Hello. I am hoping to get some opinions on how best to manage my family’s debt. I have a few ideas but curious from the experts here.
Scenario: I’m a 32 y/o anesthesiologist working in a LCOL area with a 32 y/o wife who is an engineer not currently working as we have a newborn, our first. After several years in practice (small community hospital, partner in a small group) I find myself unhappy with the job. (Not anesthesia itself, but a lot of the things that come with it.) Therefore I will be starting a fellowship in critical care this summer. Current debt: my education debt is about 400K, wife’s is about 250K, mortgage is 210K, 2 cars total debt 30K. We intend to return to the area and have found a renter for our home. We had hoped to save on rent in the fellowship city by purchasing an RV and using it for the year, then sell it at the end. Well, after purchase of said RV we now are unable to find somewhere reasonably close to hospital to park it. So we have found an apartment and are trying to cut our losses. The RV has a 60K loan on it and due to the off the lot depreciation we would be lucky to get 45-50K for it.
Any thoughts/ideas/suggestions/questions are most welcome. Thanks!July 4, 2019 at 6:15 am MST #2276708arclayParticipantStatus: PhysicianPosts: 18Joined: 01/30/2019
Unfortunately you missed an enormous opportunity to pay down good chunks of the debt while you were an attending, especially considering you’ve been able to back several years of work at only 32!
The RV is a sunk cost at this point, sell it for what you can. The silver lining is you’re still an anesthesiologist, so you should be able to find some moonlighting work during fellowship. I covered overnight OB 2-3 times a month during my fellowship and tripled my income for the year. Contribute to represent accounts, then take any extra cash and put towards loans, refinance at lower rate if able.July 4, 2019 at 6:28 am MST #227675wa2106ParticipantStatus: PhysicianPosts: 153Joined: 11/29/2017
Is your renter cash-flowing the property positive? How much equity do you have in the house? I would consider selling the house and applying equity to loan balance as well as whatever you get for the RV. Moonlighting as suggested above is a great idea. Is there a plan for your spouse to go back to work? She may need to especially while you have low years of income. You have a major debt problem that has the potential to become unmanageable during your fellowship.July 4, 2019 at 6:42 am MST #227676HankModeratorStatus: AttorneyPosts: 1272Joined: 03/27/2017
How much do you realistically expect this fellowship to increase your salary compared to its cost?
You probably have seen Jim’s advice about living like a resident for the first 2-5 years as an attending. Since you didn’t do that the first time, you could try living like a fellow until you pay off your loans.
I’m confused about the situation with the motor vehicles. You have two cars with car notes, an RV bought on credit, and you decided to add the expense of an apartment? Do you need two cars? Could your wife drive you to and from your hospital then have use of the car all day? Is the new apartment close enough to bus, bike, or Uber to the hospital? It sounds like you need at least one car; it doesn’t sound like you need two cars and an RV plus debt on all of the above.
What type of engineer is your wife? Civil engineering, structural, or mech where she can work just about anywhere? EE with experience in an area where she might be able to telework? Astronautical or biomechanical / medical device where most employment prospects are in expensive larger cities? Could she consult or work as a patent agent while staying home with the baby?
How about the house? Is it cash flow positive net of all expenses? What about if you have to replace a water heater or worse a roof? Would you have purchased this house to use as a rental property? Are you unnecessarily tying yourself back to your previous town and possibly previous employer with this house? Heck, would your old employer pay you any more post fellowship than you could have gotten with an extra shift or two a month or a weekend of locums work elsewhere?
Sorry to sound downers, but it seems like you are adding poor financial decisions to previous poor financial decisions. You may want to tear off the band aid and sell the RV, the house, and possibly one of the cars. I wouldn’t rashly drop out of the fellowship, but sharpen your pencil and honestly do the math. If you aren’t familiar with the concept of the sunk cost fallacy, read up on it.Vagabond MDParticipantStatus: PhysicianPosts: 3338Joined: 01/21/2016
That’s an amazing amount of debt ($950k, if I did the math correctly) and some of it avoidable (cars and RV). I am not sure where you had planned to live, but I fail to see a likely scenario where buying an RV would save money on rent.
That said, I think in the future, you should be laser focused on paying down the debt, over anything else. Moonlight during fellowship, for sure. Is your wife going back to work? That might help (although cost of childcare might negate some or much of the benefit). As the @WCI would say, you need to “live like a resident” while you are a fellow and the ensuing years until the debt is paid off, at least the educational and consumer debt. No fancy cars or trips, no second homes, home upgrades or remodels, big jewelry purchases or boats, etc. Drive those cars into the ground. And no new debt to pile onto the existing debt, either.
