Sigh...I'm ready for criticism...how am I doing?

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Kencufc
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Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Wed Aug 23, 2017 9:15 pm

This won't be your average "look how well I'm doing but still tell me I'm doing great because I know I am" type post. I'm definitely doing ok but not where I'd like to be. I'm a doc 2nd year out of residency. Here's the real numbers.
I'm 32, wife is 31. 2 yr old child and another due in December.

Income: likely $300k(me)+$40k(wife)
My 401k: $55k (will be maxed out this yr)
Wife tIRA: $25k
Emergency Fund: $15k
Cash savings: $12k+$3k=$15k

Debts:
Student Loans: $34k
Mortgage 1: $214k
Mortgage 2: $418k

Monthly expenses are about 10k including 2 mortgages totaling $3300/month and $1000/month minimum student loan payment. In the event of a job loss we could cut down expenses to about $8k/ month includeding the debts. We live in a LCOL area. We admit we moved a little early into the big house (4/2017). The housing market here is terrible (and we chose the wrong realtors) and we've been unable to sell our first house since 3/2017. Selling the House 1 will definitely help our situation, decreasing total monthly expenses by about $1500/month.

For tax year 2017 we will be able to max my 401k, max my wife's solo 401k to about $24k or so. I'll convert the tIRA to a Fidelity solo401k so we can each do Backdoor Roths as well ($11k). We should have some significant deductions from mortgage interest, property tax, charitable donations, and business expenses as my wife works on 1099.

Right now I'm stashing cash until mom and baby are doing ok after delivery and I should have another $25k banked after next month. I'm also going to rent the House 1 for $1500/month with tenant paying utilities. Our positive cash flow for all income should be $5000-6000/month.

Whew that's more than I wanted to write. Complex situation. It's a hole but I have a big shovel, as they say. Do I need to just give this more time? Or is this unsustainable and we need to cut back ASAP? Thanks in advance!

2pedals
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by 2pedals » Wed Aug 23, 2017 9:38 pm

Pay off your entire student loan, should be easy for you. What are you investing your invest-able money in? Asset allocation %Stocks, %bonds? Low expense ratio Index funds?

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Wed Aug 23, 2017 9:46 pm

2pedals wrote:
Wed Aug 23, 2017 9:38 pm
Pay off your entire student loan, should be easy for you. What are you investing your invest-able money in? Asset allocation %Stocks, %bonds? Low expense ratio Index funds?
Everything is in low cost index funds. AA is about 70/30 with 30% of stocks international. Emergency fund is in a vanguard muni index fund. I plan to max out my tax advantaged space first, then pay off the loan. Probably won't have anything leftover to invest in taxable this year. We will see.

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greg24
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by greg24 » Wed Aug 23, 2017 9:50 pm

Having any positive net worth coming out of med school seems pretty good.

Get the first house sold. Save as much as possible. Enjoy your young family.

Olemiss540
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Olemiss540 » Wed Aug 23, 2017 9:57 pm

Kencufc wrote:
Wed Aug 23, 2017 9:15 pm
This won't be your average "look how well I'm doing but still tell me I'm doing great because I know I am" type post. I'm definitely doing ok but not where I'd like to be. I'm a doc 2nd year out of residency. Here's the real numbers.
I'm 32, wife is 31. 2 yr old child and another due in December.

Income: likely $300k(me)+$40k(wife)
My 401k: $55k (will be maxed out this yr)
Wife tIRA: $25k
Emergency Fund: $15k
Cash savings: $12k+$3k=$15k

Debts:
Student Loans: $34k
Mortgage 1: $214k
Mortgage 2: $418k

Monthly expenses are about 10k including 2 mortgages totaling $3300/month and $1000/month minimum student loan payment. In the event of a job loss we could cut down expenses to about $8k/ month includeding the debts. We live in a LCOL area. We admit we moved a little early into the big house (4/2017). The housing market here is terrible (and we chose the wrong realtors) and we've been unable to sell our first house since 3/2017. Selling the House 1 will definitely help our situation, decreasing total monthly expenses by about $1500/month.

For tax year 2017 we will be able to max my 401k, max my wife's solo 401k to about $24k or so. I'll convert the tIRA to a Fidelity solo401k so we can each do Backdoor Roths as well ($11k). We should have some significant deductions from mortgage interest, property tax, charitable donations, and business expenses as my wife works on 1099.

Right now I'm stashing cash until mom and baby are doing ok after delivery and I should have another $25k banked after next month. I'm also going to rent the House 1 for $1500/month with tenant paying utilities. Our positive cash flow for all income should be $5000-6000/month.

Whew that's more than I wanted to write. Complex situation. It's a hole but I have a big shovel, as they say. Do I need to just give this more time? Or is this unsustainable and we need to cut back ASAP? Thanks in advance!
Unsustainable? Cut back ASAP?

