Wisdom for a high income family

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Rajsx
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Re: Wisdom for a high income family

Post by Rajsx » Mon Dec 26, 2011 12:35 pm

Unread postby goodenyou » Mon Dec 26, 2011 11:23 am
One asset class in the asset allocation recommendations often overlooked is the asset allocation of spending. Yes, happiness derived from spending is an asset. The best advice often given is to "live below your means". That is very hard for people to conceptualize and and is subjective. For "spenders" who consider the deferred lifestyle plan an anathema only find unhappiness later in life. As many on this blog, I live in this world too. I live in the high income world, and I have watched many squander their riches. After many years of hard work and schooling, people are misguided in believing it is time to pleasure themselves (with reckless spending) without regard for the future. What they fail to realize is the future is soon, and unhappiness is around the corner. The epiphany comes around age 50 or soon after when they realize that they cannot earn at a high level indefinitely (economics change or health changes) and they have deep regret for wasting all their earning in the past. I have seen this reality in my partners and friends. They see people who have earned a lot less live a more comfortable, peaceful and gratifying lifestyle in their later years either completely or partially in retirement. Freedom from obligation is the pinnacle of success. If you adhere to these values, you have achieved the greatest investment plan one can follow. That is my wisdom for a high income family from a high income family.

+++++ 1
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reggiesimpson
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Re: Wisdom for a high income family

Post by reggiesimpson » Mon Dec 26, 2011 1:09 pm

I may be in the financial position you are trying to reach at some point...........in my early 60s and financially secure (and retired). Similarly I made a lot of money throughout my 20 plus years career but because i was quite poor (immigrant) in my earlier years i new the "difference". And that experience has never left me. As a result i saved far more than i spent during the "good" years and i can only reiterate the advice given by so many on this site regarding the need to save much more and invest cautiously. Further,I always went to work with the idea that it could end in three months. That kept the fire in the belly. The hard part is passing that on to my children.

happytrades
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Re: Wisdom for a high income family

Post by happytrades » Mon Dec 26, 2011 8:41 pm

First. Congratulations. You obviously are a smart guy who has done well. Most people on this blog are DIY type investors. But, unless you enjoy reading investment material (I do), you could do better in the long run by picking a qualified financial advisor and let him manage your finances. 90% of your return can be secured with a sensible asset allocation in low cost index funds. You are reaching the point of diminishing returns trying to get a lot of juice out of the last 10%. Spend that time finding a financial advisor whom you jell with, and then spend the freed up time either making money at something you do well or your family. Big picture: save as much as you can now. Money saved and invested now will matter more in the long run that the world's best asset allocation plan. Develop 5, 10 and 20 year plans. Then make your decisions in investments in the context of those plans. Be financially independent enough that you can look a man in the eye and tell him to go to hell.

Park
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Re: Wisdom for a high income family

Post by Park » Mon Dec 26, 2011 9:15 pm

Seriously consider getting a financial planner, unless you are willing to devote a good amount of your spare time to learning about personal finance. I am a DIY, but it took me some time to feel comfortable with it. Your post looks like it's mostly about investment management, which is the glamor area of personal finance. But other areas of personal finance, such as tax planning, estate planning and risk management (insurance) are just as important. And if you stick to indexing for investment, the other areas are more complicated and time consuming.

purduepete
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Re: Wisdom for a high income family

Post by purduepete » Mon Dec 26, 2011 9:48 pm

Here are some numbers from a spreadsheet based on Otar’s book.

Lets say your spending needs are 80K in retirement expressed in age 40 dollars
Lets say Req’d Portfolio at age 60: $2M real dollars (in age 40 dollars)
Need a portfolio Nominal @3% inflation = $3.6M at age 60

Assuming you have 450K already saved for retirement by age 40, you would need to save 44K in age 40 dollars per year.

This assumes you can generate 6% return on your investments. (3% real returns + 3% inflation).

