By The Motivated MD, Guest WriterThere are times in our lives that force us to stop and reflect. If I am being completely honest, I am a very self-reflective person. Recently, I found myself thinking a lot about the roles of money and personal finance in my marriage. That may seem ridiculous to say, coming from a personal finance blogger. Of course I think about personal finance. I literally write about it every week! However, with this post, I want to approach my thoughts and reflections from a new angle.
I write a lot about personal finance as it applies to my life and profession. However, I rarely provide my readers a doorway into how this interaction plays out in my day-to-day marriage. What are we (my wife and I) putting ourselves through to solidify a strong financial future? Is it worth it? Is it too much to ask someone to live like a resident when you are making “doctor money?” Here is a financial love letter to my wife for all she puts up with.
A Moment of Reflection
Just the other night, after our kids were finally asleep, my wife, an emergency medicine physician, and I settled in to watch the series finale of Ted Lasso. We had grown to love the show, and we were eagerly waiting for a time when neither of us was working nights or on call to watch the final episode. I won’t give any spoilers here, but needless to say, it pulled at our heartstrings and asked us to reflect on the age-old question of time vs. money. What is an amount of money that is “life-changing?” Is there an amount of money that would make you re-evaluate what is important to you? Your goals? I spent that night laying in bed relentlessly going over this trade-off in my head.
The next day we found ourselves on our usual morning routine. Out to walk the dog with our daughter as she gets FOMO (fear of missing out) if she is not included. We walked and talked, addressed our daily agenda, and determined how long we needed our nanny that day. Eventually, our conversations were divulged into finances, as they often do—whether it's addressing how much is on the credit card or if we need to add more money to our emergency fund. Despite payday coming up, it just seemed like we would (again) not be able to “do it all.”
We would have to pay off the credit card entirely, but this would limit our ability to replenish the emergency fund. Furthermore, we both knew we needed to tighten the budget this month. Money would likely be tight with all the travel for graduations and family events. How is this possible? We are two freaking physicians making (academic) attending salaries, for crying out loud! How are we still in our mid-30s and having to make the same financial decisions we have since our intern year?! Inevitably, the conversation would make me seem overly frugal or mistakenly label my wife as a bit indulgent—comments that clearly do not help the situation.
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The (Self-Induced) Financial Pressure
How did we get here? Well, it is actually straightforward. We met in medical school, ultimately built a life together, and married. With the unification of our lives, so too did our debts combine. We faced a $670,000 educational debt for choosing to be physicians. With our debts fully realized, we took to recommended resources and self-education. We had to build a plan. With time, we created our financial plan, prioritized debt elimination, and started to chip away. Anytime we moonlit in residency, it either went toward affording our wedding or toward our student loans. There were endless shifts and countless nights working extra just to make a dent in our debt.
With time, we started to celebrate our progress. First, paying off $50,000, then $100,000. As my wife completed training and I entered fellowship, we could make annual payments of $100,000. It was not until 2022 that I finally completed my fellowship and could start to “carry my weight” regarding my income. With us both making physician salaries, we could finally destroy our debt, right?
We continued to keep our goal of paying $100,000 toward our student loans annually. Still, with a family of four, childcare, the cost of living in a coastal city, helping family members, and financial responsibility (emergency fund, maximizing retirement contributions, investing) . . . the financial pressures started to build. How is this possible? Our take-home pay is over $300,000. We do all the right things, after all. Just to name a few of our habits, we do the following:
- Keep an emergency fund of approximately three months of living expenses
- Max out our retirement accounts
- Invest regularly
- Plan far in advance for big purchases
- Exclusively buy used cars in cash
- Keep no other debts
- Purchased a home far below what we could afford
- Invest in index funds
- Avoid lavish or frequent vacations
- Pay massive amounts toward our debts annually
- Stick to our financial plan, which we review annually
If we are doing everything right, why does it feel like we cannot get ahead?
Really Living Like a Resident
This, my friends, is what it really means to live like a resident for 2-5 years after training. It is a bit different for my wife and me, depending on perspective. My wife completed her training in 2019, while I did not complete training until 2022. So, my wife has been living like a resident for longer (it's one of the side effects of marrying a younger physician).
See, like the grueling process of medical education and training, no one can really make you understand the realities of living like a resident until you do it. Does any altruistic college student know what lies ahead when pursuing medical school? They will not understand what they signed up for until they are in the thick of it. I feel the same way about physician finance.
