35 yr-old doc needs some wisdom

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madman19
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35 yr-old doc needs some wisdom

Post by madman19 » Sun Nov 16, 2014 11:55 am

Hi everyone.

I've been lurking here anonymously for a few months and have learned a tremendous amount from everyone. I am a new physician who last year read The Bogleheads' Guide to Investing, and have since converted to the Boglehead way.

Prior to my conversion, I lived beyond my means in medical school and residency. I also foolishly bought a house with 0% down in residency (doctor loan!) and had to write a check for 1/3 of the purchase price to get out of it. Because of these mistakes, in addition to delayed earning due to being in training, I feel way behind. However, I know I have a big shovel and my trajectory has been steeply upward during my first 15 months in practice - my net worth is less negative by $180k since starting practice according to Mint.com. I would very much appreciate your advice and recommendations on how I am doing and how I should move forward. Here goes...

E-fund: 1 month of expenses (I know)
Debt: $163k of student loans at 3.5%, $12k credit card at 0% until May 2015, luxury car lease $700 which is up in July 2015
Tax filing status: Single
Income: $350k (MA for state taxes)

Current portfolio: Around $42k

Breakdown:
tIRA: VTSAX $12k ($5.5k are 2014 contributions which will be converted to Roth by the end of the year. The rest will be rolled into my company 401k prior to 12/31/14 to avoid pro rata.)
Roth IRA: VGTSX $7.7k, VBMFX $3.5k, T. Rowe Price Retirement 2055 Fund $2.6k
HSA: VTSMX $5k
401k: VFINX $8.8k, VSMAX $2.2k

2014 Annual contributions:
401K 17.5k
Backdoor Roth: $5.5
HSA: $3.3k

I have high-quality disability insurance that was obtained in residency. I have no life insurance as I think my dog would be fine without me.

Questions:
1. How am I doing?
2. How can I meet my goals?
- I love my job. My happiest moments are often with patients. However I'd love to be in practice because I want to, not because I have to. I can see myself cutting back to 1/2 time at some point in order to enjoy other hobbies.
- My parents are amazing and spent all their money on the family to help us succeed. It is important for me to be prepared to help them in retirement, for which they are woefully unprepared. Should I consider getting life insurance to benefit my parents?
- At some point I would like to get married and have a family. Should I save for a wedding, house, kids, etc.?
3. I will be eligible for a Profit Sharing Plan in 2015. I have researched this and understand this means I can contribute up to $50k+ however I have not nailed down if this contribution is tax-deductible. If not, I would pay extra on student loans before contributing. If tax-deductible, I don't know - should I do PSP or student loans?
4. Older, wiser docs out there - what counsel can you give me as someone starting out?

Thank you for reading and for your help Bogleheads! Also, most of the smart stuff I've done financially is due to stumbling upon whitecoatinvestor.com. Thank you WCI.

madman

ResearchMed
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Re: 35 yr-old doc needs some wisdom

Post by ResearchMed » Sun Nov 16, 2014 12:06 pm

You wrote: " - At some point I would like to get married and have a family. Should I save for a wedding, house, kids, etc.? "
And that's in addition to your concern about your parents and helping with their retirement, given they spent on you, etc.

You should SERIOUSLY consider getting life insurance "for that future family" while you are young and healthy, especially the healthy part.
IF you develop some health complication before getting that insurance, you will find that either it is impossible to get, or terribly expensive.

Others can chime in more here, about terms, laddered term insurance (although you probably don't currently want much in the way of a very short term coverage, UNLESS it is your parents you are concerned about in this context).

The older/sicker you are, the more expensive life insurance becomes, assuming you can get it at all.

RM
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JDCarpenter
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Re: 35 yr-old doc needs some wisdom

Post by JDCarpenter » Sun Nov 16, 2014 12:22 pm

madman19 wrote:Hi everyone.

....
Debt: $163k of student loans at 3.5%, $12k credit card at 0% until May 2015, luxury car lease $700 which is up in July 2015
Tax filing status: Single
Income: $350k (MA for state taxes)

Current portfolio: Around $42k
....

Questions:

3. I will be eligible for a Profit Sharing Plan in 2015. I have researched this and understand this means I can contribute up to $50k+ however I have not nailed down if this contribution is tax-deductible. If not, I would pay extra on student loans before contributing. If tax-deductible, I don't know - should I do PSP or student loans?
4. Older, wiser docs out there - what counsel can you give me as someone starting out?

....

madman


EDIT: BTW, Fantastic job in the last 15 months. :sharebeer That is very impressive start to your financial career.

Your student loans are only 3.5%, your tax rate is painful, and you have 42,000 in portfolio. The profit sharing plan (which will be pretax money unless your employer was woefully advised) is a GREAT option for you.

DW is doc, almost 20 years older than you and she makes roughly the same as you. We expect three more years of work for both of us before retiring. She has done 401k and profit sharing since 1990, and nothing more aggressive for tax advantaged savings (mid-career move with large tail obligation, 3 kids, private schools and colleges....). We are hanging onto our jobs so that we can do a lot of high end travel after careers, but her IRAs/401k alone would suffice to allow us to live fairly nicely for 45 years in retirement (her ancestors just refuse to die or slow down...). You will never be able to revisit the opportunity to squirrel that money away, and your tax bracket makes it a no brainer, in my opinion.

As for counsel: "Luxury car lease." Ack! I drive a Fit, DW drives a Civic. Once, we bought a nice minivan to haul the kids, but otherwise, her PAs and Nurses have always tended to drive more expensive cars than we do--and our "new minivan" finally died after 350,000 miles. Some friends like their luxury cars, but you should weigh the cost versus the enjoyment.
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goodenyou
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Re: 35 yr-old doc needs some wisdom

Post by goodenyou » Sun Nov 16, 2014 12:26 pm

Make sure you get rid of the credit card debt by May 2015

Pay of your student loans. Don't worry about investing. You will develop a habit of good sound financial discipline that is infinitely more important. If you LBYM, and you have excess cash flow, max out all tax-advantage spaces. It is not dire. You are young. Don't try to reach for yield by making stupid doctor mistakes.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

ResearchMed
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Re: 35 yr-old doc needs some wisdom

Post by ResearchMed » Sun Nov 16, 2014 12:30 pm

EDIT: JDCapenter beat me to this: By the way, congratulations on paying down that $180k in loans in, what, 15 months?

