doc married need personal finance/investing advice

Post by SheReadsHere719 » Tue Jan 15, 2019 1:29 pm

Welcome! A few notes:

*There seem to be some discrepancies between gross and net in your Income summary (24 or 26 paychecks of $2,900 do not add up to $107,00). It would be helpful to get more accurate numbers and convert them to monthly to help determine Income – Expenses
*Your rent + debt servicing totals $4,582/month. If your monthly net income is $8,893, then you have $4,311 left for expenses + additional debt repayment. The key will be keeping expenses manageable to as to funnel the maximum amount into debt repayment.
*PAYE loan forgiveness is over 20 years, not 10 years. The forgiveness amount is also taxable. Given the outstanding balance on your husband’s loans, it would be worth your time to immerse yourselves in the world of student loan repayments (PAYE, PSLF, Married filing Jointly vs. Separately, etc.)
*Does your husband have access to a 401k or 403b? That will be helpful for bringing down your AGI on any income-driven repayment plan
*I also echo the sentiments to check out David Ramsey. After determining the Med School loan repayment strategy, I would recommend the following priority for you: Emergency fund, Subaru loan, VW loan, and then MBA loans.

Hope that’s a good starting place!

be217
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Re: 29 yo resident doc married need personal finance/investing advice

Post by be217 » Tue Jan 15, 2019 2:06 pm

I would start here:

https://www.whitecoatinvestor.com/ultim ... r-doctors/

Loan forgiveness programs have their uses but I think more people consider them than should. Among other things, it's difficult to know with certainty that one will stay in a practice that qualifies for any length of time, and I can think of few things more miserable than feeling forced to stay in a job one hates because he/she has 4.5 more years of REPAYE or whatever to complete.

You really need to sit down and write out an exhaustive budget and loan repayment plan. Speaking from experience, it's easy to consider the debt as an abstraction, which is a really bad idea. If your current loan forgiveness plan makes sense, great. If not, you should refinance ASAP, and start hammering the car loans.

4nwestsaylng
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Re: 29 yo resident doc married need personal finance/investing advice

Post by 4nwestsaylng » Tue Jan 15, 2019 2:32 pm

Nate79 wrote:
Tue Jan 15, 2019 9:38 am
I highly recommend Dave Ramsey in this case. Broke, in debt up to your eyeballs yet have an extremely high food and bar monthly budget. Focus on getting it of debt, live well below your means (rice and beans, no bars).
As Dave Ramsey says "rice and beans" , next night "beans and rice".

4nwestsaylng
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Re: 29 yo resident doc married need personal finance/investing advice

Post by 4nwestsaylng » Tue Jan 15, 2019 2:40 pm

be217 wrote:
Tue Jan 15, 2019 2:06 pm
I would start here:

https://www.whitecoatinvestor.com/ultim ... r-doctors/

Loan forgiveness programs have their uses but I think more people consider them than should. Among other things, it's difficult to know with certainty that one will stay in a practice that qualifies for any length of time, and I can think of few things more miserable than feeling forced to stay in a job one hates because he/she has 4.5 more years of REPAYE or whatever to complete.

You really need to sit down and write out an exhaustive budget and loan repayment plan. Speaking from experience, it's easy to consider the debt as an abstraction, which is a really bad idea. If your current loan forgiveness plan makes sense, great. If not, you should refinance ASAP, and start hammering the car loans.
I absolutely agree. Think about this; you are 29, heavily educated,making 50K for the next 4-5 years (less fed and state tax), when you finish you are 33 or 34. With that huge debt, a forgiveness program with work requirements may commit the rest of your 30's to work in a situation you may not like, which may not pay as well as you could otherwise. You need to know every detail of the forgiveness program, ie is it real, is there a work/location requirement, for how many years, or can you take any job and get a forgiveness schedule? The latter seems unlikely, most forgiveness programs have a catch.

When you get your neurology residency done, you will be at an age where you need the freedom to work where you want, and if the forgiveness program is going to stop that, you need to rethink and possibly refinance it, and start cutting the debt as much as you can. Go read the Dave Ramsey program, he will I think in this case help, his method works.