You, my good friend, are in the top 2% of income earners in a LCOL area. Why even post this? Big shovel doesn't even cover your situation. You have 10k expenses on an (estimating) 15k net salary. If the world had your problems, everyone would have a BIG smile on their faces. Sell the damn house already, take a few paychecks worth of loss on it and get on with your life. You seem prepare to make big strides but a few life decisions are hanging you up a little. This is a marathon, not a sprint. You will have a 7 figure networth by the time you are 37 or 38, so relax, enjoy, and keep the household happy. The biggest impact you can have to your future self right now is by keeping stress low and those around you happy....

Unless there is another side to the story.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

2pedals
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by 2pedals » Wed Aug 23, 2017 10:00 pm

I think you are doing quite well, like your investment approach. You have a big shovel so before you buy anything too fancy like a luxury car pay off your student loan is my advise.

Somewhat shocking for a medical student that your loan was not more. Not sure I would want to be a landlord. I have heard many horror stories. Was your asking price too high for the current market conditions? Was the house badly need of repairs? If it were me I would lower the price and sell the house rather than rent it. Do you have some equity in the house? Should not be too hard to move on with you life since you have significant income now.
Last edited by 2pedals on Wed Aug 23, 2017 10:01 pm, edited 1 time in total.

BusterMcTaco
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by BusterMcTaco » Wed Aug 23, 2017 10:01 pm

Olemiss540 gives damn good advice. You're just now starting to earn more than residency. You will catch up to the other BS. Don't throw money away on lavish stuff until your debt is paid off and the other house is sold... Low stress, happy family, and you'll be just fine.

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Watty
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Watty » Wed Aug 23, 2017 10:05 pm

Kencufc wrote:
Wed Aug 23, 2017 9:15 pm
Do I need to just give this more time? Or is this unsustainable and we need to cut back ASAP? Thanks in advance!
I'm not sure that I understand what your question is. It sounds like the decision has been made to rent the house and once you do that you will be doing fine.

Kencufc
Posts: 133
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Wed Aug 23, 2017 10:05 pm

Olemiss540 wrote:
Wed Aug 23, 2017 9:57 pm
Kencufc wrote:
Wed Aug 23, 2017 9:15 pm
This won't be your average "look how well I'm doing but still tell me I'm doing great because I know I am" type post. I'm definitely doing ok but not where I'd like to be. I'm a doc 2nd year out of residency. Here's the real numbers.
I'm 32, wife is 31. 2 yr old child and another due in December.

Income: likely $300k(me)+$40k(wife)
My 401k: $55k (will be maxed out this yr)
Wife tIRA: $25k
Emergency Fund: $15k
Cash savings: $12k+$3k=$15k

Debts:
Student Loans: $34k
Mortgage 1: $214k
Mortgage 2: $418k

Monthly expenses are about 10k including 2 mortgages totaling $3300/month and $1000/month minimum student loan payment. In the event of a job loss we could cut down expenses to about $8k/ month includeding the debts. We live in a LCOL area. We admit we moved a little early into the big house (4/2017). The housing market here is terrible (and we chose the wrong realtors) and we've been unable to sell our first house since 3/2017. Selling the House 1 will definitely help our situation, decreasing total monthly expenses by about $1500/month.

For tax year 2017 we will be able to max my 401k, max my wife's solo 401k to about $24k or so. I'll convert the tIRA to a Fidelity solo401k so we can each do Backdoor Roths as well ($11k). We should have some significant deductions from mortgage interest, property tax, charitable donations, and business expenses as my wife works on 1099.

Right now I'm stashing cash until mom and baby are doing ok after delivery and I should have another $25k banked after next month. I'm also going to rent the House 1 for $1500/month with tenant paying utilities. Our positive cash flow for all income should be $5000-6000/month.

Whew that's more than I wanted to write. Complex situation. It's a hole but I have a big shovel, as they say. Do I need to just give this more time? Or is this unsustainable and we need to cut back ASAP? Thanks in advance!
Unsustainable? Cut back ASAP?

You, my good friend, are in the top 2% of income earners in a LCOL area. Why even post this? Big shovel doesn't even cover your situation. You have 10k expenses on an (estimating) 15k net salary. If the world had your problems, everyone would have a BIG smile on their faces. Sell the damn house already, take a few paychecks worth of loss on it and get on with your life. You seem prepare to make big strides but a few life decisions are hanging you up a little. This is a marathon, not a sprint. You will have a 7 figure networth by the time you are 37 or 38, so relax, enjoy, and keep the household happy. The biggest impact you can have to your future self right now is by keeping stress low and those around you happy....

Unless there is another side to the story.
Thank you very well said. The onl "other thing" is my wife will take maternity leave (3 months) which will decrease income, but actually a baby cut our expenses down last time around. We rarely went out, and our family and church gave us lots of food! We're lucky to have them! I'll also cut back a bit from work. However, all that will be temporary.

Kencufc
Posts: 133
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Wed Aug 23, 2017 10:11 pm

2pedals wrote:
Wed Aug 23, 2017 10:00 pm
I think you are doing quite well, like your investment approach. You have a big shovel so before you buy anything too fancy like a luxury car pay off your student loan is my advise.

