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:
Continue to live in a very expensive home with high property taxes in a HCOL [High Cost Of Living] area for now and in retirement
Approximate Cost:
$50,000/yr in property tax
$50,000/yr in maintenance
How do you plan on paying for this item/experience?
Ongoing cash flow until retirement and then from savings.
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 (10 for my spouse, 6 for me)
Age:
61
Gender:
Male
Occupation:
Physician Entrepreneur/Start-up Founder
Marital Status:
Married
Any Children (If so please provide ages)?
26, 28
How Many Years Till Planned Retirement?
9 (Might still have passive income in retirement but who knows what the future holds)
What is your total household income?
$2,350,000
What is your % Annual Savings Rate? (savings/gross income)
42% of income to savings: 987k
Estimated Annual Living Expenses (Current):
15% of income to living expenses: $350K
43% to taxes (income and property): $1.01M
Market Value of Primary Home [For Renter =$ 0]
$2,550,000
Additional Real Estate Holdings Equity (Market Value-Debt):
$2,150,000 (generates positive cash flow income with no mortgage debt)
Current Liquid Asset Value (Savings, Checking, Etc.):
$1,800,000
Retirement Assets (401k/IRA/HSA):
$4,800,000
Brokerage Account (Taxable):
$1,200,000
Miscellaneous Asset Value (Please elaborate):
$6,000,000 (business value per my accountant. Unsure if it would be a challenge to sell)
Mortgage Balance:
$500,000 (@2.6% tax deductible; 1.4% effective)
I plan to pay this off in the next two months with subsequent increase in my savings to match the former mortgage payment.
Student Loan Balance:
$0
Additional Liabilities:
$0
Unfunded Future College Costs & Years Left Till Needed:
$0
Other Unfunded Goals and Years Remaining (Today’s Dollars):
$4M desired additional taxable investments prior to retirement to allow security in old age at current spend level.
Any other pertinent information not addressed?
I was a regular doc earning 200k-350k for most of my career until things took off with my new medically themed start-up in 2013 and my income went suddenly to 7 figures.
We loosened the purse strings and now live the high life spending over 300k per year (15% of income) on the fancy house, the full time cook/housekeeper and on multiple international first class trips every year.
My spouse greatly enjoys all of this and I love traveling the world with her but in many ways I am more simple at heart.
For example, I love reading Mr. Money Mustache and have been blissfully happy in the past living outdoors in a tent.
I somehow feel guilty about all of my success and want to do more good for the world as a legacy.
Can a couple with an 8 figure net worth indeed have champagne wishes and caviar dreams without worry?
Or does Mo’ Money actually create Mo’ Problems?
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
Interesting situation and not one most people will ever have. I generally agree the lack of any goal or direction would be my big concern. Money is not everything, it’s the options you use it for that help you achieve your true goals. Knowing those goals is important regardless of asset level. So if I were this couple that would be my focus.
Very true FTF. At a certain level, if you are lucky enough to reach it, there comes a point where you will have more money than you can reasonably spend in a lifetime. Your thoughts can then turn to leaving a legacy instead
Holy Smokes!
Income of $2.4M
I don’t think I processed anything else after reading that.
Still stunned.
Lol. Yes that income was quite impressive. It is nice that he was able to parlay medicine into something wildly successful in a startup. I’m sure there was a lot of risk but now they are reaping the reward
Wow. Congrats to this family on their successful side business. I enjoy Mr. Money Mustache as well but I don’t think they will need to follow his blog advice too much. They clearly have won the FI and money game and need to start thinking about their legacy.
I agree that at this stage being frugal is just going to create more estate issues. I’m glad to see they have loosened the purse strings and enjoying life right now. I would comment more but i think I have to work on my own startup now. Lol
Hi, Very Good Article. I really appreciate it. Well researched article. Now you got one regular visitor to your website for new topics. Keep up the Good Work Thanks for always sharing. Nicole Graham
Appreciate the support. Thank you
Dr Gates can afford anything he wants. Figuring what you want sometimes is more difficult. I wish you well in figuring it out.
Very well stated Hatton. A Purpose in life is very important
Johanna nailed it. The issue here is discipline not resources. You can’t have what ever you want, you can only have what you can afford. A Tesla? Whoop de doo a G5 no way Jorge that’s 42M plus operating expense and crew. This is simply the question of enough turned on it’s head and approached from a consumption point of view not an accumulation point of view. Why do lotto winners go broke? Lack of discipline. This is the equivalent problem.
Spot on with the lottery winner analogy. Without discipline it is rare that there is any amount that you could not blow through.
Dr. Gates needs the assistance of advisors such as Johanna. Even with enough money, you still have to figure out how to become a good steward of it.
Each family is unique. Best of luck in figuring out what your own family requires.
And I agree with Gasem, any sum of money can be gone. I have known some friends who were given massive intergenerational wealth and have simply squandered it.
I no longer think that it won’t happen…
Great points DMB. At a certain level of wealth there can be a lot more complexity especially when trying to negotiate estate taxes etc. A good advisor can add a lot of value in these cases
Hi, Very Good Article. it. The whole article is wonderful and very helpful. Keep up the Good Work Thanks for always sharing.
Imran Khan
Unique Web Studio, LLC