Financial independence through psychiatry

[Monocles]

meant to quote the poster that merely quoted, but the loan burden you had must have been on the smaller end and the amt of money made from this gig cant be beyond 2000 a day/night (at the very most) with that kind of volume unless the hospital is hemorrhaging money for the sake of having a stable psych service

At certain state hospitals (I think the one for kids in Connecticut that's affiliated with Yale, can't remember the name) they pay their PGY-4/5 fellows $1600 per overnight...

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[Ironspy]

At certain state hospitals (I think the one for kids in Connecticut that's affiliated with Yale, can't remember the name) they pay their PGY-4/5 fellows $1600 per overnight...

I had colleagues doing 24s as moonlighters making 160/hr. East coast and they were fairly busy

 

[Attending1985]

In some situations, I would agree. I don't even know where you are getting the numbers from but I don't remember @Shufflin quoting those numbers. You can't just broadly paint that he offers bad care without seeing the results. And on the other hand, if he wasn't treating patients, maybe they would get no care (or get care from an NP) which could be even worse.



You're jumping to conclusions about things that were never typed. Take a deep breath and drink some soy milk. Things will be ok.

If I misinterpreted please clarify.

 

[AD04]

If I misinterpreted please clarify.

Sure, send me a PM and we'll continue the discussion there.

 

[Nicole Kidd]

I've seen a number of posts about salary by medical students/residents as well as recent interest in the FIRE movement (Financial Independence Retire Early for those unaware) and just hit a big milestone for myself so I wanted go give anyone interest a real example of a "traditional" medical student without any family support.

Background: Grew up upper-middle class as a young child but then due to life circumstances spent formative years lower middle class. College financing was clearly something that I would need to procure on my own. Began working mowing lawns by high-school, held part-time jobs from 16-18 and saved >50% of this. Obtained significant scholarships and worked my freshman and sophomore year in a research lab to cover all undergraduate expenses (left without any loans). Took out are $175k for medical school (state school, 6.8% interest) to cover 4 years + living expenses. No paying jobs from 21-26.

Residency: Was very overwhelmed by my student loan payments and tried to pretend they didn't exist. Eventually after a few months of not paying, formally put into forbearance. Don't try this at home folks, but I think it's important to understand that other people make big money mistakes too. Got onto IBR a little before PGY-3 year, did not have the re-pay options to subsidize loan rates when I was in training. Looked into moonlighting options as a PGY-3 but options in my city were not good. Mid PGY-5 year I began to moonlight as an adult psychiatry attending working to cover weekends and some evening hours, Initially offered $110/hour, negotiated up to $150 an hour (had already passed adult boards) working about 15 hours/week.

Finances at end of fellowship: Loans had grown to about $240k with my lowly IBR contributions for a life-time loan of around $250k. Living with significant other for much of fellowship but anything I saved on rent went into a diamond and wedding costs.

Attending job hunting: Spoke with a variety of hospital chains in the area, was looking for predominantly inpatient CAP work so even in a big city the list is pretty narrow of applicable places. Most colleagues making around 250K for similar work in my area. Was able to land a position with administrative responsibilities out of the gate for 300k, fully employed with benefits, gave up moonlighting job. Worked about 36-40 hours a week with q8 home call (averaged 3-4 calls/night between 10pm-7am). Wife was completing residency this year (recently married), making about 60k. Lived like a resident except for a few changes: needed a car for work, took my wife's Honda and bought her a new BMW in cash (about 40k). Rest of the income went into student loans. Note 2, definitely should have maxed my 401k, I did not fund it at all; should have maxed a backdoor roth, failed to do so. Did fund HSA. Final loan status - $120,000 remaining when I left this job after 1 year.

Year 2: I had to move due to wife landing attending job elsewhere. New position's contract offered a student loan repayment option covering about $75,000 in 3 installments at the end of each year total annual salary (including this loan repayment) is nearly identical to last positions. Recently completed first year and had first installment arrived. I used a calculator to figure out how much the loan would move to over the next 2 years while awaiting the next 2 payments from employer and cleared the rest out about 4 months ago. Now turning off monthly payments and essentially debt free if continuing on with this job for 2 more years.

Other financials to catch up on: Fully funded 401k for last and this caldender year for wife & self, fully funded backdoor roth IRA for last year/this year for wife & myself. Large disability insurance taken out on wife (her risk of disability is much higher than mine as a male psychiatrist). Savings rate is close to 50% due to being DINKs presently, with the rest of our funds having fully paid off our house (low CoL area) and now working on growing taxable investment account. All assets in low cost index funds.