Topic Author
boomie53
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Re: 29 yo resident doc married need personal finance/investing advice

Post by boomie53 » Tue Jan 15, 2019 2:48 pm

Sandi_k wrote:
Tue Jan 15, 2019 12:22 am
boomie53 wrote:
Mon Jan 14, 2019 11:55 pm
@flyer That’s a good point, I should have specified that average expense of $1500 includes restaurant, groceries, alcohol and bars.. but that could still be a high amount per month
Yes, for two people, that's ridiculously high. We live in a HCOL area, and our stats for two are:

- $350 Safeway groceries (includes entertaining, BBQ meat, etc).
- $200 eating out
- $120 BevMo (wine, mixers)
- $200 Costco - all household supplies, some liquor and food, pet food

So that's $870 per month - and we live pretty lavishly in terms of food and beverages in a HCOL area.

Thank you for sharing your stats. Thinking about this overnight, I agree with you that it is high, and I need to make changes in my budget.

Topic Author
boomie53
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Re: 29 yo resident doc married need personal finance/investing advice

Post by boomie53 » Tue Jan 15, 2019 3:01 pm

runner540 wrote:
Tue Jan 15, 2019 7:18 am
Where are all your other expenses? (Gas for 2 cars, insurance, utilities, health insurance, etc) Do you ever travel or buy clothes? Try doing a full budget, looking back at the last 3/6 months of bank and CC statements. With a tighter budget you can pay off a lot of debt.

Check out the whitecoatinvestor site. https://www.whitecoatinvestor.com/

You're making $160k/year. (Wife just got a raise of $10k?) If I were you, I'd focus on paying off the cars and wife's loans at 6% by the end of 2019, then maxing retirement accounts next year.
Thank you @Runner540 for your recommendation to check out whitecoat, i will look into it. i (wife) got a 12% raise starting in 2019, which is what motivated me to look at all my expenses and see how I purposefully put my raise $$ in the right places.

I updated my original post with my monthly expenses, and i'll copy here. Health Insurance is deducted from my payroll already

Rent: $2745/mo
Groceries: Averaging $900
Restaurant: Averaging $300
Bars: Averaging $75
Misc. Shopping: Averaging $600
Sports & Fitness (Golf, Tennis): Averaging $400
Auto Loan Payment: $735 (for Subaru & VW)
Auto Insurance: $250
Gas: $150
Internet: $66
Mobile Phone: $50
Power Bill: $40
Utilities: $75

youngt2
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Re: 29 yo resident doc married need personal finance/investing advice

Post by youngt2 » Tue Jan 15, 2019 3:56 pm

Hi Boomie-
My wife is currently a internal med resident about to start heme/onc fellowship (only 3 more years!). We have both read most of white coat investor, it is a very good resource. I highly recommend it!

Some things to consider, although I wouldn't go as far to say it is 'advice'.

The first thing I would be interested in hearing others opinions about as well (I might make a separate post about it actually). Consider investing retirement contributions post-tax where possible. (401ks?) The reasoning for this is that your tax bracket is most likely much lower now than it will be in retirement after living the doctor salary lifestyle. So, having tax free money would be a positive during retirement when you are in a higher tax bracket. This slightly reduces the amount you can invest right now though.

Another thing to consider is filing your taxes as married filing separately. I'm not quite sure how the PAYE plan works but for my wife's repayment plan filing separately greatly reduces our monthly payment as my income is not taken into the payment equation at 100%. While your husband is in residency this can be a significant drop in payment amount since you make 2x his salary. There is a calculator to estimate payments here: https://studentaid.ed.gov/sa/repay-loan ... #estimator
And also you have to consider the cons of paying more taxes: https://thecollegeinvestor.com/17807/th ... r-or-paye/

Also consider disability insurance. May not be feasible at this point but it is something to keep in your mind. If you husband gets hurt and can't make $250k+ a year, it will be a very long road to paying off the debt. I know it is a low priority, just something to keep in mind, especially once he gets out of residency. You can only get DI for a percentage of your salary but if future doctor became unable to work and needed your care, zero income vs the debt would be crippling. In theory, some DI would help to make the minimum loan payment.

T

Thegame14
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Thegame14 » Tue Jan 15, 2019 4:05 pm

so $1,200 a month in food, $75 AT A BAR!!!!, and $400 a month for tennis.....