"Wealth is the slave of the wise man and the master of the fool.” -Seneca the Youngerwonka31ParticipantStatus: PhysicianPosts: 645Joined: 03/24/2018
This is not good. It is not, however, insurmountable. You need to moonlight. You need to not eat at restaurants except on the rarest of occasions. You need to sell at least one of the cars and the suv. You need to change your spending and debt mindset. You can do it, best of luck.
Thanks for the input.
How do I get around the 80h acgme limit? Don’t report it and don’t tell my program director?
I failed to mention in the initial post that I have at least made some progress in my 2 years post residency. My student debt was refinanced at completion of residency. Principal was 409 at 4.9% for 15 years. It is now at a balance of 374K. My group has had an excellent retirement plan and by the end of this year will have 100K between 401K and profit sharing. I have a 5500 back door roth from last year. In preparation for fellowship we have saved 80K to help make payments of student loans, mortgage etc. We stand to inherit 30K from a deceased grandparent. We have an additional 25K saved for emergency funds (car, house repairs etc.)
Additionally in that 2 year time span we got married and took our honeymoon. It was not ‘lavish’ compared to many others I’ve been to, but did cost approximately 30,000 including rings, honeymoon, reception.
According to my calculations when we return from fellowship we should be able to put 100K per year toward debt.
The baby is 5 weeks old, so no current plan to return to work for my wife who has Bachelors of Architecture and Masters in structural engineering.
The RV was obviously a bad decision in hindsight and I won’t bore you with the details of why we thought it might work.July 4, 2019 at 6:53 am MST #227683octopus85ParticipantStatus: ResidentPosts: 206Joined: 08/13/2017
OP, my spouse is also an engineer, and I’m the same age as you. Through simple good habits (no lottery winnings, inheritances, nor anything of that sort), we’re on track to hit >$1M net worth before I finish fellowship. You, on the other hand, are on track to hit NEGATIVE $1M. There may be situational differences, but I bet 99% of this discrepancy is attributable to making good decisions.
octopus85ParticipantStatus: ResidentPosts: 206Joined: 08/13/2017
- Get rid of the RV. Why on earth did you buy a *new* RV without a plan for something so fundamental as parking?
- Sell the house. You don’t want to be an absentee landlord.
- Wife goes back to work. Many big companies have “Career re-entry” programs especially for women who’ve taken time out for childcare. Cost of childcare will be less than what she can make as an engineer.
- Moonlight like crazy
- Reconsider your fellowship. I hope you will take a long, deep look at the fact that you essentially quit a high-paying job, while $1M in debt, because you were “unhappy”. At the very least, consider how you will ensure you have the ability/stamina to work in crit care and not be unhappy in that situation, as well.
- Live like a resident.
Thanks for the input. How do I get around the 80h acgme limit? Don’t report it and don’t tell my program director?Click to expand…
…and the poor decision making continues…CMParticipantStatus: PhysicianPosts: 1086Joined: 01/14/2017Reconsider your fellowship. I hope you will take a long, deep look at the fact that you essentially quit a high-paying job, while $1M in debt, because you were “unhappy”. At the very least, consider how you will ensure you have the ability/stamina to work in crit care and not be unhappy in that situation, as well.Click to expand…
This. You may not be happier in critical care.
Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried bags for Cyd Charisse (gracious). Hosted epic company parties after Friday night rehearsals.
Thanks for the input. How do I get around the 80h acgme limit? Don’t report it and don’t tell my program director?Click to expand…
…and the poor decision making continues…Click to expand…
What do you suggest octupus85?July 4, 2019 at 7:13 am MST #227691LithiumParticipantStatus: PhysicianPosts: 1132Joined: 02/15/2016
I find myself unhappy with the job. (Not anesthesia itself, but a lot of the things that come with it.) Therefore I will be starting a fellowship in critical care this summer.Click to expand…
You decided to change specialties based on not liking your job?
I can’t run the exact numbers obviously, but I wouldn’t be surprised if this fellowship costs you a half million over the next two years. Are you sure it’s the right move? Obviously you should have been posting here months ago and the problem is if you quit now you probably burn a bridge. But you have to get in the mindset to start making some really tough decisions.