Now, if you can continue that trajectory by "doing more of the same", and then start squirrelling away a goodly portion of that, you'll be "caught up" and moving ahead in no time.

Saving a "goodly portion" should also allow you enough for extra expenses for that family :happy
And all the better if your income increases, but you are already doing well, right out of the starting gate. (Is this stable?)

You've made a tremendous turnaround, it seems, so keep focusing on what you are now doing "right".

RM
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madman19
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Sun Nov 16, 2014 5:44 pm

JDCarpenter wrote:
madman19 wrote:Hi everyone.

....
Debt: $163k of student loans at 3.5%, $12k credit card at 0% until May 2015, luxury car lease $700 which is up in July 2015
Tax filing status: Single
Income: $350k (MA for state taxes)

Current portfolio: Around $42k
....

Questions:

3. I will be eligible for a Profit Sharing Plan in 2015. I have researched this and understand this means I can contribute up to $50k+ however I have not nailed down if this contribution is tax-deductible. If not, I would pay extra on student loans before contributing. If tax-deductible, I don't know - should I do PSP or student loans?
4. Older, wiser docs out there - what counsel can you give me as someone starting out?

....

madman


EDIT: BTW, Fantastic job in the last 15 months. :sharebeer That is very impressive start to your financial career.

Your student loans are only 3.5%, your tax rate is painful, and you have 42,000 in portfolio. The profit sharing plan (which will be pretax money unless your employer was woefully advised) is a GREAT option for you.

DW is doc, almost 20 years older than you and she makes roughly the same as you. We expect three more years of work for both of us before retiring. She has done 401k and profit sharing since 1990, and nothing more aggressive for tax advantaged savings (mid-career move with large tail obligation, 3 kids, private schools and colleges....). We are hanging onto our jobs so that we can do a lot of high end travel after careers, but her IRAs/401k alone would suffice to allow us to live fairly nicely for 45 years in retirement (her ancestors just refuse to die or slow down...). You will never be able to revisit the opportunity to squirrel that money away, and your tax bracket makes it a no brainer, in my opinion.

As for counsel: "Luxury car lease." Ack! I drive a Fit, DW drives a Civic. Once, we bought a nice minivan to haul the kids, but otherwise, her PAs and Nurses have always tended to drive more expensive cars than we do--and our "new minivan" finally died after 350,000 miles. Some friends like their luxury cars, but you should weigh the cost versus the enjoyment.


Thanks JDCarpenter,

OK so my employer's profit sharing plan is most likely pre-tax? This is a big question for me - no one in my group has explained it plainly!

My luxury car lease was a mistake. My next car will be a new Toyota, hopefully with 0% financing.

MM

mhalley
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Re: 35 yr-old doc needs some wisdom

Post by mhalley » Sun Nov 16, 2014 5:53 pm

I think you are doing ok for a new doc. Cudos for the debt reduction. You fell into the same trap that most new docs do, after years of delayed gratification went for the new luxury car etc. I would refer you to the Whitecoat Investor Site and recommend his book.
http://whitecoatinvestor.com/
I would continue what you are doing. I don't know of I would seriously attack the student loans with only 3.5% interest, but would definitely pay extra on them. I would get your 6 month emergency fund in place. Start saving in taxable accounts, fund the Profit sharing plan when it becomes available. It IS tax deferred, just like the 401k.
You talk about the house, but I am not sure if you sold it and are now renting? Probably want to save for a down payment for a new house if that is the case.
Life insurance would be fairly cheap for you right now, but whether you NEED it or not is debatable. If you don't have any immediate plans for marriage, you could put it off for a few years until that actually happens.
Helping out your parents would primarily consist of you getting YOUR financial house in order. As long as you do well, then you will have the ability to help them out. One thing you might consider is paying for Long term care insurance for them if they do not have it.
Mike

joerh
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Re: 35 yr-old doc needs some wisdom

Post by joerh » Sun Nov 16, 2014 7:47 pm

1) Ya, you're a little behind on where you "should be," but I'm assuming you figured that out with your new perspective. Congrats on your new saving habits, and hopefully you continue down that path (for example, instead of leasing a luxury car for $700/mo, pay cash for a 3 yr old practical car). Pretend you stayed the same course you were on for the next 40-50 years. What would that look like in finance charges? That was an eye opener for me.

2) Very noble goals you have (helping parents retire, wedding, kids, etc.). My advice for those ideas would be to plan for them, but don't take action on any of them till they actually happen. When I made my first post on what I should do, I was given this advice, which I believe to be very helpful. I wanted to go buy another house in a better school zone so when me and my soon-to-be wife had kids, we would be in the right spot. I was putting the cart before the horse. But things happen. I've already switched companies since then, and we're not sure about what the wife will do after we do have kids (affecting where we will want to live). There are too many uncertainties, so the risk is too great. That's the advice I would give you if you're thinking about life insurance without having dependents, trying to help your parents retiring without having the means to do it (yet), planning saving for a wedding without an EF, saving for college without having kids yet, etc.

3) With your income, you've got a lot of options. If I were you, I'd continue to max out the retirement accounts that are tax advantaged (don't miss out on these opportunities, they are limited) and then start dropping a bunch of cash into my savings account. You need to do this to get your EF where it needs to be (6 months is what I keep there), another $12K to pay off your cc debt all at once next May, and another $10-12K to pay cash for your used car in July.

4) I owe my parents the same way you owe yours. I also want to help out, and if it came to it, I would. But my dad is still very able to work and make decisions for himself, so working instead of me funding his retirement makes sense. I've decided to help out with some cash to help cover necessities, help him with his financial planning to reduce cost and have an ample amount of my own savings in case some emergencies. That's where taking care of your own debt and building your savings can help them the most.

5) Paying off your student loans might take you another 2-3 years if you really went after it, while saving as listed above. I just passed that milestone, and it is awesome. But my interest rate was 3.25%, so that was a little too conservative for me to do just that. I also added to my taxable account at the same rate I paid down those loans. It took longer, but there is also something to about having a nice chunk of change that could cover most emergencies that might come up (see #4). It also will most likely put me in a better place in 20 years when I'm looking to retire. If you're considering early retirement, you're going to have to wither have a nice table account to pull from, or have some other income coming in.

staythecourse
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Re: 35 yr-old doc needs some wisdom

Post by staythecourse » Sun Nov 16, 2014 8:07 pm

Another doc here.

You are doing fine. You are done training and making a good living with no real present or near term liabilities. It is nice to worry about parents and future family, but since it doesn't seem like a pressing issue I would put it low on the list of priorities.