Not until you formally complete training and still have the self-control to live below your means, pay off your debts, and avoid the lifestyle creep the world expects of you can you truly understand what living like a resident feels like. It is hard. Very hard. Look, neither my wife nor I will speak ill of our incredible life. We practice in our dream location near family and raise the two most beautiful kids you could ever imagine. But no one could ever describe the realities accompanying early-career debt elimination. It sucks, plain and simple.
The Realities of Early Physician Finances
If there is one thing for you to take from this article, it is this. If you are working your hardest to start your career on the correct financial foot and carry educational debt proportional to ours, I think it should feel like this. It sucks . . . but it is also necessary if you wish to build more financial breathing room for the remainder of your medical career. I cannot tell you if it is supposed to be this difficult; maybe that is just us. Who knows? I can tell you that no one ever prepares you in medical school that one day you will be in your mid-30s and still feel like your physician income just helps you scrape by, assuming you are doing “all the right things.”
Why Is It So Hard?
So, why is it so hard? Personally, I think it is death by a thousand cuts. It is all the little things that you fail to recognize when you are grinding through medical school and residency. It is the cost of childcare, your eventual taxation bracket, the colossal debt you accrue, and how interest constantly works against you. It’s the holidays, the vacations, “planning for the future” . . . on and on and on. All these little things, both expected and unexpected, steadily chip away at your ability to make headway early on in your career.
I try to remind myself that hundreds of millions of Americans live on far less than we do. This realization works to keep me grounded—somewhat. However, it does not fully fix the fact that I have put in a decade’s worth of work after college to make an income worthy of that investment and, hopefully, a comfortable future for my family. So, why does it feel like I haven’t achieved any of this?
Does It Have to Be This Hard?
The truth is that it doesn’t have to be this hard. So much of our financial pressures are of our own devices. The math is simple. When taxes and retirement are subtracted, we take home roughly $300,000 as a dual-physician household. Then, factor in the fact that we utilize 33% of our take-home pay toward aggressive debt elimination. That leaves us with $200,000. Don’t forget about our mortgage; that’s roughly $40,000 annually. We are down to $160,000. Now, let’s subtract our W-2 employee (nanny), leaving us with $110,000.
Hold on now, we are not done yet. To locally care for a family of 4.5 (the 0.5 is a mother-in-law)—including utilities, groceries, healthcare expenses, transport/travel, gasoline, all our various forms of insurance, automobile repairs, occasional restaurant outings, children’s activities, and let’s not forget our boat (another story for another day)—we are talking another $90,000 (approximately). That leaves us with $20,000.
Of the nearly $300,000 we take home after taxes and savings, we are left with only 7%. With 7% of our take-home pay, we must find ways to cover extra or unexpected (non-emergent) expenses.
If we were not paying 33% toward our debt annually, we would have 40% discretionary income not allocated toward a fixed expense. For those not wanting to do the math, 40% of our take-home pay would be nearly $120,000. We would have $120,000 annually to do what we want when we want. This may include maxing out our children’s 529s, finally renovating our home, investing more, or traveling.
So, it doesn’t have to be this hard. We make it this hard for a reason. Why? The sooner we pay off this debt, the sooner our discretionary income goes from $20,000 to $120,000.
Given that our family is paying roughly $100,000 toward our debt annually, we will likely eliminate my wife’s debt in mid-2024. What will remain is my debt. By mid-2024, this should total nearly $200,000. I am employed through the Veterans Affairs Healthcare System, and I receive some loan reimbursement through the Education Debt Reduction Program (EDRP). This is pro-rated based on my clinical FTE. As such, I will receive $150,000 in loan reimbursement over five years ($30,000 annually). By this measurement, once my remaining loans reach $150,000, what remains will be reimbursed through the federal government, and I will largely see my debt as complete. In summary, my wife's debt should be gone next year, and mine should reach autopilot around that time.
We live like residents now, so we can free our income from the shackles of student debt as soon as possible.
What About Catastrophic Changes?
Those of you who have made it this far in the article may ask yourself, “Why don’t they just make some big changes and fix their finances now?” Great question. It is not for lack of consideration.
For starters, we discussed selling our home. Though we bought our home for approximately $650,000 with a fixed interest rate of 3% in 2021, some estimates say it has increased by nearly $200,000 in value. We could just sell it, pay off (almost) all our debts, and let my loan reimbursement pay the rest. Or couldn’t we just sell our boat, make a quick $10,000, and stop paying nearly $4,000 in marina fees and marine gasoline each year?!