The yield on Vanguard total bond market is 2.2% nominal. So I wonder if a 60/40 stock/bond portfolio would achieve this goal?

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HomerJ
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Re: Wisdom for a high income family

Post by HomerJ » Tue Dec 27, 2011 2:28 pm

William Million wrote:Thanks, OP, for putting out your situation. You've gotten lots of good advice, and much of it is also useful for the rest of us.

I agree with many of the others that saving more would be helpful. This discussion points out an interesting dynamic in today's world. Although it varies from region to region (based on real estate prices and other local costs), an American family reaches "affluence" at an annual income somewhere around $150,000 (in Iowa) to $250,000 (in San Francisco or New York). At that level and beyond, the family has nice home, big TV, fun vacations - not to mention the comfort of security.

However, as that entry-level affluent income doubles or triples, our quality of life does not improve that much. You can be a little more frivolous, buy a bigger house, maybe a vacation house instead of staying at the Hyatt for skiing. But for most of us, the added gratification from those additional expenses is not meaningful. Private schools for the kids are not always better than high-rated public schools. The most important things in life - family, faith, friends, nature, entertainment, charity, whatever - do not change much, and you only have so many hours in the day to enjoy these additional purchases when you're not working.

So what's the advantage of earning $600,000 versus $250,000? In my opinion, it's the security that comes from saving and investing smartly. The growing nest egg will provide security against loss of work and extreme bad fortune, and it will accelerate retirement. It's in retirement that you really have time to enjoy things like golfing all day on a Tuesday, or taking Spanish lessons for two months in Ecuador.

For that reason, I'd encourage you to save 50% of after-tax income if at all possible.
This is a great post. My example I use is, when you go from a $10 steak to a $30 steak, you can really tell the difference, but there's not much difference between a $30 steak and a $100 steak.

I agree that past a certain point, it's better to just save most of the extra money, and retire earlier (or work less, with longer breaks). There is a real peace of mind when you have a large bank balance, and low expenses. My wife will probably get laid off next year... and we don't even care. She's going to take a year off probably and it won't impact our lifestyle at all. There is real value to that.

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HomerJ
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Re: Wisdom for a high income family

Post by HomerJ » Tue Dec 27, 2011 2:29 pm

goodenyou wrote:Freedom from obligation is the pinnacle of success.
Very nicely put.

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HomerJ
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Re: Wisdom for a high income family

Post by HomerJ » Tue Dec 27, 2011 2:32 pm

happytrades wrote:First. Congratulations. You obviously are a smart guy who has done well. Most people on this blog are DIY type investors. But, unless you enjoy reading investment material (I do), you could do better in the long run by picking a qualified financial advisor and let him manage your finances. 90% of your return can be secured with a sensible asset allocation in low cost index funds.
(1) You don't need to read investment material to DIY.
(2) If 90% of your return can be secured with a simple asset allocation in low cost index funds, why hire an advisor to try an eke out that last 10%?

Default User BR
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Re: Wisdom for a high income family

Post by Default User BR » Tue Dec 27, 2011 8:03 pm

Freedom from obligation is the pinnacle of success.
You're certainly entitled to your opinion. I don't happen to agree with this. Besides that fact that impossible to be free of obligation in modern society, I wouldn't consider being debt-free but scraping by on next to nothing to be any measure of success.


Brian

MrMiyagi
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Re: Wisdom for a high income family

Post by MrMiyagi » Wed Dec 28, 2011 2:49 pm

Just out of curiousity, what line of work are you and your wife in?

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momar
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Re: Wisdom for a high income family

Post by momar » Thu Dec 29, 2011 11:35 am

Default User BR wrote:
Freedom from obligation is the pinnacle of success.
You're certainly entitled to your opinion. I don't happen to agree with this. Besides that fact that impossible to be free of obligation in modern society, I wouldn't consider being debt-free but scraping by on next to nothing to be any measure of success.


