Menu

Sign in bonus and condo mortgage

Home General/Welcome Sign in bonus and condo mortgage

  • Avatar octopus85 
    Participant
    Status: Resident
    Posts: 229
    Joined: 08/13/2017

    It seems like the decisions around the $150k are small potatoes compared to the bigger decisions: housing, selecting the right job, etc. OP – don’t get bogged down in the details. Make sure to get the big picture items right, first. Are you sure this job is the best offer you can get? Have you shopped around?

    #229999 Reply
    Avatar Anne 
    Participant
    Status: Physician
    Posts: 1159
    Joined: 11/07/2017

    Do you have to take the bonus all at once?

    You said the bonus is at an interest rate of wall st + 2%, no compounded–do you mean prime + 2%?  Isn’t prime now like 5.5%–so you are charged interest of 7.5%, or $11,250/yr (plus taxes on that).  While I would pay the interest and taxes if the only alternative was foregoing the 150k, you only need like $300/month this year to solve your immediate cashflow problem, plus whatever you need to sell the condo and move.

    I agree with most of infinity’s advice, except I would try to see if you can only take the amount you need for emergencies and cash flow this year and I would sell the condo regardless of what it rents at.  $3000/month is not going to be enough.  It’s a $425k condo which you have no equity in, it’s just a $ drain in your situation, plus you don’t want to be a long distance landlord especially with no landlording experience.

    Permanent residence on path to citizenship means you are already paying OASDI(social security)/Medicare tax unless you’re in a job that doesn’t pay them anyway so no worries there.

    I think once you get out from under this condo and start working, you will be able to make quick progress if you continue to live like a resident/fellow.  I think your biggest problem now is having a house mortgage >5x your annual income.  This is a good illustration of why being house poor is so hard on people’s finances.

     

    #230333 Reply
    Liked by Tim, Infinity
    Avatar SameMD 
    Participant
    Status: Resident
    Posts: 11
    Joined: 07/03/2019

    Estimate how much condo is worth (rent/sell) after fellowship?  If you can’t get at least $3000/mo rent, I would sell it.  Distant landlord is not recommended.  If you need to sell it at a loss, you will need to have money to payback the bank.

    Would you rent it through a management company if >$3000/month? What if the mortgage and rent equalize? Would you still rent it?

    I appreciate you for sharing your wisdom. Thank you!

    That's what all we are. Amateurs. We don't live long enough to be anything else.
    - Charlie Chaplin

    #230376 Reply
    Avatar SameMD 
    Participant
    Status: Resident
    Posts: 11
    Joined: 07/03/2019

    It seems like the decisions around the $150k are small potatoes compared to the bigger decisions: housing, selecting the right job, etc. OP – don’t get bogged down in the details. Make sure to get the big picture items right, first. Are you sure this job is the best offer you can get? Have you shopped around?

    I have shopped around, and this is the most balanced offer I’ve received. Places in bigger cities offer less salary, more call/week, and less vacation. On the other hand, more remote locations offer ~30-50% more guaranteed pay, but they want me to build the practice from zero. In that scenario, I would be the only one in my specialty many miles around. I probably wouldn’t mind doing that after gaining some experience as an attending but fresh out of fellowship is something everyone has recommended me to avoid.

    I stopped looking at academic places because in general, they pay ~50% less, and their benefits don’t compensate for the loss, even considering the potential discounts for my kid’s future education. I love academia, but it is time for me to prioritize my family’s economic stability, my ego can wait.

    Thanks for the advice!

    That's what all we are. Amateurs. We don't live long enough to be anything else.
    - Charlie Chaplin

    #230383 Reply
    Liked by octopus85
    Avatar SameMD 
    Participant
    Status: Resident
    Posts: 11
    Joined: 07/03/2019

    Do you have to take the bonus all at once?

    No, I can take it in portions.

    You said the bonus is at an interest rate of wall st + 2%, no compounded–do you mean prime + 2%?