True on both accounts. We could do this. But here is our predicament: We. Are. So. Close.
We are already doing so much of what is important to us. We have already incorporated much of how we define our happiness into our lives. We live in the coastal southeast within arm’s reach of our friends and family. This is where we always wanted to settle down. We own a home that has turned out to be a phenomenal investment and that is below our budget. We are practicing at an academic institution we wanted to work for, for the state we cherish. Oh, and did I mention we are a five-minute bike ride from one of the most beautiful beaches in the world?
Yes, we could make catastrophic changes to pay our debt off faster. We could uproot our family and move to a lower-cost-of-living area away from family for the betterment of our finances. The problem is that we would actively work against what we prioritize long-term. We wanted to settle here and for our family to interact with our children regularly. Further, we wanted to stay in academics (and, honestly, to have a boat). It is our happy place. It is a shame that what we need out of life is often overshadowed by what we think we deserve.
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$320,000 and Unable to Save for Retirement
What Did I Think Life Would Be Like?
I am working toward a point here, I promise.
The truth is . . . no, I did not think this was what life would look like in my mid-30s. If I could go back in time and meet myself from medical school, I don’t think there is any multiverse where he would understand the difficulties that lie ahead. The struggles that medical school and residency will entail, the increasing prevalence of physician burnout, the looming pandemic, the debt.
I would imagine my naive younger self would assume there would be some hardships but that financial security and prosperity would be just around the corner. Unfortunately for my former self, that corner will test you and your spouse's mettle.
Our profession asks much of us—maybe too much. Aside from the clinical demands placed on our shoulders, it also (often) asks us to have financial patience. To wait just a bit longer for that life you expected you would have. These financial constraints can weigh heavy on our wallets, as well as our psyche. They can metastasize into our relationships and our lives.
One of my favorite quotes from Ted Lasso comes at a time when Ted wishes to invite a previously shamed coach to return to their team. All of Ted’s colleagues do not wish to see this individual returned, but Ted believes in forgiveness and second chances. “I hope that either all of us, or none of us, are judged by the actions of our weakest moments,” he said, “but rather the strength we show when and if we’re ever given a second chance.”
I believe all physicians deserve to experience their careers without the burden of debt. Colossal student loans have a way of making us regret our decisions and question our careers. I hope we all have the strength to overcome these financial struggles so we no longer need to practice from a place of necessity.
What I Hope Life Looks Like at 40
Now that I know the harsh realities of living like a resident and debt elimination, what do I hope my life and finances look like at 40?
For starters, I hope my debt is gone. Kaput. Fin. Zero. Zilch. Other than my mortgage payment, I want no other debts. Given our savings rate and investment strategy, I suspect we will be millionaires. That does not factor in the equity we have in our home. Strictly from investments and savings, I suspect we will be millionaires. Will we live in our forever home? I don’t know. Will I allow myself to finally get that Tesla I want . . . yeah, I don’t know about that either.
I know that I will continue to focus all my time and attention on our family. We will use our finances to reinforce these values—saving a large nest egg, building appropriate educational funds for our children, allocating enough funds to ensure our family is well-traveled, and maybe even starting to talk about retirement plans.
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From Fourth Year to the Real World: An $80,000 Wedding Causes a Downward Spiral
A Financial Love Letter to My Wife
What does all this financial rambling culminate to? Well, to be honest, it isn’t (really) for you. It is for my amazing wife. I put these thoughts on paper to rid myself of the inner turmoil I keep bottled up. A turmoil that simmers day after day as I review our finances. Am I too frugal? Do I label myself frugal but fail to practice what I preach? Am I placing too much financial pressure on my family? Am I doing everything I can to protect their future? Phew, it can be overwhelming.
Without further ado, maybe it’s best to be grateful for what you have, not what you hope to achieve, like thanking your spouse for walking this journey with you.
To my dear wife,
Thank you. Thank you for loving and supporting me all these years. Since the moment our relationship blossomed, you have supported me unconditionally. I am sorry that now, as it feels like we have reached the mountaintop, we have only discovered a higher peak left to climb. I wish I knew then what I know now. I wish I could have somehow warned you what our early careers would be like. Despite making physician incomes, we do not feel like we have “made it.” Far from it, actually.