Brian
Don't you take it to mean freedom from the obligation to work to support a lifestyle you find acceptable?
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep

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goodenyou
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Re: Wisdom for a high income family

Post by goodenyou » Thu Dec 29, 2011 3:11 pm

momar wrote:
Default User BR wrote:
Freedom from obligation is the pinnacle of success.
You're certainly entitled to your opinion. I don't happen to agree with this. Besides that fact that impossible to be free of obligation in modern society, I wouldn't consider being debt-free but scraping by on next to nothing to be any measure of success.


Brian
Don't you take it to mean freedom from the obligation to work to support a lifestyle you find acceptable?
Yes. I meant the freedom from the obligation to payoff debts, of course. Simplicity of life. I possibly could have said "Choice is the pinnacle of success". It would have meant the same.

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goodenyou
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Re: Wisdom for a high income family

Post by goodenyou » Thu Dec 29, 2011 3:31 pm

Default User BR wrote:
Freedom from obligation is the pinnacle of success.
You're certainly entitled to your opinion. I don't happen to agree with this. Besides that fact that impossible to be free of obligation in modern society, I wouldn't consider being debt-free but scraping by on next to nothing to be any measure of success.


Brian
Success, like happiness, is hard to measure. Individuals who are interested in investing are often motivated by pursuit of financial freedom. With freedom comes choice. I am sure many of us here have "scraped-by" on our way to being debt-free and considered it a success at that time, but do not wish to re-live that success. I am one in that category.

volkl72
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Re: Wisdom for a high income family

Post by volkl72 » Sat Dec 31, 2011 1:26 am

thanks for all the good sensible advice; and a few i will ignore.

the overwhelming premises are basically save more and invest wisely. the investment strategies are not far removed from what i had in mind 5 years ago (reflection of this site in general). the only question is whether to hire a professional. i found out that a friend of ours has a financial planner who not only helps out with investment ideas but also suggests an overall budget. so will probably explore that option who may provide some much needed discipline.

we are both MDs (me: surgical subspecialty, wifey: part time primary care) living in the SF bay area (since a lot of you asked). so despite what the numbers indicate, we are, at least in our area, "average". probably would get slammed if i had said middle class, but it is unbelievable how much wealth there is around here.
we chose the location and the type of practices because we want a balanced lifestyle. I like to spend time with my kids before they turn into teens full of angst. i could work more or elsewhere for a lot more money but i told myself long ago not to chase the $.
i also want some balance, ie enjoy life now and not be driving a ferrari when i am 80. i also don't want to live in "forced frugality" when i retire.

part of the reason we live the way we do is probably because we never really had any financial burdens, now or growing up; have to blame the parents on that. frankly i am more concerned about what kind of values we instill in our kids than our retirement. yeah yeah, lead by example right?

overall, i am not worried about my finances, yet. but do need to get back on track. i actually think that the last 5 years of economic downturn may be beneficial for my overall financial health/mentality.

reggiesimpson
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Re: Wisdom for a high income family

Post by reggiesimpson » Mon Jan 02, 2012 11:48 am

Have to agree with everything you just wrote. It was a joy to read and i am sure your parents are very happy for your success and the balance you have chosen. I am in your parents age category so forgive me for bringing up something that is from left field. You mentioned that you grew up without financial burden. A worthy goal of concerned parents (especially if they didnt grow up in a similar environment). Shortly before my own parents died i did a film history of them and asked them many questions about their life before me (yes they did exist much to my surprise!). At the end of all the filming my Father thanked me. I was a little confused but i slowly came to realize why he said it.

letsgobobby
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Re: Wisdom for a high income family

Post by letsgobobby » Mon Jan 02, 2012 1:34 pm

we are also struggling with how to raise our kids with the values we were raised with. We were both solidly middle/working class growing up. My dad is now a physician but didn't finish residency until I was in middle school, so I grew up in a very non-affluent way. My wife's parents were a machinist and a postal carrier, both war refugee immigrants. But my wife and I built on the values our 4 parents gave us and now we have accumulated quite a bit more financially at an earlier age than our parents did. We worry a lot about the messages we send our kids - having a 'gardener' and a 'housekeeper' and a 'nanny' is really 'not us' and yet, there they are. I grew up with no TV and yet now we have a 65 inch flat screen. I took a few vacations growing up, but as a family we now travel first class (for free - elite status) sometimes. All these confusing messages for young children, and how do you keep them from becoming spoiled?

