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Budgeting in a recession - even medical professionals can lose their job

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  • Budgeting in a recession - even medical professionals can lose their job

    First off, I would like to keep this general so its not just a "help me" post. Even medical professionals can lose their jobs. My wife, an NP working in a small family clinic, lost her job today after the clinic shut down most operations 1 week ago. Honestly, I'm shocked a family clinic had to lay off all employs after loosing out on 1 weeks worth of income.

    Quick personal summary, I'm a PGY-1 in a 5-year surgical sub-specialty and my wife is DNP. We both graduated May 2019 with a combined 140K student debt (currently in REPAYE), bought a home (420K doctor loan, approved on my income only) in the expensive city that I matched in. After taxes, we are bringing home 13k a month (6k from me, 7k from my wife). Now we are down to my income only with a 2300 month mortgage (38% income, includes taxes and insurance). Even if I stopped getting paid, we currently have 3-4 months of living expenses in the bank before we need to resort to credit cards.
    ​​​​​​​
    Some general things I can think of/did already: called my CC company and learned about payment grace period. Got information from mortgage lender on forbearance if needed. Tightening the belt - reducing monthly expenses as much as possible.

    While this is still very much doable, it really leads me to ask - what's the next step in terms of budgeting and buckling down. I have left out my personal budget as I would rather have general advice that other's could use as well. For people who lost their professional jobs in 2008/9 - what did you do then to get to where you are today?

  • #2
    Cut car insurance on any cars you don't need to drive.

    File for unemployment (obvious, but mentioning for the record).

    Cut TV/cable, phone bills, eating out, turn down the heat/ac. iPhone 6 > iPhone 97XSLeMAX+++.

    Cancel the gym & golf club. If either of you are part of specialty societies, many of them offer cut rates in times of income loss.

    Be sure you add the wife to your health insurance if she wasn't already.

    Is your sole income of $6,000 a month not enough for the 2 of you to get by on until the wife finds another job? I think it is highly unlikely you would lose your income as a pgy 1/5.
    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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    • #3
      "the wife finds another job." If she can do some online training quickly to change from family medicine (elective) to a field that handles critical care or em, she will widen the employment net. Even a decrease will be worth it. Getting a job even out of healthcare will be a huge improvement. Increasing income is usually the best choice.

      "Honestly, I'm shocked a family clinic had to lay off all employs after loosing out on 1 weeks worth of income." Why are you surprised? If the revenue wasn't going to cover the variable cost, the clinic is conserving cash too.

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      • #4
        ...you could have your wife consider RN work if midlevel stuff is not available. Those jobs are always around, and it could be gateway to a center that will get her back to midlevel work. You won't lose your PGY job since hospitals make most of their profit in flu season (and this will be the worst one in recent memory), residents are more cost effective to them than midlevels, and any hospital with residency is largely govt funded - either directly or indirectly via ACGME monies and govt insurance payers.

        It will be a good exercise in living frugal; Cubicle had good advice above. I would had her being open to RN options and selling any unnecessary or niche/lux vehicles (not just cut insurance). Public transport or biking is usually viable in high COL areas, but you know what you need and what is expendable. When she gets back in the black, you guys will be accustomed to reasonable lifestyle and able to really pay down mortgage debt, student debt, or max retirement. Good luck, man

        ...

        Originally posted by Tim View Post
        ... she can do some online training quickly to change from family medicine (elective) to a field that handles critical care or em...
        Nurses and PAs don't have to do training to switch specialties... exp or some CME in the area is preferred, but they have many cert boards which are poorly understood and largely viewed as optional (rise of midlevels still fairly new), so it is entirely up to the hospital and how much need they have and the level of laxity they want to have in hiring. That training for new specialty is often just provided on the job for midlevels and RNs.
        A nurse or NP or PA can essentially change from OB to psych to ER to surgery as long as they can get the jobs (scary, huh?). They learned it all in school, yet docs would need years for another whole residency or fellowship and board exam to change specialty. Welcome to cost effective health care
        Last edited by Max Power; 03-23-2020, 11:39 PM.

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        • #5
          Some good thoughts above. Good on you to be financially responsible and save for down times. The fact if the matter is, if we were all more responsible, forgoing some of the pleasantries in life before all this to ensure funds were available in down times, we wouldn’t have a need for a giant stimulus. Instead we add more to our debt.

          https://thehill.com/opinion/finance/...y-of-americans

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          • #6
            Back up. A bank gave you a 400k mortgage based on a 72k salary. I thought that was the problem in the last crisis?

            But really the problem is your high fixed expenses. So you either need to get rid of them like sell your house which would be very difficult now or earn more income to match them. I agree with her getting any job available at this point. I imagine the hospitals are in need of nurses or will be soon.

            Budgeting and cutting all of their expenses will help in the meantime..

            Good luck

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            • #7
              Do you regret buying a 420k house when you still had >100k student loan debt?