I will not apologize for the choices we have made together. We both love our careers. Our debts are a necessary evil that allow us to achieve our dreams. However, I am sorry our dreams have yet to manifest much as we expected. I hope you know, though, I remain stoic and determined to eliminate our debt. I, too, feel the overwhelming weight of our restricted finances. Though it is our creation, I still struggle with it far more often than I wish to admit.
I hope that in just a year, we will rid ourselves of the biggest financial challenge we will ever face, but I cannot guarantee that our life will change overnight. I hope to expedite that time as soon as possible so we may decide how to best use our income to build a better and brighter future for our family.
I love you more than you will ever understand. I cling tight to the notion that our best years are ahead. I know our careers have asked us to be patient. We have exemplified this patience for over a decade now. Yet, as we celebrate the end of our training, we again must carry the torch of patience just a little further now.
Finish this fight with me. Side by side, we will best this beast as we have all the others. And our bond will only grow stronger, my dear. Thank you.
I love you.
If you ever lived like a resident, what was your experience? Did you feel like you would ever reach the mountaintop? Would you do it over again, knowing now what you didn't know then?
Do you believe you took out ONLY what was necessary in student loans? Is your current frugal life you consider to be a sacrifice less luxurious/ pampered than your life as medical students?
Forgive my ignorance – perhaps my state medical school tuition in the ’80s was much cheaper (inflation adjusted) and I actually worked out that I’d have loan payments requiring I earn big money for so long that the military service owed if I got an HPSP scholarship was a worthwhile trade off, so I had much lower (mostly college) student loans.
However I also think middle class kids growing up in the ’70s (my spouse and I) expected a standard of living much lower than those of more recent generations. (Since we didn’t need 4 cars for the family, AC, more than 1 bathroom in the house, cell phones for everyone even the kids, computers and cable, etc. etc. which we can now no longer live without.)
For sure your state medical school was cheaper in the 80s. Mine was $8k in 1998-1999. We were all mad the next year when we started because in-state tuition had gone up to $10K.
Jenn I find your response to be interesting. Your college tuition loan was not 7%. Your college tuition itself was not $40-60K a year even after adjusted for inflation. Your medical school loan certainly wasn’t 5%, and even after adjusted for inflation it was not the equivalent of $50-70K. I am not sure what you mean by your family did not need AC – is AC a luxury, much less all that expensive? I am not sure how heating/cooling a home is a luxury. You should have focused on their boat and its associated expenses instead.
What you also underestimate (or ignore) is that physician salaries and reimbursement have remained stagnant for decades, while inflation has risen and the purchasing power of each dollar has declined. So physician salaries have essentially declined, while education and medical education (as well as cost of living) has steadily increased. I think it’s important to acknowledge the systemic forces at play which place well-meaning people in such positions, especially young high earners with high debt burdens. This is a reality of physician salaries about which you should not be ignorant.
While people like to say “physician salaries have remained stagnant” and we as docs like to hear it, most of the data does not show that, at least over the last 6 decades. Docs now are making 3X in inflation adjusted terms what docs were making in the 1960s.
But I do agree with you on their standard of living. They are not living like residents. Spending $50K on childcare when you live in a HCOL near family is not living like a resident. Owning a boat and the associated expenses is not living like a resident. Spending $40K a year on a mortgage is not living like a resident. It’s better they accept that sooner so they dont ridiculously inflate their spending when the student loans are done.
Respect. I appreciate the author’s recognition of his partner, insight, and self—reflective style. I’m in a similar position in life, and can relate to so much of your story. Although delayed gratification is important, I wonder the ways of appreciating the journey- ala the poem “the station” by Robert Hastings.
Thanks for writing this article.
I simply cannot understand why two physicians who have greater than 600k in student loans and work in academic settings did not choose to pursue PSLF. With the amount of forgiveness you would have received, and if you had instead been investing that 100k/yr into a taxable account instead of paying off your loans, you’re looking at, over the long run, a multi million dollar bad financial decision. Is there a reason you did not pursue PSLF?
Reasoning behind NOT pursuing PSLF is usually because one didn’t want to work a qualifying job.
The author works at a VA, which qualifies for both the program mentioned in the article and PSLF.
Oh, I missed that. Yea, I’m with you then on the PSLF criticism. Lots of money being left on the table there. Some people want to be out of debt sooner or don’t have faith in the program or whatever. But if it were me and my job qualified for PSLF, I’d go for it.