Would appreciate any words of wisdom.

livesoft
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Re: Wisdom for a high income family

Post by livesoft » Mon Jan 02, 2012 2:10 pm

letsgobobby wrote:.... All these confusing messages for young children, and how do you keep them from becoming spoiled?

Would appreciate any words of wisdom.
Do you get your kids (and yourselves) to do volunteer work where they come in contact with people and families from different socioeconomic platforms? This is essentially the classic way to get some of these values instilled. Sure, most kids won't volunteer on their own, so you set an example and volunteer together, then eventually force them to volunteer on their own. Hopefully, they will not need to be forced if they "get it".
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reggiesimpson
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Re: Wisdom for a high income family

Post by reggiesimpson » Mon Jan 02, 2012 2:12 pm

Its a life long concern of mine. My children are in their early 20s and working on various educational degrees. So thats good. But my definition of working hard comes with a lot of motivation behind it (not exactly rocket science eh?). I keep reflecting on my own early life and as an immigrant i know i cannot reproduce that singular motivating experience for my children. The "pain of poverty" so to speak so i have to deal with the here and now.
As your children are young you have a wonderful opportunity to guide them. And you should take full advantage of your power and influence. In a positive way of course. But what is that way? Start small and light but be consistent. Both you and your wife have to be on the same page so you may want to iron out any differences right there or it gets confusing for the children (and you two will be fighting unnecessarily). Discipline is very important. Discipline,by the way, should not be interpreted as punishment. I find women have the wrong concept of its true meaning. Its orderly thinking and children like an environment of order not disorder. Organization not disorganization if you will. They are less confused when they know what the rules are and what is expected of them. Give them chores and rewards that are age appropriate. It does wonders for the organization of their minds. There is no harm in showing (and using ) examples of people around you if you have respect for how they operate. This brings to mind two sources i found quite interesting. A book regarding The Tiger Mom (cant remember the exact title but it raised hackles when it came out a year or two ago) and its follow up articles in the N.Y.Times and elsewhere. Of lesser fame is a book about an immigrant Korean family and the raising of their daughters.....Top of the Class. It shows you what you can accomplish by getting over the American families "fear" of discipline. Were these books my "bibles" ......no. I am just giving you some samples of sources. You have wonderful examples in your own families. Get the grandparents to tell your children their own stories. They will all love it. A few areas that should not be overlooked. Goal setting (even for the little ones), "to do" lists help a lot as they get older. This does not have to as onerous as it sounds.
Further i strongly recommend avoiding any contact sport. Its mostly ego driven and can be very damaging to their health. Sports are exercise specific. So just stick to plain old exercise. Make exercise and a decent diet a mainstay of their life. They will thank you later on by living longer..... reggie

reggiesimpson
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Re: Wisdom for a high income family

Post by reggiesimpson » Mon Jan 02, 2012 2:24 pm

Regarding values? I dont think you are going to turn on any light bulbs in your children by doing volunteer work. Typically being exposed to underprivileged whomever helps you see the other side so to speak but the values come from Mom and Dad and Grandparents very early in the childrens life. Your everyday actions in the home carry far more weight by the time they do any volunteer work. I'm not saying dont do it just dont expect "values" to be born out of it. Volunteering is not a stop gap measure to create values. Sorry, just my gut.