I have no plans to retire early and hope to work as long as I can provide effective care for my patients, but I do want students and residents to know that you can make a great salary while still working 40 hours or less a week and thoroughly enjoy your work in psychiatry.

Are you still accepting application for wife lmao

 

[lyla]

I've seen a number of posts about salary by medical students/residents as well as recent interest in the FIRE movement (Financial Independence Retire Early for those unaware) and just hit a big milestone for myself so I wanted go give anyone interest a real example of a "traditional" medical student without any family support.

Background: Grew up upper-middle class as a young child but then due to life circumstances spent formative years lower middle class. College financing was clearly something that I would need to procure on my own. Began working mowing lawns by high-school, held part-time jobs from 16-18 and saved >50% of this. Obtained significant scholarships and worked my freshman and sophomore year in a research lab to cover all undergraduate expenses (left without any loans). Took out are $175k for medical school (state school, 6.8% interest) to cover 4 years + living expenses. No paying jobs from 21-26.

Residency: Was very overwhelmed by my student loan payments and tried to pretend they didn't exist. Eventually after a few months of not paying, formally put into forbearance. Don't try this at home folks, but I think it's important to understand that other people make big money mistakes too. Got onto IBR a little before PGY-3 year, did not have the re-pay options to subsidize loan rates when I was in training. Looked into moonlighting options as a PGY-3 but options in my city were not good. Mid PGY-5 year I began to moonlight as an adult psychiatry attending working to cover weekends and some evening hours, Initially offered $110/hour, negotiated up to $150 an hour (had already passed adult boards) working about 15 hours/week.

Finances at end of fellowship: Loans had grown to about $240k with my lowly IBR contributions for a life-time loan of around $250k. Living with significant other for much of fellowship but anything I saved on rent went into a diamond and wedding costs.

Attending job hunting: Spoke with a variety of hospital chains in the area, was looking for predominantly inpatient CAP work so even in a big city the list is pretty narrow of applicable places. Most colleagues making around 250K for similar work in my area. Was able to land a position with administrative responsibilities out of the gate for 300k, fully employed with benefits, gave up moonlighting job. Worked about 36-40 hours a week with q8 home call (averaged 3-4 calls/night between 10pm-7am). Wife was completing residency this year (recently married), making about 60k. Lived like a resident except for a few changes: needed a car for work, took my wife's Honda and bought her a new BMW in cash (about 40k). Rest of the income went into student loans. Note 2, definitely should have maxed my 401k, I did not fund it at all; should have maxed a backdoor roth, failed to do so. Did fund HSA. Final loan status - $120,000 remaining when I left this job after 1 year.

Year 2: I had to move due to wife landing attending job elsewhere. New position's contract offered a student loan repayment option covering about $75,000 in 3 installments at the end of each year total annual salary (including this loan repayment) is nearly identical to last positions. Recently completed first year and had first installment arrived. I used a calculator to figure out how much the loan would move to over the next 2 years while awaiting the next 2 payments from employer and cleared the rest out about 4 months ago. Now turning off monthly payments and essentially debt free if continuing on with this job for 2 more years.

Other financials to catch up on: Fully funded 401k for last and this caldender year for wife & self, fully funded backdoor roth IRA for last year/this year for wife & myself. Large disability insurance taken out on wife (her risk of disability is much higher than mine as a male psychiatrist). Savings rate is close to 50% due to being DINKs presently, with the rest of our funds having fully paid off our house (low CoL area) and now working on growing taxable investment account. All assets in low cost index funds.

I have no plans to retire early and hope to work as long as I can provide effective care for my patients, but I do want students and residents to know that you can make a great salary while still working 40 hours or less a week and thoroughly enjoy your work in psychiatry.

dude kudos to you but as others alluded to, your story isn’t all that impressive since you have dual physician income. And you’re DINKs.

 

[hallowmann]

Yeah, I'm not sure what happened to this thread. I'm all about financial independence early, but doing the math for myself, even if I live off a resident salary, which is going to difficult given that costs will increase as my kids get older, I'm still looking at working for 10+ yrs full time. Living like a resident for 10 years vs living like a "poor" doctor for 15-20 is a bit of a toss up. I'd also rather spend my weekends watching my kids grow up. If I had a spouse with an income and/or didn't have kids, I could definitely do it in more like 5 yrs, but that ship has sailed.

Bottom line is, no one is going hungry on a $200k+ salary, and if you manage even a bit of it reasonably, you're going to have a nest egg when you're done. Just make sure the things you sacrifice for FIRE and that money are worth it.

