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:
How do you plan on paying for this item/experience?
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) 5 B) 8
Recent birth of son.
How Many Years Till Planned Retirement?
What is your total household income?
$450k at new job
What is your % Annual Savings Rate? (savings/gross income)
35% while currently renting (probably 25% after buy home with mortgage)
Market Value of Primary Home [For Renter =$ 0]
Additional Real Estate Holdings Equity (Market Value-Debt):
Current Liquid Asset Value (Savings, Checking, Etc.):
$60k ($30k emergency fund, $10k for annual bills, rest for possible down payment)
Retirement Assets (401k/IRA/HSA):
Brokerage Account (Taxable):
Miscellaneous Asset Value (Please elaborate):
Student Loan Balance:
Unfunded Future College Costs & Years Left Till Needed:
Will likely do 5k/ year for about 5 years max (we only want a small fund to help cover part of a public school only, not planning to finance all education and not planning to fund private school unless we have lots of excess.)
Other Unfunded Goals and Years Remaining (Today’s Dollars):
Any other pertinent information not addressed?
I am about to start an academic-associated job and will be employed with no “partnership track.”
Our timeline for buying a home will be around June and starting work in July.
I also negotiated out all weekends, so I will be working Mon-Fri with no call, weekends, holidays or nights.
We will be back to a large city in the Midwest that is very near both our home towns, within an hour to each grandparent, and in the same city as most of our friends.
My wife will be going back to work part time once back to the area at her previous job, and will be putting money directly into a pre-tax retirement account with the goal to make 19k a year.
She is a nurse and has not gone back to working where we are living now since we just had a child.
Grandma will be spending 2-3 days with us every other week so she will probably work a few shifts just to get out of the new house.
I would doubt that she makes much more than maxing out a retirement account yearly based on quality of life/family goals.
This is also a city we both have lived before: 3 years for me during training and 5 years for my wife until we got married.
We are therefore very familiar with the area, the schools, and looking in neighborhoods we already have established friends.
I have been pretty aggressive about saving, am 2.5 years out of training and had 270k of med school debt, 50k of wife undergrad debt so a net work of -320k to start.
We are now about +320k net worth, and also cash flowed a wedding on the beach and dream honeymoon for 30k along the way.
In cash have 30k in emergency fund (about 5-6 months of current expenses).
I do the “pay yourself first” to multiple savings accounts rather than budget.
What is left over goes to investment:
- about 6k is set aside for vacations
- 3k is set aside for bills that come up (yearly bills that I “pay” for each month)
- the rest is a small amount starting to build up a possible home down payment.
Based on our current financial situation, I think we will have about 100k available cash by time closing comes.
I am researching loans and getting quotes now, so have not decided how much if any we are going to put down.
May split the difference and do 50k down and 50k to retirement since rates are very similar.
While we certainly are not Mr. Money Mustache frugal, we live a very balanced life and each pay raise has seen a larger % go to investments, and all bonuses go directly to investments.
Will this early career attending find happiness being a local in a LCOL area?
Or will the ivory tower of academia crumble under siege from the simultaneous financial stress of a new baby, new job, and new home?
Click on the Doctor’s Bill Image and find out the verdict:
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.
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Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN
This is a very typical doc home buy situation, and in most cases, it should work out okay. It’s a big city, and if the job does not work out, there is probably a decent chance that another can be found in the area. I have never heard of a doc expecting to support a college-bound child less than this example, and I expect, over time, this attitude will change. It should not make a big difference, though. I also think that this doc underestimates the cost of living in a house, the constant upkeep and improvements, but so does… Read more »
That was pretty much the same line of thinking with me VagabondMD. I think this doc is ahead of the game of most docs at this stage because he did prioritize paying off all debt first.
I see no financial concerns. As always I worry about buying a home as a new mover or new job, but it sounds like the writer at least knows the area. I must commend them on their progress so far.
Thanks FTF. Yeah it was hard to deny this request because financially it was very reasonable. The concerns I have are the same as yours but the risks are lessened since already lived there before
They got past broke in two years. 300K+ delta. Impressive. CYAI? Yes. Should he? Perhaps. New job, new house = anchor to new job and plays into the consideration. Since he’s not ‘new’ to the area presumably as family are there, making the wrong neighborhood decision is lower — but that’s a very common mistake and intra-city relocation happens more often than we all realize — hence a word of general caution for public on putting down anchor immediately. Echoing others – plan for a higher education fund. He can clearly afford it and cashflow it if needed with the… Read more »
Very wise insight Star Trek Doc (and absolutely love the moniker). Your point is spot on about home ownership being a potential financial anchor. I am sure there are many docs in the past who have stuck it out in a job they didn’t like because they found themselves underwater with their home purchase and could not financially break away from it to find a better practice. That is always a concern of mine (I do get that it is simpler to buy a house when starting a new job because in your mind you only have to move once.… Read more »
One other thought – bridge the move with temporary 6 month lease.
As an academic institution, they should be able to arrange a moving company to pack, move, and store 6 months and second move to final destination. This happens all the time and both institution and moving company can do this easily. You can even negotiate the monthly lease/furniture too under moving expenses/recruitment if you’re aggressive on it.
This is one of the few times as a hire that you hold the cards over the institution. The next is the exit on FIRE
Actually that is a great thought and one that I didn’t even think of.
I had informed the person who submitted this case (as he provided an email address) that it was going to be published today and I am sure he will be reading the comments so hopefully that is something that can be done (although from the submission he did say the contract was signed so not sure if it is still an option to negotiate).
Well I am Dr. HT, so I figured I would weigh in. I appreciate all of the comments. This initially started a while ago when we weren’t sure how much we would spend, and now feel comfortable we will be
Seems good overall. Given their ability to pay off and save so much in just a couple of years, I’m sure they could slay a mortgage in no time if they decide they want to be free of it. I suppose my only concern would be the one already voiced: buying a home before a new job starts. But given their cushion, they should be fine.
I feel the same way. Impressed with their quick net worth turnaround and destroying that much student loans that quickly took a lot of sacrifice. Financially no concern on this one (though would suggest upping the anticipated 529 amount)
HT is significantly ahead of the game, yet I see no reason to give up the considerable financial advantage by succumbing to New Attending Home Buying Disease (I, too, was afflicted, and it left scars). I echo Johanna and Xrayvsn’s fear that the job will fall short of expectations. My experience in academics echoes the saying that the politics are vicious because the stakes are so low and conducive to producing petty tyrants. Years ago, a friend who loved her academic colleagues and position was up for promotion and raise, and her tenured mentor said, “Why offer her anything? She’ll… Read more »
Great advice CD. Pretty insightful on the ways of academic medicine and what to avoid. I left academics 2 yrs after training because of how senior attendings dumped stuffed on the junior ones