[Founder's Note: Those who are familiar with our financial journey are aware that my wife and I decided to forgo spending a great deal of our income in our first few years out of residency in order to put ourselves into a better financial position and speed our journey toward financial independence. Although we wished to grow into our income slowly, our aim was never to accumulate money for the sake of accumulating money. We fully intend to eventually spend the vast majority of the money we earn and save. Over the last year, my wife and I have had a lot more discussions about spending money than we used to. Part of this is because we are now at “peak earnings” from a medical career standpoint. It is highly unlikely that my earnings from my medical practice will ever go up significantly from where they are at now, aside from some possible growth with inflation, and in fact are likely to go down as I cut back on night shifts (which pay more in my group) and in total number of shifts.
Aside from that income, we also had a nice bonus income from The White Coat Investor. So this year we made more than we ever have before, saved more than we ever have before, paid more taxes than we ever have before, gave more to charity than we ever have before, and spent more than we ever have before. We have definitely reached the light at the end of the tunnel that consists of the long medical training pipeline and the first few years afterward when debts are being paid off, the fancy doctor home is being purchased, and the initial nest egg is being accumulated. We're ready to start enjoying the good life, and for us, that looks a little differently from that of Mr. Money Mustache. It turns out that while I like bicycling, the environment, and conscious spending, I also like SUVs, expensive hobbies, and fun vacations. So over the last year or so, we've had a lot of very interesting discussions about how to spend the excess money after we've put away enough and then some to reach our financial goals. This post, however, grows out of a condition I placed on my wife when we decided she could buy the fancy-schmancy dining room table she always wanted—she had to write a post about it. As noted on her previous guest post, we have serious financial conflicts of interest between us.]
By Dr. James M. Dahle, WCI Founder
Lucky you, you get to hear from WCI’s wife a second time! This was a post I promised a year ago and I’m finally forcing myself to sit and write it. WCI gets two gifts (posts) for Christmas this year! When we moved into our new home we had very little furniture and the vast majority of it consisted of hand-me-downs. In fact, 6 rooms were completely devoid of furniture. Though we’re lucky that many of our hand-me-downs are good quality due to downsizing of family members. The only furniture we had purchased on our own up this point was a small kitchen table, a coffee table, and a bed frame when we got married 15 years ago. So buying new furniture obviously hasn’t been a major priority for us.
Since we frequently entertain large numbers of family and friends, one of the first furniture purchases I wanted to make for our home was a large dining room set with a matching china cabinet. I would check the classifieds on occasion but rarely would find something in the size or style I wanted. At one point I found a set that met the bill but we decided that was not where we wanted to put our money at that given moment. As we had some extra money in the budget we would add to the furniture fund over several years. Finally we had a sizable amount in the furniture fund so we started getting serious about looking. We had a few dates to go shop at the furniture store (WCI’s least favorite thing to do!) but there weren’t many options in the size of table we wanted.
I wasn’t happy with the quality of construction of many of the pieces so continued to look on my own. I wanted something that was solid wood (no veneers), well made, and simple styling. WCI just wanted something flat on top with four legs and didn’t really care what it looked like, so we obviously had very different priorities. One day I stepped into a shop that sold furniture made by a local company. I loved many of their styles, could custom order whatever size I wanted, and could order a matching china cabinet. I contacted the company to see if I could order direct from them but that wasn’t an option.
So I waited until the store had a good sale on the furniture and went to get a price quote. After I had a price quote, I called another local dealer of this brand to see if they could beat the price. They said it was a great deal and offered a little bit off which the first store then matched. For just under $11K I was able to purchase a 10 ft. long solid cherry wood table with 12 chairs and matching china cabinet.I love the set and it will last for many years and likely be passed on to our kids. WCI thought it was way too much money to spend on a piece of furniture as his priorities could be met with much less money, however he realized this was important to me so we agreed to spend the money. We have had many fun dinners and game nights with family and friends around this table and we have had no regrets about spending the money on it. In contrast, we also needed to replace the 15 year old kitchen table at the time as it was falling apart. [Not true- it was quite stable after I put lots of extra screws into it. It was flat on top and had four legs to boot! Of course, I can't complain since she sold it for $100 and we only paid $150 15 years earlier.-ed] I found a great cherry wood set in the classifieds for $200 to replace that table. We decided to splurge in one area but were thrifty with the other piece we purchased. Now we’ll have to get WCI to write a post about that new boat he wants to purchase which makes this table look cheap in comparison!