Somewhat shocking for a medical student that your loan was not more. Not sure I would want to be a landlord. I have heard many horror stories. Was your asking price too high for the current market conditions? Was the house badly need of repairs? If it were me I would lower the price and sell the house rather than rent it. Do you have some equity in the house? Should not be too hard to move on with you life since you have significant income now.
One reason we don't have more savings is we have paid about $20k+ on student loans and I bought a $20k car for cash (car was 15 years old). We have been married since 3rd yr of med school, wife's income paid living expenses for two years. My family paid for 2 years of tuition as well. Went to in state school, very fortunate as far as loans go. The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.

Chip
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Chip » Thu Aug 24, 2017 4:46 am

Kencufc wrote:
Wed Aug 23, 2017 10:11 pm
The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.
Nice thread title!

I agree with others that you are doing well.

As someone who had rental properties and experienced a full range of "landlord experiences", I would advise you to do whatever it takes to sell the house. Put in the 20k of repairs, hire a stager, lower the asking price, whatever. Given the time demands of job and family I'd think the last thing you need is something else to worry about. There's no guarantee that property management will fully insulate you from being a landlord.

Don't anchor on your equity, positive or negative. Just get it done and move on.

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djpeteski
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by djpeteski » Thu Aug 24, 2017 6:33 am

I'd recommend selling your first house not renting it. Why? You are in the business of doctoring, and are well compensated for it. The small amount you will make from being a landlord is not worth it. Dump the house, take the loss, who cares. You will be far better off.

Have a plan to pay off the student loan in a year; or, if mom and baby come home fine use your "baby savings" to kill that.

Other than a couple of minor tweaks, you guys are in good shape. Good work, great income. Mom and dad should be proud.

What about cars? You did not outline any car debt. Please don't let that get out of line.

Once you make these relatively minor improvements your investments will take care of themselves. In 5 years or so, maybe less you will be in the two comma club. By the time the baby is ready for college themselves you could be knocking on the door of a 10 mil net worth.

chevca
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by chevca » Thu Aug 24, 2017 7:07 am

Kencufc wrote:
Wed Aug 23, 2017 9:15 pm
This won't be your average "look how well I'm doing but still tell me I'm doing great because I know I am" type post.
Well, that's exactly what it is.

So, you're telling us you make $340k combined, live in a LCOL, own two houses, have minimal student loans, and have a $5k or so a month cushion..... Yep, you're doing more than ok. Is it sustainable? Uh, yes.

What do you possibly feel is complex about your situation? Pay off the student loans, sell or rent out the second house, and enjoy life. You're doing great. But, you knew that, huh?

Nate79
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Nate79 » Thu Aug 24, 2017 7:10 am

I would be more concerned about your insurance situation (term life and disability) than anything. You are highly dependant on your future high income stream.

saveinvestbecomefree
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by saveinvestbecomefree » Thu Aug 24, 2017 7:24 am

I agree that you will be in very good shape with some time (as long as you stay on track and don't inflate your lifestyle.....the home upgrade this early concerns me a little). I would definitely sell the first house. You don't want to deal with a rental as a busy doctor or carry it a long time looking for a slightly higher price. Get rid of it and move on.

I'd also focus on paying down debt over investing right now. Stock valuations are quite high and "safe" investments like treasuries, which is what you need to compare your loan rates to, have terrible yields right now. You make a nice, safe return by paying down your debts. Once that's done, you'll be plowing a lot monthly into your investments (and you might get lucky with a big drop so you can buy investments cheaply).

You're on the right track as long as you don't start spending more.

retiredjg
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by retiredjg » Thu Aug 24, 2017 7:49 am

In general, I think you are doing Ok.

Until the first house is sold or at least not a financial drain, I think I'd be content with saving a little less for retirement. Extra mortgage/baby coming/lowered income can be a bit of a squeeze. Better to maintain more flexibility for some months.

I'll convert the tIRA to a Fidelity solo401k so we can each do Backdoor Roths as well ($11k).
This may just be a poor choice of words, but you cannot "convert" the tIRA to a Solo 401k. If you meant "open a Solo 401k and roll the tIRA into it," that's fine.....as long as you have a side income to make you eligible for the Solo 401k.

Right now I'm stashing cash until mom and baby are doing ok after delivery and I should have another $25k banked after next month.
Good plan.

Do I need to just give this more time? Or is this unsustainable and we need to cut back ASAP? Thanks in advance!
It may be unsustainable if house #1 does not pull its own weight or get sold. Only time will tell about that. But as I said, you don't have to save that much (over $50k) for retirement every year. It won't hurt you to cut back some if you need to for a year or two.

Flashes1
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Flashes1 » Thu Aug 24, 2017 9:03 am

OP is in top 5%---the elite of the elite.

Enjoy being an American, and the benefits that comes with it.