I would pay off the credit card and get done with the lease. Then I would just buy a dependable car for the next 5-10 yrs. (think accord or corolla). I would save up for 6 months for EF. I would consider your student loan debt at 3.5% and poor whatever money you will be using as your fixed income side in you asset allocation into that (hard to beat a guaranteed 3.5% return).

The rest is like anyone else: SAVE as much as you can and invest as much as you can.

One last point: Do NOT buy a home/ condo until you are SURE this will be a job you want to stay in. At near 4-6 months the honeymoon period will be ending and you and your employer will find out if you really like each other. I see way too many folks buying without thinking what they will do if they aren't happy.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Lafder
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Re: 35 yr-old doc needs some wisdom

Post by Lafder » Sun Nov 16, 2014 10:00 pm

Congrats on finding bogleheads, and finishing your training, and for enjoying your work!!!

The biggest wisdom I can try to tell you is to live beneath your means until you pay off your debt, longer if you can stand it. Try to be satisfied knowing you CAN buy the luxury car. Then buy a safe practical car and pay off your debt and build your savings.

I understand the thinking that you have worked hard, you do make a lot of money, you deserve the luxury items.

Yes you can afford to splurge on some things. But don't lose track of the big picture.

High earning doctors are amongst the biggest spenders and worst savers. It feels like you are making so much there will be more where it came from. Your peer group will also effect you spending habits by setting the "normal" you compare to.

Check in on this site for the best finance advice.
lafder

Derby
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Re: 35 yr-old doc needs some wisdom

Post by Derby » Sun Nov 16, 2014 11:42 pm

mhalley wrote: I would refer you to the Whitecoat Investor Site and recommend his book.
http://whitecoatinvestor.com/

+1 Read. Absorb. Internalize.
Carpe Diem.

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Re: 35 yr-old doc needs some wisdom

Post by White Coat Investor » Mon Nov 17, 2014 1:40 am

1. You're doing great. Congratulations on finding the Bogleheads when you did. Try to grow into your income as slowly as possible. You want to save tons without feeling deprived. That's the key. Lately, I've been feeling a little deprived so I've been spending more. But as a physician author (not me) said, "You can start spending after your first million is in the bank."

2. It would be nice of you to buy a $1-2M 30 year level term policy. You can name your parents for now, and switch it to a spouse or child if that happens in the future. This isn't a requirement, but would be a nice way to feel like you've got your parents taken care of.

3. It's tax deductible. Limit is $53K for 2015.

4. Stop leasing cars. Stop using credit cards for credit. I'd put all my cash against that student loan AFTER maxing out all available retirement accounts.

Stop referring to it as a conversion. It isn't religious. It's just getting educated about how money works.
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

Impromptu
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Re: 35 yr-old doc needs some wisdom

Post by Impromptu » Mon Nov 17, 2014 11:01 am

I am not older, nor likely wiser, as I have been in practice for 15 months, and have many similarities to your situation.

1. How am I doing? Pretty good, considering you started from some previous mistakes. To be sure you are doing well, lay out your monthly paycheck and expenses on a spreadsheet. Cut and paste a new one each month.

2. Your goals? You want to support your parents, work 1/2 time, and get married. The basics outline is that you need to work hard early to save up enough to keep meeting these goals once you go 1/2 time.

To reach your goals you should be doing the following. 5% of each paycheck toward your 401(k), which should equal $17,500 for this year. Increase it for next year, because the 401(k) max is increasing. Profit sharing is unpredictable, but in my case is placed in my 401(k) through a safe harbor mechanism. You won't have to pay taxes on this until you withdraw it. I don't know how yours will be set up.

If you become a partner in a Service C-corporation then at the end of the year the partners will split any money left in the company as a direct payment to you. That is taxed.

On top of that, start investing $6,000/month. Once you get $18,000 in cash then start investing. Fund your back door roth IRA. Invest the rest, but not in IRAs, to make your backdoor roth easier to manage. Also, since you want to go 1/2 time eventually, don't invest in a variable universal life policy, or any other kind of whole life policies. Those ones should only be used in certain situations, young, long period of time before you need the money, and consistent high earner for 20 or so years (you will cut down your earnings when you go 1/2 time).

Have this investing automatic so that you don't even think about the money.

Live like a resident until your student loans are paid off. My barebones costs (mortgage, food, car insurance, property taxes, utilities) are <$20,000/year. Everything else goes toward life/disability insurances, investment, student loans, church tithing, and payroll taxes. If you pay $9,000/month toward your student loans you will have them paid off by June 2016. Once your debt is gone, even after investments you will have $10,000/month that you can do with as you please. Do you want to take your parents and siblings to Cancun? Sure, that will cost you a month. And you have no other obligations, so you can do whatever you want.

Get a 10 or 20 term life policy. Within 10-20 years your portfolio and savings will allow you to self insure.

Start looking for a wife now. Marriage costs around $50 for the license. With your income if you have to save up a huge amount to pay for the wedding, you likely have found a woman who is going to bleed your dry. You won't be able to meet your other goals. You can have a nice wedding for $2000-$4000. The decision on whom to marry will have a larger impact on your finances than anything else you can do, even your own personal habits, because you can control those.

If you follow this plan, you will have your student loans paid off by June 2016. Afterwhich you will have $10,000/month to do with as you please. When you go 1/2 time, this amount will decrease. That is enough to help out your parents. If you keep the investments going, even after going 1/2 time, you will have about $4 Million in your portfolio in about 25 years, plenty for retirement and self insurance.

Good luck.
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Re: 35 yr-old doc needs some wisdom

Post by lululu » Mon Nov 17, 2014 12:52 pm

I would definitely firm up your goal to help your parents. I am not sure life insurance is sufficient; suppose you are alive but a vegetable.

Also, have you made arrangements for the care of your dog if need be? Who would he live with? Money for vet bills?

I don't understand what happened with the house. That would be an entertaining story :D

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Re: 35 yr-old doc needs some wisdom

Post by jkg » Mon Nov 17, 2014 3:39 pm

I love whitcoatinvestor.com, He's got a ton of great, specific information relevant for docs. I also like the debt snowball method at whatsthecost.com. My wife and I are both docs and will be completely debt free by the time we turn 40 (36 now), mortgage to be paid off in about 20 months.

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avenger
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Re: 35 yr-old doc needs some wisdom

Post by avenger » Tue Nov 18, 2014 9:10 pm

Another doc here.