I have a family of 3 and we spend about a quarter of that on food. Who is going to a bar when you are married, drink at home.... $400 a MONTH FOR TENNIS, how about buy a tennis pass to your local town which is like $25 a year, per person.... Edit, I see also gold, ok get a membership at the county golf course probably $100 a year...... You are living like you are already a doctor making $300,000 a year, when you are making a lot less......

You could easily cut the groceries to $500 a month and eat well, no bar and tennis and town and that would save $1,100 a month to pay down those loans. I would pay off that small car loan to then take that payment towards the next loan.

Also car insurance is $3,000 a year, for 2 cars, I think you can do a lot better than that, we have two cars one old one newer, and we pay like $1,500 year.

other advice I would put money in tax deferred accounts, you will save 22% in taxes on that money and then you can use the money you get from your tax return from the savings and use that to pay a chunk of debt.

Also you should have an emergency fund, that is probably priority #1 what happens if you have a medical emergency?

SCb&b
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Re: 29 yo resident doc married need personal finance/investing advice

Post by SCb&b » Tue Jan 15, 2019 4:09 pm

Almost every category is too high. Kudos to you for recognizing it now. Whitecoatinvestor.com is a great resource and also has a forum with many members well-versed in PSLF who can offer advice. Your expenditures (groceries/restaurants/sports most egregiously) need to be reduced.

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Re: 29 yo resident doc married need personal finance/investing advice

Post by LadyGeek » Tue Jan 15, 2019 4:41 pm

boomie53 wrote:
Tue Jan 15, 2019 3:01 pm
I updated my original post with my monthly expenses, and i'll copy here.
Since you've updated your original post, I removed the 2nd post - which is a duplicate. (If there was any information you needed in that post, please PM me.)
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youngt2
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Re: 29 yo resident doc married need personal finance/investing advice

Post by youngt2 » Tue Jan 15, 2019 4:47 pm

Thegame14 wrote:
Tue Jan 15, 2019 4:05 pm
so $1,200 a month in food, $75 AT A BAR!!!!, and $400 a month for tennis.....

I have a family of 3 and we spend about a quarter of that on food. Who is going to a bar when you are married, drink at home.... $400 a MONTH FOR TENNIS, how about buy a tennis pass to your local town which is like $25 a year, per person.... Edit, I see also gold, ok get a membership at the county golf course probably $100 a year...... You are living like you are already a doctor making $300,000 a year, when you are making a lot less......

You could easily cut the groceries to $500 a month and eat well, no bar and tennis and town and that would save $1,100 a month to pay down those loans. I would pay off that small car loan to then take that payment towards the next loan.

Also car insurance is $3,000 a year, for 2 cars, I think you can do a lot better than that, we have two cars one old one newer, and we pay like $1,500 year.

other advice I would put money in tax deferred accounts, you will save 22% in taxes on that money and then you can use the money you get from your tax return from the savings and use that to pay a chunk of debt.

Also you should have an emergency fund, that is probably priority #1 what happens if you have a medical emergency?
Going to a bar to have a life isn't illegak and probably recommended for a stressed out surgery resident... Also no country club is $100? They are $1,000 a month around me...

Thegame14
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Re: 29 yo resident doc married need personal finance/investing advice

Post by Thegame14 » Tue Jan 15, 2019 5:04 pm

youngt2 wrote:
Tue Jan 15, 2019 4:47 pm
Thegame14 wrote:
Tue Jan 15, 2019 4:05 pm
so $1,200 a month in food, $75 AT A BAR!!!!, and $400 a month for tennis.....

I have a family of 3 and we spend about a quarter of that on food. Who is going to a bar when you are married, drink at home.... $400 a MONTH FOR TENNIS, how about buy a tennis pass to your local town which is like $25 a year, per person.... Edit, I see also gold, ok get a membership at the county golf course probably $100 a year...... You are living like you are already a doctor making $300,000 a year, when you are making a lot less......

You could easily cut the groceries to $500 a month and eat well, no bar and tennis and town and that would save $1,100 a month to pay down those loans. I would pay off that small car loan to then take that payment towards the next loan.