I think people make a lot of assumptions about PSLF. It’s not always that easy. Not all residency/fellowship are nonprofit. Certainly not all jobs when you come out are non profit. There’s a bit of hedging. Student loans interest is 7%-ish to 8ish coming out. If you are unsure if you will be able to get a job at a non Profit/gov organization—even if it was your plan—it would make more sense to refinance to a private loan with lower interest.
At least once you know what job you’ll take as a senior resident.
One caveat to PSLF is if you’re not confident you’re going to stay in a qualifying job for the remaining (up to 10) years. My residency and first job both qualified for PSLF but I got fed up and moved on before the 10 years. I had started out in PAYE going for PSLF but as the organization changed over my first couple years, I started to figure there was a good chance I wouldn’t be happy there for a full decade. I refinanced and paid my loans off in the first few years out of residency and now I’m in a non qualifying job less than 10 years from residency. If I had staid in PAYE, interest would’ve kept accruing and the growing balance would’ve been a huge loan burden by now. Anyway, it pays to know what you want and to get good loan advice.
If these guys are confident they want to stay in qualifying jobs for the next decade it’s hard to argue against pursuing PSLF.
I enjoyed your candid article and the letter to your wife, and am looking forward to the conversation here. I suspect the gist of some of the comments will be that you aren’t really living like a resident.
I remember those years. My wife made it possible for me to work “extra” as her schedule was flexible at a Montessori school. All the women that worked there helped each other. My wife was able to take all of our children to work with her until they were old enough to go to 1st grade.
The nanny cost you mentioned was quite a mind expander for me. In 1994, after our “parental leave” expired, we had to hire a nanny…for $10 an hour when we both went back to work. After we moved to Michigan, my wife’s parents helped us with childcare when my wife was in graduate school.
Our starter home had an 8% mortgage and cost $102,000. The house was 25 years old and was in a blue collar neighborhood. Most of our neighbors worked at, or had retired from GM. That house is now on Zillow at $180K.
We had no boat. We had older, used cars early on. My salary was $135K plus bonuses. My wife’s job paid very little after marginal tax rates. We had $125K in student loans. Yet, even we were not living like a resident. We took three vacations a year and were only maxing out the 401K (about $10K at that time) and contributing to non-deductible IRA’s. We underfunded our kids educational accounts, and I had to work more later to catch up.
Your house sounds like the McMansion that we built in 2003. That housing decision after paying off our student loans was one of our biggest financial mistakes. We became “house poor”. I calculated once that it cost me ten additional years of full time work.
My advice is to tone down the expectations and stay the course. My 23 year old daughter is getting a PT doctorate. She has put aside her teenage dream of getting a Tesla. She drives a used 2009 Camry. When she finishes grad school…she will get a newer Camry.
We did not end up in a huge custom built $750K cabin. We did not end up with Teslas. We have a Mazda SUV and a Honda van. Our boats are kayaks. In order to retire and still pay for our four kids educational expenses, we had to downsize our life. I tossed all my “young doctor” expectations across the decades.
It’s a good life here on the mountain in the older place and I love our $150 electric/gas bill. I love our 2.5% mortgage payment of $900, and our $300 a month property taxes. The 2500 square feet is just fine, and I won’t be getting a boat or a new Jeep.
You are doing great. It will work out fine. Take a well deserved congratulations and best wishes to you and your family. You are two doctors. You have a plan. The world is your oyster…in a couple of years.
Agree on the point about not really “living like residents.” Residents don’t buy $650K houses or pay $50K a year for a nanny. The author feels financially constricted because their cash flow is tight, but although they are paying huge sums toward debt reduction, they are also living at a standard far beyond that of a resident and in fact exactly at the level of two (admittedly underpaid in academia) attendings. The author discusses take home income of $300K but leaves out the value of maxed out retirement accounts (presumably at least $50K per year combined). They chose to have multiple kids and hire help to raise them, buy an expensive house, and live and work apparently *exactly* where they wanted to at the opportunity cost of numerous financially superior alternatives. Their quality of life in all these regards is maximized and the appropriate cost is the financial pressure they feel. Not to mention they’re building wealth at a rate of at least $150K per year. I understand the sentiment of the article and it resonates with me, but I can’t help but feel the author is conflicted because they feel like they wanted to be able to “have it all” both spending and saving and still feel flexible, but they chose to earn less, spend more, and not reduce their savings rate commensurately. So they’ve lost flexibility and it reduces their quality of life. Sounds about right.
My wife said as much. She lost a bit of empathy at $40K housing cost and $50K nanny cost. She also mentioned the boat costs.
