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  • Could use a lot of advice

    Hi forum. I've been afraid to post this for months now. You guys are going to be frustrated by me because I've made a lot of stupid mistakes and I'm in over my head now. I'm about to be a new attending. I start my attending position December 1st (took time off during residency so graduated off cycle). I took an attending at an academic center because I enjoy teaching but they don't pay well and now I'm regretting the decision. My wife was laid off in August and has had trouble finding another job so we've been living off my training salary.

    I'll just be honest about what's happening.

    Student loans -- 300K (currently year 5 on PSLF plan). No loans on my wife's end.

    Credit card debt between the two of us (I'm ashamed) -- 100K.

    I don't know how we got so far into debt. I've had my credit cards since med school and I was not at all responsible back then. Even as I became more responsible as a resident, it just snowballed with interest and whatnot. All credit cards have been cut in half and destroyed. No more credit for us, but I'm so overwhelmed with how to pay this back and actually start our life.

    We're both 35 years old and have very little in retirement (about $60,000). I have a stepdaughter who is 8 years old, in public school. No other kids. We rent, but just moved for my new job and it's in an expensive city so rent is about $3000/month. Cars are paid off. My new salary will be $200K and we live in a high tax area (I know, poor job decision on my part, but I really wanted this particular job).

    I'm so lost on how to get back on track, pay off all my debt, put away money for retirement, maybe even someday save up for a house. I've also been looking into life insurance since we have so little and so much debt and I don't know how my wife will raise our daughter without me, but that's an extra several hundred a month and I don't know if we can afford it.

    Please give me advice. I'm ashamed of the mess we're in and don't know what to do. I always prioritized family and our life over moonlighting so I didn't moonlight at all and I'm not excited about doing it now instead of spending time with my family, but that may be the only way I guess.




  • #2
    You know you've made some mistakes but you have acknowledged that and are looking to improve. You are young and now is the right time to turn things around.

    First consider your expenses. You need to stop the bleeding and start reducing that CC debt ASAP. You should review what you are spending on so you can address your spending. Evaluate all your spending; don't assume anything is untouchable or not worth taking a second look. For the next several years you must restrain yourself to a very basic lifestyle. For many physicians $200k in HCOL is not great but it is still more than many people make so you should be able to pay off those debts quickly.

    The other side of the equation is earning. Hopefully your wife can find another soon as additional income will help. I would strongly consider your options as well. If you have reasonable opportunity to moonlight extra income will help. On the other hand, don't burn yourself out or damage your family relationships. Deciding if you want to stick with your current job is a very personal decision. I'm guessing you could find somewhere that pays more but there are tradeoffs. Your income is enough but if you stick at that level in a HCOL area you need to accept that you will be living a more modest lifestyle than many people associate with a physician.

    Don't even think about buying a house right now. I would even prioritize the credit card debt over retirement at this point unless you have matching funds. Do get a quote on term life (it should not be too expensive assuming you don't have any medical issues).
    Last edited by Gamma Knives; 11-20-2019, 01:33 PM.

    Comment


    • #3
      I would not be putting money into your retirement account until you pay off your credit card debt. Once you get that paid off and have pslf wipe out your student loans, you guys should be on your way. I would read some basic personal finance books, write yourself out a budget and keep trying to live on your resident salary until your credit card debt is cleared. Once you have a budget and have every dollar assigned to a task, you will probably have less stress. I would probably try to find some way to fit some amount of life insurance into your budget.

      Comment


      • #4
        Great job identifying the problem and having the courage to look in the mirror and change. Probably 99% of the battle, so long as your partner agrees.
        No shame, just don't be an eternal victim, and now do something about it.

        1. Do you really truly need to be in the HCOL area? Housing, cars, food, school/childcare. Control those big tickets = FI 5-10yrs earlier.
        2. Dave Ramsey for now until CC paid off, make a plan and timeline for payoff. LBYM, you can pay it off in 2 years or less. Find 0% credit card transfers
        3. Agreed with no retirement savings until the CC are paid off. (maybe the minimum to max the match, if you get one).
        4. Once you're ready to invest, check out the rest of WCI/bogleheads/educate yourself.
        5. Big hole, but you have a big shovel.