 

[finalpsychyear]

Yeah, I'm not sure what happened to this thread. I'm all about financial independence early, but doing the math for myself, even if I live off a resident salary, which is going to difficult given that costs will increase as my kids get older, I'm still looking at working for 10+ yrs full time. Living like a resident for 10 years vs living like a "poor" doctor for 15-20 is a bit of a toss up. I'd also rather spend my weekends watching my kids grow up. If I had a spouse with an income and/or didn't have kids, I could definitely do it in more like 5 yrs, but that ship has sailed.

Bottom line is, no one is going hungry on a $200k+ salary, and if you manage even a bit of it reasonably, you're going to have a nest egg when you're done. Just make sure the things you sacrifice for FIRE and that money are worth it.

I think people assume you always have to sacrifice things for FIRE and that I guess is one way you can get there early by working weekends, nights, etc.
I think the most life friendly way and enjoyable process is to keep your spending at a resident ish level x 1.5 but of course that won't be possible for everyone given loans, house mortages, etc.

The biggest factor is if you grew into your attending salary soon after getting there. For those select individuals that live like a resident for say 5 years soon after on an attending salary and invest most of the remaining are rewarded via compound interest for the remainder of their career.

I don't want to be 65 and loaded with $$ because you can't predict your health and what you'll be able to do physically. I want to be early 40's and loaded with $$ that generates avg clinical salary passively forever so on the low end if you want 150k/year forever you'll have to accumulate 3 mill investments given a 5% inflation adjusted return. I am unlikely to get there in 10 years but I'll give it a shot.

 

[Merovinge]

Yeah, I'm not sure what happened to this thread. I'm all about financial independence early, but doing the math for myself, even if I live off a resident salary, which is going to difficult given that costs will increase as my kids get older, I'm still looking at working for 10+ yrs full time. Living like a resident for 10 years vs living like a "poor" doctor for 15-20 is a bit of a toss up. I'd also rather spend my weekends watching my kids grow up. If I had a spouse with an income and/or didn't have kids, I could definitely do it in more like 5 yrs, but that ship has sailed.

Bottom line is, no one is going hungry on a $200k+ salary, and if you manage even a bit of it reasonably, you're going to have a nest egg when you're done. Just make sure the things you sacrifice for FIRE and that money are worth it.

The rhetoric of what you are saying I completely agree with, and prior to listening/learning about PF would have completely agreed. Unfortunately the data consistently, year after year, show that this is objectively not true. Many doctors are living paycheck to paycheck and many more practice later into life then they would want to out of financial need. I'm sure every one of us has worked with a doc (in psych or any other field) who has clearly hung up the towel but works for the paycheck. Financial stress contributes to burnout and suicide, two of the bigger concerns in medicine right now.

Its a lot of words to say that if we put 1% the effort into our finances as we do into mastery of medicine, that would like improve our medical practice more than 1% more effect into medicine itself rather than just trying to wing it and hope for the best.

 

[hallowmann]

The rhetoric of what you are saying I completely agree with, and prior to listening/learning about PF would have completely agreed. Unfortunately the data consistently, year after year, show that this is objectively not true. Many doctors are living paycheck to paycheck and many more practice later into life then they would want to out of financial need. I'm sure every one of us has worked with a doc (in psych or any other field) who has clearly hung up the towel but works for the paycheck. Financial stress contributes to burnout and suicide, two of the bigger concerns in medicine right now.

Its a lot of words to say that if we put 1% the effort into our finances as we do into mastery of medicine, that would like improve our medical practice more than 1% more effect into medicine itself rather than just trying to wing it and hope for the best.

If people are living paycheck to paycheck on a doctor's salary, something is wrong. I'm not saying people don't live outside their means. My point was there's a difference between living in such a way where your main goal is the RE part of FIRE vs. being financially responsible, but still enjoying your younger years while still working.

I'm not going to live off of $40k with a family of 4, because that will mean my day-to-day involves buying only essentials and worrying about indulging every time I buy something (kind of like how I'm living now). I'm also not going to work every weekend so that I can get to the FI in 10 years as opposed to 20. To me, I'd rather work 20 years without missing weekends with my family and worrying about every purchase or even donation, than 10 years killing myself to save enough to work part time.

There is a difference between being financially responsible and saving all you can to FIRE. Everyone acts like it's an either, or scenario. Living outside of your means vs saving everything you can and living like a resident. It's a spectrum, you can be financially responsible without being ready to retire after 5-10 yrs.

