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:
Porsche
Approximate Cost:
$100,000
How do you plan on paying for this item/experience?
Finance
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) 8 B) 8
Age:
39
Gender:
Male
Occupation:
Surgeon
Marital Status:
Married
Any Children (If so please provide ages)?
5, 7
How Many Years Till Planned Retirement?
28 years
What is your total household income?
$725,000
State Income Tax (if Any)
5%
What is your % Annual Savings Rate? (savings/gross income)
15%
Estimated Annual Living Expenses (Current):
$150,000
Estimated/Desired Annual Living Expenses (In Retirement):
$240,000
Market Value of Primary Home [For Renter =$ 0]
$650,000
Additional Real Estate Holdings Equity (Market Value-Debt):
$75,000
Current Liquid Asset Value (Savings, Checking, Etc.):
$50,000
Retirement Assets (401k/IRA/HSA):
$200,000
Brokerage Account (Taxable):
$50,000
Miscellaneous Asset Value:
$75,000
Mortgage Balance:
$575,000
Student Loan Balance:
$0 (paid off $317k)
Additional Liabilities:
$80,000: Remaining balance of 2 vehicles ($150k initial cost) and remainder of pool payoff on home equity line
Unfunded Future College Costs & Years Left Till Needed:
$500/mo/child (
- 12 and 14 years remaining until freshmen in college
- Have about $10k thus far
Other Unfunded Goals and Years Remaining (Today’s Dollars):
$50k (have about $50k of a $100k rainy day fund)
Any other pertinent information not addressed?
I live in the middle of nowhere
- There are no restaurants, few stores, little to spend money on.
So does this young surgeon get to carve up the roads with the epitome of German luxury sports cars?
Or will buying a Porsche wreck his financial future instead?
Click on the Doctor’s Bill Image and find out the verdict:
Click on the Bill (image) 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:
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
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
I vote thumbs down. I say this as a doc who used to own a porsche. You can buy one for less than $100k. I bought a a low mileage boxster that was 5 years old for $30k. I drove it for 5 years and sold it for $15k. I got the sportscar and convertible thing out of my system. No it was not the most powerful model but it looked great and had the roar. In a very rural area you will encounter some problems. I think the community will all know about it and you will stand out… Read more »
I agree if anything wait until you save up the money and pay for it in cash. If you can’t see yourself having that kind of extra cash to save, that will be your biggest red flag. You also demonstrate the value of buying used (I admit I have not always done this) because the previous owner took the major depreciation hit and you can drive it (in your case for 5 years) with relatively little financial hit (essentially your Porsche ownership cost you $3k/year for the 5 years you had it (exclusive of maintenance)).
I love this series. It shows how much more planners do than just managing someone’s investments. Good planners, like this one, take the time to crunch the numbers, look at options, and base advice on careful analysis. And if you notice, it’s more than money. She highlights the tendency of this and other doctors to justify borrowing and spending based on a high income and counting on that income to continue. I can’t tell you how many times I’ve had to talk clients out of that tree. It’s a hard thing to do. I hope this doc listens to Xray… Read more »
Thanks Fred for your insight and I appreciate the kind words regarding this series. Too often docs, and I fell for this myself, look at the income and say of course I can afford it. But there are so many moving parts that it is far more complex than just what you make.
Why is the savings rate (15%) so low given his high income ($725k) and relatively low annual household expenses ($150k)? I agree with Hatton1. If you want to scratch the Porsche itch, then a used Porsche is the better approach. Have someone pay the exorbitant price for the new car smell. I vote thumbs down to a new car at $100,000. The saved amount is too low at this point to afford the desired retirement income. Why add to the financial burden with a new $100,000 car. Wait 10 years more, shore up the savings first (maybe get to $5… Read more »
That was my concern too Sport of Money. The income was there and the annual spending was reasonable but did not have an idea where the balance went and why there was a low savings rate. With the delayed start that docs have I push for a savings rate of 20% or higher
As the driver of a 9 year old Kia, bought used, I’ll admit my bias up front. This is lifestyle inflation extremely early in a physician career. The problem with the job that pays 2X in Boringville is there a solid chance it lasts a few years and then you relocate to a lower paying job in a preferred area. If you saved a ton from the first job, you come out ahead. If you used the first geographic arbitrage job to justify creation of financial entitlements to compensate for your suffering in the sticks, you not only blew your… Read more »
Excellent points CD. Great observation that if this doc feels there is nothing to do here there will likely be a pull to move somewhere else where geographic arbitrage will be lost.
I am the opposite of a car person, and I acknowledge that’s not my priority, but that said:
I second pretty much all the comments so far. This savings rate is pretty shocking to me. And I feel like even if they don’t change their whole lifestyle/money approach, they should at least aggressively save for a year or two specifically for this. Worst case, they change their mind and have a load of extra cash!
Consider yourself fortunate not to be a car person, it can get expensive real quick 🙂 I wholeheartedly agree with the save cash until you can pay for the car outright. It first avoids a lot of the finance fees tacked on, but it also gives you time to realize if after all that cash is piled up whether or not the car is worth it or not. As a physician we are blessed with high income but it is countered by some severe disadvantages, mainly the time delay and debt required to get to that income level. This doc… Read more »
Ooo, that’s so interesting. Shoot me that article if you ever get the chance!