All decisions have consequences: no kids or several. Expensive toys or not. Expensive cars or not. Big house in an expensive area or not. Nanny versus day care versus other options. PSLF or not. Public vs private school for your degrees and your kids schooling.
We made some of these choices: 4 kids, private school for them, public schools for us, big house after 8 years in the blue collar neighborhood, older cars, no toys. We did build the McMansion…
The several hundred thousand in equity we eventually captured by selling the big house is currently earning about 6%.
I didn’t get my “dream Jeep” until I was age 51 and bought it used. I sold it a few years later and owed excess depreciation on my taxes…
It’s all about choices and expectations.
The thing that struck me was that it sounds like the nanny doesn’t know their working hours till the day of? Unless “determining how long we needed the nanny for that day” is just determining “do we need the nanny for the full scheduled day or for less time”, I’m pretty sure I wouldn’t want to never be able to plan anything outside of work in my life for $50k/year gross.
Thanks for the raw peek into your life, both emotionally and financially. Also, very well written article with a touching letter to your partner.
However, I think it’s hard to say you’re “living like a resident“ when you have a boat, but I can appreciate you putting your money into what you value. If it provides that much happiness, then it is probably worth it, but still hard to say that you’re living like a resident with a boat that close to the beach.
You make a good point about the expectations of young physicians that still remain in our society. Certainly the world expects us to live a lavish life as “rich doctors“, but even those entering the profession still have misconceptions about what their financial life will look like, at least for the 2-5 years after residency. Hopefully this article and website are starting to shed some light on that.
If the boat is cheap enough….lots of average Americans have boats and a resident has the average American household income. Spend your money on what you care about most, whether you have a lot or a little.
Lots of average Americans are also not saving for retirement. The average American may not be the best standard for comparison.
It’s funny that lots of the comments here are saying these guys should spend more while others are saying they should spend less. It’s a funny thing about money (and spending in particular.) Everyone LOVES posts when people get personal and talk about what they’re doing, but they also LOVE to criticize them because they made different decisions than the critic would.
Of course this is a totally fair point about the subjectivity of personal finance, but I would take a contrarian position and suggest (as I alluded to in my other comment) that they might be happier if they *saved less,* since they seem to be happy with their lifestyle choices but unhappy because their cash flow feels so tight. What’s the marginal utility of $20K more flexibility per year for them? Perhaps quite substantial. The cost of saving this much less (either for retirement or debt repayment) is probably favorable compared to leaving their apparent dream jobs for higher pay elsewhere, moving out of their house or town, etc.
Confession: we had a bargain sailboat in residency. But we were military- better paid than most residents, with cheap or free access to boat launches and slips. We still are saving hundreds a month on slip fees using a military marina now in retirement (for our 4th and much less frugal boat).
I had a resident when I was faculty who lived on a boat in the harbor down the road.
I had a boat as a resident and quite a few more since then. They all added to my quality of life. Enjoy the ride. It’s not all about the retirement accounts
My childhood inured me to hardship……it’s all been easy breezy since then.
The exception is working night shifts on holidays– that’s when I succumb to self-pity.
Somewhat harsh comments on author not really living like a resident.
Don’t forget that there is a balance between “living like a resident” and preventing burnout. As long as you’re saving 20% toward retirement (or maybe a bit less if you’re paying off loans aggressively), you will be ok.
EM and CC are both high burnout fields. If you’re working 20 shifts a month, constantly trying to care for the kids post-night shift to save on nanny fees, you’ll surely end up with burnout. Major burnout is happening in EM in docs just a few years out of residency. A career is a marathon, not a sprint. If having a boat and a nanny helps you keep at the career for a couple decades, you’ll be much better off than if one of you burns out and becomes a stay-at-home spouse in 3 years time. Even worse, burnout could lead to unhappiness and divorce, which is a disastrous financial setback.
Keep at it, you’re doing fine, even with a boat. Maybe just avoid upgrading the cars and boat for a while and learn to accept that your current house might just end up being your forever house, even if it’s not perfect.
It is an entirely fair critique to point out that the author is not “living like a resident” when the author explicitly claims they are “*Really* living like a resident.” The author and spouse spend an after-tax $200K per year(!) on their living expenses, which include several marked luxuries (a full time nanny, and a home loan that rivals their massive student debt as of the end of their training). The numbers and material reality of their living situation are a far cry from a sustainable lifestyle for a resident (even a married pair of them).