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Re: Wisdom for a high income family

Post by hicabob » Mon Jan 02, 2012 2:49 pm

volkl72 wrote:thanks for all the good sensible advice; and a few i will ignore.

the overwhelming premises are basically save more and invest wisely. the investment strategies are not far removed from what i had in mind 5 years ago (reflection of this site in general). the only question is whether to hire a professional. i found out that a friend of ours has a financial planner who not only helps out with investment ideas but also suggests an overall budget. so will probably explore that option who may provide some much needed discipline.

we are both MDs (me: surgical subspecialty, wifey: part time primary care) living in the SF bay area (since a lot of you asked). so despite what the numbers indicate, we are, at least in our area, "average". probably would get slammed if i had said middle class, but it is unbelievable how much wealth there is around here.
we chose the location and the type of practices because we want a balanced lifestyle. I like to spend time with my kids before they turn into teens full of angst. i could work more or elsewhere for a lot more money but i told myself long ago not to chase the $.
i also want some balance, ie enjoy life now and not be driving a ferrari when i am 80. i also don't want to live in "forced frugality" when i retire.

part of the reason we live the way we do is probably because we never really had any financial burdens, now or growing up; have to blame the parents on that. frankly i am more concerned about what kind of values we instill in our kids than our retirement. yeah yeah, lead by example right?

overall, i am not worried about my finances, yet. but do need to get back on track. i actually think that the last 5 years of economic downturn may be beneficial for my overall financial health/mentality.

I feel your pain - living in the bay area making a mill a year really is only upper middle class - it seems the nice thing about being a doc is that the income is pretty much guaranteed (unless you start using the patients drugs or similiar). Some of us tech types may have higher incomes but they can disappear as quickly as they started - so I save 65% net

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Re: Wisdom for a high income family

Post by White Coat Investor » Mon Jan 02, 2012 4:28 pm

Whoa...lots of not so nice comments.

Keep in mind that people making $40K can say the same things to people making $100K. People making $600K need financial advice just as much as those making 1/10th the amount, sometimes more.

Read read read. Carve out 20-30% of your income to be saved TOWARD RETIREMENT not a house, or a car, or a vacation, or kid's college.

Figure out what tax-protection accounts you're eligible for and max them out. You should have some type of 401K/solo 401K for each of you into which you can plow $50K each. You should also both fund a backdoor Roth. http://whitecoatinvestor.com/retirement ... -roth-ira/

An HSA is probably a good idea, as are 529s for any kids. After that, look into paying down debt or investing in a taxable account.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

volkl72
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Re: Wisdom for a high income family

Post by volkl72 » Tue Jan 03, 2012 1:06 am

letsgobobby wrote:we are also struggling with how to raise our kids with the values we were raised with. We were both solidly middle/working class growing up. My dad is now a physician but didn't finish residency until I was in middle school, so I grew up in a very non-affluent way. My wife's parents were a machinist and a postal carrier, both war refugee immigrants. But my wife and I built on the values our 4 parents gave us and now we have accumulated quite a bit more financially at an earlier age than our parents did. We worry a lot about the messages we send our kids - having a 'gardener' and a 'housekeeper' and a 'nanny' is really 'not us' and yet, there they are. I grew up with no TV and yet now we have a 65 inch flat screen. I took a few vacations growing up, but as a family we now travel first class (for free - elite status) sometimes. All these confusing messages for young children, and how do you keep them from becoming spoiled?

Would appreciate any words of wisdom.
yes, this is far higher on my priority list than my finances. although, i really don't have any words of wisdom for you.
i would really hate to raise two kids who expect all of these luxuries and become entitled. so i, too, am fearful in providing the lifestyle you describe.
i do plan to volunteer in various "3rd world" countries like nepal and nicaragua as soon as my kids are capable of making such trips. at least it should provide some exposure.
we have always planned some volunteering locally as well, just haven't acted upon them.
if not, i will just have to slapped the entitlement out of them!!!

volkl72
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Re: Wisdom for a high income family

Post by volkl72 » Tue Jan 03, 2012 1:09 am

I feel your pain - living in the bay area making a mill a year really is only upper middle class - it seems the nice thing about being a doc is that the income is pretty much guaranteed (unless you start using the patients drugs or similiar). Some of us tech types may have higher incomes but they can disappear as quickly as they started - so I save 65% net[/quote]

thanks for the confirmation. the perspective is a bit skewed living in the bay area.