Sent from my SM-G970U using SDN mobile

 

[TexasPhysician]

Yeah, I'm not sure what happened to this thread. I'm all about financial independence early, but doing the math for myself, even if I live off a resident salary, which is going to difficult given that costs will increase as my kids get older, I'm still looking at working for 10+ yrs full time. Living like a resident for 10 years vs living like a "poor" doctor for 15-20 is a bit of a toss up. I'd also rather spend my weekends watching my kids grow up. If I had a spouse with an income and/or didn't have kids, I could definitely do it in more like 5 yrs, but that ship has sailed.

Bottom line is, no one is going hungry on a $200k+ salary, and if you manage even a bit of it reasonably, you're going to have a nest egg when you're done. Just make sure the things you sacrifice for FIRE and that money are worth it.

There are many paths to get there. If you want to retire after 10 years as an attending from working in academia FT with no moonlighting, living like a resident is necessary.

If you start your own practice, grow other businesses, participate in start-ups, work extra hours, take less desirable jobs, invest in real estate, or some combo of this, it is quite possible to retire in 10ish years. Good investments will produce yearly income long-term. I’d be too bored to fully retire, but I could see myself cutting back in 10 years. I don’t live anything like a resident, but I don’t generally buy lavish things either. My yearly income is more than my home. I purchase new $40k cars. I find joy in investing.

 

[Mass Effect]

Unfortunately the data consistently, year after year, show that this is objectively not true. Many doctors are living paycheck to paycheck

Where is this data that says many docs are living paycheck to paycheck? Unless you're a brand new attending trying to pay off your loans in a year, there's no reason any doctor should be living paycheck to paycheck, even in San Francisco and NYC.

 

[Splenda88]

There are many paths to get there. If you want to retire after 10 years as an attending from working in academia FT with no moonlighting, living like a resident is necessary.

If you start your own practice, grow other businesses, participate in start-ups, work extra hours, take less desirable jobs, invest in real estate, or some combo of this, it is quite possible to retire in 10ish years. Good investments will produce yearly income long-term. I’d be too bored to fully retire, but I could see myself cutting back in 10 years. I don’t live anything like a resident, but I don’t generally buy lavish things either. My yearly income is more than my home. I purchase new $40k cars. I find joy in investing.

You must not be living in a 5000+ sqft like most doctors...

 

[finalpsychyear]

There are many paths to get there. If you want to retire after 10 years as an attending from working in academia FT with no moonlighting, living like a resident is necessary.

If you start your own practice, grow other businesses, participate in start-ups, work extra hours, take less desirable jobs, invest in real estate, or some combo of this, it is quite possible to retire in 10ish years. Good investments will produce yearly income long-term. I’d be too bored to fully retire, but I could see myself cutting back in 10 years. I don’t live anything like a resident, but I don’t generally buy lavish things either. My yearly income is more than my home. I purchase new $40k cars. I find joy in investing.

I think the challenge of getting to FI is one thing but actually retiring is a whole new ball game. I do believe there are innate qualities of having not just work but intellectual work to optimally function. Also, many people don't know what their "number" in retirement is. Some people spend way more then as they have time to travel and buy things that they did not before. Also, agree with the lavish things as well. I am at least the type that loses interest once i COULD have it.

 

[VA Hopeful Dr]

You must not be living in a 5000+ sqft like most doctors...

Or living somewhere cheap. My first house out of residency was 4000 sqft but we only paid 350k for it.

Also there's to my experience a big difference, house wise, based on the doctors age. There are 8 doctors in my neighborhood that I know of. The only ones living in houses over 4000 sqft are all over 40.

 

[Monocles]

Or living somewhere cheap. My first house out of residency was 4000 sqft but we only paid 350k for it.

Also there's to my experience a big difference, house wise, based on the doctors age. There are 8 doctors in my neighborhood that I know of. The only ones living in houses over 4000 sqft are all over 40.

Serious question: what do yall do with houses that large?? My SO and I live in a 1bd1br that's like ... 500 sq ft? for $2k a month

 

[Shufflin]

A 4000K sq ft house in my region starts at $2Mill

 

[Splenda88]

Or living somewhere cheap. My first house out of residency was 4000 sqft but we only paid 350k for it.

Also there's to my experience a big difference, house wise, based on the doctors age. There are 8 doctors in my neighborhood that I know of. The only ones living in houses over 4000 sqft are all over 40.

Do you more than 4 kids? Why do doctors like big houses? 2500 sgft (4ba/2ba) is good enough IMO.