Yea, lots of critics today. Reminds of one of my favorite quotes about critics that I read after an online beatdown (which has happened to me many times over the years):
Man I remember this time and there’s a HUGE difference in NW between age 35 and 45. I’m not even there yet (I’m 42) but our NW at 35 was negative and it’s near $2m at 42 and I think it’ll probably be around $3m at 45. We have 3 kids too. 35-40 is a really tough age for a physician. It DOEs get better, and the betterment is exponential
The financial betterment is exponential ONLY if you’re doing things right. There are plenty of docs sitting in the same hole at 45 that they were at 35. That’s the point of this website.
Nice humble brag, you either come from a wealthy family who paid your loans or are one of the top paying specialties, or both. Most docs won’t be anywhere near that NW in their 50s, much less 40’s. But yes you should be out debt by 40, don’t think most will have millions like you.
I dunno, I was 38 when we hit our first million on an average income of $180K/year. $2M at 42 doesn’t seem particularly outlandish. If you come out of residency at 30, earn 8% on your money, you would need to save $105K/year in order to get to $2 million in nest egg by 42. Some of that net worth is likely house, so let’s say $1.5 million by 42. That’s $79K a year. That’s a 29% savings rate on $275K/year, the average primary care income. Loans would have to be paid in addition to that of course, but that can be done by living like a resident.
Fair enough. I’d be curious to know the percentage of docs who are actually millionaires by 40. I’d wager it’s pretty low.
I think you’re right, I’m just saying it doesn’t have to be that way if they’d live like a resident in their early 30s for a few years.
What do you intend to do with 120k/yr that you need to restrict yourself so harshly today for? (Early retirement? Mansion? Private schools?sports cars? All weird for academics)
A little forecasting would indicate you’re destined for a high or super high net worth. Your finances are in good shape for your income. You’ve established good spending habits for your income. I don’t see any need to plan on radically increasing your cash flow/expendable income some scheduled day in 2024.
I’m kind of surprised the comments aren’t more harsh. Your transparency and the letter are nice, but… really? The Cliffs Notes version: we’re richer than almost all people who have ever lived but we’re suffering here and really need some more to get ahead. I get it, blogs need eyeballs, but sheesh.
I hope people around here will generally strive not to make harsh comments even when providing useful feedback.
This blog is all about “first world problems.” If you don’t want to learn about solving those, it’s probably not the best place to hang out. This is intended to be a “safe space” for high earners/wealthy folks where they can discuss just these sorts of things. There are very few blog posts on this blog where you couldn’t make a similar comment about them.
I get all that. Perhaps it’s the melodramatic language that prompted me to comment.
“So, it doesn’t have to be this hard. We make it this hard for a reason. Why? The sooner we pay off this debt, the sooner our discretionary income goes from $20,000 to $120,000.”
There is a certain graciousness to be transparent about your lifestyle and share what drives your financial decisions that can be food for thought for others. Finances are ultimately very personal and we often don’t get a window into how others look at them and live.
I would point out to other young professionals in a similar situation reading this, as others have, that from the outside this doesn’t seem to be the healthiest mindset regarding finances. Avoiding creep in lifestyle early on as an attending and improving your finances quickly in those first 3-5 years makes a lot of sense and can put you in a position to have more flexibility and ability to control your time and be generous later on. What doesn’t make sense to me is the idea of furiously paying down loans to the point that you feel resentful, just so that you can binge on consumption or save hundreds of thousands for your kids’ college funds later on. Honestly, having 20,000 / year in discretionary spending is an enviable position to be in already, but you could certainly increase this and stay within your means. There is no law requiring you to save 100,000 per year versus say 80,000 per year to pay debts, and this would allow you to double your discretionary spending. You risk developing an unhealthy mindset toward money and spending and if you feel “I am sorry our dreams have yet to manifest much as we expected” and attribute this to spending less than you want. It is good to be optimistic about the future, but try to work on enjoying where you are.
Take home pay of $300k — hope that is per person, not for the entire couple. If so, they better love academics more than any other activities as could easily double their incomes with another job. If they are really making $150k each as a physician they have an income problem.
Not doing 10 year debt forgiveness from the government is crazy. That’s an extra $85k in compensation ($600k/ 7 years) since residency years count. Probably a little less since have to pay some payments, say $60k / year. That’s a 20% raise is they are making $300k and 10% raise if they are making $600k.
For me even as a lowly hospitalist once I focused on improving income my financial life got a lot better. I’d tell myself in med school you could pick whatever speciality you want but max income. There are many ways to do it with still having a good lifestyle.