You're doing great.

Other people may direct you to other sites. This is the only one you need. You're not special/different because you're a doctor. If you bookmark and read just bogleheads (and internalize) you'll do great.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [3 fund portfolio: VTI, VXUS, SV fund (yield 3.01%)]

madman19
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Thu Nov 20, 2014 11:27 pm

ResearchMed wrote: You should SERIOUSLY consider getting life insurance "for that future family" while you are young and healthy, especially the healthy part.
IF you develop some health complication before getting that insurance, you will find that either it is impossible to get, or terribly expensive . . . The older/sicker you are, the more expensive life insurance becomes, assuming you can get it at all.


Thank you ResearchMed. I will look into some term life insurance to make sure my parents are taken care of in case I die soon. Must say I am surprised at the multiple recommendations to obtain life insurance although I do not have any true dependents.

If I died tonight, my folks would be okay. They are survivors - they would survive. And be happy. They are not counting on me for their future, but it would bring me great joy to help them out in the future.

MM

madman19
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Thu Nov 20, 2014 11:41 pm

EmergDoc wrote:1. You're doing great. Congratulations on finding the Bogleheads when you did. Try to grow into your income as slowly as possible. You want to save tons without feeling deprived. That's the key. Lately, I've been feeling a little deprived so I've been spending more. But as a physician author (not me) said, "You can start spending after your first million is in the bank."

2. It would be nice of you to buy a $1-2M 30 year level term policy. You can name your parents for now, and switch it to a spouse or child if that happens in the future. This isn't a requirement, but would be a nice way to feel like you've got your parents taken care of.

3. It's tax deductible. Limit is $53K for 2015.

4. Stop leasing cars. Stop using credit cards for credit. I'd put all my cash against that student loan AFTER maxing out all available retirement accounts.

Stop referring to it as a conversion. It isn't religious. It's just getting educated about how money works.


Thanks WCI,

I appreciate the encouraging words. I have been down on myself lately but I know I need to press on to increase my net worth.

Can you tell me more about why you have been feeling a little deprived? Is this due to your fellow docs? Every morning I drive into a doctor's parking lot full of BMWs, Audis, and a couple Porsches. Two of my close friends have $5000 watches. Is it just an issue of feeling deprived relative to your peers? Moving forward, how can I save tons without feeling deprived?

MM

TomTX
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Re: 35 yr-old doc needs some wisdom

Post by TomTX » Thu Nov 20, 2014 11:52 pm

Meh, I'm not nearly as big on the life insurance as these other folks. Disability, absolutely.

You have no real dependents - you're only thinking about theoretical future dependents.

I would

1) Live like a resident.

2) Pay the disability insurance.

3) Get the emergency fund up to 6 months

4) Fully fund tax advantaged accounts (401(k), IRA)

5) Pay off the credit card (NOTE: Must be done before interest rate kicks in)

6) Pay off student loans

7) Think about whether I really need life insurance for theoretical future wife and future kids. Only consider low-cost, fixed rate term insurance.

8) Start funding a taxable account at Vanguard, something that will be largely long-term cap gains and qualified dividends like the total stock market or S&P 500 index funds. (put your bonds in the tax advantaged accounts)

madman19
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Fri Nov 21, 2014 12:15 am

lululu wrote:I don't understand what happened with the house. That would be an entertaining story :D


I bought a house in residency. The housing market in my area subsequently crashed. I thought about being an accidental landlord but decided to sell it for a huge loss just to get out. I wrote a big check to get out. I shouldn't have bought the house.

MM

madman19
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Fri Nov 21, 2014 12:18 am

Impromptu wrote:Marriage costs around $50 for the license. With your income if you have to save up a huge amount to pay for the wedding, you likely have found a woman who is going to bleed your dry. You won't be able to meet your other goals. You can have a nice wedding for $2000-$4000. The decision on whom to marry will have a larger impact on your finances than anything else you can do, even your own personal habits, because you can control those.


+1

MM

FRx
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Re: 35 yr-old doc needs some wisdom

Post by FRx » Fri Nov 21, 2014 1:29 am

I didn't see this mentioned but definitely buy and read WCI, it's great that you are starting so early. I read this only once so far but I can tell you more things out of the WCI website than from my old Netter book. "Is that the navicular that's fractured or cuboid?" "I dunno but AVOID whole life insurance!"

here's the link, I bought it on kindle, really easy read at a cafe
http://www.amazon.com/The-White-Coat-In ... 0991433106

madman19
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Thu Nov 09, 2017 10:04 pm

Wanted to post an update for the community. I'm 3 years older, have done some things right, some things wrong, and am thankful for all the great advice I have received from this board.

Income is 400-450k, tax-filing single, and still no dependents except for the dog.

Assets: 287k
401k: 181k
HSA: 14.5k
Roth IRA: 42.4
Taxable: 29k
Stuff: 20k

Liabilities: 22k
This is a 0% credit card.

On the being naughty side, I leased a luxury car for $1000 a month. Had to get an M... the 328 wouldn't do any more. After gas and insurance I spend as much on this thing as I do on housing. On the being nice side, I loaned my parents $82k and will be fine if I they don't repay me.

This is a check-in. I want you to talk me out of leasing another luxury car, and instead buying a Honda Fit.

MM

Hi everyone.

I've been lurking here anonymously for a few months and have learned a tremendous amount from everyone. I am a new physician who last year read The Bogleheads' Guide to Investing, and have since converted to the Boglehead way.

Prior to my conversion, I lived beyond my means in medical school and residency. I also foolishly bought a house with 0% down in residency (doctor loan!) and had to write a check for 1/3 of the purchase price to get out of it. Because of these mistakes, in addition to delayed earning due to being in training, I feel way behind. However, I know I have a big shovel and my trajectory has been steeply upward during my first 15 months in practice - my net worth is less negative by $180k since starting practice according to Mint.com. I would very much appreciate your advice and recommendations on how I am doing and how I should move forward. Here goes...

E-fund: 1 month of expenses
Debt: $163k of student loans at 3.5%, $12k credit card at 0% until May 2015, luxury car lease $700 which is up in July 2015
Tax filing status: Single
Income: $350k (MA for state taxes)

Current portfolio: Around $42k

Breakdown:
tIRA: VTSAX $12k ($5.5k are 2014 contributions which will be converted to Roth by the end of the year. The rest will be rolled into my company 401k prior to 12/31/14 to avoid pro rata.)
Roth IRA: VGTSX $7.7k, VBMFX $3.5k, T. Rowe Price Retirement 2055 Fund $2.6k
HSA: VTSMX $5k
401k: VFINX $8.8k, VSMAX $2.2k

2014 Annual contributions:
401K 17.5k
Backdoor Roth: $5.5
HSA: $3.3k

I have high-quality disability insurance that was obtained in residency. I have no life insurance as I think my dog would be fine without me.