Steve723
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Steve723 » Thu Aug 24, 2017 9:13 am

He's in the top 5% of income earners, yes, but I think his opening line in the post was more of a comment on how he is faring as compared to other bogleheads that ask "how am I doing?", then proceed to tell us they have $2M+ in investable assets and are looking for validation....

Flashes1
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Flashes1 » Thu Aug 24, 2017 12:21 pm

Steve723 wrote:
Thu Aug 24, 2017 9:13 am
He's in the top 5% of income earners, yes, but I think his opening line in the post was more of a comment on how he is faring as compared to other bogleheads that ask "how am I doing?", then proceed to tell us they have $2M+ in investable assets and are looking for validation....
The OP is 32 years old making $340,000 PER YEAR and has very little non-mortgage debt. It's people like this that make me proud to be an American. The wealth is simply breathtaking, and what makes it even better, is the OP thinks they're not doing very well. It's things like the OP's post that reinforces my convictions to keep investing into the American economy. Where else in the world do people in the top 5% not think they're doing very well? That's where I want to invest my money. People who won't settle for top 5% are hungry for success....this is who I want to support with my capital.

Steve723
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Steve723 » Thu Aug 24, 2017 2:33 pm

Flashes1 wrote:
Thu Aug 24, 2017 12:21 pm
Steve723 wrote:
Thu Aug 24, 2017 9:13 am
He's in the top 5% of income earners, yes, but I think his opening line in the post was more of a comment on how he is faring as compared to other bogleheads that ask "how am I doing?", then proceed to tell us they have $2M+ in investable assets and are looking for validation....
The OP is 32 years old making $340,000 PER YEAR and has very little non-mortgage debt. It's people like this that make me proud to be an American. The wealth is simply breathtaking, and what makes it even better, is the OP thinks they're not doing very well. It's things like the OP's post that reinforces my convictions to keep investing into the American economy. Where else in the world do people in the top 5% not think they're doing very well? That's where I want to invest my money. People who won't settle for top 5% are hungry for success....this is who I want to support with my capital.

Well, there is top 5% net worth and top 5% income. I believe his "sigh" was more directed toward his net worth/nest egg situation. But yes, he's doing very well and with the advice given here I'm sure he will eventually build up his net worth to a very nice number.

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:15 pm

Steve723 wrote:
Thu Aug 24, 2017 9:13 am
He's in the top 5% of income earners, yes, but I think his opening line in the post was more of a comment on how he is faring as compared to other bogleheads that ask "how am I doing?", then proceed to tell us they have $2M+ in investable assets and are looking for validation....
Yes exactly. Going deeper, I work a fair amount of extra right now and I don't want to keep doing that as the children get older. My goal is freedom, rather than riches.

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:17 pm

Flashes1 wrote:
Thu Aug 24, 2017 12:21 pm
Steve723 wrote:
Thu Aug 24, 2017 9:13 am
He's in the top 5% of income earners, yes, but I think his opening line in the post was more of a comment on how he is faring as compared to other bogleheads that ask "how am I doing?", then proceed to tell us they have $2M+ in investable assets and are looking for validation....
The OP is 32 years old making $340,000 PER YEAR and has very little non-mortgage debt. It's people like this that make me proud to be an American. The wealth is simply breathtaking, and what makes it even better, is the OP thinks they're not doing very well. It's things like the OP's post that reinforces my convictions to keep investing into the American economy. Where else in the world do people in the top 5% not think they're doing very well? That's where I want to invest my money. People who won't settle for top 5% are hungry for success....this is who I want to support with my capital.
Yes top 5% for income but certainly not net worth at this point. I'm trying to craft a life of freedom to make career choices by keeping expenses low. I plan to work the minimum required for my "job" in five years, then possibly low stress concierge practice to only cover living expenses.

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:21 pm

Nate79 wrote:
Thu Aug 24, 2017 7:10 am
I would be more concerned about your insurance situation (term life and disability) than anything. You are highly dependant on your future high income stream.
Absolutely. I have an own occupation LTD policy covering $6k/month plus a group policy with 2 years own occupation that pays $4k or about that. No STD will just use emergency fund and cash. I have a $2M term policy and another $650k group term policy.

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:22 pm

saveinvestbecomefree wrote:
Thu Aug 24, 2017 7:24 am
I agree that you will be in very good shape with some time (as long as you stay on track and don't inflate your lifestyle.....the home upgrade this early concerns me a little). I would definitely sell the first house. You don't want to deal with a rental as a busy doctor or carry it a long time looking for a slightly higher price. Get rid of it and move on.

I'd also focus on paying down debt over investing right now. Stock valuations are quite high and "safe" investments like treasuries, which is what you need to compare your loan rates to, have terrible yields right now. You make a nice, safe return by paying down your debts. Once that's done, you'll be plowing a lot monthly into your investments (and you might get lucky with a big drop so you can buy investments cheaply).

