A different kind of salary question...

[resta77]

So, long story short, my parents have had very middle class or even lower middle class incomes for a long time. They never made over 60k combined before taxes and what not. I am entering my first year of medical school (I posted in EM because I like it and I think that is what I may end up in, but this applies to all specialties) and I really have no understanding of how much money something like 150k, 200k, 250k, etc. really is. This is a goofy question haha, but I am unable to rationalize this at the moment. What sort of lifestyle does someone making 250k have? Is this the kind of money that could be to pay for your kids' private schools to an extent, yearly vacations, etc. I am trying hard not to sound stupid, but I am more curious of what lifestyle would go with this. What if I have 250k debt?

I guess I just want any general advice to rationalize this, because right now I understand specialties that make more money are generally more competitive (mixed with lifestyle), but I just do not see the point of gunning for a specific specialty unless it was what I was absolutely passionate about. Honestly, the residency salaries sound pretty amazing to me right (minus the hours worked). Maybe some of you have similar experiences you could share. Thanks!

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[Old_Mil]

It is a lot less than you you think after taking out taxes, student loan repayment, disability insurance, health insurance, saving for retirement, CME, licenses, and so on. Depending on the sort of job you take, your employer may cover some of this.

Sent from my Z10 using Tapatalk

 

[Apollyon]

Making money in medicine is like trying to fall down - you don't have to try.

What you do NOT want is a lucrative job that you hate. Medical practice has three parts - the head (knowledge), the hands (skill), and the heart (the will to power). As a note, this was posited in the 1927 film "Metropolis" ("There can be no understanding between the hands and the brain unless the heart acts as mediator"), and, for a newer generation, with Madonna's video for "Express Yourself" (which was based on "Metropolis") - "Without the heart, there can be no understanding between the hand and the mind". If you are a spine surgeon or an ophthalmologist specializing in retinal surgery, and you are good at it, but you HATE every single day, you won't last long (or be satisfied). On the other hand, pediatricians routinely are found to be the happiest and most satisfied doctors, yet they don't make anything - and those that do adolescent medicine make even less than general peds.

And, if you are happy with residency pay, then you'll be delirious with attending pay. At the same time, though, remember, business is business, and corporate persons are jerks. Like in that book by Ken Iserson, where he writes "just think of the postal service as a conspiracy against you", if you just think everyone is trying to financially screw you, that will keep you on your toes. Likewise, if you grew up with nothing (as I did), you might get the urge to get/buy/do the things you couldn't afford when you were younger. I'm telling you, "both/and" is MUCH superior to "either/or". However, do like they advise the new NFL rookies - don't spend anything the first year (when you're an attending). Just let the money pile up.

Now, you haven't even started. Again, as Iserson wrote, think of med school like this: in the morning, a truck backs up to you, full of the richest, most nutrient, most beneficial manure there is, and dumps it on you. You dig yourself out, and, the next morning, there are two trucks. Remember, "C=MD", but first in your class gets you whatever residency you want - from "prison doc" to neuropsychiatry to IM/Cards fast track, or whatever. For example, Duke would rather have the #1 student from the #50 med school, than the #50 student from the #1 med school.

 

[Arcan57]

What $250k provides in terms of lifestyle is going to be largely dependent on where you are in the country and the makeup of your household. Figuring that 1/3 of your salary is going to taxes, you're looking at a take home of ~$14k/month. If you're single and living in Pine Bluff AK, then you're going to have money left over after buying a really nice condo and making your monthly on the new 5 series. If you're married with 5 school age children going to private school then you're driving a mid-2000 Japanese sedan and living in a nice (but not elite) subdivision. $250k of debt takes off somewhere around $2900 per month if you're trying to pay it off in ten years.

 

[deleted126335]

It is incredibly easy to have one's lifestyle expand to fill their income. No mater how large the income. Bad trap to fall in for young doctors.

 

[deleted480308]

read whitecoatinvestors blog/book

 

[The White Coat Investor]

I posted my budget a few years ago which generated lots of great discussion. Might answer your question.

http://forums.studentdoctor.net/threads/an-emergency-docs-budget.817037/

Regular readers should be aware that my budget doesn't look like this anymore, mostly because I make a lot more money as a partner and through my website/book.

Bottom line, $250K IS a lot of money, but not as much as you think. You can reasonably expect a lifestyle about twice as nice as your parents. The remainder will go toward taxes, student loan payments, and retirement savings.

I make more than $250K and I don't feel like I can afford private school for the kids, but I can certainly afford a nice vacation every year. In fact, I go on vacation more months than not. Perhaps if I quit doing that I could afford private school. Basically, you can buy anything you like, but not everything you like.

 

[The White Coat Investor]

What $250k provides in terms of lifestyle is going to be largely dependent on where you are in the country and the makeup of your household. Figuring that 1/3 of your salary is going to taxes, you're looking at a take home of ~$14k/month. If you're single and living in Pine Bluff AK, then you're going to have money left over after buying a really nice condo and making your monthly on the new 5 series. If you're married with 5 school age children going to private school then you're driving a mid-2000 Japanese sedan and living in a nice (but not elite) subdivision. $250k of debt takes off somewhere around $2900 per month if you're trying to pay it off in ten years.