Also, sell as much crap as you can. I’m pretty much an anti-automobile evangelical, so of course I say to dump the RV and one of the cars. Figure out how to lower your taxes.trebizondParticipantStatus: ResidentPosts: 108Joined: 12/31/2017
There are a lot of moving parts that need to be fixed and that require a change in mentality.
1. I’m not sure where the decision to pursue critical care comes from because you yourself stated that it wasn’t anesthesia itself that was the problem, it was the things that come with it. Is it the job situation itself? If so, it sounds like you need a job in a different hospital/group, not a different fellowship. Is it the lack of being a patient’s “primary physician” or the work with difficult surgeons? The CC attending has to take into account what other teams want – the transplant nephrologist, the hematologist giving the pt chemo, the surgeons with the post-op patient, ID antibiotic stewardship refusing the antibiotic you want, etc. so you’re not having as much autonomy as you might think.
Also, I’m not sure that in a community setting you needed a CC fellowship. There are rural open ICUs where internists who have no critical care training are taking care of their patients in the unit. I’m sure you could have found some similar gig where as an anesthesiologist you managed these patients for a good salary and thereby test your true interest in CC, rather than taking the paycut to do a CC fellowship. Honestly, I don’t think you should do the CC fellowship.
2. If you do plan to go ahead with CC fellowship, strongly recommend selling the house and just renting. If you decide to stay put, obviously stay in your house. Is this feasible? Have you had the renter sign a lease or is this not yet official?
3. Moonlight to the 80hr max if you do end up doing the CC fellowship. I doubt that with the shift structure in CC you will be doing more than 65-70 hrs a week. Don’t lie about your work hours, it could get you fired.
4. Sell the RV ASAP. Pay off the car debt on both cars immediately so you open up cash flow. It’ll probably be hard to get by with just 1 car but if you can finagle it, that would be the best option financially speaking and sell the other car.
5. Your wife needs to go back to work within several months. Perhaps when your kid is 6 mo? I mean, it’s not ideal, but there is just so much debt here that it’s not reasonable for another high income earner to be at home. If you guys pay off all that debt, it’s reasonable for her to stay at home thereafter. Can she do telework?
6. No luxuries. No vacations. No eating out except on anniversaries/birthdays.
7. Buy Dave Ramsey’s book and read it cover to cover. Watch some of his youtube videos. Clean up the debt before you start investing too much. Have a goal to pay everything off within 5 years or less.EndoRobertParticipantPosts: 49Joined: 01/12/2019
I think you and spouse need to do some soul searching about why you’re unhappy. (Perhaps even find a good talk therapist to help you figure this out.) (edit- did you love your SICU/ICU rotation as a resident? Did you at least like it way more than your work in the OR/PACU?)
If critical care is gonna allow you to enjoy a long, fruitful career, then absolutely do the fellowship. But this is your career mulligan and with your debt load it needs to work out. You’ve left a partnership in a small, community hospital in a LCOL area. With people I know in that situation, partnership in a high-paying field in LCOL area, traditionally that’s a great recipe for financial success.
All that said, the solution is simple but ain’t easy. And it took a decade to get to this point so it’ll take 2-5 years to unwind.
If you really wanna build wealth get on a written budget and live within your means on a fellowship salary. If that means you gotta dump the cars and the rv then do it, or if you wanna moonlight constantly to afford the payments then do that. But the most important thing is to have a written budget y’all can agree upon and stick to. Then when you make attending money, and this is the hard part, do not increase lifestyle one nickel. Set some goals at 750k, 500k, 250k of debt and increase spending just a *little* as you reach those milestones.
You can do this. Please report back with updates.HankModeratorStatus: AttorneyPosts: 1272Joined: 03/27/2017
It’s Independence Day. Make a plan to be independent of this debt in five years or less.
There are folks on this forum who have retired as much debt as you have and more on an anesthesiologist’s salary or less. You’re in a highly compensated speciality, your wife has marketable skills, you don’t have an overwhelming desire to compete with tech bros for overpriced housing in Silicon Valley or keep up with hedge fund guys in NYC. You have a lot of things going for you, but you’re going to have to make some uncomfortable changes and tighten the belt for the next few short years.
Maximize qualified funds contributions each year, then spend the rest retiring student loan debt. When you kill off his and hers student loans, you can attack the mortgage, fund the 529(s), and invest for retirement in taxable. Once you pay off the house and have a good chunk saved towards retirement for you and college for the kid(s), you and the wife can reduce shifts or go part time to increase career satisfaction and avoid burnout. Your future self will thank you for the heavy lifting you’re about to do now.July 4, 2019 at 7:52 am MST #227697