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momar
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Re: Wisdom for a high income family

Post by momar » Tue Jan 03, 2012 1:21 am

volkl72 wrote:
I feel your pain - living in the bay area making a mill a year really is only upper middle class - it seems the nice thing about being a doc is that the income is pretty much guaranteed (unless you start using the patients drugs or similiar). Some of us tech types may have higher incomes but they can disappear as quickly as they started - so I save 65% net
thanks for the confirmation. the perspective is a bit skewed living in the bay area.
I'll say.

There are lots of wealthy people in the Bay Area. Just because some have more than you doesn't mean you are merely average or upper middle class. A million dollar income puts you in the top 0.3% of earners in the United States. If that qualifies you as either average or part of the upper middle class, I would wonder exactly who the wealthy are.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep

volkl72
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Re: Wisdom for a high income family

Post by volkl72 » Tue Jan 03, 2012 1:24 am

EmergDoc wrote:Whoa...lots of not so nice comments.

Keep in mind that people making $40K can say the same things to people making $100K. People making $600K need financial advice just as much as those making 1/10th the amount, sometimes more.

Read read read. Carve out 20-30% of your income to be saved TOWARD RETIREMENT not a house, or a car, or a vacation, or kid's college.

Figure out what tax-protection accounts you're eligible for and max them out. You should have some type of 401K/solo 401K for each of you into which you can plow $50K each. You should also both fund a backdoor Roth. http://whitecoatinvestor.com/retirement ... -roth-ira/

An HSA is probably a good idea, as are 529s for any kids. After that, look into paying down debt or investing in a taxable account.

your whitecoat site is now in my bookmark, so i will be exploring it a bit.
thanks.

at the same time, i will be speaking with the financial adviser who my friend hired. apparently she keeps them in line and they have been able to "save a lot of money".
i guess i am more of a big picture type. someone had suggested in keeping track of everything and be aware of where each dollar goes by the end of the year. honestly, i just don't think i am capable of that. in fact, as all the numbers roll in at the end of the year, we actually make a good amount more than i thought.

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Re: Wisdom for a high income family

Post by goodenyou » Tue Jan 03, 2012 2:38 pm

hicabob wrote:
volkl72 wrote:thanks for all the good sensible advice; and a few i will ignore.

the overwhelming premises are basically save more and invest wisely. the investment strategies are not far removed from what i had in mind 5 years ago (reflection of this site in general). the only question is whether to hire a professional. i found out that a friend of ours has a financial planner who not only helps out with investment ideas but also suggests an overall budget. so will probably explore that option who may provide some much needed discipline.

we are both MDs (me: surgical subspecialty, wifey: part time primary care) living in the SF bay area (since a lot of you asked). so despite what the numbers indicate, we are, at least in our area, "average". probably would get slammed if i had said middle class, but it is unbelievable how much wealth there is around here.
we chose the location and the type of practices because we want a balanced lifestyle. I like to spend time with my kids before they turn into teens full of angst. i could work more or elsewhere for a lot more money but i told myself long ago not to chase the $.
i also want some balance, ie enjoy life now and not be driving a ferrari when i am 80. i also don't want to live in "forced frugality" when i retire.

part of the reason we live the way we do is probably because we never really had any financial burdens, now or growing up; have to blame the parents on that. frankly i am more concerned about what kind of values we instill in our kids than our retirement. yeah yeah, lead by example right?

overall, i am not worried about my finances, yet. but do need to get back on track. i actually think that the last 5 years of economic downturn may be beneficial for my overall financial health/mentality.

