[Real-Life] Dentist's Wife is disappointed that they can't afford a house because of his loans

[Incis0r]

FI/RE is the goal (at least the FI part) but whether or not it is truly attainable in this field is the question.

Sometimes I regret the fact that I switched over from medicine, but that's purely financial I still would prefer to practice dentistry.

I just think that the possibility to really earn a decent income in dentistry is decreasing with each passing year, and while I like dentistry for a lot more than money, I'd be lying if i said it wasn't a big part of it.

Rock on! I think it is attainable depending on your expectations and lifestyle. If you want my projections/plan, shoot me a PM, but my calculations show a very comfortable level at a 3% SWR in just a few decades....and this is without specializing, buying a practice, and assumes I won't get any social security.

If you bump it up to a 4% SWR....it gets even more beautiful.

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[como]

I've heard a lot of people mention that you can earn more in rural/underserved areas. Does anyone have any insight on this? Outside of service corps I have not heard of dentists going to rural areas to make money. Just an FYI I'm from a rural area and would love to find myself back to my home town or somewhere like it.

Just for some background, my husband graduated from dental school 11 years ago, spent 4 years in the Army (HPSP), and 2 1/2 years as an associate before buying his current practice 4 1/2 years ago. Now I've decided to go to dental school and am applying this cycle.

My husband was an associate in a small town of about 11,000 (probably serviced a population of about 20,000 from the surrounding areas), with 5 local dentists. He stayed busy and made decent money. The cost of living was low and we loved the small town (I grew up in two rural areas and was used to it).

When we decided we needed to be closer to extended family we started looking at practices to buy that would bring us back to the Western US. We narrowed down the stack of prospectuses to our top four. One was rural, the other three in the suburbs of major metro areas. We spoke to the owner of the rural practice. He loved it there, his wife didn't. We looked at all of the quality of life factors for us and decided not to go look at the practice.

We ended up buying one of the practices in the suburbs. Income potential was less while cost of living was more, but we felt like it was worth the trade off for us and our kids. We knew we could be happy in a rural location, but the opportunities we have living in a metro area tipped the scales in that direction for us. Each person/family would have to decide their own list of things that contribute to their quality of life. Our list would obviously be different from other's lists.

For us, here are the pros and cons of each:
Rural Area
Pros: Small town atmosphere, good income potential, low cost of living, fewer places to spend money!
Cons: Small town atmosphere (yes, it had it's downside), busy medicaid-based practice, limited shopping/recreation/services, quality of education, distance from extended family (long drive, far from airport, three time zone difference when visiting!),

Metro Area
Pros: Income potential, education system, access to shopping/recreation/services, proximity to extended family (still a long drive but not AS long, close to airport, same time zone)
Cons: more competition so more time and money spent on marketing dental practice, higher cost of living, traffic,

This being said, every rural area is going to have numerous variables that affect income potential. Questions anyone who is considered practicing in a rural location should ask: What is the population? How close are the nearest services currently? Are there other dentists in the area and how many? Can it support a quality dentist to patient ratio? Have you had enough experience/training to be able to provide treatments that could save patients the trip to a specialist? Are you honest and naturally good with people (word will get out quickly in a small town if you don't click with people easily, or if they feel you are encouraging treatment they don't need)? What is the main industry/economy in this community? Is it something that can fluctuate (the answer to almost every industry is "yes"). If so, what will you do so that your practice can weather the natural ebb and flow of the local economy? One other thing to consider, as this happened in the rural area I grew up in, what will you do if you are the only dentist in a rural community and a couple of years in someone else decides to "open up shop"? In a metro area someone could open a new office right down the street and it would likely not even have a noticeable effect. In a rural community this could be very difficult on your practice.

Those are just a few thoughts from my experiences, which I know will differ drastically from others. Hopefully it's some good food for thought!

 

[stoopidmonkeycatdog]

Do you think Medicine makes more?

Yeah, depending on the residency you want to go into. For example if you got into derm the earning potential doesn't even compare to dentistry, it blows it out of the park. Other than family care and pediatric, I don't even know if there is a medical specialty that earns less!

 

[oralcare123]

A house costs more than just a mortgage payment.