 

[VA Hopeful Dr]

Serious question: what do yall do with houses that large?? My SO and I live in a 1bd1br that's like ... 500 sq ft? for $2k a month

Yeah that 4000 sq ft house also cost us 2k/month in mortgage.

I have a huge family and we host lots of get togethers. When the weather is bad the kids still have room to run around. My wife paints and so needed room for a small studio. I hunt and need a place I can lock so the kids don't get into all the gear.

Do you more than 4 kids? Why do doctors like big houses? 2500 sgft (4ba/2ba) is good enough IMO.

If you can afford it without a stretch having the extra space is nice.

 

[Splenda88]

Yeah that 4000 sq ft house also cost us 2k/month in mortgage.

I have a huge family and we host lots of get togethers. When the weather is bad the kids still have room to run around. My wife paints and so needed room for a small studio. I hunt and need a place I can lock so the kids don't get into all the gear.


If you can afford it without a stretch having the extra space is nice.

Well, that is not a huge morgage... That is the mortgage payment of most lower middle families

 

[VA Hopeful Dr]

Well, that is not a huge morgage... That is the mortgage payment of most lower middle families

South Carolina outside of Charleston is super cheap

 

[Splenda88]

South Carolina outside of Charleston is super cheap

SC is really cheap then...


Are there nice suburbs near Charleston with good school districts?

 

[VA Hopeful Dr]

SC is really cheap then...


Are there nice suburbs near Charleston with good school districts?

Yes, but still pretty pricey

 

[Splenda88]

Yes, but still pretty pricey

Are we talking about more than 300k for a decent place?

 

[VA Hopeful Dr]

Are we talking about more than 300k for a decent place?

Like 700k gets you 2000 sq ft. 300k gets you a small condo.

 

[finalpsychyear]

Like 700k gets you 2000 sq ft. 300k gets you a small condo.

Wow. Glad i live in an area where I can easily get 4000-4500 sq ft for 550-600 ish and can keep investing the rest.

 

[Splenda88]

Like 700k gets you 2000 sq ft. 300k gets you a small condo.

This is worse than south Florida...

 

[Mad Jack]

The naive part of me thinks that there has to be a way that you can work less, provide standard of care to your patients, and still maintain your lifestyle. Nothing against the posters above but I personally wouldn't feel comfortable seeing pts for less than 15 minutes.

I think one of the parts of FIRE that doesn't get talked about a lot is preventing lifestyle creep. I had classmates who are half a million dollars in debt and yet when we go out they would spend $100 on drinks whereas I get my $5 slice of jumbo pizza and hang out with them. They really seem to embrace the "physician lifestyle" even though we're still trainees. To each their own.

Disclaimer I don't think to FIRE or not FIRE is wrong either way... as long as you are happy make your own decision.

You are the one who is fully in control of whether or not your lifestyle creeps. Just don't let it

 

[Mad Jack]

I hesitated chiming in, wondering if convincing folks you can make it big is the right way to go. Will we attract more gunners, or perhaps more higher IQ folks with higher Step scores? Will we improve how Psych is practiced by getting higher-scoring residents? What are we selecting for?

My sense is that Psych pays well, a lot of jobs out there land you in the $250K range ~ typical full-time employee job.

I doubt higher scores and more gunners will improve the standard of care. If anything, a bunch of people entering the field for the wrong reason might erode care

 

[Mass Effect]

Or living somewhere cheap. My first house out of residency was 4000 sqft but we only paid 350k for it.

That's the place to live! I keep seeing emails for 400K salary out in the midwest and it's so tempting for the reason above.

Serious question: what do yall do with houses that large?? My SO and I live in a 1bd1br that's like ... 500 sq ft? for $2k a month

I consider 500 sq ft to be too small for me. YMMV. I think the last time I had something that small, I was in undergrad. My apartment during med school was 750 sq ft and after I got married, even that seemed small though we made it work to save money.

These days, I'm in 1200 sq ft and looking to upgrade. But I totally get the cost thing. Outrageous prices.

 

[Trismegistus4]

Well, that is not a huge morgage... That is the mortgage payment of most lower middle families

If we are going by the rule of thumb that your mortgage payment should be no more than 25% of your take-home income, a $2000 mortgage payment would mean your take-home income is $8000 per month. According to this calculator, that would mean a gross annual income of $138,625. And that's without any other deductions like retirement contributions.

Is $139k per year lower-middle now? Or are a lot of people spending half their monthly take-home income on their mortgage payment?

 

[Splenda88]

If we are going by the rule of thumb that your mortgage payment should be no more than 25% of your take-home income, a $2000 mortgage payment would mean your take-home income is $8000 per month. According to this calculator, that would mean a gross annual income of $138,625. And that's without any other deductions like retirement contributions.