        Comment


        • FinanciallyIlliterateDoc
          FinanciallyIlliterateDoc commented
          Editing a comment
          Have found a lot of credit cards offering 0% interest for a year, but they all come with 3 - 5% fees on the amount transferred.

      • #5
        I'm not sure what advice you need. put as much money to the credit cards as possible and spend as little as possible.

        Comment


        • #6
          The first dichotomy is to figure out if you really want to live in the HCOL area making a low salary for a physician and having to really scrimp by while paying your debts. If that's the path you take then things are going to be tight but it can be done.

          As a related aside, I'm generally more bullish on newer attendings putting more emphasis on money out of residency. Paying off debts and putting some money aside really gives you so many more options later on. Plus, it allows you to take life's curveballs and hit them out of the park.

          Comment


          • #7
            Originally posted by FinanciallyIlliterateDoc View Post
            Hi forum. I've been afraid to post this for months now. You guys are going to be frustrated by me because I've made a lot of stupid mistakes and I'm in over my head now. I'm about to be a new attending. I start my attending position December 1st (took time off during residency so graduated off cycle). I took an attending at an academic center because I enjoy teaching but they don't pay well and now I'm regretting the decision. My wife was laid off in August and has had trouble finding another job so we've been living off my training salary.

            I'll just be honest about what's happening.

            Student loans -- 300K (currently year 5 on PSLF plan). No loans on my wife's end.

            Credit card debt between the two of us (I'm ashamed) -- 100K.

            I don't know how we got so far into debt. I've had my credit cards since med school and I was not at all responsible back then. Even as I became more responsible as a resident, it just snowballed with interest and whatnot. All credit cards have been cut in half and destroyed. No more credit for us, but I'm so overwhelmed with how to pay this back and actually start our life.

            We're both 35 years old and have very little in retirement (about $60,000). I have a stepdaughter who is 8 years old, in public school. No other kids. We rent, but just moved for my new job and it's in an expensive city so rent is about $3000/month. Cars are paid off. My new salary will be $200K and we live in a high tax area (I know, poor job decision on my part, but I really wanted this particular job).

            I'm so lost on how to get back on track, pay off all my debt, put away money for retirement, maybe even someday save up for a house. I've also been looking into life insurance since we have so little and so much debt and I don't know how my wife will raise our daughter without me, but that's an extra several hundred a month and I don't know if we can afford it.

            Please give me advice. I'm ashamed of the mess we're in and don't know what to do. I always prioritized family and our life over moonlighting so I didn't moonlight at all and I'm not excited about doing it now instead of spending time with my family, but that may be the only way I guess.


            Common situation. Stop beating yourself up. It's not hopeless either, far from it. But it is going to involve some pain fixing things.

            But go back and read your post. The solution to all of your problem is outlined there. You're asking how to fix your issues. Well, you take them one by one and do the opposite of what you've done.

            Problem # 1 $100K in credit card debt.

            Solution: Stop digging (check.) Consolidate the debt to as low of an interest rate as you can and start stomping on it as hard as you can with every dime you can cut out of your budget.

            Problem # 2 Dramatic drop in income as wife lost job

            Solution: Wife gets new job.

            Problem # 3 Took a job that pays like crap

            Solution: Get a new job or two

            Problem # 4 Moved to an expensive cost of living area with high taxes

            Solution: Move to a cheap cost of living area with no taxes

            Problem # 5 No life insurance

            Solution: Buy a whole bunch of cheap term life insurance

            Problem # 6 Huge student loan burden

            Solution: PSLF, VA loan program, and/or refinance and live like a resident for 5 years (that's 5 years AFTER the credit cards are wiped out)

            There's no shortcut here. This isn't going to be easy, but if you think you're going to get different results while doing the same thing you have been doing in the past you're nuts. Maybe you don't have to do all six of these things, but I'll bet you need to do the majority of them.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

            Comment


            • #8
              So, your first baby step is to have an emergency fund in a savings account. Do you have any cash saved? Probably around 2 month of rent and living expenses would be a good place to start.

              Then your next step is to make a plan to pay off the credit card debt. In your shoes, I would make a spreadsheet of each account, the balance owed, and the interest rate for each card. Then sort by interest rate and size of balance. Start to attack the debt in a stepwise fashion, prioritizing paying off the highest interest rate balances as well as paying off any accounts with small balances in full.

              When you fully payoff any credit balance, even a small balance account, that bumps your credit score. When you pay down the highest interest rate balances, you save lots of interest charges the following month. Once your credit score gets to a better level, you may be able to get a zero interest rollover from Bank of America for 18 months interest free, and then you can work on some of the other balances with high interest while riding that free interest for a while.

              Comment


              • #9
                I'd be interested to hear what members think about the not working too much to focus on family thing. Granted my first 4 decades were spent in the dark ages where everyone worked until near exhaustion with little regard for anything other than their work ethic but I have to wonder if the pendulum has swung a bit too far in the opposite direction?

                Comment


                • #10
                  Originally posted by StateOfMyHead View Post
                  I'd be interested to hear what members think about the not working too much to focus on family thing. Granted my first 4 decades were spent in the dark ages where everyone worked until near exhaustion with little regard for anything other than their work ethic but I have to wonder if the pendulum has swung a bit too far in the opposite direction?
                  There is a certainly a happy medium there. You don't want your children to grow up not knowing who you are but you also don't want to have to financially rely on them because you didn't earn money to be able to get your financial house in order.

                  Comment


                  • #11
                    Originally posted by FinanciallyIlliterateDoc View Post
                    Hi forum. I've been afraid to post this for months now. You guys are going to be frustrated by me because I've made a lot of stupid mistakes and I'm in over my head now. I'm about to be a new attending. I start my attending position December 1st (took time off during residency so graduated off cycle). I took an attending at an academic center because I enjoy teaching but they don't pay well and now I'm regretting the decision. My wife was laid off in August and has had trouble finding another job so we've been living off my training salary.

                    I'll just be honest about what's happening.

                    Student loans -- 300K (currently year 5 on PSLF plan). No loans on my wife's end.

                    Credit card debt between the two of us (I'm ashamed) -- 100K.

                    I don't know how we got so far into debt. I've had my credit cards since med school and I was not at all responsible back then. Even as I became more responsible as a resident, it just snowballed with interest and whatnot. All credit cards have been cut in half and destroyed. No more credit for us, but I'm so overwhelmed with how to pay this back and actually start our life.

                    We're both 35 years old and have very little in retirement (about $60,000). I have a stepdaughter who is 8 years old, in public school. No other kids. We rent, but just moved for my new job and it's in an expensive city so rent is about $3000/month. Cars are paid off. My new salary will be $200K and we live in a high tax area (I know, poor job decision on my part, but I really wanted this particular job).

                    I'm so lost on how to get back on track, pay off all my debt, put away money for retirement, maybe even someday save up for a house. I've also been looking into life insurance since we have so little and so much debt and I don't know how my wife will raise our daughter without me, but that's an extra several hundred a month and I don't know if we can afford it.

                    Please give me advice. I'm ashamed of the mess we're in and don't know what to do. I always prioritized family and our life over moonlighting so I didn't moonlight at all and I'm not excited about doing it now instead of spending time with my family, but that may be the only way I guess.


                    You’re 400 in the hole. I would start to get very excited about moonlighting. You haven’t earned the right not to be excited about moonlighting.

                    Comment


                    • ENT Doc
                      ENT Doc commented
                      Editing a comment
                      If that’s allowed.

                  • #12
                    I don't think you need to be ashamed. Besides, shame does you no good, just keeps you down and unable to make a plan. Chin up! This is by no means insurmountable. I think you can pay off the cc debt in 2 years while living in your current area at your current job without moonlighting. You are going to have to make and stick to a budget though. I'm sure your wife can find another job. Start with seasonal temp work over the holidays if that is all that's available right now. Keep working the pslf angle and loans are gone in 5 years. You already have 60k in retirement- that's awesome! Reallocate the money going to pay off credit cards in 2 years to retirement. Once student loans are gone, consider a new job and new location. Save up a downpayment for a house. I think 5 years from now you are debt free, on track with retirement and buying a house. That's not so bad, is it?

