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New Attending Strategy?

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  • Avatar SuperhandsomeIR 
    Participant
    Status: Physician
    Posts: 3
    Joined: 06/30/2019

    Hello forum

    New IR attending, total comp is between 325k and 425k. I am unexpectedly single, so decided to rent with something that’s about 1.6k a month. Bought a car from my family at around 5K. Not a car guy and don’t plan to become one. My hobbies are cheap, computer gaming which is maximum of 100-200 USD a month, cruise vacation here and there with family, and road trips/outdoorsy stuff. Don’t have an expensive taste in furniture or possessions so will travel light for now. I do decide to spoil myself with a fancy desk and chair but those will be comped as professional expense since I plan to read diagnostic stuff at home. My only other vice is that I like to eat out a lot, spending up to 50-100 USD per meal if I am with someone, maybe once or twice a week? Otherwise is 15-40 USD for myself every meal. I do want to start cooking now that I am out of training.

    I have about 50k or so in loan, actually lending from my parents who have achieved FIRE through real estate rental, low interest at 3%. No credit card debts or other debts.

    My plan for the first paycheck

    – Pay off loan to family as soon and as fast as I can. I know it’s low rate and they keep wanting to gift me the money but it’s a principal thing.

    – Put all the rest of the money besides daily expense

    – Goal is to save up as much money as possible while maintaining my current lifestyle as I am currently very happy. I don’t particularly budget but I know I spent 34k last year in NYC (minus rent which was subtracted from salary) while feeling incredibly content with life. I am moving to a place where everything is cheaper so I aim to spend between 40-50k as an attending for a modest lifestyle increase. This includes about 8k or so of loan repayment monthly and 5.5k a year of IRA last year.

    So questions for the forum:

     

    1. Where should I put down the extra income? I looked at some of the waterfall chart and such. My gig supposedly include 40 to 50k of retirement pension that is part of my benefit. Can people generally put in additional tax deferred 401k despite presence of those pension? I will put money into HSA, 529 etc (with myself as the beneficiary) as well.

    But what about the rest? I got a feeling there maybe something left over. What’s the best vehicle, in general, to save those left over funds?

     

    2. Disability insurance: right now I have 5k a year of disability. I am on the fence about how much actual income replacement is needed in the event of disability, especially with presence of some generational wealth. I know my family will help me if I am disabled and they are well, and I will probably receive their estate / rental properties if I am disabled and they are gone. I can be convinced one way or the other, but how much disability support is generally recommended? (As a % of attending salary)

     

    3. Rent vs. Buy: The place I am going to is an undesirable metro. I am hoping to move within a few years (depends on whether I meet someone there or not). I don’t plan to buy which is a constant point of contention with my family. In general, how long should one stay for buying to be worth it? I don’t expect to stay for longer than 3 years. Location is upstate NY where property taxes are nuts. I didn’t buy during residency in this region but rent was cheaper then (around 800 a month)

    #226576 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017

    2. Buy your own disability insurance that will pay enough for 24 hour care, if needed. Even if your family is wealthy, relying on that is unfair to them.

    3. There’s no time frame to judge your rent vs. buy decision. Renting may be the best decision for some people who plan on staying in one place indefinitely. If 3 years is how long you think you’ll stay, rent. There’s nothing wrong with renting and it isn’t throwing money away.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #226631 Reply
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 936
    Joined: 02/06/2016

    If you have extra money after maxing retirement accounts and paying back your loans, start a taxable investment account.  Vanguard life strategy funds are good.  At your age maybe choose one with an 80/20 asset allocation.  You could also very simply invest in Vanguard VTI, a broadly diversified index fund.

    As far as buying, I would not buy for a planned 3 year stay.  Personally I like to buy if I am planning to stay for a long time, say 10 years or more.  5-10 years I might consider buying.  The rent/buy decision would depend on whether I could find a reasonable rental, considering location and other factors.