Is $139k per year lower-middle now? Or are a lot of people spending half their monthly take-home income on their mortgage payment?

This is probably a rule of thumb for Dave Ramsey, but most bank would approve you if the mortgage + property tax + home owner insurance is ~33% of your gross pay with no other big outstanding debt... as long as you have good credit (680+)

By the way, I agree with the 20% rule of thump of your take home pay, but most people in the US bite more they can chew when it comes to buying a home.

139k is not lower middle class. I would consider it mid middle class (I invented that one).

 

[MBBSMOM]

This is probably a rule of thumb for Dave Ramsey, but most bank would approve you if the mortgage + property tax + home owner insurance is ~33% of your gross pay with no other big outstanding debt... as long as you have good credit (680+)

By the way, I agree with the 20% rule of thump of your take home pay, but most people in the US bite more they can chew when it comes to buying a home.

139k is not lower middle class. I would consider it mid middle class (I invented that one).

According to the US census 139k is a very high middle class. It's only 1k away from being classified as upper middle class. The Us census defines 45k-139k as middle class. After 139k you are upper middle class and make significantly most than most Americans.

 

[Splenda88]

According to the US census 139k is a very high middle class. It's only 1k away from being classified as upper middle class. The Us census defines 45k-139k as middle class. After 139k you are upper middle class and make significantly most than most Americans.

My household income was ~120k/year prior starting med school and I will admit that we were not stranded for money, but we weren't swimming in cash either.

I think US census should at least start at 70k... I am barely making it with 60k/yr right now as resident...

 

[Trismegistus4]

This is probably a rule of thumb for Dave Ramsey, but most bank would approve you if the mortgage + property tax + home owner insurance is ~33% of your gross pay with no other big outstanding debt... as long as you have good credit (680+)

By the way, I agree with the 20% rule of thump of your take home pay, but most people in the US bite more they can chew when it comes to buying a home.

139k is not lower middle class. I would consider it mid middle class (I invented that one).

I just changed jobs recently, but in my last job my annual salary was $230k, and, after taxes, my share of the benefits, and my 403(b) contribution rate at the maximum of 15%, my bi-weekly paycheck was $4673. So, $9346 per month. If I'd spent 33% of gross, that is, the $230k, on monthly housing costs, that would be $6325, which would have been 68% of my monthly take-home! Are people really doing that?

 

[MBBSMOM]

I just changed jobs recently, but in my last job my annual salary was $230k, and, after taxes, my share of the benefits, and my 403(b) contribution rate at the maximum of 15%, my bi-weekly paycheck was $4673. So, $9346 per month. If I'd spent 33% of gross, that is, the $230k, on monthly housing costs, that would be $6325, which would have been 68% of my monthly take-home! Are people really doing that?

Some people do but they are house broke. People who did this usually have no retirement savings or even savings at all. I live in a state where property taxes increase substantially yearly. I know physicians who bought houses around the 500-700k range and then taxes go up that year to 15k-20k. They end up being unable to afford it or only spending most of the money they earn on there home. I would hate spending most of my income on a home and property taxes. I would much rather travel and save for retirement .

 

[Splenda88]

I just changed jobs recently, but in my last job my annual salary was $230k, and, after taxes, my share of the benefits, and my 403(b) contribution rate at the maximum of 15%, my bi-weekly paycheck was $4673. So, $9346 per month. If I'd spent 33% of gross, that is, the $230k, on monthly housing costs, that would be $6325, which would have been 68% of my monthly take-home! Are people really doing that?

Unfortunately, people do... After the housing bubble, I was approved for 250k to purchase a second home by reputable bank even if my household income was only 120k. We would have had two mortgages (180k+250k) on a household income of 120k... I only spent 120k out of that 250k that was approved... Looking back, I should have spent it all. I would have had a greater return now.

And this is after the housing bubble when landing requiremenst were very strict...

 

[Trismegistus4]

Some people do but they are house broke. People who did this usually have no retirement savings or even savings at all. I live in a state where property taxes increase substantially yearly. I know physicians who bought houses around the 500-700k range and then taxes go up that year to 15k-20k. They end up being unable to afford it or only spending most of the money they earn on there home. I would hate spending most of my income on a home and property taxes. I would much rather travel and save for retirement .