Examples:
1) Property Tax
2) Interest on the Mortgage
3) Utilities
4) Repair bills- what if the roof needs a $10K repair?
5) HOA dues
6) Lawn Maintenance and Snow Removal

Etc. etc.

There is a saying...it is something along the lines of a "If you rent, then that is the maximum you'll pay for housing while a mortgage is the minimum you'll pay if you own."

And renting provides flexibility. Got a better job? Want to try out a new place of the country? Just don't extend your lease. If you own, then you have to list the house, pay a real estate agent, pray the buyers don't back out at the last minute, etc etc.

Since I own a house, let me correct you a little. Interest is in the mortgage payment already, HOA fees are taken into account when bank figures out how much to lend you and you can find house without HOA fees. Property tax is usually payed every month in the same payment, as well as house insurance payment - which you forgot about. Utilities you pay everywhere even if you rent. Whole house insurance, which is about $400 a year covers all your repairs. Even my MD neighbor cuts his grass himself, so can you
If I were this guy. I would not buy a house, but a 1 bedroom apartment - maybe, depending on a combined income

 

[Incis0r]

Since I own a house, let me correct you a little. Interest is in the mortgage payment already, HOA fees are taken into account when bank figures out how much to lend you and you can find house without HOA fees. Property tax is usually payed every month in the same payment, as well as house insurance payment - which you forgot about. Utilities you pay everywhere even if you rent. Whole house insurance, which is about $400 a year covers all your repairs. Even my MD neighbor cuts his grass himself, so can you
If I were this guy. I would not buy a house, but a 1 bedroom apartment - maybe, depending on a combined income

Thank you for correcting me there- I should have said "it's more than just a principal payment" when referring to interest!

 

[distressstudent]

@schmoob



As for me...I want to stack cash ($200k+ cash, $1m+ investments) and eventually one day retire overseas....perhaps a nice beach villa in Costa Rica or Thailand. Thailand is great because it can function as a central backpacking hub for the entire SEA region.

I was going to ask if you were FIRE. I see later on that you admitted to it

 

[Incis0r]

I was going to ask if you were FIRE. I see later on that you admitted to it

You too!? Wow, I now know at least five SDNers interested in/on the FI/RE track. Go us.

 

[oralcare123]

Thank you for correcting me there- I should have said "it's more than just a principal payment" when referring to interest!

It's a complicated matter, but investing in real estate helped me to make some money.
Lots of pros and cons to consider. The easiest way to answer this question, would be to go to the bank or credit union - they have better conditions, like lower interest - and ask them how much you qualify for. Generally your payment can't be more then 25-30% of your gross monthly income. This includes the mortgage payment itself, utilities, insurance, taxes and other loan payments

 

[Incis0r]

It's a complicated matter, but investing in real estate helped me to make some money.
Lots of pros and cons to consider. The easiest way to answer this question, would be to go to the bank or credit union - they have better conditions, like lower interest - and ask them how much you qualify for. Generally your payment can't be more then 25-30% of your gross monthly income. This includes the mortgage payment itself, utilities, insurance, taxes and other loan payments

If you know what you're doing and are open to leveraging, then REI can be a fantastic way to grow wealth, whether it is buy-and-hold or flipping. Congratulations on your success

Personally, I see myself going more towards REITS, market index funds (I love you VTSAX), and some P2P lending. The ROI may not be as high as leveraged real estate, but my savings rate (aiming for 50%+) will compensate for this and I'm more comfortable with these forms of investing.

 

[como]

You too!? Wow, I now know at least five SDNers interested in/on the FI/RE track. Go us.

I think the FI/RE crowd should have their own thread! I would love to learn from others and share some of the things we've done that have helped us along the way. I would probably do more lurking than anything, but it be a worthwhile thread to many I'm sure.

 

[Incis0r]

I think the FI/RE crowd should have their own thread! I would love to learn from others and share some of the things we've done that have helped us along the way. I would probably do more lurking than anything, but it be a worthwhile thread to many I'm sure.

Own thread? Pfft....we have our own SUBRREDDIT!

Seriously though, I'd love to learn from your experience, and if there are any questions I can answer, please shoot them my way

If more people have an interest in a thread, I'll make one.

Be warned- I am also a beginner/novice at this FI material. My exposure is limited to MMM/WCI/JLCollins and a few others. I'm growing, but certainly not an expert yet.