[Founder's Note: I thought this post would be a great opportunity to talk about when to splurge on stuff you want that you can afford to buy. We have saved up for and purchased a ton of expensive stuff this year. The first item was the table, but we also purchased two high-four-figure vacations, an expensive home remodeling project, a fancy mountain bike, and a new furnace in 2014. We're currently shopping for a new boat. None of these items was a need, or anything close to it. But each of them illustrates important principles of spending that are worth talking about. The format will be a back and forth discussion.]
The fancy dining room set- gingerbread houses were extra
The $11K Table Set
The first item was the table. Why did you think the table was a wise purchase?
Her: As noted above, we both come from large families, have frequent house guests and family dinners and other social events and frankly need the seats. For example, over a recent one month period we had 16 people in addition to the 5 of us stay here, and hosted two dinners with over 50 people.
Him: We're at that point in life where there is no point to buying crap. Now if we're going to buy something, I want it to last. Although I didn't really care enough about a dining room set to spend a 5 figure amount on it, I knew that she did; it was important to her. She also researched and shopped it well. We had the money saved up, we could afford it, and it was something we had talked about and planned getting for years. Hardly a splurge.
The Home Remodel
Your next major 2014 expense was a major home remodel. You basically spent $15K to have the entire back wall of the main floor of your home replaced with very high quality windows and a door. Why did you think that was a good way to use your money and how did you go about that purchase?
Her: We had water running down the inside of the windows during bad storms. The windows were 25 years old and had to be replaced; the wood floor inside was starting to be damaged. I wanted to move the windows a bit to make room for some built-in cabinets and change the configuration of the door. The windows were very high quality, but we definitely paid a premium for it. I really detested the sales tactics of the window guy, but was happy with the eventual finished product. All in, it took 6 months from ordering until completion of the project. But we did like the fact that the window company warrantied the whole project and addressed all the issues that came into play when the stucco guys subsequently damaged the windows.
Him: We had the window salesman out to the house. We had him give us a quote to replace every window and door in the house. He then applied all the discounts he could give us and the total came to $83K. I about had a heart attack. We didn't have anywhere near that amount of money saved up for this, plus I wasn't looking forward to what seemed like having the entire house rebuilt. Some of the little changes my wife wanted (making round windows into square windows for instance) were really expensive, and I didn't see much value there. Sure, some of our windows were leaking, BUT NOT ALL OF THEM. So we decided to take this project a piece at a time and had them replace the worst section on the North wall of the main floor. These are the windows I care about anyway, since that's where we spend most of our time and we have a 180 degree, 100 mile view all the way across The Great Salt Lake out of those windows. I was really glad we did a smaller project first, to see what kind of issues we had not yet thought about, before forking out major cash. We'll likely end up replacing everything in the long run anyway, but will do it over a handful of years. Like the table, only a small part of this purchase was a need, the rest was just a big want, so we don't need to finance it or use our emergency fund for it.
The Expensive Vacation
Your next major 2014 purchase was your 15th anniversary trip to France that cost you the better part of $10K. Your thoughts on that?
Her: We had a fantastic time. We could have done it on less money, but we went and did what we wanted to. We saved money where we could, but we weren't trying to do this trip “on the cheap.”
Climbing in Chamonix France
Him: I don't regret a dime I spent on this. Easily the most enjoyable $10K spent in the last decade and well worth 2 1/2 beat-up Durangos. We knew it was going to be expensive when we spent $2200 a piece on direct flights from SLC to Paris. Even the flights were awesome though. I caught 5 “free” movies going each way. What a pleasure compared to domestic travel! We basically did this trip without ever looking/caring about the price of anything. If we wanted to do something, we did it.