    I don’t know what the exact term is, I meant to say I don’t get charged interest over the principal + interest previously charged.

    Isn’t prime now like 5.5%–so you are charged interest of 7.5%, or $11,250/yr (plus taxes on that).

    I will not get charged directly with 11,250/yr if I work for the full length of the contract. However, I would have to pay taxes on that amount given it will be considered “income” for the purposes of the forgiveness plan. So let’s say the interest they charge me every year is $11,250, each year I will pay taxes on $411,250 instead of on my base salary of $400k.

    I agree with most of infinity’s advice, except I would try to see if you can only take the amount you need for emergencies and cash flow this year and I would sell the condo regardless of what it rents at.  $3000/month is not going to be enough.  It’s a $425k condo which you have no equity in, it’s just a $ drain in your situation, plus you don’t want to be a long distance landlord especially with no landlording experience.

    Considering the above, would you take the whole amount and maximize retirement plans?

    I think once you get out from under this condo and start working, you will be able to make quick progress if you continue to live like a resident/fellow.  I think your biggest problem now is having a house mortgage >5x your annual income.  This is a good illustration of why being house poor is so hard on people’s finances.

    I agree I was very naive. I believed what the realtor’s “rent/buy” calculator showed and fell into this trap. My mortgage payments have been steadily increasing, and now I am paying around $400 more of what an average rental in the area would be.

    Thank you so much for taking the time to write here!

    That's what all we are. Amateurs. We don't live long enough to be anything else.
    - Charlie Chaplin

    #230386 Reply
    Avatar Infinity 
    Participant
    Status: Physician
    Posts: 91
    Joined: 05/25/2019

    What if the mortgage and rent equalize? Would you still rent it?

    Click to expand…

    -Your costs for renting out condo = mortgages (interests+property tax+home insurance) + property manager fee (12-15% of rents) + repairs (2-5% of your condo) + homeowners association fees + liabilities insurance.

    -Your returns = rents + principal paid from the mortgage +/- condo appreciation.

    Like Anne said, it is better to sell than to rent.  I have a rent option just incase you have to sell at a loss and you do not have money to pay back the bank or if your condo has to sit on the market for a long time.  When you sell, you need to have reserve ~10% ($45K) for realtor fees + other expenses.

    Other people can be in deep trouble if they are in your situation.  However, I hope that after one year, you will save $200K from extra incomes and this problem will be solved.

    I love academia, but it is time for me to prioritize my family’s economic stability, my ego can wait.

    Click to expand…

    Yes, being the first generation immigrants is tough.  We can’t choose where we come from, but we can choose where we want to live.  Your kids will be proud of you.

    #230408 Reply
    Liked by Anne, SameMD
    Avatar SameMD 
    Participant
    Status: Resident
    Posts: 11
    Joined: 07/03/2019

    Like Anne said, it is better to sell than to rent.  I have a rent option just incase you have to sell at a loss and you do not have money to pay back the bank or if your condo has to sit on the market for a long time.  When you sell, you need to have reserve ~10% ($45K) for realtor fees + other expenses.

    Other people can be in deep trouble if they are in your situation.  However, I hope that after one year, you will save $200K from extra incomes and this problem will be solved.

    Thanks for your advice, I appreciate your input!

    Yes, being the first generation immigrants is tough.  We can’t choose where we come from, but we can choose where we want to live.  Your kids will be proud of you.

    Thank you 😉

     

    That's what all we are. Amateurs. We don't live long enough to be anything else.
    - Charlie Chaplin

    #230429 Reply
    Avatar Anne 
    Participant
    Status: Physician
    Posts: 1159
    Joined: 11/07/2017

    Do you have to take the bonus all at once?

    No, I can take it in portions.

    You said the bonus is at an interest rate of wall st + 2%, no compounded–do you mean prime + 2%?

    I don’t know what the exact term is, I meant to say I don’t get charged interest over the principal + interest previously charged.

    Isn’t prime now like 5.5%–so you are charged interest of 7.5%, or $11,250/yr (plus taxes on that).