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              • #8
                While there are current firings from subspecialties, hospitals around the country are about to become overwhelmed with Covid patients. If you are willing and have the skillset to help care for these patients, you will be able to find work. But of course that work will be dangerous. As a PGY-1 your hospital will be automatically repurposing you so I don't think you need to worry about losing your job. Your wife can work as an RN on the floor. Financially I think you should be fine.

                If I and the rest of the members of my family are still alive and without longterm organ damage once this is over I'd consider that a success.

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                • #9
                  I would think that jobs will be plentiful in the hospital and she should applying today. This case illustrates why buying a home before you have ALL areas of your financial life in order is not a good decision.

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                  • #10
                    you will have a job.
                    she needs to find a new job.
                    otherwise you are now house poor, so you spend less everywhere else.

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                    • #11
                      Obviously too late for OP but I don't understand utilizing student loans for a DNP when a NP Masters provides the same clinical abilities and wages. The DNP should be a pay in cash add on later if someone deems it desirable.

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                      • #12
                        Originally posted by Zach View Post
                        First off, I would like to keep this general so its not just a "help me" post. Even medical professionals can lose their jobs. My wife, an NP working in a small family clinic, lost her job today after the clinic shut down most operations 1 week ago. Honestly, I'm shocked a family clinic had to lay off all employs after loosing out on 1 weeks worth of income.
                        As someone who runs a solo practice the possibilities are:

                        1. There is not much in reserves after the high overhead and reduced income of a Family practice.
                        2. There is uncertainty of how long this will last. If you know that you will reopen in a month, you can continue to pay. But if there is a possibility that this might last 3 months, better to stop paying early.
                        3. Conserve some reserves so that you have money to help restart the practice when you can finally open it.
                        4. Unless you already have an established line of credit, trying to get one now is next to impossible.

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                        • #13
                          We are entering this territory as well. My wife is a dentist with a company that didn't want to shut down during this pandemic. She took off this week since positives are growing, and she shouldn't be in someone's mouth at this time. She contacted the clinic owner today, and my wife is being told that she may need to be out longer aka furlough time. Definitely sucks, but we budget for the worst case scenarios here.

                          I like the idea of utilizing any forebearance/interest-free scenarios. Any delay can help at this time, but double check all of the conditions, of course.
                          - cutting out subscriptions is huge
                          - maybe even switching insurance carriers. you'd be surprised how you can save a few hundred bucks with a change.

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                          • #14
                            Originally posted by Cubicle View Post
                            Cut car insurance on any cars you don't need to drive.
                            File for unemployment (obvious, but mentioning for the record).
                            Cut TV/cable, phone bills, eating out, turn down the heat/ac. iPhone 6 > iPhone 97XSLeMAX+++.
                            Cancel the gym & golf club. If either of you are part of specialty societies, many of them offer cut rates in times of income loss.
                            Be sure you add the wife to your health insurance if she wasn't already.
                            As some people mentioned, yes #1 is her finding a new job. All great points, she already filed for unemployment. She was already on my health insurance (allowed for negotiation of her salary) but excellent point and one we brought up that we were glad we did. We never paid for cable/memberships/etc as they were deemed a waste of money at this point in our career. I turned our garage into a home gym long time ago.

                            In fact, I will bring this up now: All of the student loans were my wife's undergrad and DNP school, we were putting almost her whole salary into the loans starting last October, currently 110k<-144k. We were already "living off" my salary.

                            Originally posted by ENT Doc
                            Some good thoughts above. Good on you to be financially responsible and save for down times. The fact if the matter is, if we were all more responsible, forgoing some of the pleasantries in life before all this to ensure funds were available in down times, we wouldn’t have a need for a giant stimulus. Instead we add more to our debt.
                            https://thehill.com/opinion/finance/...y-of-americans
                            Agreed, all great advice. Thank you! Fantastic article, thanks for sharing it!

                            Originally posted by Lordosis
                            Back up. A bank gave you a 400k mortgage based on a 72k salary. I thought that was the problem in the last crisis?
                            Correct! Renting a similar house in my area is close to 3k a month that is within 20 min drive from the hospital. Used a doctor loan from a lender that advertises on this website for a 3.625% rate and 0% down with no PMI. As the person below you asked, do I regret it? Not even now. In 1 year? ...Maybe yes if that RE market does something similar to 2008. Risk I considered and was okay with taking when we decided to buy.

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                            • #15
                              Originally posted by Kamban View Post

                              As someone who runs a solo practice the possibilities are:

                              1. There is not much in reserves after the high overhead and reduced income of a Family practice.
                              2. There is uncertainty of how long this will last. If you know that you will reopen in a month, you can continue to pay. But if there is a possibility that this might last 3 months, better to stop paying early.
                              3. Conserve some reserves so that you have money to help restart the practice when you can finally open it.
                              4. Unless you already have an established line of credit, trying to get one now is next to impossible.
                              These are all valid points. Thanks for sharing them. What steps/order would you take to reduce overhead? Would you try to reduce to half-staff first, wait a week, then the rest? What about equipment on leases, any forbearance options with those payments?

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