I feel your pain - living in the bay area making a mill a year really is only upper middle class -it seems the nice thing about being a doc is that the income is pretty much guaranteed (unless you start using t he patients drugs or similiar). Some of us tech types may have higher incomes but they can disappear as quickly as they started - so I save 65% net
Be very careful about that assumption. There are many doctors who would not agree. Many are closing their doors, especially doctors relying on government health care (Medicare and Medicaid). The economic outlook for medicine is poor. That is certain. Doctors' reimbursement goes down every year, and so do margins. Your only hope to make the same or more is to work harder; this is only possible if you are in a growing market with few doctors and you don't get old.

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Re: Wisdom for a high income family

Post by goodenyou » Thu Jan 05, 2012 2:18 pm

goodenyou wrote:
hicabob wrote:
volkl72 wrote:thanks for all the good sensible advice; and a few i will ignore.

the overwhelming premises are basically save more and invest wisely. the investment strategies are not far removed from what i had in mind 5 years ago (reflection of this site in general). the only question is whether to hire a professional. i found out that a friend of ours has a financial planner who not only helps out with investment ideas but also suggests an overall budget. so will probably explore that option who may provide some much needed discipline.

we are both MDs (me: surgical subspecialty, wifey: part time primary care) living in the SF bay area (since a lot of you asked). so despite what the numbers indicate, we are, at least in our area, "average". probably would get slammed if i had said middle class, but it is unbelievable how much wealth there is around here.
we chose the location and the type of practices because we want a balanced lifestyle. I like to spend time with my kids before they turn into teens full of angst. i could work more or elsewhere for a lot more money but i told myself long ago not to chase the $.
i also want some balance, ie enjoy life now and not be driving a ferrari when i am 80. i also don't want to live in "forced frugality" when i retire.

part of the reason we live the way we do is probably because we never really had any financial burdens, now or growing up; have to blame the parents on that. frankly i am more concerned about what kind of values we instill in our kids than our retirement. yeah yeah, lead by example right?

overall, i am not worried about my finances, yet. but do need to get back on track. i actually think that the last 5 years of economic downturn may be beneficial for my overall financial health/mentality.

I feel your pain - living in the bay area making a mill a year really is only upper middle class -it seems the nice thing about being a doc is that the income is pretty much guaranteed (unless you start using t he patients drugs or similiar). Some of us tech types may have higher incomes but they can disappear as quickly as they started - so I save 65% net
Be very careful about that assumption. There are many doctors who would not agree. Many are closing their doors, especially doctors relying on government health care (Medicare and Medicaid). The economic outlook for medicine is poor. That is certain. Doctors' reimbursement goes down every year, and so do margins. Your only hope to make the same or more is to work harder; this is only possible if you are in a growing market with few doctors and you don't get old.
How timely...from today

Doctors Going Broke
http://money.cnn.com/2012/01/05/smallbu ... /index.htm

vested1
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Re: Wisdom for a high income family

Post by vested1 » Thu Jan 05, 2012 6:16 pm

[quote]letsgobobby wrote:
we are also struggling with how to raise our kids with the values we were raised with. We were both solidly middle/working class growing up. My dad is now a physician but didn't finish residency until I was in middle school, so I grew up in a very non-affluent way. My wife's parents were a machinist and a postal carrier, both war refugee immigrants. But my wife and I built on the values our 4 parents gave us and now we have accumulated quite a bit more financially at an earlier age than our parents did. We worry a lot about the messages we send our kids - having a 'gardener' and a 'housekeeper' and a 'nanny' is really 'not us' and yet, there they are. I grew up with no TV and yet now we have a 65 inch flat screen. I took a few vacations growing up, but as a family we now travel first class (for free - elite status) sometimes. All these confusing messages for young children, and how do you keep them from becoming spoiled?

Would appreciate any words of wisdom.