                    Comment


                    • #13
                      Interesting situation with a ton of issues. Financially, you might want to build a spreadsheet with two pages. One strategic and one tactical.
                      Tactical= monthly/annual budget
                      gross pay
                      -taxes
                      -benefits
                      net pay
                      -rent
                      -utilities
                      ​​​​​​-food
                      -Insurance
                      etc
                      -cc debt
                      -loan payments
                      -savings for known expenses
                      Down to zero
                      This is where you are. Gross -taxes-retirement =spending (including debt payments)

                      Strategic:
                      Items you know you want or should be doing.
                      Credit card payoff
                      Loan payoff
                      Retirement savings at 20%
                      House purchase
                      Vehicles
                      Disabilty Insurance
                      Term life
                      Vacations
                      College savings
                      Child expenses
                      Health care deductibles expenses

                      You will find the you can plan your goals, but they won’t happen unless you actually translate them into a line on the first page. It all comes down to income and expenses. It will give you a perspective that some expenses are less important because they are keeping you from your long term goals.

                      The risk I see is at 40/45 you end up debt free with no retirement savings and a teenager and still renting with college on the horizon.
                      That would motivate you to make some of changes that are difficult. Apartment rent, cut it in half and commute. Wife working or moving and getting a different job or moonlighting. Yes, paying off the Cc and loans will help tremendously but the calculations on the strategic page need to be on payments on page 1, the tactical page. Cutting expenses for specific goals or boosting income has a specific reason. Controlling spend isn’t because you can’t afford it, it’s because you choose to spend it differently.

                      Your anxiety is from the unknown. Put it on paper and you will know where your at and where you are going. Don’t fret the details, just refine as you go. You can afford term life insurance, you will simply give up something else. But you do it for a reason. Congratulations on your new job. Just make a plan rather than deal with the emotions.


                      Comment


                      • #14
                        you've already gotten a lot of good advice. one thing I haven't seen mentioned is the possibility of negotiating your credit card debt. does anyone else know if this is a viable option?

                        https://www.creditkarma.com/advice/i...-card-company/

                        Comment


                        • #15
                          I'm 50. Training was different and expectations were different. I feel like the old man yelling at the kids to get off the lawn. But we sucked up a lot and sacrificed a lot in our relationships - maybe too much. I would have a heart to heart with your wife. Discuss that the family is in financial trouble but it is surmountable with a year or two of sacrifice and hard work. You are so so lucky to be a physician. If this were anyone else - who else can come up with a hundred grand extra in a year or two with hard work? You are really lucky.

                          Everything everyone said was good. Obviously you've torn up the credit cards. No starbucks. No dinners out. No movies. That all goes to credit card debt.
                          Next, kid is old enough to be in school? Mom gets a job.

                          How far are you from a LCOL? Is it too late to move? Make your commute longer. But at this point your priority is not developing a beautiful relationship with your family.

                          Your priority is make as much money as you can because that CC debt is going to get big fast. Have a real hard heart to heart with your wife. Tell her you need to bust your tail as hard as you can for a year or two to make as much money as you can to get out of that CC debt. Everything else will fall into place after that. So moonlight as much as you can. For a year you will just have to suck it up. No fancy vacations. No starbucks. No restaurants.
                          I've heard great things about Dave Ramsey to get out debt (not necessarily to invest).
                          Finally - may be an option might not - when we had our first kid we needed a safer car. Didn't have any money. Fresh out of training. In-laws lent us the money and we paid it back over the next year. Can your parents or hers lend you a hundred grand or anything to pay off the CC debt then come up with a payment plan? It would have to be official with contracts. Can they take out a home equity that you would pay back? With a written contract? The home equity or second mortgage will be tax deductible and a much lower rate.

                          You are so lucky to be a physician. You got this. For sure. It's going to take an extra year of hard work but imagine your pride when you look back at the hole and see how you dug out. And it's a rough spot in the marriage, but it will be one of those things you two worked on and beat.

                          Congratulations in advance!

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