We didn't have the kids, we saw a ton of sights we had always wanted to see (Normandy beaches, Carcassonne, Paris, the Riviera, Chamonix-Mont Blanc), did some climbing, ascended some via ferratas, and realized just how much better French food is than English.
Expensive Vacation Number Two
Although you had a lot of cheaper road trips, you also took the family to Hawaii for Christmas the same year the two of your went to France. That couldn't have been cheap. Your thoughts on that splurge?
Her: That trip has been years in the making and was 90% paid for a year ago. It was actually a family reunion for my widespread family. I have siblings in Guam, Mauritania (Africa), Hawaii, Louisiana, and Oklahoma, along with parents and grandparents in two other states. Hawaii was as central as any other place to meet. This trip was a big deal because everyone was able to make it and we haven't been all together for at least 5 years.
Hawaii at Christmas
Him: Christmas in Hawaii? What's not to like? Lava and sea turtles on the Big Island? Boogie boarding, hiking, snorkeling, and hanging out with the kids and the Obamas on Oahu? As you'll notice, we have a lot lower threshold to spend a lot of money on a trip than on stuff. We find that makes us happier, and that's certainly consistent with all the financial happiness studies out there. Again, you'll notice a few key principles behind these “splurges”- paid for with saved money, well-researched and shopped, and purchased with an intent to increase our happiness. We generally also try to spend “extra money” on one time purchases, rather than ongoing expenses like a leased car or a fancier home.
The Fancy Bike
Jim bought a mountain bike that cost more than his old beater Durango this year. What was the thinking behind that?
Fancy new bike
Him: I love mountain biking and have been doing it for a long time. It's something nearly every one of my partners do. We've actually had quite productive business meetings while out on the trails. However, my old bike was 20 years old and breaking frequently. In fact, I've replaced nearly every part on it, including the frame, at some point or other in the last 20 years. There are actually only three original components still on it- the two derailleurs and the front rim. It was a classic case of “use it up, wear it out, make it do, or do without.” Not only did this bicycle provide lots of fun recreation, but it was also my main transportation for 8 of those years. I commuted on it to college classes, to residency, and to my first job out of residency. But it was time to replace it so I'd quit being left in the dust by my partners. I saved up for it for a year, spent a few months shopping for it, then bought it in the off-season for a significant discount. I got tons of features that weren't invented when I bought my last bike- carbon fiber frame, full suspension, disc brakes, tubeless wheels, 29 inch wheels etc. I don't regret buying it at all.
Her: He bought it with his allowance money, so I can't complain. Each month any money left over from the lump sum we allocate to our variable expenses (food, gas, kid's activities etc) in our budget is split between us and put into our personal allowance fund. We're allowed to spend that money without having to answer to the other person for it. I plan to buy a bike this year too with mine.
The Furnace
You had to replace a furnace this year. What was that process like?
Her: The furnace went out. We couldn't blame it, since it was 25 years old and you can only really expect 15 years out of them. It was pretty cold for a couple of weeks while we waited for it to be replaced. Luckily, our house has two, so we slept warm, but we had two space heaters going in the kitchen for a while. Clearly the furnace replacement was a need, but we didn't need the fancy new one we bought. A bare-bones one (70% efficient) was $2500. After $600 of rebates from the manufacturer and our local gas supplier, the fancy one (98% efficient and much quieter) was $4000. We figured that it wouldn't take 15 years to make up $1500 with lower energy costs.
Him: I had a beautiful experience buying this furnace. The furnace saleswoman came over and showed us 30 furnaces in a brochure. It is a wonderful thing to only have to ask a single question with a purchase like this- “Which one is the best?” She pointed it out, and I said, “Let's get that one.” Having a good income, a solid emergency fund, and an optimized financial situation provides for lots of financial freedom, like buying any furnace you want without having to worry about whether you'll be able to put food on the table that month.
