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2019 Personal Finance Check-up

Home Personal Finance and Budgeting 2019 Personal Finance Check-up

  • Avatar Dilaudidopenia 
    Participant
    Status: Physician
    Posts: 188
    Joined: 05/22/2016

    Thanks for all the great advice so far.  Forgot to mention that will likely have to purchase a new car soonish (pushing 175k miles on our sedan) especially with baby coming.  Would prefer cash purchase instead of financing.  Agree with taking some of that cash fund and paying down the loan.

    #187299 Reply
    Avatar Dilaudidopenia 
    Participant
    Status: Physician
    Posts: 188
    Joined: 05/22/2016

    Say I killed the loan today. And say our time horizon for buying a house is 15 to 24 months. After making my 401k contributions and her 403b, expenses etc,I have around 10k a month to play with. I would want to start building back up our cash reserve for a down payment, but the other thing I was thinking of is contributing to a 529. How would you manage this split?

    #187315 Reply
    Liked by MPMD
    Avatar EMPAC623 
    Participant
    Status: Advanced Practice Provider
    Posts: 28
    Joined: 11/15/2018

    You could kill loans and have 35K left, buy a new car for 20 and still have 15K in emergency fund with 10K extra coming in a month.

     

    529 plans are great but you only get state tax break, so say $1,000 a month gives your kid a great start and at 9K a month for saving youre looking at essentailyl 100K/year saved. Cant go wrong with that ratio

    #187317 Reply
    Liked by Zaphod
    Avatar Dilaudidopenia 
    Participant
    Status: Physician
    Posts: 188
    Joined: 05/22/2016
    Earnest refinancing bonus

    Been thinking through this and I think we are leaning towards killing off my loan.

    However, some people (as in this forum) have suggested instead deploying all or part of this money into a taxable account.

    I am wondering if someone can quantitatively take me through the alternatives of paying off the 140k @ 3% vs investing.  The loan is currently on a 5 yr fixed term with about 3.5 yrs remaining.

    #189744 Reply
    Avatar docnews 
    Participant
    Status: Physician
    Posts: 392
    Joined: 01/09/2016

    First off my background: 2.5yrs into my EM career, similar loan amount for me which I paid off but my refinanced student loan rate never beat my tax deductible mortgage rate so it was a no brainer (after maxing out my i401k/HSA/bdRoths). If you are dead set on getting a house in a year rates have gone up and some docs aren’t even itemizing (depends if you give substantial charity or not) you might be better off putting the cash into your home. Remember you can get doctors loans with no pmi (zero percent down for me). I’d suggest consider renting as an option especially if you don’t even know where in the new town you want to live. Also both of you have to like your jobs in that place.

    Your last post is asking the wrong question. “Quantitatively” the market solidly beats your loans ON AVERAGE OVER LONG PERIODS OF TIME. Therefore what you really need to consider is your risk tolerance. If you invest money without paying off your loans, you are increasing risk for higher return. Nothing wrong with that but not my cup of tea.

    #189767 Reply

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