For an audio version of this post, please click on the speaker icon (top left).
Welcome to this episode of The Doctor’s Bill (Can You Afford It?).
Wonder if you should buy that big ticket item or not?
Well here’s your chance to have a wealth management expert, Johanna Fox Turner, of Fox & Company Wealth Management analyze your overall finances and make a final verdict on whether or not you can indeed swing for the fences and splurge on yourself or whether you should just walk away.
[Johanna and I have no current financial relationship]
Disclaimer: This is not meant to be a substitute for paid professional advice but only meant to serve as a suggestion/guideline.
The following are the details from our submission form:
Item/Experience Desired:
India Trip
Approximate Cost:
$15,000
On A Happiness Scale of 1-10 (10 Being Happiest), rate what this item/experience will do for you A) Short Term and B) Long Term:
A) 7 B) 9
Age:
33
How Many Years Till Planned Retirement?
28
What is your total household income?
$350,000
What is your % Annual Savings Rate? (savings/gross income)
6%
Primary Home Equity (Market Value-Debt) [For Renter =$ 0]
$0
Additional Real Estate Holdings Equity (Market Value-Debt):
$0
Current Liquid Asset Value (Savings, Checking, Etc.):
$35,000
Retirement/HSA Combined Value:
$20,000
Miscellaneous Asset Value:
$0
Mortgage Balance:
$500,000
Student Loan Balance:
$220,000
Additional Liabilities:
$0
Future College Plan Funding Needed (Today’s Dollars):
$0
Additional Future Obligation Support (Today’s Dollars):
$0
How do you plan on paying for this item/experience?
Plan to pay with cash
Based on this submitter’s financials, what would you advise?
Does he or she get to Eat, Pray, and Love?
Or does he or she not have a prayer for a trip to the subcontinent?
Click on the Doctor’s Bill Image and find out the verdict:
Open the Bill And Find Out If Can Afford It or Not
After you see the verdict please come back to this page and comment whether you agree or not with the decision (and no cheating by looking at comments first!)
If you would like to submit your own Doctor’s Bill request please fill out the submission form.
Note:
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Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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Interesting, I would say okay as long as you promise that this is a one-time splurge and that you will get serious about paying down debt and building your nest egg when you return.
Yes it would still be manageable if that indeed is a one time splurge and then concentrate on knocking down the debt and build up savings. That sometimes is easier said than done as we all fall for traps and something always comes up
Given your caveat, I would agree, and you make a good point (prob s/h added to my comments). Unfortunately, we don’t have that promise so it’s my job to be the harda$$ and assume that’s not the case ?
Thanks for dropping by, always nice to chat with you!
Based on the given information, I agree with Johanna and XrayVsn. Thumbs down. Denied. However, there is just not enough information here. I want to know how long this trip is. If it is a week in India… then $15,000 sounds like wayyyyyy too much. It’s really easy to get cheap flights to anywhere in the world these days. Airfare is just getting cheaper and cheaper… and then there’s also travel hacking too. Of course, I understand there’s a learning curve to travel hacking and most people are not as enthusiastic about it as I am… but still. And India… Read more »
Awesome analysis DMF. I may just have you substitute you in for my analysis in the future 🙂 Unfortunately this submitter did not give an email to let us ask more questions or even tell him/her (by the way I changed the submission to now include gender as well as some other tidbits that help as well) that the post was going up. I agree India is definitely a value oriented destination if done right, not sure the length of this trip or how many people were going. I too feel that the 6% savings rate made it seem like… Read more »
Agreed, see below. Really appreciate your insight!
The trip seems on the pricier side and I’d like to have more details before I comment on it. For me, I’d be more geared toward paying off debt and building a nest egg while young. However, there is a consideration not factored into your Q&A. Does this couple plan to have kids soon and realize a trip like this wouldn’t be possible with a family? My wife and I are trying to knock off bucket list trips quickly before setting down roots and having kids. We know we stand to sacrifice our freedom once they enter the picture and… Read more »
Very smart point Young and the Invested. I know of many people who do their last hurrah and travel before getting bogged down with children.
I have been on both sides and traveling with kids, especially young ones, adds so much complexity to the mix (as well as expense).
If that is indeed the case with this India trip than I agree there should be a discount given.
Thanks for stopping by and commenting as always. Appreciate it
hmmm – maybe a babymoon? I didn’t know what that was until my kids took one to Paris. Actually packed her wedding gown and had a photo shoot. Well, they’re not both my kids, but you know what I mean. They didn’t ask me first, but my answer wouldn’t have made an iota of difference. Anyway, possible and that’s an interesting thought. Many people are commenting on the lack of information and I agree. It would be nice to have more commentary (we have a space at the end to supply additional information). Usually, we are able to reach out… Read more »
I would definitely travel as much as you can as a young married couple with no kids. My wife and I did it. In the two years we were married without kids, we took 8 big international trips spanning 12 countries. We are going to find a way to travel again with kids… but it’s so much more challenging.
That’s the mentality we’re taking. We’re using every advantage we can to travel abroad and even domestically. Credit card points, airline miles, membership rewards, etc.
So far we’ve done Colombia, Perú, Iceland, London, and Greece. We may be doing Turkey and Israel this coming year but that’s likely to be it for a while.
This person is making mistakes. He/she bought a house with presumably the first job. No downpayment. Now a $15k trip! Low saving rate, late start, physician mortgage. This person is not heading for FI any time soon. I say no you cannot afford it. A trip is not a good use for an emergency fund!
Appreciate the input Hatton1. I agree that there were a lot of concerning components in this request and although I don’t have all the details given high salary and not much financial progress I assumed lifestyle inflation had to have occurred.
Ouch! This was a tough one, just cause of all the debt, draining all that monthly cash flow. At their income though, I would think they can turn things around quickly with just a couple of years of intentionality.
Because of thee slow debt payoff, and extended retirement timeline, I might lean towards yes. If they don’t take the trip now, they’ll be waiting forever.
Great post man. Cheers!
TJ thank for stopping by and sharing your thoughts. It is true that this trip probably will not make or break things in the long run either way because of the income. But just with the information given it seems that there is lot of expenses already going on in the household (low savings rate, lot of debt) that this trip would add fuel to the fire. I’ve made way more mistakes than this and turned it around so it can be done.
No way a trip to India would cost that much.
I am traveling to India with family for two weeks. My major expenses are the air tickets. This 2 persons trip would cause me about 3000$ max for hotel and flights. Food and other splurges would not cause more than 1000$ unless I decided to buy a lot of Sari or Indian jewelry.
Thanks for the comment. Yeah several people have commented on the expense of this trip. Unfortunately I am not able to get back in touch with the submitter (did not leave an email) so have no idea how many people are going on this trip or for what length of time.
But even in places where the money goes a lot further, I am sure you can spend a bit if you do not pull the reigns in some.
Sell the house, move into an apartment, pay some debt, take a trip or better yet don’t take a trip. I am not impressed with either the market or the economy right now. I think soon enough stocks will be on sale and that 15K will come in handy. Bad time to be frittering.
I agree that this particular submitter is house poor right now, especially at 100% mortgage. Any little external push can bring the whole financial house of cards down. I know we always says shouldn’t time the market (which those holding cash on the sidelines waiting to pounce when the market does drop) but I sort of follow your philosophy that there may be buying opportunities in the near horizon.