Also car insurance is $3,000 a year, for 2 cars, I think you can do a lot better than that, we have two cars one old one newer, and we pay like $1,500 year.

other advice I would put money in tax deferred accounts, you will save 22% in taxes on that money and then you can use the money you get from your tax return from the savings and use that to pay a chunk of debt.

Also you should have an emergency fund, that is probably priority #1 what happens if you have a medical emergency?
Going to a bar to have a life isn't illegak and probably recommended for a stressed out surgery resident... Also no country club is $100? They are $1,000 a month around me...
Yeah COUNTY Club not COUNTRY Club, like local county golf course, like average people. You are living like you are already a high paid doctor, you are not, and if you are already spending like a doctor it will only get worse when you actually are one, then it will be $80K car, and huge mortgage, and expensive clothes, etc... and that debt wont be paid for a long time, vs living like a normal person you can pay that debt off in a reasonable time.

TheMadEph
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Re: 29 yo resident doc married need personal finance/investing advice

Post by TheMadEph » Tue Jan 15, 2019 5:24 pm

I feel like every one has been a little harsh on you for your spending; I don't want to encourage you to be profligate but you got to enjoy life now too.
For example, $75 dollars at bars per month is completely fine. Like, really, really, completely fine. My wife met a lot of good friends in her residency and, guess what, a fair amount of her socializing was at bars and restaurants. So don't beat yourself up over that spending (though obviously, stay alert to minimizing excessive costs by buying on sale and being flexible with brands, happy hours, etc.)

My personal opinion is that the more important questions weren't really addressed in your post: to wit, do you guys plan/want to have kids? Are you going to keep working at this job or another if you do? Do you guys like work (generally?). Does your husband want to do academic medicine, or is he happy with a community practice and maybe doing a lot of botox injections on the side (which can be lucrative for neurologists apparently). Also, you say you want to move to Oregon, but does that mean Portland (elevated house prices) or the coast (same) or Pendleton (buy yourself a good sized ranch).

You guys are making enough money to forego public interest loan forgiveness programs and I think that the chain has expressed appropriate skepticism. There will be a catch and you don't want to mess it up. Plus flexibility in life is sometimes undervalued. A public interest loan repayment program (especially of the duration you are talking about) can really limit that flexibility. I would try and consolidate all your husbands loans (through SoFi or similar company) and try and lower the interest rate you are paying (even if you need to go with a floating rate).

I wouldnt worry about saving up for a house quite yet - sounds like you guys are a number of years away, and in any event, will be able to qualify for a doctor loan if you don't have a ton of cash at that point. I think adding to Roth investments right now should be number one priority - we may see some further declines in market (or maybe not) but certainly given your time frame you should prioritize getting money in there at reasonable valuations while you still qualify. Also, at this point in time, i don't see why your target AA is 70/30? Doctors make very good cash flow (your income is a little more at risk, in my mind) - you should go with more aggressive AA I think (100% stocks if I were you). My wife and I are 7 years older than you two, we are still at 95+% stocks (though we have about a million in fixed mortgage debt, so perhaps >100% stocks depending on how you view mortgages as reverse bonds etc.) But in any event, I would say that as a young, renting couple with no plans to move for a few years, you should be maximizing money into the market in Roth and in your separate investment accounts. I would try and max out the 403(b) for sure.

All the Dave Ramsey talk also bothers me a bit - you guys are pretty secure in job positions right (at least the resident). I wouldn't worry about an emergency fund right now if you have a checking account that you don't run close to the bone. Plus - I am going to guess that you guys might be able to turn to family for short term funds in a real emergency. If not, you could certainly get short term credit in various scenarios (even if just CC debt). I would prioritize Roth and 403(b) contributions over that.

Anyway, good luck and don't let all that nominal debt load get you down. It will be gone sooner than you know it after residency. That is the key takeaway from the white coast investor (which I am glad lots of people were pointing you to) - living like a resident AFTER you are an attending can solve a lot of financial issues in a hurry :happy :moneybag
So go have a drink with your husband :sharebeer :sharebeer :!:

NMBob
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Re: 29 yo resident doc married need personal finance/investing advice

Post by NMBob » Tue Jan 15, 2019 6:07 pm

two doctors can at some point afford to pay for some good planning. I am not saying to hire someone to be taking a cut out of your portfolio year after year, but if you can find when moving to Oregon perhaps great cfp etc to pay to draw up a plan and look at taxes, and pay for an appointment and plan perhaps from the sharpest tax lawyer, I think you two would be penny wise pound foolish to not do so. Over the years many stories from folks on how they did things or organized some things that are financially advantageous that outside most of the basic things of low cost processes discussed.