Then I take it what a lot of these people are doing is banking on their house being their retirement. I.e., they figure, "when we retire, our house will be worth $3 million, and then we can sell it and buy a $500k condo in Florida." Which assumes that 1) real estate will continue to appreciate astronomically, indefinitely, in the area where your current house is located, while 2) it will NOT continue to appreciate astronomically in the community in which that condo is located in Florida. Which are not valid assumptions.

Also, since you're talking mortgages and identify as a "mom," I wondered if you have experience with and can comment on the much-vaunted tax deductions for owning a house and having children. My impression is that the advantages of these is commonly exaggerated. For one thing, they're only deductions from your federal income tax, not payroll taxes, or state or local taxes. For another, it's not your entire mortgage payment that's tax-deductible, it's only the interest portion, which decreases every year as you pay down your mortgage. So, ignoring everything else and considering only the mortgage tax deduction, your taxes go up, and thus your take-home pay goes down, gradually year after year.

 

[dl2dp2]

Then I take it what a lot of these people are doing is banking on their house being their retirement. I.e., they figure, "when we retire, our house will be worth $3 million, and then we can sell it and buy a $500k condo in Florida." Which assumes that 1) real estate will continue to appreciate astronomically, indefinitely, in the area where your current house is located, while 2) it will NOT continue to appreciate astronomically in the community in which that condo is located in Florida. Which are not valid assumptions.

Also, since you're talking mortgages and identify as a "mom," I wondered if you have experience with and can comment on the much-vaunted tax deductions for owning a house and having children. My impression is that the advantages of these is commonly exaggerated. For one thing, they're only deductions from your federal income tax, not payroll taxes, or state or local taxes. For another, it's not your entire mortgage payment that's tax-deductible, it's only the interest portion, which decreases every year as you pay down your mortgage. So, ignoring everything else and considering only the mortgage tax deduction, your taxes go up, and thus your take-home pay goes down, gradually year after year.

The value of deductions depends on your marginal tax rate. My marginal tax rate is almost 50%. It's without a question every dollar above standard deduction is worth it.

 

[finalpsychyear]

Then I take it what a lot of these people are doing is banking on their house being their retirement. I.e., they figure, "when we retire, our house will be worth $3 million, and then we can sell it and buy a $500k condo in Florida." Which assumes that 1) real estate will continue to appreciate astronomically, indefinitely, in the area where your current house is located, while 2) it will NOT continue to appreciate astronomically in the community in which that condo is located in Florida. Which are not valid assumptions.

Also, since you're talking mortgages and identify as a "mom," I wondered if you have experience with and can comment on the much-vaunted tax deductions for owning a house and having children. My impression is that the advantages of these is commonly exaggerated. For one thing, they're only deductions from your federal income tax, not payroll taxes, or state or local taxes. For another, it's not your entire mortgage payment that's tax-deductible, it's only the interest portion, which decreases every year as you pay down your mortgage. So, ignoring everything else and considering only the mortgage tax deduction, your taxes go up, and thus your take-home pay goes down, gradually year after year.

Owning a house in the 500-700k income tax range has no substantial tax benefit especially with the new SALT laws that limit your deductions overall.

Also, people have this idea that owning a house is always the right move. For some ok but it is a consumption item and when your talking about homes in this price range there is no savings whatsoever. In my area for homes in the 500-600k arena just the property tax alone is very close to my rent. Anyone that owns a house knows the plethora of additional expenses that go along with it like heating/cooling, landscape, things breaking or leaking, cleaning, yard work, snow removal etc.

If you can rent in a reasonable price range you come out ahead especially if you bite on a house in a good market. The idea of houses making money is fools gold unless real estate is your MO.

Example: if your a married couple making 400k in my state your already paying 23k in state and local taxes. Under the new salt law your capped on not being able to deduct your property taxes since the trump SALT law tax plan in 2017.

Mitchell Wiggins - Virginia Certified Public Accountants

Providing proactive year round guidance and services, including tax, audit, business valuations and estate and trust administration and planning.

mwcpa.com

 

[Shufflin]

I doubt higher scores and more gunners will improve the standard of care. If anything, a bunch of people entering the field for the wrong reason might erode care

My point exactly. Gunners may hurt the specialty.

 

[MBBSMOM]

My point exactly. Gunners won't improve our specialty.

More gunners in our specialty I agree would only further erode care. We already have psychiatrist who provide very poor care we don't need anymore.

 

[MBBSMOM]

Then I take it what a lot of these people are doing is banking on their house being their retirement. I.e., they figure, "when we retire, our house will be worth $3 million, and then we can sell it and buy a $500k condo in Florida." Which assumes that 1) real estate will continue to appreciate astronomically, indefinitely, in the area where your current house is located, while 2) it will NOT continue to appreciate astronomically in the community in which that condo is located in Florida. Which are not valid assumptions.