OP wrote,
yes, this is far higher on my priority list than my finances. although, i really don't have any words of wisdom for you.
i would really hate to raise two kids who expect all of these luxuries and become entitled. so i, too, am fearful in providing the lifestyle you describe.
i do plan to volunteer in various "3rd world" countries like nepal and nicaragua as soon as my kids are capable of making such trips. at least it should provide some exposure.
we have always planned some volunteering locally as well, just haven't acted upon them.
if not, i will just have to slapped the entitlement out of them!!!
volkl72

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/quote]

My advice would be to keep your childrens focus away from any inheritence you plan to leave them, and instill in them that a gift is simply that. Resist the urge to use the carrot and stick approach. Don't favor one over the other and don't compare them in their presence. Let them know that you love them and show them through your example how strong ethical values should be foremost in their lives. Above all else teach consideration.

reggiesimpson
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Re: Wisdom for a high income family

Post by reggiesimpson » Thu Jan 05, 2012 9:50 pm

vested1
Agreed with everything you said. . Especially on the inheritance front. A GST (generation skipping trust) is a nice tool along with a SLAT ( spousal limited access trust) for 2012. Hey........you never know!

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Blue
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Re: Wisdom for a high income family

Post by Blue » Thu Jan 05, 2012 10:10 pm

rrosenkoetter wrote:
goodenyou wrote:Freedom from obligation is the pinnacle of success.
Very nicely put.

This is an interesting lense through which to view the world.

Success for me has always involved multiple endpoints involving personal, family, professional, religious and wealth goals; I'm not inclined to believe their is a solitary "pinnacle" of success for most people. If there is a single pinnacle of success, I am not sure freedom from obligation is it?

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goodenyou
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Re: Wisdom for a high income family

Post by goodenyou » Fri Jan 06, 2012 12:30 am

Blue wrote:
rrosenkoetter wrote:
goodenyou wrote:Freedom from obligation is the pinnacle of success.
Very nicely put.

This is an interesting lense through which to view the world.

Success for me has always involved multiple endpoints involving personal, family, professional, religious and wealth goals; I'm not inclined to believe their is a solitary "pinnacle" of success for most people. If there is a single pinnacle of success, I am not sure freedom from obligation is it?
There seems to be a strong desire to take this comment out of context. I get it. It allows one to wax philosophical about the meaning of obligation, success, life, etc. If you read my posts (and follow-ups), I have specifically reiterated that is was in the context of freedom from FINANCIAL obligation and FINANCIAL SUCCESS. To have choice, and not have the burden of DEBT. After all, this is a financial forum. I am delighted that people feel compelled to chime in with philosophy, but the comment was not intended to go there.

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Blue
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Re: Wisdom for a high income family

Post by Blue » Fri Jan 06, 2012 5:34 am

goodenyou wrote:
Blue wrote:
rrosenkoetter wrote:
goodenyou wrote:Freedom from obligation is the pinnacle of success.
Very nicely put.

This is an interesting lense through which to view the world.

Success for me has always involved multiple endpoints involving personal, family, professional, religious and wealth goals; I'm not inclined to believe their is a solitary "pinnacle" of success for most people. If there is a single pinnacle of success, I am not sure freedom from obligation is it?
There seems to be a strong desire to take this comment out of context. I get it. It allows one to wax philosophical about the meaning of obligation, success, life, etc. If you read my posts (and follow-ups), I have specifically reiterated that is was in the context of freedom from FINANCIAL obligation and FINANCIAL SUCCESS. To have choice, and not have the burden of DEBT. After all, this is a financial forum. I am delighted that people feel compelled to chime in with philosophy, but the comment was not intended to go there.
I think your comment in many ways captures the core of the question.

At high/very high incomes, what point is it worth trading the ability to be financially independent earlier for things like a nicer home, more time off from work with family, a vacation home, personal luxury expenditures that provide enjoyment/satisfaction, etc. For most of us, life is probably shades of gray between the two extremes.

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