You're on the right track as long as you don't start spending more.
The new home was not quite in line with how I had foreseen my first year out of residency, however the mortgage is not crippling and it truly is a great house in an area where it is a bit hard to find quality houses.

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:23 pm

Chip wrote:
Thu Aug 24, 2017 4:46 am
Kencufc wrote:
Wed Aug 23, 2017 10:11 pm
The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.
Nice thread title!

I agree with others that you are doing well.

As someone who had rental properties and experienced a full range of "landlord experiences", I would advise you to do whatever it takes to sell the house. Put in the 20k of repairs, hire a stager, lower the asking price, whatever. Given the time demands of job and family I'd think the last thing you need is something else to worry about. There's no guarantee that property management will fully insulate you from being a landlord.

Don't anchor on your equity, positive or negative. Just get it done and move on.
The theme from the Bogleheads seems to be "rip off the bandaid and get it over with"!

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:26 pm

retiredjg wrote:
Thu Aug 24, 2017 7:49 am
In general, I think you are doing Ok.

Until the first house is sold or at least not a financial drain, I think I'd be content with saving a little less for retirement. Extra mortgage/baby coming/lowered income can be a bit of a squeeze. Better to maintain more flexibility for some months.

I'll convert the tIRA to a Fidelity solo401k so we can each do Backdoor Roths as well ($11k).
This may just be a poor choice of words, but you cannot "convert" the tIRA to a Solo 401k. If you meant "open a Solo 401k and roll the tIRA into it," that's fine.....as long as you have a side income to make you eligible for the Solo 401k.

Right now I'm stashing cash until mom and baby are doing ok after delivery and I should have another $25k banked after next month.
Good plan.

Do I need to just give this more time? Or is this unsustainable and we need to cut back ASAP? Thanks in advance!
It may be unsustainable if house #1 does not pull its own weight or get sold. Only time will tell about that. But as I said, you don't have to save that much (over $50k) for retirement every year. It won't hurt you to cut back some if you need to for a year or two.
Yes thank you rollover is more correct. The second house really adds to monthly expenses. Should be able to knock out student loans with the baby fund if all goes well

Kencufc
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Thu Aug 24, 2017 8:34 pm

chevca wrote:
Thu Aug 24, 2017 7:07 am
Kencufc wrote:
Wed Aug 23, 2017 9:15 pm
This won't be your average "look how well I'm doing but still tell me I'm doing great because I know I am" type post.
Well, that's exactly what it is.

So, you're telling us you make $340k combined, live in a LCOL, own two houses, have minimal student loans, and have a $5k or so a month cushion..... Yep, you're doing more than ok. Is it sustainable? Uh, yes.

What do you possibly feel is complex about your situation? Pay off the student loans, sell or rent out the second house, and enjoy life. You're doing great. But, you knew that, huh?
I think my outlook may be a bit different than most people. Freedom is most important for my life. Maybe I'm a little over zealous in growing net worth quickly and maybe too ambitious/impatient or whatever you want to call it. Seems like most of these threads start out with, I'm 32 I have $1M collecting dust in a money market account at Scottrade what ever shall I do with this? Should I be doing better? Lol!

MindBogler
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by MindBogler » Thu Aug 24, 2017 9:01 pm

I guess I'll be the first one to say that you have a shoestring savings compared to your obligatory expenses. You need to get 4-6 months of expenses saved up, stat. Sell that 2nd house if you can, rent it if you can't. Get a property manager if you must because as another poster said, you're in the business of being a doctor. That is time consuming enough, you don't need the stress of being a landlord as well. At the same time, you can't afford to not max both your 401k and your wife's. Once you do these two things hammer down the rest of that student loan with all the cash you can spare. Then start investing in taxable.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by chevca » Thu Aug 24, 2017 9:54 pm

Kencufc wrote:
Thu Aug 24, 2017 8:38 pm
forkhorn wrote:
Thu Aug 24, 2017 8:33 pm
This reminds me of the "50 years old, $80k/year expenses, $6M liquid assets, can I afford to retire yet" posts.
Really? Let's run the current numbers...32 years old, 120k/yr expenses, $30k liquid assets, $30k debt, $600k+ mortgage debt. Not exactly
You're being very short-sighted about this. Your human capital/earning potential is massive compared to most folks... i.e. the mention of top 5% and all. The student loans could be gone very soon, sell the second home, and then you have a very manageable mortgage and massive income. That's why some of us are like, are you kidding here?

I would go over your expenses and spending more. Even with two mortgages now, $10k/month seems high for a LCOL area. Where can you cut down on things that way?

chevca
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by chevca » Thu Aug 24, 2017 9:57 pm

In other words, you're doing great because you have set yourself up for success with all your hard work to get where you are with the career and living in a LCOL area. Let it play out for a while before asking how your doing.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by veindoc » Fri Aug 25, 2017 6:35 am

Until the baby comes I would stash the extra $5k in the efund. Do you really only have 3 months expenses in cash savings?