The Boat
Okay, let's talk about the boat. What's going on there?
Him: We bought a $6K boat 5 years ago as I was leaving the military. Actually, it was only a $3K boat, since the military subsequently paid me $3K (about a dollar a pound) to drive it across the country as part of our moving allowance. It has been a ton of fun, despite fulfilling the old adage that “a boat is a hole in the water that you throw money into.” We go to Lake Powell once or twice a year to explore, canyoneer, wakeboard, waterski, camp, and just relax, and use it on the local lakes as well. Despite the cost, these are some of our favorite family days of the year. However, our 17 foot, 135 hp boat doesn't quite do everything I want it to do, especially as our family gets older. We'd like to be able to take more stuff and people (we boat into remote sites and camp at Lake Powell) without having to worry about whether the boat will get out of the hole upon exiting the marina.
The boat is also 13 years old and a little less reliable than I would like when 50 miles away from the nearest marina. (Although I've learned a lot of neat tricks, like how to get water out of an engine block, how to hotwire a boat, and how to repair a starter with a cotter pin.) Not to mention it doesn't throw much of a wake. I want a big fancy wakeboat that will haul more people and allow us to catch some air and wakesurf behind it. Unfortunately, those are really expensive. The manufacturer's suggested retail price (MSRP) on the biggest, fanciest wake boats these days is pushing $150K. Even the “price-point” brands (think Toyota vs Lexus) are going to be $60-80K for a nice, new boat. Unfortunately, the whole wake surfing system thing is pretty new, so if you want one, you're looking at something 2013 or newer, so the used option isn't really there for what I'm looking for. So we've been shopping for the last 6 months and will be purchasing one in the next few weeks, hopefully getting a pretty good discount for buying it in the middle of the winter.
Her: The boat we have doesn't allow us to take very many others outside of our immediate family on our adventures. I'm happy enough with the boat we have but I can see the benefits of getting a bigger, nicer boat. I've got some home renovation projects on the long-term list that I'm more interested in than a boat upgrade, although I confess I don't really enjoy boat breakdowns 50 miles away from a marina. It seems extravagant to spend 10 times as much on a boat as the last one we bought, but if we're going to buy a boat, we might as well buy the one we want in the long-term. Plus, I know if I let him buy “his boat” he'll have no room to complain about more house renovations.
Loosening the Purse Strings
Robert Doroghazi, author of The Physician's Guide to Investing, said this about splurging:
If you do wish to “splurge” a little, to loosen up, do it after there is $1 million in the bank and after the mortgage has been paid.
Well, the mortgage isn't quite paid yet, but more on that in a couple of weeks. We're certainly at that point where by any reasonable measure we can afford to loosen the purse strings. Despite all of these expensive, unnecessary purchases in the last year, we're still saving 25-30% of our income (maxing out all retirement accounts,) giving 10% of it away, and paying almost a quarter of it in taxes. Our “mandatory” (fixed + reasonable variable) monthly spending is just 10-20% of our income. I see these “splurges” as the benefits of a well-planned financial life and expect to continue to do them from time to time going forward. We want to be just as deliberate about how we spend our money as we are about budgeting it, investing it, and giving it away. Here are a few guidelines to use when deciding whether you should buy expensive stuff like we have this year.
10 Questions to Ask Yourself (and Your Spouse) Before Splurging
- Are you keeping your fixed expenses as low as possible, so that in the event of economic downturn you can rapidly pare back your lifestyle?
- Have you honestly determined your needs versus your wants?
- How many months have you been considering this purchase for?
- Do you have the money, in cash, to purchase this item?
- Is this item going to make you happier than any other use of this amount of money?
- Are you already saving 20% of your gross income for retirement and enough to meet your other investing goals?
- Do you have any consumer or student loan debt at all?
- Do you have a plan to pay off your mortgage in less than 15 years total?
- Are you buying this item at the best time of year to purchase it?
- How much time have you spent researching and shopping around for this purchase?
Now it's time for you to weigh in readers. What do you think about our reasoning for purchases? What did you spend money on in 2014? Do you regret any of it? What other rules for spending would you add to this list? Comment below!
It was good to buy the new table, it will last a lifetime, you will use it a lot and it made your wife really happy. Sounds like a bargain.
Its great to see that there indeed is light at the end of the tunnel. Congrats!
been reading for months and just picked up your book, but this is my first post. Thanks for all you do, and congrats on the blog success!
Not sure if this is the appropriate place, but I have now read much of your savings philosophy and seen your “plan of attack” for student loan debt and down payments both here online and in the book. But I have a question I thought of last night while reading the chapter on residency (which I found very helpful, despite finishing residency 18 months ago)– you encourage residents making ~$50K to live just a little cheaper, putting about 5k into investments (roth IRA) both to get used to the sacrifice and take advantage of a longer compounding time. In the next chapter you talk about how to attack student loans when you get that first paycheck. But what are your thoughts on the relative merits of paying at least the accruing interest on unsubsidized (and private) student loans while in residency and forsaking the Roth IRA entirely? For many of us, the interest payments each year would have been several grand a year (for me at least it was unrealistic to pay both interest and save for retirement). Many folks have a ~100-300k debt load; preventing the interest on this from compounding at 6.8% is a much better “return on investment” than you will get out of most investments these days and is a guaranteed investment “return” even in a Bear Market.
If I missed that in the book or if perhaps that is common sense, my apologies. But I thought Id get your take
I’ve written before about the whole student loans vs investing question, both in the book and on the site (although astute readers will notice the list is slightly different between the two):
https://www.whitecoatinvestor.com/student-loans-vs-investing/
The truth is many residents simply cannot pay the interest on their loans. Imagine $400K at an average rate of 7%- that’s $28K a year in interest alone. It’s just not going to happen. That doesn’t mean they shouldn’t pay what they can, but maxing out a Roth is also a worthy goal. The other benefit of investing instead of paying down debt is it still leaves student loan forgiveness (PSLF or PAYE) as an option. It seems silly to pay interest that might later be forgiven.
I’m completing a 6 year residency and figure after all the loops I jumped through I probably will have accumulated 5 years towards PSLF on my $300K in loans. (However, my excitement for this program has lost its zeal and I’m starting to be pessimistic.) The catch is there is a giant elephant, one which no one wants to talk about: If PSLF is the cornerstone to your plan, and the funding is pulled or dramatically changed– it could dramatically alter the stability of the rest of your plan. I can only imagine how quickly congress will change the funding rules once the news headlines read: “Doctor has $300K forgiven in loans with YOUR MONEY while pocketing $350,000”.
Rick, I concur. Also, Is it worth keeping loans at 6.8% for 5 additional years? Or taking a lower paying/less desirable job? To me it is a fools game that way too many are playing.
I don’t know if it is a fool’s game or not. I do know that many 501(c)3 jobs pay just as well as many non-501(c)3 jobs. I’m also sure it is better to pay 6.8% on a loan for 5 years than to pay the principle on that loan. However, there is a great alternative for those who should be eligible for PSLF but are worried it will disappear- pay off your loan into a side fund/taxable account. If PSLF disappears, take the side fund and pay off the student loans. If the forgiveness actually comes through…you’ll get a huge windfall and retire 5 years earlier.
Maybe fools game is a little harsh. I just know that a large amount of my co-residents have no plan whatsoever if the PSLF falls through. I think that creating a side fund is a good idea; it does have the disadvantage of being put in a taxable account when residents likely are not maxing out tax-deferred accounts on top of this side fund. I would like to see a semi-formal analysis of 501(c)3 jobs versus non-501(c)3s. This I am sure is very specialty specific. What is definitely not 501(c)3 is starting your own practice. Starting 5-7 years later on building your business could have detrimental long-term consequences. My main problem with PSLF is that it often narrows young physicians’ focus purely for the sake of getting rid of those loans. There are lots of ways to pay ’em off and there are many scenarios where you can make your situation at least as good or better than where you would be waiting for the PSLF to come through.
I think it is unlikely for a doctor with a long training period (say 6 or 7 years of post-grad training) to make your situation anywhere near as good as waiting for PSLF. The loans have ballooned so much by then. Only making 40 or 50 payments instead of paying those off is huge.
I also keep running into docs making very little money (say $150K) with monstrous student loan burdens (say $450K). At 7% or so, even paying their loans off in 10-20 years, much less 5, is a serious issue. When interest alone represents 20% of your salary, you’re in big trouble if forgiveness never materializes.
I couldn’t imagine that. As a family doc I don’t make to much more and I certainly don’t live extravagently. I got into the military with about 70K in debt and out with about 45k. (now 35K, shooting to pay off half this year). Still my loan payment isn’t chump change (I do pay over the minimum) but I can’t imagine how relatively poor I would be living on 450K in loans.
WCI, what are your thoughts on using a 401k loan (from an individual 401k account) to help pay of a student loan (lower rate and interest is paid to yourself)?
It works great until you leave the job and have to pay it back nearly instantaneously.
But if it’s an individual/solo 401k that should take that problem out right? Any other downsides?
Love this post and editor’s note. We are almost mirror images in terms of where you are in terms of years out of residency, approx net worth, and overall financial situation.
The main problem now is that I am now starting to suffer from financial anorexia of sorts – I have saved for so long, I feel guilty for spending any money in significant sums. Having said this, thank you for this post. This really brings things into perspective and makes me feel less guilty about spending some money!
I agree about this post and I like that in fact it is a different lifestyle compared to Mr. Money Mustache.
I think the guilt is a common thing. I like the idea of looking at things in terms of networth and salary percentages. If you make $400K per year and your networth say is $2M, then $11K is really a small percentage of that. It’s ~3% of your salary and 0.7% of your networth.
That’s like someone who has an “average” salary and networth spending like $600 on a table, which may be expensive but certainly not excessive.
That’s a good point. And while readers should be aware that in the 7 years from residency graduation until the time we were millionaires we averaged an income well under the average physician income of $200K, we now make much more. This year we definitely spent more than a family with an average physician income should be spending.
I could’ve written this post myself. I really wanted a large high quality dining table but my husband could’ve cared less. I finally found one for a fair price and now it’s his favorite piece of furniture. We have family over alot and it’s been great having them all fit (at least the adults). That’s a fantastic deal for a cherry set!
Although I’m nervous about having people sit and play cards there without a tablecloth, which is annoying….
Wow WCI WIFE, that’s an expensive piece of furniture. Luckily for me, my wife quite literally COULDN’T spend that much money on anything (other than a car). She would have convulsions! But you deserve it, putting up with WCI all these years! You should write more posts. The wife and I enjoy them. Like Paul Harvey, it’s good to hear “The Rest of the Story.”
Well, technically it’s a table, 3 leaves, 12 chairs, and a china cabinet.
And yes, I could buy 3 cars like the one I’m driving now for that!
Our goal is geothermal this year, part of windows next year, maybe siding after that. Yes I also keep hearing about the table all the time and maybe new rugs, and someday refinish the floors too. Maybe solar, maybe more wall insulation as well. Hopefully Tesla 3 is out in few years, that would be my big expense.
I love reading these kinds of posts as well. It is nice to see the other half of this equation — both in terms of the spouse as well as the spending. WCI, you do a great job of guiding us through savings, investment, and planning for retirement. It is nice to see it complemented with how you choose to spend and how you rationalize the use of your money (after the savings priority is achieved, of course!).
Two rules we’re trying to follow and use to guide our spending decisions:
1) Moderation in all things (find a good balance of saving and spending- you might live to 90 or you might drop dead at 50) and
2) Be generally frugal and selectively extravagant (i.e. spend your money on what makes you happy.)
Hopefully, we’re being as wise spending money as earning it, saving it, protecting it, and investing it.