Also, you may need to talk to legal business experts if opening your own office etc. and establising your office as a business. May or may not be ways to have several LLC's or something be your company. An example would be, for legal protection, , you don't buy a golf course and put the building, land, course equipment , payrolls all under one business. Equipment is owned under an LLC. The use and management and care of the equipment under another llc. Somebody gets ran over by a mower, pretty tough to try to sue for the clubhouse and grounds when the equipment and operators and managers don't belong to the club. Probably some books somewhere by doctor/lawyers on the best way to organize medical practices.

Best wishes for both of you.

be217
Posts: 16
Joined: Tue Aug 14, 2018 11:32 am

Re: 29 yo resident doc married need personal finance/investing advice

Post by be217 » Wed Jan 16, 2019 11:25 am

TheMadEph wrote:
Tue Jan 15, 2019 5:24 pm
I feel like every one has been a little harsh on you for your spending; I don't want to encourage you to be profligate but you got to enjoy life now too.
For example, $75 dollars at bars per month is completely fine. Like, really, really, completely fine. My wife met a lot of good friends in her residency and, guess what, a fair amount of her socializing was at bars and restaurants. So don't beat yourself up over that spending (though obviously, stay alert to minimizing excessive costs by buying on sale and being flexible with brands, happy hours, etc.)

My personal opinion is that the more important questions weren't really addressed in your post: to wit, do you guys plan/want to have kids? Are you going to keep working at this job or another if you do? Do you guys like work (generally?). Does your husband want to do academic medicine, or is he happy with a community practice and maybe doing a lot of botox injections on the side (which can be lucrative for neurologists apparently). Also, you say you want to move to Oregon, but does that mean Portland (elevated house prices) or the coast (same) or Pendleton (buy yourself a good sized ranch).

You guys are making enough money to forego public interest loan forgiveness programs and I think that the chain has expressed appropriate skepticism. There will be a catch and you don't want to mess it up. Plus flexibility in life is sometimes undervalued. A public interest loan repayment program (especially of the duration you are talking about) can really limit that flexibility. I would try and consolidate all your husbands loans (through SoFi or similar company) and try and lower the interest rate you are paying (even if you need to go with a floating rate).

I wouldnt worry about saving up for a house quite yet - sounds like you guys are a number of years away, and in any event, will be able to qualify for a doctor loan if you don't have a ton of cash at that point. I think adding to Roth investments right now should be number one priority - we may see some further declines in market (or maybe not) but certainly given your time frame you should prioritize getting money in there at reasonable valuations while you still qualify. Also, at this point in time, i don't see why your target AA is 70/30? Doctors make very good cash flow (your income is a little more at risk, in my mind) - you should go with more aggressive AA I think (100% stocks if I were you). My wife and I are 7 years older than you two, we are still at 95+% stocks (though we have about a million in fixed mortgage debt, so perhaps >100% stocks depending on how you view mortgages as reverse bonds etc.) But in any event, I would say that as a young, renting couple with no plans to move for a few years, you should be maximizing money into the market in Roth and in your separate investment accounts. I would try and max out the 403(b) for sure.

All the Dave Ramsey talk also bothers me a bit - you guys are pretty secure in job positions right (at least the resident). I wouldn't worry about an emergency fund right now if you have a checking account that you don't run close to the bone. Plus - I am going to guess that you guys might be able to turn to family for short term funds in a real emergency. If not, you could certainly get short term credit in various scenarios (even if just CC debt). I would prioritize Roth and 403(b) contributions over that.