Also, since you're talking mortgages and identify as a "mom," I wondered if you have experience with and can comment on the much-vaunted tax deductions for owning a house and having children. My impression is that the advantages of these is commonly exaggerated. For one thing, they're only deductions from your federal income tax, not payroll taxes, or state or local taxes. For another, it's not your entire mortgage payment that's tax-deductible, it's only the interest portion, which decreases every year as you pay down your mortgage. So, ignoring everything else and considering only the mortgage tax deduction, your taxes go up, and thus your take-home pay goes down, gradually year after year.

That's how some people do think but the housing market is rather unpredictable so you shouldn't bank on your home for retirement. I bought my home in 2005 for around 377k now it's worth around 318k. So home values depreciate and you should never bank on your home being worth 3 million dollars. The market is unpredictable and if a recession hits the housing market will be impacted and you won't be able to sell your home for 3 million. As what finalpsychyear said there are no financial benefits to owning a home in the 500-700k range. Home ownership is quite expensive and you are responsible for anything that breaks. Homeowners can only deduct mortgage interest and property tax payments and other expenses from their federal taxable income. Starting as of 2018 when you claim dependents this no longer exempts you from having any of your income taxed. You do get some sort of deduction for children but it's a very low deduction as having children is very expensive.

 

[Splenda88]

I purchased an investment property in 2011 for 150k (I put 20% down) now it's worth 320k and I only owe 60k on it. It's a 15-yr mortgage and once it's paid off, I am cashing in...

 

[thepoopologist]

I just changed jobs recently, but in my last job my annual salary was $230k, and, after taxes, my share of the benefits, and my 403(b) contribution rate at the maximum of 15%, my bi-weekly paycheck was $4673. So, $9346 per month. If I'd spent 33% of gross, that is, the $230k, on monthly housing costs, that would be $6325, which would have been 68% of my monthly take-home! Are people really doing that?

Ouch, I hope its better now.

 

[TexasPhysician]

Unfortunately, people do... After the housing bubble, I was approved for 250k to purchase a second home by reputable bank even if my household income was only 120k. We would have had two mortgages (180k+250k) on a household income of 120k... I only spent 120k out of that 250k that was approved... Looking back, I should have spent it all. I would have had a greater return now.

And this is after the housing bubble when landing requiremenst were very strict...

What banks will approve is insane. After the last housing bust, I was offered a loan up to a $250k home as a poor resident. I knew how insane it was. I bought a place at about $150k, and it was a struggle some months to stay afloat.

 

[yanks26dmb]

I think these rules are different for people living in NYC/socal/sf. You need to spend seven figures to get a decent place in one of these locales. But even still, it's very doable. looking at the numbers, a 1.2M house will generate a PITI of roughly 6k/mo with 20% down. Roughly 8k at 10%.

There are decent jobs easily found offering 275-300. Throw in a weekend moonlighting shift once a month and tack on another 80-100k a year.

Assuming married but no working spouse and total income of 380k annually, that's 17.8k monthly after contributing 10% of gross to retirement. This is also in a very high state income state.

When you lay it all out, it doesn't look that crazy to spend that kind of money of a house.

 

[Splenda88]

What banks will approve is insane. After the last housing bust, I was offered a loan up to a $250k home as a poor resident. I knew how insane it was. I bought a place at about $150k, and it was a struggle some months to stay afloat.

I agree... I feel bad for people in the middle class who feel like they have to live in big house... The credit system in the US is predatory in its nature...

My rule of thumb when it comes to mortgage payment is that it has be 25% or less of my take home pay on a 15-yr note...

 

[Splenda88]

There are decent jobs easily found offering 275-300. Throw in a weekend moonlighting shift once a month and tack on another 80-100k a year.

Assuming married but no working spouse and total income of 380k annually, that's 17.8k monthly after contributing 10% of gross to retirement. This is also in a very high state income state.

When you lay it all out, it doesn't look that crazy to spend that kind of money of a house.

That is a very generous net pay in NY...

 

[Splenda88]

People are brainwashed in the US... I remembered reading somewhere that over 70% of US household would not be able to 'bail' themselves out if they had to come up with 2k right away. Come to think of it, that might be true.

When my wife was working as nurse, one of her coworkers who happened to come to our place for a birthday party told another coworker she could not believe that my wife is living in that small house as a RN... That house was 1488 sqft under air (3BR/2BA). This is how stupid people can be.