Questions:
1. How am I doing?
2. How can I meet my goals?
- I love my job. My happiest moments are often with patients. However I'd love to be in practice because I want to, not because I have to. I can see myself cutting back to 1/2 time at some point in order to enjoy other hobbies.
- My parents are amazing and spent all their money on the family to help us succeed. It is important for me to be prepared to help them in retirement, for which they are woefully unprepared. Should I consider getting life insurance to benefit my parents?
- At some point I would like to get married and have a family. Should I save for a wedding, house, kids, etc.?
3. I will be eligible for a Profit Sharing Plan in 2015. I have researched this and understand this means I can contribute up to $50k+ however I have not nailed down if this contribution is tax-deductible. If not, I would pay extra on student loans before contributing. If tax-deductible, I don't know - should I do PSP or student loans?
4. Older, wiser docs out there - what counsel can you give me as someone starting out?

Thank you for reading and for your help Bogleheads! Also, most of the smart stuff I've done financially is due to stumbling upon whitecoatinvestor.com. Thank you WCI.

madman

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Re: 35 yr-old doc needs some wisdom

Post by MedSaver » Thu Nov 09, 2017 10:33 pm

Thanks for the update. I'm similar to you 3 years ago except I'm married and she makes about $150k ($500k combined with $175k in low interest student debt). I think you're doing ok, but with that salary you probably should have more invested than you currently do, especially with the massive bull market. Is your e fund where it should be? Also, your cc debt seems really high to me. Why are you leasing? Why not just buy the car outright even if it's a luxury sport? Maybe you could invest for your parents and spin off dividends for some of their expenses.

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Re: 35 yr-old doc needs some wisdom

Post by ram » Thu Nov 09, 2017 11:26 pm

If you insist on having a luxury car, consider a Lexus. Buy it outright and keep for 10yrs. I like my LS 460.
A fellow physician.
Ram

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Re: 35 yr-old doc needs some wisdom

Post by White Coat Investor » Fri Nov 10, 2017 12:22 am

I think you've done pretty well the last 3 years. A big turn around with a net worth what, $400K+ higher?

I still wouldn't drive luxury cars at this stage nor make $82K "loans." But you could probably afford to do that stuff in a few more years as a millionaire. You're getting there.
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Re: 35 yr-old doc needs some wisdom

Post by msk » Fri Nov 10, 2017 1:58 am

OK, I would assume that your after-tax net income is circa $300k. My rules-of-thumb at any income level (worked well for me, retired at 55, now in my 70s, not an MD):

1. Save and invest 30% of after-tax income, i.e. $100k. You can include paying off principal (not interest!) on a home mortgage.
2. Never purchase a house worth more than 3x income, i.e. $900k in your case. Expensive homes come with high maintenance costs. Just because you can afford the monthly mortgage payments does not mean that you will be financially comfortable at a higher multiple. As your investment income builds up, so does that 3x equivalent, so future home upgrades are very probable.
3. Never acquire a car (either purchase or on lease) that is worth more than 6 months income. A $150k Mercedes can slip in, perhaps excessive for most, but if you are a car enthusiast... I bought one at age 37... Today I would second purchasing a Lexus. I am just about to replace my 10-year old LS460 (totally trouble-free) with the new LS500. But for an unmarried young guy perhaps the LC500 ($100k?) is more up your alley? YOLO.

Basically excellent progress to date, but always keep that para 1. above fulfilled, always. With lots of luck, your investment income may well eclipse your job income in a decade or two. Did for me :beer
Last edited by msk on Sat Nov 11, 2017 12:27 am, edited 1 time in total.

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Re: 35 yr-old doc needs some wisdom

Post by daveydoo » Fri Nov 10, 2017 2:18 am

madman19 wrote:
Thu Nov 09, 2017 10:04 pm

Income is 400-450k, tax-filing single, and still no dependents except for the dog.
...

On the being naughty side, I leased a luxury car for $1000 a month. Had to get an M... the 328 wouldn't do any more. After gas and insurance I spend as much on this thing as I do on housing. On the being nice side, I loaned my parents $82k and will be fine if I they don't repay me.
With that income, it's hard for me to be too congratulatory. Top 1% and you're managing! :D

You bought your M at least a decade too early, imo. Don't replace it with a Fit unless you get zero joy from your stop-and-go urban commute. If you want a gas hog, get a Chevy SS with the 6.2L V8 and magnetorheological dampers. Last year of production and they are giving them away for $39K (like 20% off). Nice reviews, great handlng, incognito driving. Never coveted a Chevy before (sorry, Corvette) but I can't stop thinking about this one. Priced a few M's over the years. If you're planning to go up from there, only look off-lease, imo; new German luxury cars are for suckers.

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Re: 35 yr-old doc needs some wisdom

Post by JDCarpenter » Mon Nov 13, 2017 2:29 pm

Thanks for the update, Madman! Looking good--you've got room to make some pricey choices (like the car), just continue keeping the overall picture under control. Your large income gives you nice cushion as long as you avoid the "need" to keep up with the more spendy invasive cardiologists and Orthos!

We sure didn't make all the right spending decisions during our working lives, but as I planned at the time of your first post, DW (OBG) and I (JD) retired this year at 57/56, and are in a position to greatly increase our lifestyle in retirement (Basically, now that we have time to travel....)