Anyway, good luck and don't let all that nominal debt load get you down. It will be gone sooner than you know it after residency. That is the key takeaway from the white coast investor (which I am glad lots of people were pointing you to) - living like a resident AFTER you are an attending can solve a lot of financial issues in a hurry :happy :moneybag
So go have a drink with your husband :sharebeer :sharebeer :!:
This is very sound advice IMO. Would cutting spending to the bone get your loans paid off faster? Yes. Would you be happy for the next, let's say, 5 years doing that? Doubtful. I've been a neurology resident. Your spouse (and you) do not want to have to pass on the exceptionally rare opportunity to de-stress a bit because it "doesn't fit the budget."

Obviously there's a happy medium and you don't need to be taking yearly Caribbean vacations either, but you get the point.

I looked a lot at loan forgiveness before opting to refinance instead. I was in an academic job at that point and the amount I was going to have forgiven was nominal (not zero, but something like 20 to 30% of the starting balance). I chose just to pay it more quickly because I didn't want to have 10 years of debt payments (I wasn't smart enough to start in residency, or fellowship). However, after a year and a half in that job, I realized academics wasn't for me and moved to a job that happened to have a significantly higher salary. It still "qualifies" for PSLF but the % of my discretionary income that I would have been required to pay would have paid the loans all the way off in 10 years anyway. All that to say that I agree with the above that there is definite value in having flexibility. Not everything (IMO) should be strictly arithmetic (same goes for the "pay debt or invest?" question).

Good luck. Residency will be past you before you know it.

Luke Duke
Posts: 804
Joined: Tue Jun 18, 2013 11:44 am
Location: Texas

Re: 29 yo resident doc married need personal finance/investing advice

Post by Luke Duke » Wed Jan 16, 2019 2:26 pm

Sandi_k wrote:
Tue Jan 15, 2019 12:22 am
boomie53 wrote:
Mon Jan 14, 2019 11:55 pm
@flyer That’s a good point, I should have specified that average expense of $1500 includes restaurant, groceries, alcohol and bars.. but that could still be a high amount per month
Yes, for two people, that's ridiculously high. We live in a HCOL area, and our stats for two are:

- $350 Safeway groceries (includes entertaining, BBQ meat, etc).
- $200 eating out
- $120 BevMo (wine, mixers)
- $200 Costco - all household supplies, some liquor and food, pet food

So that's $870 per month - and we live pretty lavishly in terms of food and beverages in a HCOL area.
No you don't. That isn't a bad thing. I don't either.

SheReadsHere719
Posts: 92
Joined: Fri Jan 06, 2017 7:28 pm

Re: 29 yo resident doc married need personal finance/investing advice

Post by SheReadsHere719 » Wed Jan 16, 2019 3:37 pm

Quick clarification: PAYE doesn’t restrict to public service like PSLF does. However, it is a 20-year repayment and a tax bill on the forgiven amount. PSLF is 10 years with no tax bill but restricted to public service for the duration. @boomie53, in your original post are you referring to PSLF?

Like youngt2, TheMadEph, and be217 have said, your priority #1 is deciding on the Med School loan repayment, and your energy should be directed at making that happen. This will inform your pre-tax retirement contributions, tax filing status, remainder for additional debt repayment, etc. The discussions around other loans and expenses are secondary to the $268K balance.

The White Coat Investor is a great place to start for making this decision.

youngt2
Posts: 30
Joined: Wed Feb 02, 2011 2:25 am

Re: 29 yo resident doc married need personal finance/investing advice

Post by youngt2 » Fri Jan 18, 2019 1:02 pm

Thegame14 wrote:
Tue Jan 15, 2019 5:04 pm


Yeah COUNTY Club not COUNTRY Club, like local county golf course, like average people. You are living like you are already a high paid doctor, you are not, and if you are already spending like a doctor it will only get worse when you actually are one, then it will be $80K car, and huge mortgage, and expensive clothes, etc... and that debt wont be paid for a long time, vs living like a normal person you can pay that debt off in a reasonable time.
haha. thanks for pointing that out! I play the $20 municipal course as well :)

Topic Author
boomie53
Posts: 6
Joined: Sun Jan 06, 2019 11:59 am

Re: 29 yo resident doc married need personal finance/investing advice

Post by boomie53 » Sun Feb 10, 2019 2:10 pm

TheMadEph wrote:
Tue Jan 15, 2019 5:24 pm
I feel like every one has been a little harsh on you for your spending; I don't want to encourage you to be profligate but you got to enjoy life now too.
For example, $75 dollars at bars per month is completely fine. Like, really, really, completely fine. My wife met a lot of good friends in her residency and, guess what, a fair amount of her socializing was at bars and restaurants. So don't beat yourself up over that spending (though obviously, stay alert to minimizing excessive costs by buying on sale and being flexible with brands, happy hours, etc.)