    I will not get charged directly with 11,250/yr if I work for the full length of the contract. However, I would have to pay taxes on that amount given it will be considered “income” for the purposes of the forgiveness plan. So let’s say the interest they charge me every year is $11,250, each year I will pay taxes on $411,250 instead of on my base salary of $400k.

    I agree with most of infinity’s advice, except I would try to see if you can only take the amount you need for emergencies and cash flow this year and I would sell the condo regardless of what it rents at.  $3000/month is not going to be enough.  It’s a $425k condo which you have no equity in, it’s just a $ drain in your situation, plus you don’t want to be a long distance landlord especially with no landlording experience.

    Considering the above, would you take the whole amount and maximize retirement plans?

     

    Honestly, I probably would–at least I would take enough to do so (maybe not the whole thing–save what you don’t need for when you start).  But I think my tolerance to put up with a less than ideal job for 4 years in order to get caught up/ahead financially would be pretty high.  Unless they were asking me to do something unethical I would just stay and I would ask my family to just suck it up for 4 years if they were unhappy in the new location.  That’s easy for me to say, I know, and you have to decide if you would do the same, and your family’s (esp your spouse’s) ability to go along with it.  If you leave at year 1 because you don’t like the job then you will regret taking it out even to max out retirement. But if you stay for 4 years using the money to start your retirement savings now and get you out from under this condo is not a bad idea.  This is kind of a decision with moving parts, literally and figuratively, so update us periodically with what you decide to do and advice needed moving forward.

     

    edited to say that on my screen when I hit submit it cuts out the part I was trying to quote–“considering the above, would you take the whole amount and max retirement plans?”

    #230465 Reply
    Liked by Infinity
    Avatar SameMD 
    Participant
    Status: Resident
    Posts: 11
    Joined: 07/03/2019

    Honestly, I probably would–at least I would take enough to do so (maybe not the whole thing–save what you don’t need for when you start).  But I think my tolerance to put up with a less than ideal job for 4 years in order to get caught up/ahead financially would be pretty high.  Unless they were asking me to do something unethical I would just stay and I would ask my family to just suck it up for 4 years if they were unhappy in the new location.  That’s easy for me to say, I know, and you have to decide if you would do the same, and your family’s (esp your spouse’s) ability to go along with it.  If you leave at year 1 because you don’t like the job then you will regret taking it out even to max out retirement. But if you stay for 4 years using the money to start your retirement savings now and get you out from under this condo is not a bad idea.  This is kind of a decision with moving parts, literally and figuratively, so update us periodically with what you decide to do and advice needed moving forward.

    Great advice, I will certainly keep you updated. Thank you!

    That's what all we are. Amateurs. We don't live long enough to be anything else.
    - Charlie Chaplin

    #230487 Reply
    Avatar Infinity 
    Participant
    Status: Physician
    Posts: 91
    Joined: 05/25/2019

    they want me to build the practice from zero.

    Click to expand…

    That is not easy.  They pay you $400k/yr plus benefits, they will expect you to generate $600K/yr in return, otherwise, you will not be there after few years. Keep in touch with your seniors or attending who are in private practices.  You will have to work hard, but more important work smart!

    #230501 Reply
    Avatar SameMD 
    Participant
    Status: Resident
    Posts: 11
    Joined: 07/03/2019

    That is not easy.  They pay you $400k/yr plus benefits, they will expect you to generate $600K/yr in return, otherwise, you will not be there after few years. Keep in touch with your seniors or attending who are in private practices.  You will have to work hard, but more important work smart!

    Probably I didn’t explain myself well. I was referring to the other places that pay better but want the new hiree to build the practice. The site I will likely be joining is already established and is offering a guaranteed base salary ($400k for four years). Thanks!

    That's what all we are. Amateurs. We don't live long enough to be anything else.
    - Charlie Chaplin

    #230616 Reply

Reply To: Sign in bonus and condo mortgage

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear