Insulated groups of people tend to eventually push themselves to ridiculous extremes. This is easily seen with political parties. For instance, in my state the political parties have a caucus and convention system. It is not uncommon at all for the most extreme candidate to be favored at the convention, but then fail to be elected in the primary election because the overall party membership is far less extreme than those who are willing to spend days just to place their vote through a caucus and convention. It also occurs with groups of investors and forum participants. I sometimes see it on the Bogleheads forum where a significant percentage of forum members pooh-pooh any form of entrepreneurship and push for ever lower safe withdrawal rates. I witnessed it on the Reddit FIRE (Financial Independence/ Retire Early) sub in response to a post I wrote suggesting that perhaps the costs of early retirement weren't worth the benefits for some people. And I even see it here occasionally in the comments threads or on the forums, particularly in regard to your finances as a resident.
Resident Finances
I have seen some extremely impressive examples of financial discipline and acumen among residents who frequent the blog. For example, this post by Amanda Liu (RIP) who hit a net worth of $0 as an intern. More and more, I am seeing residents who are not only maxing out a Roth IRA, but also maxing out their 403(b). And maybe even a 457(b). Now, given a typical resident salary of $50K , and contribution limits of $5.5K, $18K, and $18K, you can see this requires a savings rate of 50-80%. That's extreme. One med student just emailed me with a plan to live on $60K a year for his first 10 years out of residency so he could be financially independent as early as possible. I even ran a post recently about a cool trick to start making REPAYE payments even earlier in order to maximize PSLF. Sometimes I worry that these sorts of examples, and our glorifying of them, will lead people to the wrong conclusion-i.e. that this sort of discipline and personal sacrifice is required to be financially successful as a physician. The truth of the matter is that it isn't required. Not even close. These folks are the “Early Retirement Extreme” folks of the physician financial world. If you're not familiar with the extreme early retirement community they are basically people trying to retire in their 20s and 30s primarily by virtue of living an extremely frugal life both before and after retiring. You know, going grocery shopping on your bicycle, making your own clothing, and reusing paper towels and ziploc bags.
The Importance of the First Year
The truth of the matter is that what you do in your first year as an attending will have a much larger effect on your personal finances than anything and everything you do as a resident. There is simply more raw material (i.e. income) to work with. By keeping your living standard somewhat similar to what it was as a resident, you should have a six figure amount each year with which to build wealth. That can be used to rapidly pay off your student loans, save up a down payment on your dream home, and max out your retirement accounts. Most readers will agree that my wife and I have been reasonably financially successful. Our “loans” were paid off 47 months out of residency, we were millionaires 7 years out of residency, and we should be financially independent by our mid 40s and now enjoy a lifestyle where we live in a 4400 sq ft mansion with a 100 mile view, go on vacation every month, buy automobiles brand new, and even purchase expensive toys from time to time. So what was our savings rate in residency? Well, in 2004, my first full year as a resident when my wife was working as a teacher, we saved 9%. The second year, after she was a stay at home mom, that dropped to 5%. Sure, the year I graduated (half of which I was an attending) that rate went up to 47%, but we still had a small upgrade in lifestyle that year including buying a town home, a second cell phone, and a second car. No ramen noodles. No reusing paper towels.
A Little Consumption Smoothing
Consumption smoothing is an important personal finance concept to understand. This is the idea that you keep your lifestyle the same throughout your entire life. You do this by borrowing money early on until your income is high enough to both support the lifestyle and pay off the previously taken out debt. I think it is generally a bad idea. I think you're probably better off with a slowly, but constantly increasing standard of living throughout your life, and I really dislike the idea of living on debt early on rather than learning to live within your means. Clearly, many residents take consumption smoothing too far by driving “attending cars”, living in “attending houses”, and borrowing to fund lifestyle choices as residents. However, it is probably just fine to consumption smooth a little. What I mean by a little is to have a little lower savings rate in residency and a little higher rate your first few years as an attending. Financial priorities for residents should be adequate disability and life insurance, some financial education, a smart student loan management plan, and some Roth savings. That's it. You don't need to be building home equity. You don't need to moonlight 8 days a month. You don't need to develop some complex asset allocation.
Advice For the Minority
The vast majority of doctors, and even residents, aren't saving enough money and aren't paying enough attention to their finances. So this post is for the tiny minority that is trying to do it all at once. Unless you hate being a doctor (or other high income professional) there is no reason you need to rush this process. Patience is a virtue. You will eventually have millions in savings. You will eventually be able to supply your every need and most of your reasonable wants. You will eventually be debt-free. You will eventually own the house of your dreams. Don't kill yourself to rush the process. It doesn't do you any good to be financially independent three years earlier if you have already molded your life into exactly what you want it to look like. Moderation in all things.
What does moderation look like specifically? It looks like this:
- Saving 20% of your gross income throughout your attending years for retirement
- Having your student loans paid off within 5 years of residency graduation
- Paying off your house within 20 years of residency graduation
- Reaching financial independence (savings equal to 25 times expenses) at some time in your 50s
- Never feeling financially deprived
Don't get me wrong. I appreciate your enthusiasm for the process. I'm totally impressed with your dedication and discipline. You will someday be able to either spend, give, or leave behind gobs of money. But look inside yourself and make sure your financial habits are bringing you and those you care about real happiness, and not just financial independence.
What do you think? Have you found yourself inappropriately going to extremes? How do you fight against that tendency? Should you fight against that tendency? Comment below!
I find myself fighting the urge to work more and more shifts every month, not because I need all of the extra money, but simply because I’m young, healthy and “hungry” and I’m trying make hay while the sun is shining. I don’t intend on working this much 10 years from now, but if I was 100% honest I would say my work-life balance is a little off right now. FYI I’m an ER doc 5 yrs out of residency, no student loans, 350K mortgage, 20K car loan, 600K in IRAs/401ks/taxable accounts, working about 22 shifts per month.
22 shifts is a lot. Why not reward yourself for paying off the car by cutting back to 18 shifts? 🙂
Dont get burned out now, so you are unable to work and make money later. Strike a balance. Also if your health is not there to enjoy the money later what is the use. Great article, strike some balance, dont yo-yo between extremes.
22 shifts is not only a lot, but unhealthy as well. You will burn out, and when you do you will find it very hard to even do 1 shift a month. Unless your goal is to retire ASAP you are doing more harm than good. Look at it another way because the tax code is progressive you are far better off working 22 years at 10 shifts a month than 10 years at 22 shifts a month. (I know if you add investment growth in there the numbers get skewed a bit, but the premise is accurate.) This is considering that every additional dollar you are making in Texas is being taxed at 39.6%. I am an ER doctor as well and there is no way in hell I will ever work that many shifts in a month. Actually my goal is to work part time in the future and hopefully be able to pay my way out of night shifts.
I do this also. I am taking about 75% more call (at least, in terms of number of days and “busyness” of call days due to increased specialty coverage) than any of my 4 partners, two of whom started as attendings within a year of me, and two of whom have been at it for a while. My main motivation, at least for now, is paying off my student loans. If all goes according to plan, they should be completely paid off around 36 months after becoming an attending.
I’m also trying to make hay while the sun shines. My call reimbursement is quite high for my specialty and so I’m trying to take advantage while I still can. If what they pay for call goes down (and my loans are paid off), I would easily be able to cut down to cover only my required days and still be totally fine financially. If pay for call remains the same, I’ll probably eventually cut back, but am enjoying the upgraded lifestyle we have right now because of it. We’ve taken some amazing trips/vacations while still managing to exceed our financial goals, which has helped on the burnout side of things. If I always have something amazing to look forward to it makes call and work so much more bearable.
Well, if there’s ever a time NOT to be moderate, it’s while you’re fighting your way back to a net worth of zero.
Off-topic, but I’m new here and have really enjoyed this site.
Keep up the good work!
Hey.
You want some of my shifts?
😉
Dude, you will wear out or burn out. Take more time for yourself and family.
Your health and mental well-being are your biggest assets and hard to replace.
Remember one of the biggest expenses to avoid is a divorce. So those burning the candles at both ends- hope you’re single and childfree for now. Much too expensive otherwise.
Ya I agree 22 shifts per month is a lot, and not sustainable long term. Short term I have a different perspective. I only work that much if we aren’t on vacation, and we do go on a heck of a lot of vacation. In fact, my wife, 5 month old son and I were able to go on an incredible 30 day trip to Australia, New Zealand and Bora Bora, yet still managed to make more than 4x in 2016 what the military paid me per year during my four years on active duty. I intend on going on lots more trips when my son gets a bit older, not to mention going to his baseball games and weekly events. To me, that means I need to seriously hustle while the pay is very good, my son is young and my motivation is high. I may cut down a few per month but not more than that…not now anyway.
Love the destinations you chose! I have two little ones, 3 and 5, and have been thinking of how to travel to those same areas sometime in the near future. If you don’t mind, I would appreciate hearing about your trip itinerary and what you did and didn’t enjoy.
Thoughtful and well-written post. Unfortunately, somehow Reddit will twist your words anyway and find a way to start bashing you.
I agree that a high savings rate in residency is unnecessary. Yes, don’t run a deficit because that’s poor form, but as long as you learn the discipline to save some money (~5-10%) during residency, you are well positioned to be disciplined in your first years as an attending, which are so critical to your future financial success.
I was totally financially ignorant as a resident. I really saved no money. What I did not do is run up a big credit card debt like several of my peers. I lived within my means. I discovered personal finance at 31. I am now 59 and have a net worth of about 7 million. I think it is great to save money as a resident but what really matters is avoiding lifestyle hyperinflation when you start actually making money.
I have been struggling with this as an intern. I read comments from super saver residents or as I would read Amanda’s blog posts there was a sense of inferiority in my savings rate. My wife and I are saving very similarly to where you were in residency(10-15%) as a dual intern household with a kid in full time daycare. There is only so much you can do with resident resources when you are both working 60 (or sometimes 90) hours a week.
Thanks for helping keep this in perspective.
My husband and I were both interns together with a kid in daycare. Having kids in residency really limits your ability to save, even though we lived frugally. Unfortunately, it is not realistic to have cheap childcare, especially when the hours you need sometimes start at 0600 or earlier and go until 1900 or later. Nannies have been necessary and they are expensive. However, we are now saving and paying off student loans quickly 7 years later since I started my first attending job a couple years ago. He will finish fellowship in June and then we should be on track to have great lifestyles (both working 4 days per week, minimal weekend or night work) and make >600k combined. There is a light at the end of training! Don’t worry too much about saving a ton right now, you can make up for it when training is done as long as you don’t start spending all that extra income 🙂
So glad you wrote this post. I definitely feel the comment section was leaning far too saver extreme for me personally. We gave ourselves raises at various points like coming out of residency and when loans were paid off. It definitely helped control our spending to slowly advance it over the years instead of consumption smoothing. Our mortgage would be the one item we used to consumption smooth and even that has a plan for eventual early payoff.
As we all should know Time is your greatest asset as an investor. Time in the market, not timing the market is a long held axiom in the field
Life is about the journey. If you don’t enjoy the path to Fi in some way you’ve wasted your life. You could die before hitting that point. Even if not how will you even know how to find happiness in retirement if you can’t find it when working? It’s not like your entire life resets when you retire. Your friends are still your friends, the things you enjoy are still the same, and your still you. So if your not happy now you won’t be happy then.
I very much agree with not being too extreme so you can enjoy the process. I did a little consumption smoothing when I bought a condo in residency that was a bit of a stretch financially at the time but is now well below what I can afford. That is enabling me to pay off my student loans early (3.5 years post-residency they should be finished). But I did still splurge on a new Ford SUV as a present to myself when I finished residency. Once the loans are paid then I’ll look at getting a bigger home, but for now I enjoy my condo and my nice car.
Don’t be in a hurry to move up to a bigger home. You might find that the freedom from yardwork and other maintenance headaches and the added cash in the bank (allowing you to have some actual FUN on the weekends, instead of cutting grass and cleaning gutters) makes the condo a better fit for you.
I bought a 2700 square foot house 2 years out of residency. i sold it last year, and downsized to an 1800 square foot condo. I now have less room, but more free time. The tradeoff was worth it!
Love this post!
I’m trying to enjoy being an early attending, pay off loans relatively quickly, while building up a retirement nest egg. I’m doing all of them pretty well, none of them anywhere near perfectly. Sometimes I read comments and posts and think I need to kick myself in the butt and get in gear… but when I look at the overall plan and projections and talk it over with my wife, we like life now and we like where our life is headed. Not going to eat ramen to get there a little earlier, and not going to be able to buy a 150 ft yaght in retirement. We are ok with both!
Nice job!
This was so well written that some corollary of Murphy’s Law guarantees that non-savers will use it as an excuse to lease Porsches and hyper-savers will charge you with treason.
🙂
You are so right!
Love it! I agree completely. I followed this path to the “Golden Mean” and it worked great for me. I enjoyed the journey and I arrived at a destination of financial freedom. The Middle Way is where it is at!
I’ve found myself getting caught up in the uber FIRE mindset slowly over the past couple of years. Not a bad idea to “pump the brakes” on trying to retire asap and spend more time appreciating and enjoying the profession we’ve worked so hard for and invested in? It’s something I’ve been thinking more about the past few months, so this post is a great complement to my current mindset/ruminations…..
Good and ironic timing with what has gone on with our political situation in the past week. A little more moderation ruling over our lives as a whole would be good. My moderation is my Tesla and golf. Yours, the vacations and boat? Just trying to enjoy the ride and stay healthy. Bad health is the only thing that would really throw me off track. Which brings me to a question about disability insurance. Any recommendations when I have already maxed out one policies options as to getting a secondary/additional disability as my income has far exceeded my disability coverage at this point?
My climbing partner just bought a Tesla (only 50% cash, grrrr, so I’m giving him a hard time about that) but I am looking forward to riding to the crags in it!
I got my new Tesla with NO MONEY DOWN!!! ha ha. 1.49% interest for 6 years, I can easily beat that safely on the side investing. I could have easily written a check for the car but there’s no point.
Your post raises several really interesting points.
Someone could and probably should write a book, for example, about the way online communities create and enforce orthodoxies for community members.
Your comments about hardcore saving? Great points there.
The other *financial* thing I wonder about FIRE is how practical it really is. It seems like the people who have jobs they hate would more easily and maybe even more quickly optimize by getting or creating a job they enjoy.
Agree on all points, its very interesting and this was timely. There are lots of varied communities that usually end up in some sort of group think and it can be hard not to succumb somewhat. Also hard to keep that balance from shifting to an extreme of sorts as groups self select and reinforce their assortment.
FIRE is absolutely not practical for the majority of people from an obvious economic standpoint, there has to be someone working and consuming to pay for the those that are not. In our era of overcapacity everywhere is what currently allows this minute percent of folks to do so.
Same thing with the trade balance, easy to solve. Americans spend less and have the other countries save less. Not really good for gdp, but a recent executive order made logic illegal so it works now.
Zaphod, good points. 🙂
FIRE may not be a practical option for the majority of people but I can’t see how it would not be an attainable option for the majority of MDs. I mean come on. Unless one is totally consumed with consumption or multiple spouses or is a serial sucker, how is it not possible to retire early with the kinds of net incomes that MDs are capable of generating. It is just not that difficult.
I meant possible on aggregate for the economy to overall support it.
Its possible because the overall amount of people doing it is infinitesimal, therefore it has no noticeable effect on anything overall. Have 50% of practicing physicians retire at 40 and there would be havoc on the medical system, still not much for the overall, even doctors are a tiny subset of the whole, but important systemically. This would of course increase demand and pay and pull some people into working, such is economics.
Now if 10-50% of the work force just “retired” its not technically different than massive unemployment striking the country (unless they all were FI and used no benefits) and would effect everything including your portfolio. These are just thought experiments since in reality we are such a very small group of people.
20% of gross, huh? Well, with loans paid off in 2 months (could do it today, but want to keep my 6 month emergency fund an actual 6 month’s worth…) so maybe with loans paid off, we can loosen up a little and drop down closer to 20% of gross. We’ve been maxing tax advantaged retirement options and the rest toward student loans up to 30% gross. Now that $180K in loans are done in under 3 years…maybe we don’t need to keep the same rate of savings as we continue to max out retirement accounts, start some college savings accounts and pay off mortgage quicker. Even dropping down to 27% would be a nice little bonus to our lifestyle and enjoyment of our good health and young age with 4 kids. Great post on just making sure we avoid the extremes of anything if it results in significantly less happiness now without much increase in the future.
This is similar to post I wrote recently: Moderatism vs Minimalism. Life is sweet if you make it sweet. There is a balance between being a die hard frugal person and making smart choices (living a bit below your means and saving money). I have opted for a balance. I like the idea of minimalism but it will not work in the setting of my family. If I was alone, maybe.
Check out the post here if interested: https://www.dadsdollarsanddebts.com/blog/2017/1/12/moderatism-versus-minimalism
Guilty. I save more than 50% of my gross income because that gives me more satisfaction than a new kitchen and a Tesla. Also, like TX ER Doc, I want to make the hay and store it while the sun is shining. There might be a big change in the industry that disrupts physician salaries, or more likely, I might become ill and unable to ever earn this much again. On the other hand, I don’t feel deprived of anything.
As a senior resident, I ran up a huge credit card balance doing all sorts of extravagant things with my then girlfriend. That debt was definitely worthwhile. Still, I paid off the credit card and all student loans within a year or so of my first attending job. Then I paid cash for an expensive sports car in my second year. Again, worth every penny to my quality of life at the time.
I can only think of one expensive thing that I would really want now; a private jet. That would improve my quality of life. Unfortunately, that’s still out of reach.
Great post, timeless good advice. Have to admit I occasionally feel envious reading posts by extreme savers, but in the end stick with moderation. No consumption smoothing, but gradually increasing consumption has been the key for us. Another example of what moderation looks like:
Save 10% as resident, 20% as an attending
Purchase a small condo, live otherwise like a resident, pay off student loans in 4 years
Small lakehouse with mortgage payment similar to nice car payment, still driving a beater
Upsize to large enough attending house…upsize to moderate lakehouse
Finally quit driving beaters…finishing up 529’s for 2 kids…will trade cash for TESLA or upgrade 20 year old boat in 3-5 years…on road to financial independence without mortgage by about 60. Still like my job, nice 25 year ride so far, have no need to play with FIRE.
In a way, the acronym FIRE is unfortunate because it ties together two very different concepts; financial independence, and early retirement. In today’s uncertain world, achieving financial independence ASAP makes a lot of sense for safety’s sake, but if a person likes his/her job, I can see on particular reason to prioritize early retirement.
Financial independence is a continuum and retirement is squishy. Whether together or separate they’re tough concepts to define at all once you spend some time thinking about them.
Yes, trying to define either concept rigidly is rather like trying to answer the question “How long is a piece of string?”. The answer’s going to be different for every person.
Nice that we each get to choose our path. The world is indeed uncertain, but I remain optimistic about the future of medicine. Achieving financial independence ASAP may come at a price if it is extreme. If you like your job, why set up your life as if you hated it? There is some chance that medical reimbursement will go downhill fast, but also some chance you will die young – have to strike a balance. No way I would trade 15 years and counting of weekend fun at the lake with friends and family with achieving FI 5 years sooner.
I think the “Financial Priorities for Residents” link may be incorrectly taking me to “Loosening Up the Purse Strings” – ???
Thanks! Fixed.
A Freudian misdirect? That might be a first.
🙂
-PoF
I agree with this post more than most people might think.
As a resident, I balanced minimal investments (Roth IRA at $3,000 a year) with an anesthesia foundation loan to have some fun money. After residency, my earning power went up nearly ten-fold overnight. I paid off the $7,000 with a week’s worth of locums work.
I still believe in moderation in almost all things — some things are best left untouched, like heroin, for example. I do advocate trying to live on half your takehome pay, which is more aggressive than a 20% savings rate, because FI gives you great options.
We live pretty well on about $70,000 a year an a LCOL area, but with paid off mortages, student loans, and being self-insured without life or disability insurance payments, it’s easily a six-figure lifestyle.
Cheers!
-PoF
“I still believe in moderation in almost all things — some things are best left untouched, like heroin, for example.”
Funny. 🙂
We spend about the same, also in LCOL area with no mortgage or other debt payments, and no life or disability premiums. We don’t aim at a savings rate; we just spend what we need to live comfortably and the savings rate falls out.
Note that $70,000 in after-tax spending is still well above the median household gross income. So is $60,000. The medical student who plans to live on $60,000 per year (described in the article above) for the next ten years is hardly extreme. He’ll live better than half the nation.
And here we unveil Exhibit A of
“Insulated groups of people tend to eventually push themselves to ridiculous extremes….I even see it here occasionally in the comments threads or on the forums”
Seriously. Go talk to docs in real life about money and ask if they think living on $60K while making $300K is extreme or not. Let us know the results of your informal poll. I assure you that the vast majority of physicians will consider that extreme.
Not to say I don’t think it’s a very good idea to be a little extreme when you come out of residency with a net worth of -$300K. But “living like a resident” isn’t supposed to be a permanent condition.
This is analogous to stating that your retirement income needs to be 70% (or 80% or some %) of your pre-retirement salary, a notion that has probably been debunked on this site in the past (just guessing). What does one have to do with the other?
$60K provides a happy, comfortable life. We bought a car last year and spent more, but we might spend less than that this year, and not because we strive to be ascetic. We buy what we want and don’t make a budget. We just tally up the expenses after the fact. For heaven’s sake, it’s just easy, comfortable. I find it hard to believe that we spend so much. (Those in NYC and San Francisco, and those with kids in college may beg to differ. I get that.)
Extreme is MMM riding his bike through the snow to the grocery store and hauling groceries in a cart behind the bike. That would be uncomfortable. Installing your own water heater. That would be a PITA. I don’t even mow my own lawn!
We’re living the dream (except for the recurring nightmare of weekend and night call).
My point is not necessarily to define what is extreme and what isn’t. My point is that a physician doesn’t have to do what you’re doing to be financially successful.
You’re also cracking me up. “We live on $60K. Except the new car.” Well. I live on $60K too. Except the new car. And the vacations. And the eating out. And the charitable donations. And the taxes. etc etc etc. I would submit your spending isn’t as extremely low as you make it out to be!
Low!? I think it’s extravagant.
We spent a little over $34,500 (after tax) on a brand new Kia Optima SXL. It’s very nice. Annual expenses ex-car were $51,323.55. That’s why I guess we might spend less than $60K this year. (We’ll probably drive the car for 10 years, so the amortized expense puts us well under $60K for last year.)
I try to think of useful ways to blow more money, but I’m not that imaginative.
My wife wanted to see her parents who live overseas and her post-doc brother and his wife on the east coast, so we bought round-trip tickets for all of them to stay with us for the holidays. Then DW decided our frig wasn’t big enough for the whole family for an extended stay, so we put the old one in the garage and spent $1200 on a new one, just for that occasion. (It’s nice.) Her brother had to leave when we weren’t able to make the 4-hour round trip to the nearest airport so I hired a $390 taxi to take him.
My parents won’t accept our offer to fund a vacation for them, but they allow me to spend over $2,000 on landscapers for their yard every spring. It always looks very spiffy when they’re done.
We spend a lot relative to the median American family, and I think it’s a life of plenty.
You’re correct that we could spend more and still do very well, and I would spend more if I could think of something that would add value to our lives, but failing that, it’s satisfying to watch the nest egg grow faster.
I’m not saying YOU should spend any more. You’re probably right that it isn’t going to make YOU any happier. What I’m saying is that if another doc is reading your comments and thinking “I can’t do that, why bother trying to be financially successful” he should be reassured that one does not have to do that in order to be financially successful.
I’m in the same boat as you CM. I spend about 50 to 60k per year, and that figure includes 5-6 weeks of vacations. It helps that I live in a low cost of living area and don’t have/want kids, but other than travel, there really isn’t much from a material perspective that I believe would increase my happiness beyond what I already have. I could spend more money, but it really wouldn’t add that much meaning to what is already a very comfortable and happy life.
Does the “save 20% of gross income” include anything used to build wealth such as paying off student loans in 5 years from residency graduation or in addition to repaying the loans?
The 20% is for retirement. Until you’re debt free, at least besides your mortgage, you’re going to need to carve out a larger percentage of your income to build wealth with. I generally recommend living a life similar to that of a resident for 2-5 years after residency. You can give yourself a little raise, but don’t multiply your spending by 4X. That would be extreme too!
I have tried to figure out how to calculate what my debt will actually be when I finish residency given my current REPAYE payments and interest benefits, and then to figure out what I’ll need to pay monthly in order to eliminate that debt quickly. I may be going for PSLF too. Have you found existing resources to do these multi step calculations and comparisons, or is there a set of Excel functions I can do? I am sure I could figure it out but it gets confusing. I’m paying with REPAYE for the next few years of residency anyway but it would be helpful for my peace of mind to know what I have coming when I do reach attending level salary–and what I am (or am not) gaining by making payments now that are not even covering interest.
There was a spreadsheet floating around on the forum a while back. I would try asking there.
Here it is I think: https://www.whitecoatinvestor.com/forums/topic/new-pslf-plannercalculator/
I haven’t used it. Let me know how it goes. If you need professional help, try one of these guys: https://www.whitecoatinvestor.com/student-loan-advice/
Frankly, some of these student loan decisions are complicated enough that this a great time to burn a little money and get really good personalized advice on the subject.
I guess it’s all about expectations. I was a student for way too long before residency and had to live on $25K. Even now, spending more than that reflexively seems a bit extravagant to me. But of course, I don’t have kids yet.
Agree that you certainly can be financially successful without being a Mustachian. I personally love my job but still want to be financially independent ASAP because I am basically a conservative guy. Who knows what the job market for doctors will look like in 10 years? I want to be able to walk away if it’s best.
My favorite thing about Mustachianism is actually the implicit health benefits… like someone mentioned, of course if you don’t have your health then the value of FI goes way down.
I have the same philosophy. Right now our yearly spending is about $70k; though it may be “extreme” by WCI’s standards, it still feels extravagant to me a few years out of residency! Our savings rate is maybe 40%, and charitable giving is 5%. It feels fantastic.
Ditto re: the health benefits too. I agree with WCI that it makes no sense to kill yourself in the process of becoming FI, but why not adopt financially healthy habits that are physically healthy too? That’s where I do think some of the more “extreme” elements of Mustachianism – like biking to the grocery store – actually make sense. It’s pretty normal for people to do that just about anywhere else in the world, and I’m pretty sure they don’t consider it equivalent to reusing paper towels.
My hat’s off to those extreme savers, but its not for me. I started my medical journey about 5 yrs late compared to everyone else. I spent 8 years in post-graduate training and have been out for 17 months. Along the line, we had 4 kids. I started moonlighting soon after residency and all during fellowship(s), and we increased our life-style little by little. We have found that we can live happily on $60K, but since being out, our spending about doubled. We bought a big house for the 4 kids and for family to come visit (and they do). But we also give more to our church. We have never been on a vacation that has not revolved around going to see family (5 car ride). Now at 40, I have a little more than 180K in the bank and investments, have student loans and a size-able mortgage. We decided, this year to take a vacation. My kids are not getting any younger and my wife says, “we need to make memories.” I feel confident in doing so because when faced with buying a new car, I bought a used truck and paid cash. We do not spend much monthly on “stuff.” We are saving 25% of gross, aggressively paying off the student loan (48 mo) and the mortgage and while pushing the 529s as well. Although, healthy but overweight now, my brother had a CABG at 43 – it’s coming for me. My life insurance and disability are paid up. We are taking risk, but have taken measures to weather storms if they should come. If things go well, I will be FI in 10 years, eyeing retirement in 15 (though I still will have kids in high school), but will continue to work if healthy enough, because I can’t sit idle.
We value family and time together and refuse these times pass by just for the sake of saving one more dollar. But at the same time, we want to be good stewards to what God has blessed us with. The key to do things in moderation, and to do that, you must plan!
Thanks for your site. I have learned a lot over the past 5 years.
People who comment on blogs and forums are not a representation of the general population. It is a highly self-selecting group which can shape the narrative quite a bit. Remember that when consuming online content. I think the biggest take away here is to see what other people are doing, use what is useful and discard what is not. Seeing the extremes is fun because it shows what is possible, just don’t let it make you feel guilty about your life.
There are right and wrong tactics to use to accomplish a certain financial goal, but ultimately we are responsible for defining that goal. No one can figure that out for us, not WCI, MMM or any other blogger. How aggressive we push to achieve FI is dependent on our career satisfaction, risk tolerance, health, what level of consumption makes us happy and many other factors.
I saved pretty aggressively in residency, and in the long run it made absolutely no real difference to where I am financially today. WCI is correct here. What you do when the fire hose of money comes pouring into your bank account after residency is what determines your financial fate. But saving aggressively in residency did establish habits that stuck. For me that was the biggest benefit.
Early FI is easy for physicians if you start early. Heck, if you just manage to buy an average house, average car and avoid divorce it’s pretty hard not to be FI by 50 or 55. Good post WCI.
Excellent points.
I did not save and made even more dumb decisions in residency, but overall they didnt matter at all since one or two checks worth of disposable income blew those away. Its the long term commitments and De-commitments that are dangerous, especially at attending level wealth.
What I like about the financial independence philosophy (and what I apply from it in my life) is how they try and find out what actually makes them happy, puruse those things, but discard the things that don’t make them happy. They also positive view on exercise, health, environment, independence, self reliance, thrift, and industry.
For those that say, what if everyone did that?, you can say that about nearly everything. What if everyone wanted to become a doctor or bought a speed boat? Everyone in the country doing the exact same thing is very unlikely. But even so, this country could do with more exercise, more savings, more thrift and industry, and less pollution. And a shift toward more of that would not be a bad thing.
The usefulness of web sites like this is because doctors have traditionally been bad with their money. They tend toward the over consumption side of things. So preaching a little farther toward the financial independence side of things may prod them to make some better decisions, rather than the consumption side of things.
The internet does tend to have self reinforcing groups. But reality rarely has such stark divisions.