I think 300K is what they get after paying taxes, Social security and medicare so probably grossing 600K
Cry me a river. This guy has a FT nanny, an enormous house, contributes fully to his retirement and thinks he’s suffering. Seriously what a crybaby. And his letter to his wife was incredibly cringe.
I though the letter to his wife was beautiful. I don’t think he’s a crybaby, he’s pointing out what it takes… If only someone had ever written a letter like that to me!!!!!!!
A little consumption smoothing seems to be in order? Pay $70k per year toward the loans instead of 100k. Have 50k for extras instead of 20, and enjoy a more pleasant ride?
Consumption smoothing has some behavioral issues. The main one is that people are happier with a gradually increasing standard of living. If you start with a standard that is too high, it’s pretty hard to keep it increasing from there.
I agree, though in the case of OP it seems like there’s room for a middle ground. The other thing I’d add that’s specific to his situation is that the pay scale in academics tends to have a more strong upward slope. In private practice, maybe you pay your dues for 2-4 years on some kind of associate track, but then you quickly reach peak pay, as you are getting full value on your effort and have enough energy to pick up extra work. Unless you are very skilled at finding practice efficiencies, building your own practice, etc., which most people aren’t, you shouldn’t expect big pay boosts after that.
Different story in academics. You start low, but if you do things right then pay should go up and up and up, without necessarily putting in more effort. It’s a lot of sweat up front to build a research apparatus or stake your claim to some clinical niche, but you’re rewarded down the road with pay escalations attached to rank without added effort.
A plateau might be a bad thing, but it might still beat the alternative.
I mean, would you rather plateau at $500,000 or work your way up to $400,000 over a decade?
Oh don’t get me wrong… there’s a reason I left academics. A certain type of person ends up financially better off on the academic path. To put it diplomatically… skilled physicians whose strengths lie outside of direct clinical care. It’s a lot easier to “retire in place” and collect paychecks later than you maybe should as well. Just my observations.
My point relates to the OP’s specific situation: they are a double academic MD family. They should expect a different household income trajectory than a household earning the same amount at the same stage of career in private practice. Planning for current and future consumption can reasonably account for this. Thanks for engaging, and for running a great site!
honestly , you are wasting time which is something that you can’t buy back with all the money in the world that you will have in your 50s. Your world will not come to an end if you pay off your medical school loan at 45 instead of 40.
That said, many of us would have hated to have med school debt still at 40 much less 45. Lots of people are ready to retire at 45. If someone can’t pay off medical school loans in 15 years, how are they ever going to save up enough to retire in 20-30?
I think a 5 year rule (pay off student loans within 5 years after finishing training) has a lot of good behavioral reasoning behind it. Now you don’t have to pay it off in 2, but 10-15? Ugh. I’d hate that.
I was so unwilling to be paying off med school loans long term that I joined the Army. My 21 yo mind set was- what if I hate being a doctor? With the Army it’s 5 years minimum (less if I washed out of med school early). With loans, 10-20 years when I have to earn a high salary.
Thanks for sharing. I think perhaps one reason for so much criticism in the comments, is that your post reads like you have a dilemma… and commenters are sharing solutions to your problem. To recap… Your problem: is that you are surprised and unhappy with how limited your spending money is at this stage of your life. And the solutions being offered are:
One, recognize that you actually do have a very fortunate financial situation. It doesn’t seem as bad as you are making it out to be (ie. You are being a bit dramatic/ungrateful)
And two, consider an intentional increase in your spending if you think that would make you happier.
This all seems reasonable advice to anyone who finds them sold in this situation.
My advice would be to find joy in the journey as you make your way along the financial path. I’m still living as a resident in some areas of my life while enjoying selective extravagance in others 7+ years out of training. You can have anything you want, but you can’t have everything.
Wow! Honestly, constrictive criticism or not, I love the level of engagement this post brought. All the comments and considerations really got me thinking! What better use than to channel all of this interaction into a follow up post addressing some of these questions, comments and critiques. As such, instead of meticulously responding to each and every comment here, I decided to publish a follow up post on our site. Check it out here:
https://themotivatedmd.com/7-personal-financial-critiques-answered/
As always, I appreciate The White Coat Investor for providing their platform for me to talk about my life and my financial journey. If you enjoyed the article, we would love to have you check out our site! Just follow the link above or simply navigate to themotivatedmd.com Cheers!