Once you are in the market for a replacement car, I disagree with daveydoo, as I continue to enjoy driving my Honda Fit; with a manual transmission it isn't a zero joy car, particularly given the knowledge of how little it is costing you. (Heck, I bought it new with a points credit card and never bothered to have anything other than liability insurance on it.) :beer
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Re: 35 yr-old doc needs some wisdom

Post by hightower » Mon Nov 13, 2017 11:38 pm

Great thread! Thanks for updating us on the progress. You're doing very well overall. You certainly have a thing for expensive cars. I get it. I like cars too. But, when I really started to run the math on what I'd be giving up in terms of years of extra work needed to maintain that lifestyle, I started to rethink my likes.
Have you ever calculated what you spend yearly and tried to figure out what "your number" is for retirement? For me, when I started really thinking about that number and all of the unknown variables to account for (like health insurance, changes to taxes, etc), it made me start to see the money I was spending now as a lot more valuable to my future self than I had previously thought of. I now see $1000/month on a car loan or lease as 1.1 million dollars in retirement (if I start with $0, save $1000/month for 32 years and get 6% return).
I mean, you have to enjoy your life and your money some, but make sure you're fully aware of the real cost of those dollars you're spending now. Personally, if I'm going to blow money on something, I'd prefer it to be on a life experience (travel mostly). Basically anything that will help make new, fond memories. Perhaps you need to get into racing go carts or something? They would certainly fulfill any adrenaline needs you have, lol! Would be a lot cheaper than leasing a $1000/month luxury car:) BMW-M4 coupes sure are sexy cars though.

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Re: 35 yr-old doc needs some wisdom

Post by hightower » Mon Nov 13, 2017 11:47 pm

msk wrote:
Fri Nov 10, 2017 1:58 am
OK, I would assume that your after-tax net income is circa $300k. My rules-of-thumb at any income level (worked well for me, retired at 55, now in my 70s, not an MD):

1. Save and invest 30% of after-tax income, i.e. $100k. You can include paying off principal (not interest!) on a home mortgage.
2. Never purchase a house worth more than 3x income, i.e. $900k in your case. Expensive homes come with high maintenance costs. Just because you can afford the monthly mortgage payments does not mean that you will be financially comfortable at a higher multiple. As your investment income builds up, so does that 3x equivalent, so future home upgrades are very probable.
3. Never acquire a car (either purchase or on lease) that is worth more than 6 months income. A $150k Mercedes can slip in, perhaps excessive for most, but if you are a car enthusiast... I bought one at age 37... Today I would second purchasing a Lexus. I am just about to replace my 10-year old LS460 (totally trouble-free) with the new LS500. But for an unmarried young guy perhaps the LC500 ($100k?) is more up your alley? YOLO.

Basically excellent progress to date, but always keep that para 1. above fulfilled, always. With lots of luck, your investment income may well eclipse your job income in a decade or two. Did for me :beer
I agree with your savings rate suggestion, but your house and car allotments are a little too generous IMHO. I like to follow the 2X gross salary rule for the size of one's mortgage and the 20% gross salary rule for how much you can spend on a car. I think that allows for plenty of excess, but not enough to be house poor or drive a car that is absurdly too expensive for your level of income.

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Re: 35 yr-old doc needs some wisdom

Post by Top99% » Tue Nov 14, 2017 8:21 am

ram wrote:
Thu Nov 09, 2017 11:26 pm
If you insist on having a luxury car, consider a Lexus. Buy it outright and keep for 10yrs. I like my LS 460.
A fellow physician.
+1. Cars are by far the best opportunity to reduce spending and increase savings. We went from Mercedes to Toyotas 15 years ago and after a few weeks didn't miss the "luxury" at all. We certainly enjoy the fine dining and extra travel this reduction in car expenses made possible.
Adapt or perish

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Re: 35 yr-old doc needs some wisdom

Post by bgf » Tue Nov 14, 2017 8:44 am

wow, a top tax bracket income solves so many problems.

my initial reaction was that your net worth is crazy crazy low given your income. you are throwing away $12000 a year on a lease with a net worth of like ~$250k...

but then I look at your income and... it just doesn't matter. it just doesn't. you have so much coming in that as long as you have even a low end decent savings rate, you are going to be saving and investing more than many people on this board with much higher savings rates.

so, you're a doctor, you help people for a living, you make an exceptional salary, and you at least are thinking about trying to save a decent amount. all of that put together means that I think you are going to be just fine. :sharebeer

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Re: 35 yr-old doc needs some wisdom

Post by Bmac » Tue Nov 14, 2017 9:33 am

As mentioned by many, the car stands out. But if the 328 wasn’t enough such that you had to get the M, it may be an incurable problem. I think most BHs would at least recommend buying your next car with cash and keeping for 8-10 years. And if you are unable to pay with cash you probably can’t afford it. Maybe it’s different in MA, but here in the Pacific Noerthwesr I’ve never felt any pressure in the MD parking lot to drive anything more luxurious than a Honda. Of course my frugal side gets even more pleasure out of driving a cheaper car than many of our office staff (my spouse might suggest this is my incurable problem. 😂)

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Re: 35 yr-old doc needs some wisdom

Post by CoAndy » Tue Nov 14, 2017 10:11 am

Thanks for the update OP. Did you pay off your student loans? I am assuming so since they are not listed. Great job!

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Re: 35 yr-old doc needs some wisdom

Post by hightower » Tue Nov 14, 2017 10:40 am

bgf wrote:
Tue Nov 14, 2017 8:44 am
wow, a top tax bracket income solves so many problems.

my initial reaction was that your net worth is crazy crazy low given your income. you are throwing away $12000 a year on a lease with a net worth of like ~$250k...

but then I look at your income and... it just doesn't matter. it just doesn't. you have so much coming in that as long as you have even a low end decent savings rate, you are going to be saving and investing more than many people on this board with much higher savings rates.

so, you're a doctor, you help people for a living, you make an exceptional salary, and you at least are thinking about trying to save a decent amount. all of that put together means that I think you are going to be just fine. :sharebeer
I respectfully disagree. Good income doesn't make up for excessive lifestyle inflation. The reason being is that income isn't guaranteed. Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane? It happens to a lot of docs these days. And there's no guarantee that physicians salaries will be this high 10 years from now. Also, the problem with getting used to high spending is that with a low savings rate he won't be able to sustain that kind of spending in retirement, especially if he wants to retire before he's 65+ y/o. Not sure what his spending actually is, but the danger is that it will keep inflating.
One of the docs in my group is in his 50's and still works 72 hours a week (6 night shifts per week). I'm pretty certain he's doing it because he's just barely paying the bills. He lives in the city's most expensive neighborhood, sent his kids to the most expensive private schools, I see him shopping on line regularly for furniture and things, and I've heard him say things about how he's paying for his kids college still (meaning, I don't believe he saved in a 529, he's just paying cash now). Lot's of docs find themselves in situations like this when they're older because they didn't save enough when they first started out.
If I hadn't found WCI and bogleheads, I'd be heading toward that kind of life as well. Instead, I'm saving over 50% of what I bring home and hope to be FI and debt free in 10 years or less (at 45 y/o). That's the goal anyway.

