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Finishing up my first year as an attending - any advice on how to manage my money?

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  • #16
    Gross

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    • #17
      Originally posted by Peds View Post
      Gross
      Thanks Peds. So hypothetically speaking, if i make 400k gross, $80,000 should go to retirement? I don't have a 401k at work unfortunately, so combo of IRA + Taxable investments should equal $80,000? Using simple math:
      (400,000) - (approx 36% in taxes) = $256,000 take home pay
      $256,000 take home - $80,000 for retirement = $176,000 for everything else (rent, food, savings, etc)
      Of that $176,000, should another percentage go towards something else i.e. savings, real estate investing?
      Thanks again !
      Last edited by detroitMD; 05-11-2020, 09:22 PM.

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      • #18
        I think you might not understand marginal tax rates versus tax brackets. While your last dollar might be taxed at 35%, that doesn’t mean you lose your standard deduction or the lower tax rates on the first dollars you earned.

        That said, a 401(k) would reduce your income at your highest marginal rate. Who is your employer? Why does he or she think it is wise not to offer a 401(k)?

        If you’re employed at $400K, I should hope that the business owner(s) earn at least as much. How does it benefit “Management” not to offer a defined contribution retirement plan?

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        • #19
          Originally posted by detroitMD View Post
          if i make 400k gross, $80,000 should go to retirement?
          yes, start there.

          1. Find accurate take home salary
          2. subtract $80k
          3. subtract rent, insurance, etc. but not car and loan payments
          4. find average spending for first year out of training, subtract that (if I were you I would exclude wedding related expenses)

          With what's left come up with an aggressive but reasonable plan for paying off those very manageable loans. You didn't state how much you owe on the car but even if it's $60k I expect you could have both knocked out in 2 years max. It's still unclear if the $105k is savings or EF or both. Make sure you have an adequate EF and with what's left you can now think about other financial goals like saving for a home down payment.

          If you come up short after the first 4 steps you'll need to take a closer look at your spending.
          Last edited by mapplebum; 05-12-2020, 07:02 AM.

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          • #20
            Originally posted by detroitMD View Post

            Thanks Peds. So hypothetically speaking, if i make 400k gross, $80,000 should go to retirement? I don't have a 401k at work unfortunately, so combo of IRA + Taxable investments should equal $80,000? Using simple math:
            -- thats the goal. just realize we have to save more given our late start, so the general 10% doesnt really work.
            (400,000) - (approx 36% in taxes) = $256,000 take home pay
            -- another item you should spend some time on. taxes.
            -- mike pipers book is excellent:
            https://www.amazon.com/Taxes-Made-Si.../dp/0981454216
            $256,000 take home - $80,000 for retirement = $176,000 for everything else (rent, food, savings, etc)
            -- but even if you assume 400K in taxable wages for MFJ, you are expecting only ~85K in fed taxes
            -- so even if you round that to 100K......400K - 80K - 100K = 220K left to spend.......
            Of that $176,000, should another percentage go towards something else i.e. savings, real estate investing?
            -- yes thats the money you use for loan payments, living, other savings goal like the car loan .....
            Thanks again !
            tax time.

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            • #21
              $75K for a wedding?! yowza. maybe I should be thankful no woman finds me desirable. i'll just keep hoarding my gold and become a bitter old (figurative) dragon

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              • #22
                Serious question: you're spending 75k on a wedding during a time when no large gatherings are allowed, likely no catering, no travel, and no elderly present?

                Are you just buying a gigantic rock for her?

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                • #23
                  Originally posted by xraygoggles View Post
                  Serious question: you're spending 75k on a wedding during a time when no large gatherings are allowed, likely no catering, no travel, and no elderly present?

                  Are you just buying a gigantic rock for her?
                  good question. we ended up postponing to Summer 2021 due to covid/ban on large gatherings, etc. this gives me an extra year to save, invest and get my financial situation in better order. thanks everyone for your help!

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                  • #24
                    Forgive me for my ignorance, but why roll over 2019 SEP IRA money into a solo 401k? I haven't started a solo 401k yet. Should I purchase any investments in the SEP IRA prior to rolling it over ? Also, I think I made a mistake on my backdoor roth for 2019 tax year. My 1099-R reads $6000.68 instead of a flat $6000 for gross distribution. I know my contribution was $6000 but i think the 68 cents was interest in a money market fund. Will this be a problem? What can i do to fix this? Thanks

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                    • #25
                      Originally posted by detroitMD View Post
                      Forgive me for my ignorance, but why roll over 2019 SEP IRA money into a solo 401k? I haven't started a solo 401k yet. Should I purchase any investments in the SEP IRA prior to rolling it over ? Also, I think I made a mistake on my backdoor roth for 2019 tax year. My 1099-R reads $6000.68 instead of a flat $6000 for gross distribution. I know my contribution was $6000 but i think the 68 cents was interest in a money market fund. Will this be a problem? What can i do to fix this? Thanks
                      • Just set up a solo-k, no reason to start with a SEP.
                      • The $.68 will be reported as $1 income, no problems, very common issue
                      Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

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                      • #26
                        Originally posted by detroitMD View Post

                        good question. we ended up postponing to Summer 2021 due to covid/ban on large gatherings, etc. this gives me an extra year to save, invest and get my financial situation in better order. thanks everyone for your help!
                        You're taking the wrong approach. It gives you an excuse not to have this elaborate party.

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                        • #27
                          Originally posted by CordMcNally View Post

                          You're taking the wrong approach. It gives you an excuse not to have this elaborate party.
                          haha trust me, i thought about it. on the bright side, i do believe i will be able to cut my expenses from 75k to 50k

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                          • #28
                            after hearing everyone, makes sense to open solo 401k ASAP. does charles schwab offer a sep-ira to solo 401k rollover? would be convenient since I have my sep-ira and roth ira there. if not, any recommendations on best solo 401k product?

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                            • #29
                              Originally posted by detroitMD View Post
                              after hearing everyone, makes sense to open solo 401k ASAP. does charles schwab offer a sep-ira to solo 401k rollover? would be convenient since I have my sep-ira and roth ira there. if not, any recommendations on best solo 401k product?
                              Yes, Schwab would be ok. My current personal favorite (following along in the footsteps ofspiritrider ) is E*TRADE, which checks off all the boxes, even some your may not need now but could in the future (such as mega-backdoor Roth). However, I would also consider that you can change custodians whenever the need arises. Iow, if Schwab is your personal fav right now and it will make the process more efficient for you (and, thus, more likely to motivate you to complete this project), that gets my vote.
                              Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

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