Losing your wife's income for 6 months or so won't hurt your bottom line too much. Also you mentioned your income would drop to be around home more after the baby's born. How so? Are you not salaried? How is your practice set up? Are you moonlighting and planning to do less of it?

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Carl53 » Fri Aug 25, 2017 6:58 am

Be sure you have adequate life/disability insurance in place.

Put your efforts into keeping your family relationships a priority. Dump the 2nd house and knock out the school loan. Congratulations on a great start.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Fri Aug 25, 2017 2:51 pm

mrsytf wrote:
Fri Aug 25, 2017 6:35 am
Until the baby comes I would stash the extra $5k in the efund. Do you really only have 3 months expenses in cash savings?

Losing your wife's income for 6 months or so won't hurt your bottom line too much. Also you mentioned your income would drop to be around home more after the baby's born. How so? Are you not salaried? How is your practice set up? Are you moonlighting and planning to do less of it?

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by fundseeker » Sat Aug 26, 2017 6:31 am

Kencufc wrote:
Wed Aug 23, 2017 10:11 pm
The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.
IMO, you should lower the price and get rid of the 1st house. You may plan to use a management company, but you would be just one bad tenant from maybe another $20k in repairs. Who needs the headaches of being a landlord! And as Dave Ramsey would explain, if you are just becoming a landlord by default, meaning that you would not go out and buy this house just so you could rent it out, then you should sell it. And as I'm sure you have heard, life is too short... Good luck!

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by letsgobobby » Sat Aug 26, 2017 6:45 am

It annoys me that you are getting so many snarky responses and I almost feel the need to apologize on behalf of this community. You posted a reasonable question and deserved a reasonable answer. And yes, I know there are a few posts that can get under all of our skins (we have 50 x expenses saved, can I retire? I did not include my pension, my inheritance, or my wife's income), but yours is clearly not one of them.

If you want less snark and, probably, more constructive criticism, post at Whitecoatinvestor.com.

You're in good shape. I would definitely sell the first home, whatever the cost. You're about to have a baby, a stay at home spouse, 2 kids under 3, and a full time job. You don't want a rental. And you will feel so much better when it's sold. Try to find a price that allows you to get rid of it.

After that, things will fall into place more easily. Assuming your spouse returns to work after her leave, you should aim to save 25% of your gross income each year. More is better of course but 25% for at least the next 10 years pretty much guarantees your financial future. After that you could back off a little and have much of the heavy lifting done. I encourage new docs to live like residents for at least five years. You didn't quite do that but your home is not outrageous. Keep your savings rate high and your expenses low til 40 and you will be set.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by chipperd » Sat Aug 26, 2017 6:51 am

+1 (or is it +5?). Sell the first house immediately. Do not rent.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Dendritic Tree » Sat Aug 26, 2017 7:08 am

If it makes you feel any better, I'm a physician two years out of training (but 4 years older than you), married to another physician, and we are in a worse financial situation than you primarily due to our large med school debt (about 600k, combined). We have similar or slightly more savings, and have not bought our first house yet so don't have a mortgage.

I think you have to have a sliding scale of expectations for your net worth due to the fact that you started earning real money so late in life (hey, earlier than me though). Feeling insecure about your net worth at this point is similar to a 22-year old computer programmer feeling insecure about her net worth. Be patient, try your best to continue living somewhat like a resident and grow slowly into your new income so you can crush the debt and maximize savings. As long as you can protect that income and plow money into your net worth (either debt or savings) rather than toys, your net worth will start growing quite satisfactorily, I think.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by retiredjg » Sat Aug 26, 2017 8:29 am

letsgobobby wrote:
Sat Aug 26, 2017 6:45 am
It annoys me that you are getting so many snarky responses and I almost feel the need to apologize on behalf of this community. You posted a reasonable question and deserved a reasonable answer.
I was annoyed as well. There's rarely an appropriate time for snark on this forum, especially with newbies.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by hightower » Sat Aug 26, 2017 8:46 am

You have similar numbers to me when I was your age (I'm 35 now). We make about the same (I'm a physician too). The only difference with me is that my debt was mostly in the form of student loans. My main house mortgage is a lot smaller though. But, my advice is to stay the course, get rid of the second house even if you lose a little, and get rid of the rest of your debt except the mortgage. Then, you need to focus on ramping up your savings a lot. Physicians are always behind the curve in terms of savings when they first start working as attendings. You need to be maxing your 401k, Roth's, HSA's, and funding 529's for your kids. Then, anything left over should be going into a taxable account. Once you have a healthy start on savings, you can consider throwing extra at your mortgage each year.
Put money aside each year for fun stuff with the family. You have to remember to focus on enjoying life now. You're lucky to have a family already;) You'll be in great shape in no time if you stick with that plan.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by LadyGeek » Sat Aug 26, 2017 11:09 am

Some off-topic posts have been removed. As a reminder, see: General Etiquette
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Re: Sigh...I'm ready for criticism...how am I doing?