 

[BluntForceTrauma]

You pursuing FI/RE too?!

Eh, Idk about the RE, has in, I enjoy working and so that's not necessarily the goal. However, I am a fan of not needing to worry after a time and just spending time with family sounds nice ha.

 

[Cranjis McBasketball]

Own thread? Pfft....we have our own SUBRREDDIT!

Seriously though, I'd love to learn from your experience, and if there are any questions I can answer, please shoot them my way

If more people have an interest in a thread, I'll make one.

Be warned- I am also a beginner/novice at this FI material. My exposure is limited to MMM/WCI/JLCollins and a few others. I'm growing, but certainly not an expert yet.

I 2nd the thread making

 

[Shifff based]

What is FI/RE? Haha

Sent from my SM-G920V using SDN mobile

 

[Incis0r]

@como @smurfeyD @Shifff based thread on FI (with introduction to what it is) has been created here: http://forums.studentdoctor.net/threads/financial-independence-dental-edition.1223903/

 

[schmoob]

Just for some background, my husband graduated from dental school 11 years ago, spent 4 years in the Army (HPSP), and 2 1/2 years as an associate before buying his current practice 4 1/2 years ago. Now I've decided to go to dental school and am applying this cycle.

My husband was an associate in a small town of about 11,000 (probably serviced a population of about 20,000 from the surrounding areas), with 5 local dentists. He stayed busy and made decent money. The cost of living was low and we loved the small town (I grew up in two rural areas and was used to it).

When we decided we needed to be closer to extended family we started looking at practices to buy that would bring us back to the Western US. We narrowed down the stack of prospectuses to our top four. One was rural, the other three in the suburbs of major metro areas. We spoke to the owner of the rural practice. He loved it there, his wife didn't. We looked at all of the quality of life factors for us and decided not to go look at the practice.

We ended up buying one of the practices in the suburbs. Income potential was less while cost of living was more, but we felt like it was worth the trade off for us and our kids. We knew we could be happy in a rural location, but the opportunities we have living in a metro area tipped the scales in that direction for us. Each person/family would have to decide their own list of things that contribute to their quality of life. Our list would obviously be different from other's lists.

For us, here are the pros and cons of each:
Rural Area
Pros: Small town atmosphere, good income potential, low cost of living, fewer places to spend money!
Cons: Small town atmosphere (yes, it had it's downside), busy medicaid-based practice, limited shopping/recreation/services, quality of education, distance from extended family (long drive, far from airport, three time zone difference when visiting!),

Metro Area
Pros: Income potential, education system, access to shopping/recreation/services, proximity to extended family (still a long drive but not AS long, close to airport, same time zone)
Cons: more competition so more time and money spent on marketing dental practice, higher cost of living, traffic,

This being said, every rural area is going to have numerous variables that affect income potential. Questions anyone who is considered practicing in a rural location should ask: What is the population? How close are the nearest services currently? Are there other dentists in the area and how many? Can it support a quality dentist to patient ratio? Have you had enough experience/training to be able to provide treatments that could save patients the trip to a specialist? Are you honest and naturally good with people (word will get out quickly in a small town if you don't click with people easily, or if they feel you are encouraging treatment they don't need)? What is the main industry/economy in this community? Is it something that can fluctuate (the answer to almost every industry is "yes"). If so, what will you do so that your practice can weather the natural ebb and flow of the local economy? One other thing to consider, as this happened in the rural area I grew up in, what will you do if you are the only dentist in a rural community and a couple of years in someone else decides to "open up shop"? In a metro area someone could open a new office right down the street and it would likely not even have a noticeable effect. In a rural community this could be very difficult on your practice.

Those are just a few thoughts from my experiences, which I know will differ drastically from others. Hopefully it's some good food for thought!

Wow.
I want to congratulate you on pursuing your dream, that is no small accomplishment. Being a predent/dental student while married with children is not easy, it really puts things in perspective.
Also, I think that you and your husband have an excellent philosophy. I don't believe that following the money is what will make someone the happiest. Quality of life is important, so who needs more money if they are in a situation that they are unhappy in?
Of course there are the situations where the debt is so massive that the money is following you, so one does what is necessary to pay off the lure debt.
Having a husband who is a dentist is something that will definitely help you. He will understand your stresses, the pressures, abd the demand on you. Plus you literally have a personal tutor at all times
As long as the practice is thriving, you know you have job security upon graduation as well. So things are looking good for you and your family.
I wish you luck this cycle, I hope you get into the school of your choice.