    #226647 Reply
    Liked by wonka31
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018

    Your question is about finances. So I will keep it on track. Quit eating out at expensive places. Just the tips add up to a ton of money.
    Now the real reason, The ambiance and food may be delicious. But , long term you will need a lot more belts and wardrobe. As with any habit with downsides, fixing it sooner than later makes sense. Pursue your cooking desire. Be smart about it, plan your nutritional needs. The accomplish that. Fancy and come later.
    Pay the parents back. Dump anything left into taxable.
    Since you ARE planning on moving later, don’t buy, rent.

    #226655 Reply
    Avatar Brains428 
    Participant
    Status: Physician
    Posts: 392
    Joined: 11/09/2017

    Get disability with good definition of OWN occupation. Remember, you’re still certified to be a diagnostic radiologist, and if you become disabled in the extent that you can’t direct a catheter, they (insert insurance company) may say that you can just read diagnostic, even if you haven’t done so at a high level in 10-15 years.

    What’s the employer match to retirement (if any)? How long until you’re vested?

    I’m assuming you’re academic based on salary numbers. Do you intend to stay academic? Or are you just getting low balled? If you’re in a location that you don’t want to be in, then perhaps you picked a wrong place for geographic arbitrage?

    — edit to the last comment: Sorry, I forgot to account that it may be a first year contract with a potential increase in pay. If that’s the case, disregard my last questions.

     

    #226663 Reply
    Avatar Anne 
    Participant
    Status: Physician
    Posts: 1159
    Joined: 11/07/2017

    1. Look at the retirement vehicles offered through your job and max out whatever tax deferred accounts are available.  Pension does not preclude 401k as long as your employer offers it.  Do a backdoor Roth.  Agree with WBD on starting the taxable account. Would only do 529 if you are 100% certain you are going to have kids or you know you are going to pursue more education at some point (if pursuing work-related degree like an MBA ideally your employer would be paying for this). Would make paying back your family a priority, esp given the “point of contention” comment–best IMO to not feel like they have any power over your financial decisions moving forward.

    2. You should have enough own occupation disability coverage to care for yourself. If you are partially disabled (e.g. Unable to do IR but still able to do something else such as DR) you want to have to answer only to yourself and the disability insurance company what you can and can’t do. If you are totally disabled you will likely want to at least feel like you are financially covering your own needs. Once you save enough to make yourself FI or your family leaves you an inheritance that makes you FI you can cancel your policy then.

    3. Make it clear to your family that you appreciate their advice but ultimately the decision of whether to buy vs rent is yours to make. It should not be a point of contention, if it does you need to politely but persistently find ways to assert your independence as an adult who is fully capable of taking care of yourself and making your own good decisions. I wouldn’t buy in a place you only plan to stay for a few years, especially in a place you consider undesirable.

    4. Make sure to enjoy life and don’t feel guilty about the reasonable splurge on what you value. From what you’ve written you are likely going to have more money than you know what to do with in due time.   You sound like you want to meet someone, choose wisely (aside from catastrophic disability, marrying someone not right for you is probably the only thing that could derail your future at this point).

    #226692 Reply
    Avatar Gamma Knives 
    Participant
    Status: Physician
    Posts: 169
    Joined: 06/25/2017

    Your question is about finances. So I will keep it on track. Quit eating out at expensive places. Just the tips add up to a ton of money.
    Now the real reason, The ambiance and food may be delicious. But , long term you will need a lot more belts and wardrobe. As with any habit with downsides, fixing it sooner than later makes sense. Pursue your cooking desire. Be smart about it, plan your nutritional needs. The accomplish that. Fancy and come later.
    Pay the parents back. Dump anything left into taxable.
    Since you ARE planning on moving later, don’t buy, rent.

    Click to expand…

    I’ve got to disagree. Sounds like this is his one of his few indulgences. He can certainly afford it. As for the health aspect, fine dining can be unhealthy or healthy same as cheap dining or eating in.

     

    #226697 Reply
    Liked by Panscan, Tim, MaxPower, Anne
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 1079
    Joined: 03/18/2017

    100 twice a week is 10k. If that’s your biggest “vice” from a money standpoint then you are going to crush it.

    #226766 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 697
    Joined: 06/18/2018

    Is your total comp really that low as an IR in an ‘undesirable metro’ (total comp is between 325k and 425k)?