Post by JGoneRiding » Sat Aug 26, 2017 6:16 pm

Chip wrote:
Thu Aug 24, 2017 4:46 am
Kencufc wrote:
Wed Aug 23, 2017 10:11 pm
The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.
Nice thread title!

I agree with others that you are doing well.

As someone who had rental properties and experienced a full range of "landlord experiences", I would advise you to do whatever it takes to sell the house. Put in the 20k of repairs, hire a stager, lower the asking price, whatever. Given the time demands of job and family I'd think the last thing you need is something else to worry about. There's no guarantee that property management will fully insulate you from being a landlord.

Don't anchor on your equity, positive or negative. Just get it done and move on.
Really? I know the OP has a huge potential net worth but he doesn't have it yet. I just couldn't fathom taking a 50-70k loss when he could have 500 /mos positive cash flow and probably sell next year with a gain. Ad long as you get decent tenants the "hassle" of LL is highly inflated on this site

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by fundseeker » Sat Aug 26, 2017 7:27 pm

I couldn't find where he said his loss would be that great. But regardless, it he does decide to become a landlord, that would be another reason he needs a huge umbrella policy, if he does not already have one. A tenant may just latch on to an opportunity to sue a wealthy doctor, unfortunately.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by bayview » Sat Aug 26, 2017 9:28 pm

Kencufc wrote:
Thu Aug 24, 2017 8:23 pm
Chip wrote:
Thu Aug 24, 2017 4:46 am
Kencufc wrote:
Wed Aug 23, 2017 10:11 pm
The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.
Nice thread title!

I agree with others that you are doing well.

As someone who had rental properties and experienced a full range of "landlord experiences", I would advise you to do whatever it takes to sell the house. Put in the 20k of repairs, hire a stager, lower the asking price, whatever. Given the time demands of job and family I'd think the last thing you need is something else to worry about. There's no guarantee that property management will fully insulate you from being a landlord.

Don't anchor on your equity, positive or negative. Just get it done and move on.
The theme from the Bogleheads seems to be "rip off the bandaid and get it over with"!
Yes, in fact, in your case, that's exactly the theme.:D

All of us, at some point, wind up with a dud investment, whether due to not-so-smart choices or plain old bad luck. Some can be revived; others cannot. At some point, you have to call the code.

DH and I would be severely affected by having to bail on an underwater mortgage. You aren't. You have the income stream that allows you to shrug it off and go on. You might even be able to use this to help your taxes.

Simply your life, dump the first house, amp up your emergency savings, and enjoy your family. Best wishes to you, and for the new little one. :beer
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Chip » Sun Aug 27, 2017 4:27 am

JGoneRiding wrote:
Sat Aug 26, 2017 6:16 pm
Really? I know the OP has a huge potential net worth but he doesn't have it yet. I just couldn't fathom taking a 50-70k loss when he could have 500 /mos positive cash flow and probably sell next year with a gain. Ad long as you get decent tenants the "hassle" of LL is highly inflated on this site
Yes, really.

I don't see anything to indicate a high probability of $500/mo cash flow, a gain on sale in less than a year, nor a certainty in getting good tenants (dream on if you think a property manager will guarantee it).

The "hassle" of landlording is often mentioned by those have been through it, like me. I owned and rented (through a property manager) a couple of single family homes for nearly 20 years. I agree, good tenants are really important. And it only takes one bad one to make the entire landlording experience something close to nightmare. You can google "eviction" on this site for a nice taste of it. Start at this post for just a few of those hassles. Here's another, where the OP's management company failed to do a good job screening tenants. Here's one where the OP was relating, in real time, his extensive efforts over a few months to get a "professional tenant" out of his rental.

I'm not saying there isn't money to be made in being a landlord. But this OP, with a demanding job, young kids and plenty of cash flow should skip the "opportunity".

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by peterinjapan » Sun Aug 27, 2017 7:03 am

I love managing my three properties, but that's because I have three good managers, and haven't had any really bad tenants. if I were trying to do it myself, I would probably have torn my hair out.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by JGoneRiding » Sun Aug 27, 2017 10:33 am

fundseeker wrote:
Sat Aug 26, 2017 7:27 pm
I couldn't find where he said his loss would be that great. But regardless, it he does decide to become a landlord, that would be another reason he needs a huge umbrella policy, if he does not already have one. A tenant may just latch on to an opportunity to sue a wealthy doctor, unfortunately.
I was adding up all the costs the previous poster had suggested spending
20k repairs:
stager--I don't actually know what one of those costs
undisclosed loss to price to sale--lets call it 10-20k
cost of real estate agent 25k (based on value of property in OP)

So at least a 50k loss
Houses sell poorly in the winter so he has a limited time left to try and sale. Most likely financially the OP will be better off if he rents and sells in the spring. If they are near a college there will be a large pool of candidtes and lots want a 9 mos lease. It sounded like in the OP that maybe they had a person they knew was a good tenant already lined up

Just fyi, I am a LL with 6 "doors" I understand the issues. I do agree all doctors should have large umbrella policies

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Mon Aug 28, 2017 8:23 pm

bayview wrote:
Sat Aug 26, 2017 9:28 pm
Kencufc wrote:
Thu Aug 24, 2017 8:23 pm
Chip wrote:
Thu Aug 24, 2017 4:46 am
Kencufc wrote:
Wed Aug 23, 2017 10:11 pm
The house does need some repairs and we had a buyer but he lost financing. All our equity is essentially gone since the market has depreciated and about $20k in repairs are needed. If we rent it, we will use property management.
Nice thread title!