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Re: 35 yr-old doc needs some wisdom

Post by bgf » Tue Nov 14, 2017 10:59 am

hightower wrote:
Tue Nov 14, 2017 10:40 am
bgf wrote:
Tue Nov 14, 2017 8:44 am
wow, a top tax bracket income solves so many problems.

my initial reaction was that your net worth is crazy crazy low given your income. you are throwing away $12000 a year on a lease with a net worth of like ~$250k...

but then I look at your income and... it just doesn't matter. it just doesn't. you have so much coming in that as long as you have even a low end decent savings rate, you are going to be saving and investing more than many people on this board with much higher savings rates.

so, you're a doctor, you help people for a living, you make an exceptional salary, and you at least are thinking about trying to save a decent amount. all of that put together means that I think you are going to be just fine. :sharebeer
I respectfully disagree. Good income doesn't make up for excessive lifestyle inflation. The reason being is that income isn't guaranteed. Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane? It happens to a lot of docs these days. And there's no guarantee that physicians salaries will be this high 10 years from now. Also, the problem with getting used to high spending is that with a low savings rate he won't be able to sustain that kind of spending in retirement, especially if he wants to retire before he's 65+ y/o. Not sure what his spending actually is, but the danger is that it will keep inflating.
One of the docs in my group is in his 50's and still works 72 hours a week (6 night shifts per week). I'm pretty certain he's doing it because he's just barely paying the bills. He lives in the city's most expensive neighborhood, sent his kids to the most expensive private schools, I see him shopping on line regularly for furniture and things, and I've heard him say things about how he's paying for his kids college still (meaning, I don't believe he saved in a 529, he's just paying cash now). Lot's of docs find themselves in situations like this when they're older because they didn't save enough when they first started out.
If I hadn't found WCI and bogleheads, I'd be heading toward that kind of life as well. Instead, I'm saving over 50% of what I bring home and hope to be FI and debt free in 10 years or less (at 45 y/o). That's the goal anyway.
i actually agree with you and was basically just trying to be nice. i do however think that having a very high income provides a margin for error that a low income does not. as you said however, if you never fix that error, it doesn't matter.

the high income situation mixed with the discrepancy in high and low cost of living areas makes me wonder why we still talk about financial situations in the context of nominal incomes, expenses, assets, and liabilities.

i think we should simply talk about ratios. this isn't perfect, but it is better. after tax income:expenses; liquid net assets:expenses; savings rate; etc. ratios like that.

in that case, his net worth is not even 1x his annual after tax income. what do most people shoot for in retirement around here? net liquid assets of about 25x expenses?

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Re: 35 yr-old doc needs some wisdom

Post by gasdoc » Tue Nov 14, 2017 11:12 am

House and Car are the big ticket items. As a single person, I wouldn't buy a house or condo- I would lease/rent, and just get what I need. As for cars, I also like luxury imports, but I stick to 2-3 year old versions from CarMax, and keep them until they are 10 years old or 100K miles. I like my Infinity Q60 all wheel drive coupe. I am a doc in my 50's, and I'll tell you, the night work doesn't get any easier. I recently starting paying the new guys to work my weekend shifts, so at least I get a break and time to spend with my wife on the weekends now. The others in the group think I am "rich," but really I just try to be reasonable with expenses; it is nice to be able to cut back a little for what I hope to be the last 5 years of my career. Hope this is helpful.

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Last edited by gasdoc on Tue Nov 14, 2017 11:52 am, edited 1 time in total.

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Re: 35 yr-old doc needs some wisdom

Post by deltaneutral83 » Tue Nov 14, 2017 11:16 am

Think about a compromise of buying these luxury cars you covet with 30k miles on them CPO. They will still provide you the luxury you want without the likelihood of massive repairs at about 70% of the cost, and your first 20k miles should be under factory warranty anyway. I read a lot about either the $60k brand new luxury car or a 12 year old Honda. Plenty of middle ground and the OP is set on luxury vehicle anyhow.

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Re: 35 yr-old doc needs some wisdom

Post by Top99% » Wed Nov 15, 2017 7:55 am

bgf wrote:
Tue Nov 14, 2017 10:59 am
in that case, his net worth is not even 1x his annual after tax income. what do most people shoot for in retirement around here? net liquid assets of about 25x expenses?
This article might sober things up a bit: https://earlyretirementnow.com/2017/11/ ... etirement/ As several have mentioned a high income helps but ultimately the savings rate is what matters. In the case of OP if he wants to be FI by 65 he should be at >35% for sure. Probably higher at today's valuations. Finally, of all my regrets I wish I had spent less money on stuff and more money on experiences and savings. YMMV.
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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Fri Nov 17, 2017 8:56 pm

White Coat Investor wrote:
Fri Nov 10, 2017 12:22 am
I think you've done pretty well the last 3 years. A big turn around with a net worth what, $400K+ higher?

I still wouldn't drive luxury cars at this stage nor make $82K "loans." But you could probably afford to do that stuff in a few more years as a millionaire. You're getting there.
Thanks WCI. I'm most proud of paying off my med school loans in under four years. For some reason your argument that otherwise you might as well have gone into the military resonated with me.

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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Fri Nov 17, 2017 9:02 pm

msk wrote:
Fri Nov 10, 2017 1:58 am
3. Never acquire a car (either purchase or on lease) that is worth more than 6 months income. A $150k Mercedes can slip in, perhaps excessive for most, but if you are a car enthusiast... I bought one at age 37... Today I would second purchasing a Lexus. I am just about to replace my 10-year old LS460 (totally trouble-free) with the new LS500. But for an unmarried young guy perhaps the LC500 ($100k?) is more up your alley? YOLO.
You are NOT in the talking me into a buying a Honda Fit camp I see! Thank you for representing the YOLO peeps.

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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Fri Nov 17, 2017 9:06 pm

CoAndy wrote:
Tue Nov 14, 2017 10:11 am
Thanks for the update OP. Did you pay off your student loans? I am assuming so since they are not listed. Great job!
I did. Was tough because they were low-interest but I wanted to work toward not having debt. My current no interest credit cards are related to impulsive watch purchases. I'm hoping I got THAT out of my system.