My personal opinion is that the more important questions weren't really addressed in your post: to wit, do you guys plan/want to have kids? Are you going to keep working at this job or another if you do? Do you guys like work (generally?). Does your husband want to do academic medicine, or is he happy with a community practice and maybe doing a lot of botox injections on the side (which can be lucrative for neurologists apparently). Also, you say you want to move to Oregon, but does that mean Portland (elevated house prices) or the coast (same) or Pendleton (buy yourself a good sized ranch).

You guys are making enough money to forego public interest loan forgiveness programs and I think that the chain has expressed appropriate skepticism. There will be a catch and you don't want to mess it up. Plus flexibility in life is sometimes undervalued. A public interest loan repayment program (especially of the duration you are talking about) can really limit that flexibility. I would try and consolidate all your husbands loans (through SoFi or similar company) and try and lower the interest rate you are paying (even if you need to go with a floating rate).

I wouldnt worry about saving up for a house quite yet - sounds like you guys are a number of years away, and in any event, will be able to qualify for a doctor loan if you don't have a ton of cash at that point. I think adding to Roth investments right now should be number one priority - we may see some further declines in market (or maybe not) but certainly given your time frame you should prioritize getting money in there at reasonable valuations while you still qualify. Also, at this point in time, i don't see why your target AA is 70/30? Doctors make very good cash flow (your income is a little more at risk, in my mind) - you should go with more aggressive AA I think (100% stocks if I were you). My wife and I are 7 years older than you two, we are still at 95+% stocks (though we have about a million in fixed mortgage debt, so perhaps >100% stocks depending on how you view mortgages as reverse bonds etc.) But in any event, I would say that as a young, renting couple with no plans to move for a few years, you should be maximizing money into the market in Roth and in your separate investment accounts. I would try and max out the 403(b) for sure.

All the Dave Ramsey talk also bothers me a bit - you guys are pretty secure in job positions right (at least the resident). I wouldn't worry about an emergency fund right now if you have a checking account that you don't run close to the bone. Plus - I am going to guess that you guys might be able to turn to family for short term funds in a real emergency. If not, you could certainly get short term credit in various scenarios (even if just CC debt). I would prioritize Roth and 403(b) contributions over that.

Anyway, good luck and don't let all that nominal debt load get you down. It will be gone sooner than you know it after residency. That is the key takeaway from the white coast investor (which I am glad lots of people were pointing you to) - living like a resident AFTER you are an attending can solve a lot of financial issues in a hurry :happy :moneybag
So go have a drink with your husband :sharebeer :sharebeer :!:
Thanks for your reply. I appreciate you sharing your thoughts, and I am definitely still going to prioritize my 403b matching and my roth.

Topic Author
boomie53
Posts: 6
Joined: Sun Jan 06, 2019 11:59 am

Re: 29 yo resident doc married need personal finance/investing advice

Post by boomie53 » Sun Feb 10, 2019 2:12 pm

SheReadsHere719 wrote:
Wed Jan 16, 2019 3:37 pm
Quick clarification: PAYE doesn’t restrict to public service like PSLF does. However, it is a 20-year repayment and a tax bill on the forgiven amount. PSLF is 10 years with no tax bill but restricted to public service for the duration. @boomie53, in your original post are you referring to PSLF?

Like youngt2, TheMadEph, and be217 have said, your priority #1 is deciding on the Med School loan repayment, and your energy should be directed at making that happen. This will inform your pre-tax retirement contributions, tax filing status, remainder for additional debt repayment, etc. The discussions around other loans and expenses are secondary to the $268K balance.

The White Coat Investor is a great place to start for making this decision.
Hi @SheReadsHere719 - in my original post, I am referring to PAYE, not PSLF. I will look into The White Coat Investor, it seems like the best next step to make these financial decisions.

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