I agree with others that you are doing well.

As someone who had rental properties and experienced a full range of "landlord experiences", I would advise you to do whatever it takes to sell the house. Put in the 20k of repairs, hire a stager, lower the asking price, whatever. Given the time demands of job and family I'd think the last thing you need is something else to worry about. There's no guarantee that property management will fully insulate you from being a landlord.

Don't anchor on your equity, positive or negative. Just get it done and move on.
The theme from the Bogleheads seems to be "rip off the bandaid and get it over with"!
Yes, in fact, in your case, that's exactly the theme.:D

All of us, at some point, wind up with a dud investment, whether due to not-so-smart choices or plain old bad luck. Some can be revived; others cannot. At some point, you have to call the code.

DH and I would be severely affected by having to bail on an underwater mortgage. You aren't. You have the income stream that allows you to shrug it off and go on. You might even be able to use this to help your taxes.

Simply your life, dump the first house, amp up your emergency savings, and enjoy your family. Best wishes to you, and for the new little one. :beer
Cheers right back at ya!

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Mon Aug 28, 2017 8:27 pm

JGoneRiding wrote:
Sun Aug 27, 2017 10:33 am
fundseeker wrote:
Sat Aug 26, 2017 7:27 pm
I couldn't find where he said his loss would be that great. But regardless, it he does decide to become a landlord, that would be another reason he needs a huge umbrella policy, if he does not already have one. A tenant may just latch on to an opportunity to sue a wealthy doctor, unfortunately.
I was adding up all the costs the previous poster had suggested spending
20k repairs:
stager--I don't actually know what one of those costs
undisclosed loss to price to sale--lets call it 10-20k
cost of real estate agent 25k (based on value of property in OP)

So at least a 50k loss
Houses sell poorly in the winter so he has a limited time left to try and sale. Most likely financially the OP will be better off if he rents and sells in the spring. If they are near a college there will be a large pool of candidtes and lots want a 9 mos lease. It sounded like in the OP that maybe they had a person they knew was a good tenant already lined up

Just fyi, I am a LL with 6 "doors" I understand the issues. I do agree all doctors should have large umbrella policies
50k is about ballpark for total losses counting about $10k in improvements over the last year. Once a tenant has been found, I am getting an umbrella policy. Something I have been waiting to do anyhow.

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Mon Aug 28, 2017 8:28 pm

hightower wrote:
Sat Aug 26, 2017 8:46 am
You have similar numbers to me when I was your age (I'm 35 now). We make about the same (I'm a physician too). The only difference with me is that my debt was mostly in the form of student loans. My main house mortgage is a lot smaller though. But, my advice is to stay the course, get rid of the second house even if you lose a little, and get rid of the rest of your debt except the mortgage. Then, you need to focus on ramping up your savings a lot. Physicians are always behind the curve in terms of savings when they first start working as attendings. You need to be maxing your 401k, Roth's, HSA's, and funding 529's for your kids. Then, anything left over should be going into a taxable account. Once you have a healthy start on savings, you can consider throwing extra at your mortgage each year.
Put money aside each year for fun stuff with the family. You have to remember to focus on enjoying life now. You're lucky to have a family already;) You'll be in great shape in no time if you stick with that plan.
Especially nice to hear from another phyisican, thanks

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Re: Sigh...I'm ready for criticism...how am I doing?

Post by Kencufc » Mon Aug 28, 2017 8:31 pm

Dendritic Tree wrote:
Sat Aug 26, 2017 7:08 am
If it makes you feel any better, I'm a physician two years out of training (but 4 years older than you), married to another physician, and we are in a worse financial situation than you primarily due to our large med school debt (about 600k, combined). We have similar or slightly more savings, and have not bought our first house yet so don't have a mortgage.

I think you have to have a sliding scale of expectations for your net worth due to the fact that you started earning real money so late in life (hey, earlier than me though). Feeling insecure about your net worth at this point is similar to a 22-year old computer programmer feeling insecure about her net worth. Be patient, try your best to continue living somewhat like a resident and grow slowly into your new income so you can crush the debt and maximize savings. As long as you can protect that income and plow money into your net worth (either debt or savings) rather than toys, your net worth will start growing quite satisfactorily, I think.
Legit point you make. Ouch 600k. Hope you guys can crush through that as well. Are you holding on for PSLF? Most recent white coat investor podcast has an nice segment abou that.

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