 

[okiedokeartichoke]

Own thread? Pfft....we have our own SUBRREDDIT!

I've been subscribed to that subreddit for some time, but learning all of it seems so intimidating haha. I just like to read the posts when it comes up on my feed.

 

[Incis0r]

I've been subscribed to that subreddit for some time, but learning all of it seems so intimidating haha. I just like to read the posts when it comes up on my feed.

Start with Mr. Money Mustache- he explains the core concepts in an entertaining manner. Feel free to let me know if you have any questions!

 

[okiedokeartichoke]

Start with Mr. Money Mustache- he explains the core concepts in an entertaining manner. Feel free to let me know if you have any questions!

Thanks, will do! I should also probably consider exploring the information sidebar and FAQ of that subreddit instead of reading those posts passively for entertainment without much thought

 

[Incis0r]

Thanks, will do! I should also probably consider exploring the information sidebar and FAQ of that subreddit instead of reading those posts passively for entertainment without much thought

Oh, there's a sidebar/FAQ?
Er...yeah read that!

Man, that would've made my life so much easier when I was starting out...

 

[okiedokeartichoke]

Oh, there's a sidebar/FAQ?
Er...yeah read that!

Man, that would've made my life so much easier when I was starting out...

Definitely! So many branching subreddits like /r/frugal, /r/personalfinance, etc. and plenty of resources. Check it out!

 

[Incis0r]

.

 

[Panis et Circenses]

THE DENTIST'S WIFE (Caller from the video with Dave Ramsey)MADE AN SDN ACCOUNT AND IS POSTING RIGHT ON THE DENTAL SUBFORUM- see link below:

http://forums.studentdoctor.net/thr...s-dentists-wife-dreams.1223680/#post-18185802

LOL!!!

 

[MaizeGoBlue]

I'm assuming it's better to pay off student taxes before you start investing money, right? I'm a super beginner at finances, but wouldn't you want to pay off the 7+% loans before you start investing?

 

[Cranjis McBasketball]

LOL!!!

Its as if she could smell the convo

I'm assuming it's better to pay off student taxes before you start investing money, right? I'm a super beginner at finances, but wouldn't you want to pay off the 7+% loans before you start investing?

If your return rate is higher than the interest rate, then no. But if you have a higher interest rate then yes.

 

[Incis0r]

but wouldn't you want to pay off the 7+% loans before you start investing?

If you can refinance to 4% interest rate on your loans, then it may be more advantageous to invest if you can get more than a 4% after-tax return.

 

[MaizeGoBlue]

If you can refinance to 4% interest rate on your loans, then it may be more advantageous to invest if you can get more than a 4% after-tax return.

How exactly does refinancing loans work? I've heard the term thrown out a lot and I understand that you can essentially switch to a lower interest rate, but I don't understand how you go about the change/why the bank allows it.

 

[Incis0r]

How exactly does refinancing loans work? I've heard the term thrown out a lot and I understand that you can essentially switch to a lower interest rate, but I don't understand how you go about the change/why the bank allows it.

It works because we are fortunate to live in an capitalist economy that allows competition.

You take out a loan from a lender. If you're taking out federal student loans, then your lender is the U.S. government. They decide they want to charge you 7% interest on your loan. Inflation has been around 1% recently, so that means that the federal government is making a profit of about 6% on loans to you.

You graduate and are earning six figures, and decide "hey, I don't want to pay thousands and thousands of dollars in interest unnecessarily."

Meanwhile, several other lenders (private lenders) have access to A LOT of cash at very low interest rates (for argument's sake, assume they are being charged 1% interest on that cash by some other entity). They want to lend that cash out and get a return on it instead of having that cash just sitting there being eroded by inflation. So they say: "hey, the federal government is charging these kids 7% interest. We can charge them 3%, thereby giving them a discount, and still make a good return on our cash!"

Now you interact with the private lender, you show your financial profile to them, they determine you to be low-risk (and that you will pay back the loan on time) and they buy out your loan from the federal government.