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Re: 35 yr-old doc needs some wisdom

Post by madman19 » Fri Nov 17, 2017 9:39 pm

hightower wrote:
Tue Nov 14, 2017 10:40 am
bgf wrote:
Tue Nov 14, 2017 8:44 am
wow, a top tax bracket income solves so many problems.

my initial reaction was that your net worth is crazy crazy low given your income. you are throwing away $12000 a year on a lease with a net worth of like ~$250k...

but then I look at your income and... it just doesn't matter. it just doesn't. you have so much coming in that as long as you have even a low end decent savings rate, you are going to be saving and investing more than many people on this board with much higher savings rates.

so, you're a doctor, you help people for a living, you make an exceptional salary, and you at least are thinking about trying to save a decent amount. all of that put together means that I think you are going to be just fine. :sharebeer
I respectfully disagree. Good income doesn't make up for excessive lifestyle inflation. The reason being is that income isn't guaranteed. Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane? It happens to a lot of docs these days. And there's no guarantee that physicians salaries will be this high 10 years from now. Also, the problem with getting used to high spending is that with a low savings rate he won't be able to sustain that kind of spending in retirement, especially if he wants to retire before he's 65+ y/o. Not sure what his spending actually is, but the danger is that it will keep inflating.
One of the docs in my group is in his 50's and still works 72 hours a week (6 night shifts per week). I'm pretty certain he's doing it because he's just barely paying the bills. He lives in the city's most expensive neighborhood, sent his kids to the most expensive private schools, I see him shopping on line regularly for furniture and things, and I've heard him say things about how he's paying for his kids college still (meaning, I don't believe he saved in a 529, he's just paying cash now). Lot's of docs find themselves in situations like this when they're older because they didn't save enough when they first started out.
If I hadn't found WCI and bogleheads, I'd be heading toward that kind of life as well. Instead, I'm saving over 50% of what I bring home and hope to be FI and debt free in 10 years or less (at 45 y/o). That's the goal anyway.
"Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane?"

This is the question I ask daily. I don't want to be trapped in a job living a life of quiet desperation, compelled to see X number of patients or do Y number of procedures, just to pay the bills.

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Re: 35 yr-old doc needs some wisdom

Post by JDCarpenter » Fri Nov 17, 2017 10:04 pm

madman19 wrote:
Fri Nov 17, 2017 9:39 pm
...

"Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane?"

This is the question I ask daily. I don't want to be trapped in a job living a life of quiet desperation, compelled to see X number of patients or do Y number of procedures, just to pay the bills.
Prudent man for not yet 40. Bravo! :beer
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Re: 35 yr-old doc needs some wisdom

Post by avenger » Sat Nov 18, 2017 7:45 am

JDCarpenter wrote:
Fri Nov 17, 2017 10:04 pm
madman19 wrote:
Fri Nov 17, 2017 9:39 pm
...

"Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane?"

This is the question I ask daily. I don't want to be trapped in a job living a life of quiet desperation, compelled to see X number of patients or do Y number of procedures, just to pay the bills.
Prudent man for not yet 40. Bravo! :beer
This is how I feel. I’m 37 and paid off all of my debt, and am living on 25% of my gross pay, saving about 50% of gross pay. I don’t feel like I’m depriving myself either. I want to have options available if/when I burn out as a sub specialty surgeon.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [3 fund portfolio: VTI, VXUS, SV fund (yield 3.01%)]

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Re: 35 yr-old doc needs some wisdom

Post by Lonestarz » Sat Nov 18, 2017 9:50 pm

Yes, as a single person with that income I would be saving 50% and living extravagantly. Once you start spending >$100k/yr you don’t really improve your quality of life you just do the same things with fancier items. ($50/bottle wine vs $20) but apart from knowing you spent more on it - I don’t think you really can taste the difference.

You’re making progress but you need to start putting money away regularly. If you can put away 150k/yr you can maybe retire by 50?

Don’t buy a Honda Fit. Get a decent car for 30-40k and drive it for 5-10 years.

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Re: 35 yr-old doc needs some wisdom

Post by sambb » Sat Nov 18, 2017 11:02 pm

M cars are awesome - I would enjoy that car, you earned it! Way better than a civic.

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Re: 35 yr-old doc needs some wisdom

Post by WL2034 » Sat Nov 18, 2017 11:08 pm

madman19 wrote:
Fri Nov 17, 2017 9:39 pm

"Sure he makes great money, but what if he becomes burnt out in 5 years and needs to cut back to stay sane?"

This is the question I ask daily. I don't want to be trapped in a job living a life of quiet desperation, compelled to see X number of patients or do Y number of procedures, just to pay the bills.
I agree with this, so much. I would be saving more, if I were you, for that very reason. You make $450k, but haven't really saved a tremendous amount yet, have credit card debt (at 0%, I realize). I'm assuming the $82k loan is a one-time thing, so that is fine (personal choice).

What is your yearly breakdown of expenditures vs. savings (i.e. where, exactly, is the money going now that you are free of your student loans)?

Overall, congrats--you did get rid of your student loans quicker than the average physician!

HopeToGolf
Posts: 283
Joined: Fri Dec 24, 2010 4:04 pm

Re: 35 yr-old doc needs some wisdom

Post by HopeToGolf » Sun Nov 19, 2017 7:05 am

Madman

Nice work over three years. My guess is after-tax you had at least $600k in cash to play with to cover your expenses and debt.

You have a bit of thinking to do.....Do you want to be the baller doctor? When do you want to retire? Do you know the retirement lifestyle you covet and the savings rate you need to get there?

$600k is a ton of cash and you saved a bit and paid your debt but you’ve spent quite a bit. The fact that you have a credit card liability of $22k is crazy (unless you really were going in with the idea of trying to get a market return on the money instead of paying cash...which I advise against).

The questions are an attempt to get you to figure out what you want long term. While you’ve made a ton of progress, it could have been better for someone who wants to retire before 60, have a spouse and children that he/she supports and a very comfortable lifestyle along the way. You have an excellent opportunity to save a bunch of money and spend some too before the big expenses hit.

You have a history of having a standard of living generally aligned with your income. That is OK but it means you need to be comfortable working a long time to support your habits. Before you know it you are going to have the spouse, the Range Rover, the LV handbags and the private school tuition. If you can save $150k now to cover retirement and future home/car purchases you will be in a great spot and still be able to spend over $90k in cash.

Decide...do you want to live like the $450k a year guy you are and everyone knows you are or live large but take control of your financial future. Neither is wrong but give it thought.

I am not doctor but I also own a few expensive watches, I’ve seen this movie before and I am trying to control the number of times I make a cameo appearance in it. I wanted to share my observations and experiences.

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