    Your health insurance, dental insurance, malpractice insurance, and basic group disability insurance should be worth at least 20k. Plus you say, ‘My gig supposedly include 40 to 50k of retirement pension that is part of my benefit’.

    So, on the low end, that’s 60k in compensation. So, subtract that from your expected total comp and your saying your salary may be 265k. Is this a full time job?

    Your best financial strategy will be to look at other jobs. You’re selling yourself way short if that’s really the total comp.

     

    #226771 Reply
    Avatar Nysoz 
    Participant
    Status: Physician
    Posts: 86
    Joined: 10/23/2017
    Earnest refinancing bonus

    1. max your 401k, backdoor roth IRA. HSA if you qualify. the rest goes to paying down loans or a taxable investment account. if you’re young and have good risk tolerance, VTI/VTSAX makes it pretty straight forward. otherwise you can just do a target date retirement fund

    2. another vote for a good own occupation disability insurance.

    3. you can rent forever as long as that’s what you want to do. if the area is truly undesirable, and even you meet someone (should be easy cause you’re superhandsome) doesn’t mean you have to stay there.

    as for your vice of eating out, if you’re planning on starting to cook for yourself it can be kinda intimidating if you haven’t done it at all. especially if you’re by yourself because cooking single nice meals for yourself is unnecessarily difficult. meal prep can help with that a little, but otherwise look into those meal delivery prep services. more expensive than getting things yourself, but convenient and a bridge from eating out all the time.

    #226784 Reply
    Avatar SuperhandsomeIR 
    Participant
    Status: Physician
    Posts: 3
    Joined: 06/30/2019

    Thank you guys for the kind comments.

    I guess I forgot about health and malpractice insurance etc. the numbers I posted is only for base salary plus the pension. It’s academic, and I think right now I want to stay in academic. I do think I am being lowballed because I initially had a geographical restriction in this nondesirable location (had a long term partner in this region). This is no longer the case so I’ll do me in my future job search.

    As far as disability goes, I have a strong personal policy with good own occupation definition. My big question is really how expensive is 24 hour care? If I suffer a catastrophic event and essentially become trached/vented but can still think, I would like to stay alive and just read the news daily. Will that realistically take more than 5k a month? I am veering toward upping my disability to 15k a month because I do have a future option rider.

    I am definitely going to rent and I don’t get pressured by family about that really.

    As far as 529, I am 100% sure that I want children.

    When it comes to food, I think the issue is that I just don’t enjoy meal prep so I have no hesitation to outsource things I don’t particularly enjoy.

    #226817 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017

    My big question is really how expensive is 24 hour care? If I suffer a catastrophic event and essentially become trached/vented but can still think, I would like to stay alive and just read the news daily. Will that realistically take more than 5k a month?

    Click to expand…

    If you want to stay at home and you need round the clock care because you’re a quadriplegic and you’re paying $20/hr, that’s $14,400 for a 30 day month. I suspect a facility that can take care of you will likely be around that ballpark, too.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #226829 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018
    If you want to stay at home and you need round the clock care because you

    Click to expand…

    can’t take care of daily living tasks and need supervision, that is a huge burden on someone. Caregiver’s that can take on a 24hr responsibility are sacrificing their lives. The problem is “daily living” as opposed to “medically required”. Spouse, parents, children? Do not plan on any government programs to provide much assistance if physically or mentally you cannot take care of yourself. Living expenses and assistance will not be covered.

    #226843 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017
    can’t take care of daily living tasks and need supervision, that is a huge burden on someone. Caregiver’s that can take on a 24hr responsibility are sacrificing their lives. The problem is “daily living” as opposed to “medically required”. Spouse, parents, children? Do not plan on any government programs to provide much assistance if physically or mentally you cannot take care of yourself. Living expenses and assistance will not be covered.

    Click to expand…

    This is why I told the OP to not rely on his family and quoted $20/hr for companies that provide this type of care.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #226847 Reply
    Avatar SuperhandsomeIR 
    Participant
    Status: Physician
    Posts: 3
    Joined: 06/30/2019

    Thank you for clearing it up. I’ll definitely bump my disability then, consider that I wouldn’t want to burden my family shall I become catastrophically disabled.

    #226870 Reply

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