Social Finance (SoFi) is a great refinancing lender.

Caveat: if you refinance a federal student loan, you lose eligibility for certain federal programs with that loan (i.e. you can't use PSLF, etc. anymore)

 

[Advance]

It works because we are fortunate to live in an capitalist economy that allows competition.

You take out a loan from a lender. If you're taking out federal student loans, then your lender is the U.S. government. They decide they want to charge you 7% interest on your loan. Inflation has been around 1% recently, so that means that the federal government is making a profit of about 6% on loans to you.

You graduate and are earning six figures, and decide "hey, I don't want to pay thousands and thousands of dollars in interest unnecessarily."

Meanwhile, several other lenders (private lenders) have access to A LOT of cash at very low interest rates (for argument's sake, assume they are being charged 1% interest on that cash by some other entity). They want to lend that cash out and get a return on it instead of having that cash just sitting there being eroded by inflation. So they say: "hey, the federal government is charging these kids 7% interest. We can charge them 3%, thereby giving them a discount, and still make a good return on our cash!"

Now you interact with the private lender, you show your financial profile to them, they determine you to be low-risk (and that you will pay back the loan on time) and they buy out your loan from the federal government.

Social Finance (SoFi) is a great refinancing lender.

Caveat: if you refinance a federal student loan, you lose eligibility for certain federal programs with that loan (i.e. you can't use PSLF, etc. anymore)

 

[Cranjis McBasketball]

It works because we are fortunate to live in an capitalist economy that allows competition.

You take out a loan from a lender. If you're taking out federal student loans, then your lender is the U.S. government. They decide they want to charge you 7% interest on your loan. Inflation has been around 1% recently, so that means that the federal government is making a profit of about 6% on loans to you.

You graduate and are earning six figures, and decide "hey, I don't want to pay thousands and thousands of dollars in interest unnecessarily."

Meanwhile, several other lenders (private lenders) have access to A LOT of cash at very low interest rates (for argument's sake, assume they are being charged 1% interest on that cash by some other entity). They want to lend that cash out and get a return on it instead of having that cash just sitting there being eroded by inflation. So they say: "hey, the federal government is charging these kids 7% interest. We can charge them 3%, thereby giving them a discount, and still make a good return on our cash!"

Now you interact with the private lender, you show your financial profile to them, they determine you to be low-risk (and that you will pay back the loan on time) and they buy out your loan from the federal government.

Social Finance (SoFi) is a great refinancing lender.

Caveat: if you refinance a federal student loan, you lose eligibility for certain federal programs with that loan (i.e. you can't use PSLF, etc. anymore)

Why do some people choose not to use private lenders?

 

[Incis0r]

Why do some people choose not to use private lenders?

I'm no expert, and I don't know every single reason why people choose the federal government over private lenders.

But a few of the reasons I know:

• they want access to certain programs that only federal student loans are eligible for. For example, if you want to do PSLF (Public Service Loan Forgiveness), you can't do it with private loans
• they do have neither a credit score nor a cosigner, so they don't qualify for private loans
• private lenders will not loan you $500K for dental school, while the federal government will

etc.

 

[distressstudent]

Why do some people choose not to use private lenders?

Besides having to get a cosigner, another big reason will be the repayment terms. You have much more flexibility with the federal government than a private lender with repayment. You can apply for hardship, apply for deferrment if you decide to do a residency, etc. With a private lender you might not have that option.

Same for refinancing. When you are refinancing, you are agreeing to a set monthly plan. Usually ten years I think. But when you have over 400k in the loans, paying all that off is just not very feasible. So imagine going into school right now, graduate in 2021, and the bank tells you " I see you have nearly 450k in loans. I expect a monthly payment of $4,500 for the next ten years. k good luck". It's not PSLF that's going to help new grads; it's applying for IBR/PAYE that lets you limit your starting monthly payment even if you have no intention of applying for forgiveness down the line.

Plus, I am not an expert on this but I don't think pre-dental/pre-medical students would get the same rates. There's a chance that a student never graduates and never earns that degree. So banks is taking a bigger risk and would likely amp up the interest rate to compensate


If you wanna know more, you can head over to white coat investor and look at some articles on private loans and refinancing