If there were a town called Pine Bluff in Alaska, it certainly wouldn't have condos. Maybe cabins.

 

[resta77]

These are very thoughtful replies. I appreciate it!

I like a lot of different areas and I have a long way to go obviously, but when I see average salary of 250k vs 350-400k, its tough for me to understand just how different these numbers are practically, but some of these posts are definitely giving me a much better informed idea of things.

Thank you!

 

[vanfanal]

I think this was a great question. Very helpful.

 

[EctopicFetus]

Best line on here which I live by... " Basically, you can buy anything you like, but not everything you like."

Keep in mind as I am sure is discussed on WCIs link. By the time you are done with residency you are at about 30 and you have ZERO or close to it in your retirement.

If you think about how much you need to retire then figure out how much you have to save per yr while working.

The money goes quickly esp if you have 250k+ in loans at around 7%.

 

[Apollyon]

If there were a town called Pine Bluff in Alaska, it certainly wouldn't have condos. Maybe cabins.

Hey, at least I was discreet and PM'd him about it - didn't skyline him like you did!

 

[shopsteward]

OP: the main thing for you at the moment (after doing well in med school and on your steps) is to minimise the amount of debt you get into, and make sure you know what rates of interest you will be paying on it. That will put you in the best position to freely choose your specialty and location without being dependent on differences in salary.

Also, have a look at the disability insurance provisions here and on White Coat Investor. Provided you graduate med school and then get into and complete residency, your only financial risks in the future are stupidity, addiction and disability, and posting here suggests that you should be able to avoid financial stupidity.

 

[Arcan57]

If there were a town called Pine Bluff in Alaska, it certainly wouldn't have condos. Maybe cabins.

Apparently I was more successful than I thought in erasing my time in that part of the country from my mind.

 

[The White Coat Investor]

Hey, at least I was discreet and PM'd him about it - didn't skyline him like you did!

Those of us who grew up in Alaska get sensitive about things like that. (and getting letters with 4 stamps on them. What country did people think they were sending mail to?)

 

[Groove]

So, long story short, my parents have had very middle class or even lower middle class incomes for a long time. They never made over 60k combined before taxes and what not. I am entering my first year of medical school (I posted in EM because I like it and I think that is what I may end up in, but this applies to all specialties) and I really have no understanding of how much money something like 150k, 200k, 250k, etc. really is. This is a goofy question haha, but I am unable to rationalize this at the moment. What sort of lifestyle does someone making 250k have? Is this the kind of money that could be to pay for your kids' private schools to an extent, yearly vacations, etc. I am trying hard not to sound stupid, but I am more curious of what lifestyle would go with this. What if I have 250k debt?

I guess I just want any general advice to rationalize this, because right now I understand specialties that make more money are generally more competitive (mixed with lifestyle), but I just do not see the point of gunning for a specific specialty unless it was what I was absolutely passionate about. Honestly, the residency salaries sound pretty amazing to me right (minus the hours worked). Maybe some of you have similar experiences you could share. Thanks!

You'll make plenty of money as a physician, no matter what the specialty. Focus on medical school and then focus on what specialties fit you best. The absolute worst mistake that I see medical students make is in ignoring their gut instincts and dissecting a specialty into pay/work ratios, weekly schedules, SO/family opinions, lifestyle adjustment factors and what have you... You can make damn near anything look good on paper. If I had done that, I would have pursued anesthesiology. In fact, I tried to talk myself out of EM for a good 2 months in medical school and attempted to force myself to love my gas rotation in spite of the fact that I, in fact...hated it. I went with EM because that's what I loved doing and I was honestly oblivious to the money potential. It's been a wonderful surprise for me to see just how much in need we are as a specialty and the type of income that we can command right now. It won't last forever though. Trying to forecast physician income in all the specialties more than 5 or 10 years away is dubious at best. Much can change between now and then as we've seen with healthcare. I don't anticipate that I'll be making this much 15 years from now, but who knows. I'll enjoy it while I can.

Either way, when you get past $200K and def $250K, there's absolutely no reason you can't have a wonderful lifestyle. If you're lucky enough to get past the 3-400K marks, then great, but I'd recommend paying heavy on your loans first when you get out of residency before splurging on an extravagant lifestyle. I pay around $13K a month on my loans which are 7%. All of you guys that got a portion of your loans or all of them after 2005 are going to be at those rates if they are federal. You can't adopt the same repayment strategy as the pre-2005 guys who have 2-2.5% where it makes more sense to string that out while investing your money at a greater return. It's tough to find something that you can safely invest in that pays greater than 7%, so, in my opinion, repayment strategies should be much different for those of us with these ridiculous federal loans. Luckily, only about 2/3rd of mine are at that rate but I still try to pay aggressively every month. I try to remind myself every month when I see my checks that it's essentially monopoly money until I have these loans paid off, or at least the high interest ones.

 

[ketosisevangelist]

None of your money is ever yours. None of it.