WCI,
In many past posts you always write about this hypothetical “boat”….
Now, having read that you actually want one I understand why this “boat” keeps coming up.
I hope you live on/have a dock on the great salt lake that you have the view of, because as I know you are aware boats are 180 degrees opposite from everything your blog stands for 😉
They are a giant money sinkhole which won’t get nearly the use you expect.
But, if you gotta have a boat, then you gotta have a boat. Sometimes, we all have to decide when/where to “loosen those purse strings”/sphincters!
Thanks for letting us know you are human.
More on the boat tomorrow. 🙂 You are absolutely correct that a boat is 180 degrees opposite of most of what this blog talks about. But there is a big difference between a boat bought with a boat loan by a new attending with a 0% savings rate and $400K in student loans and a boat bought with cash 10 years later by an attending with a 30% savings rate. Here’s the post on boats from the first year of the blog: https://www.whitecoatinvestor.com/boats-planes-and-automobiles/
There have been a lot of posts about spending this month. It’s important for people to remember what they’re saving for. For me, I save in order to SPEND MORE LATER. I don’t plan on dying with $10 Million in the bank. I expect to spend my way out of an estate tax problem.
This is a very special post, where two of my two favorite blogs collide! I think Mr. Money Mustache would probably support these two purchases. Keeping your spouse happy on the road to financial independence comes up a lot. He may argue that there are more efficient ways of obtaining these two purchases, like doing some or all of the work yourself or finding a similar piece of furniture used… but in general no face punches are necessary.
Jacob, of Early Retirement Extreme who is one of the main influences of Mr. Money Mustache, looks at all purchases in terms of depreciation by this formula (price paid – price you could sell the item for) divided by years owned. The table depreciation will be high at first but then level out over time to probably only a couple hundred bucks (or less). It is likely that in the projected long life span of the table depreciation will be quite low because it is of high quality and has a classic design that will always be considered desirable.
The boat (and the Sequoia which BTW made me cringe a little bit when I read that post!) might be a different story. However, the fact of the matter is that life is short and you should enjoy what you have earned. Being miserly is at least as destructive for your overall life happiness as being extravagant with debt. You are making these purchases in a way that is smarter than 99.999% of similar purchases made every day!
Why are student loan rates so high, that is disturbing in this int rate environment
Main lesson from this post -> “happy wife happy life”.
Replacing doors and windows is always great, we had a house where prior owner put in nice energy efficient windows and they are fantastic in all seasons.
WCI!!!
I have regained faith in you! I have been a reader for the past 24 months or so, finished residency 18 months ago, and began doubting you about 6 months ago. I was discouraged by what seemed like a passion to hoard money. I realize you routinely assure us that you are not focused solely on accumulating money… but it really seems you are most of the time. FINALLY!!! You have expensive (extravagant?) desires like the rest of us. Good for you spending some money. Over the past year I have wondered how long you would aggressively save. I just try to imagine being 5 years ahead of where I am now and still living like a resident (kinda) and with no end in sight! The thought is discouraging. But as you have said, this is the light at the end of the tunnel. This certainly motivates me to buckle down and control my finances. If you can do it in 7 years, perhaps I can do it in 15. And that is a very comforting thought.
Thanks for spending some money, I hope your boat is over the top!
It’s not too over the top; I’m going to pass on the touch screen controls and the seat warmer. I’m not skimping on the engine or ballast system though!
For the record, I never truly lived like a resident after residency. We lived on $30-35K our last year or two of residency. In the military, while making perhaps $120-130K, we lived on something like $70K. We thought it was a pretty good raise! It felt like we had money coming out of our ears.
As mentioned in the post, the goal isn’t to live like a resident forever, but the goal is also to not have to live like a resident in retirement.
WCI, I just wanted to say that I have learnt so much from your posts over the last 2 years. I wanted to share my own story of loosening the purse that was basically unplanned and ate up an entire year’s savings. While I am not as frugal as you are, I saved aggressively (about 100K/year for a psychiatrist) until last year when an uncontrollable urge to decorate my first house ever (3 years after residency) led me to spend about 100K on an interior designer. While it was painful and I regretted the decision, now I am fine with it and think I will enjoy the furniture for a long time to come. But the idea that I could spend so much on just decorating a house is still hard for me to comprehend. I went to the designer with a budget of 30K and before I knew it, I had already paid 100K (including fees) over 3 months. Sometimes I think renting saves much more money in the long term because people are not always upgrading. But then life is much more than just saving money. The connection to a rented place is rarely the same.
I have a question and I hope it is not too personal. I have noticed in many of your entries that you became a millionaire 7 years after residency. I also noticed that your initial salary was a military salary and therefore much less than what you might be making today. I am puzzled as to how you were able to reach a million in 7 years. Even if someone saves 100K/year (and you were not for a few years after residency on military salary), they would be stretching to reach that number in 7 years, despite a good investment return.
Thank you again for all that you have done for our community.
1) Lots of savings
2) Some investment earnings
3) Pay down of debt
4) Appreciation of property
There are more details in the book if you really care. Also, we had a mid 5 figures net worth coming out of residency, so we weren’t starting with nothing, or in the hole, like many. That was money saved during residency.
What’s really impressive is how much it has gone up since I hit a million a little over a year ago despite all this splurging. The first million is definitely the hardest.
Thank you for explaining that. I was perhaps confused between net worth and the amount actively saved. I will read the book for sure.
So true about the first million being the hardest, like the first $100K being the toughest one to achieve.
You likely more than paid for your new bike with the use you got out of the last one. Especially if you went without two cars early on in your career!
I guess I’m the only one who thinks that $11,000 for a kitchen table definitely counts as a splurge. By definition, it is an “expensive product to be displayed to others”. At least be honest with yourself and call a spade a spade.
I also cringed when your wife considers it an heirloom to pass down to the kids. We likewise inherited a cherry dining room set and cabinet and it caused so many headaches with travel as we moved across the country that we could not wait to dump it.
And I gasped that you sold the broken down table for $100.
But whatever.
Because $100 was too much or too little? She sold my 20 year old mountain bike for twice that!
Ha – looks like you guys were down at Forsey’s. We have a similar table and went though the same struggle. It’s tough. It’s especially tough to keep your values in mind when you are shopping for stuff like this. That said, life is ultimately about the journey. You need to enjoy it along the way because the end really sucks.
I about had a heart attack reading about you about having a heart attack… that window quote! Wow! Hard to rationalize that one!
When I read about the exchange between WCI and his wife regarding the purchase of the dining table I recollected the same conversation I had with my wife about our dining table a few days earlier. Granted out table is old and not very sturdy but it hardly gets used since we use the kitchen dining table more. But I suppose I will have to give in, since it is not a huge amount in the long run.
I agree with spending money once you are on the way to achieving the retirement goals. I have seen too many times physicians hoarding money and always wanting to retire and then take their dream vacations, but when they reach the retirement age they have a stroke or MI and cannot travel. Or they develop arthritis and cannot walk uphill or long distances. Once does not realize that the tourist facilities abroad are not well suited for disabled persons. So decided to take one (or sometimes two) good overseas vacation each year while I am still in good health so that when I cannot do it anymore I will have the memories ( and photographs) to make me happy. I would rather take a $10K vacation than live in a large house or drive a Lexus / BMW.
Relatively new reader here (enjoyed catching up on many of the blog’s archive of posts over last couple weeks). Not a physician (I did catch the passing reference to someone in my profession — actuary — in the book) but this provides a unique perspective to blog that is really interesting. It has already given me a bit of a different perspective on budgeting / saving plan.
At any rate, I have a random question. Having read about the mountain bike purchase in a couple posts and being in the market for one myself, I would love to hear more about it (model or cost if willing to share).
I look forward to following new posts going forward!
It’s a Pivot 429 bought a little over a year ago. Around $5K I believe.