Help I don't understand MONEY

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
listener23

listener23

Membership Revoked
Removed
10+ Year Member
Joined
Aug 11, 2013
Messages
779
Reaction score
387
Members do not see this ad.
I always read on SDN how physicians are in the top 5 percent of all earners. This can't be true because according to SDN, Doctors aren't rich. Then I looked it up and it is in fact true an maybe an understament http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/ . Anybody over 150k (i.e any attendant) is in the top 5 percent, hell a resident is in the top 30 percent. How can you say doctors aren't rich ?? Please don't say student loans because anybody who owes 300k or less and makes an attendant salary can payback student loans and interest in less than 10 years if there not an idiot ( which they are not because they made it through med schools). Also I know this is not a political website but really wanted to know: since there are so many "poor" people how come the democrats don't completely control the white house every year. It seems like the bottom 80 percent would have a a lot of voting power. I can't wrap my head around why wealth is distrubuted like this in this country...
 
Um well first you say you don't understand money and then you say "don't say student loans." What's your definition of rich? Before I spend time writing, I'd like you to answer that question.
 
What you're not taking into account is the lost income from all the years of training (~10 years for most specialties, not including undergrad) and the major hit to finances that debt takes. The most important thing in getting "rich," honestly, is time. Investing a modest amount in a Roth IRA index fund starting in your early-to-mid 20s will make you a millionaire by retirement. Doctors have to catch up to other professionals (lawyers, accountants, bankers, etc.) late, usually by 10 years or more. While they can contribute a lot toward retirement once they're earning and debt is paid down, time has already worked against them.

You're never going to be poor as a doctor, but if money is the main concern you're really better off going into another field.

As for why Democrats don't control the White House indefinitely-- just because you're poor doesn't mean you buy into their platforms. Whatever their actual merits (not going to debate that here), many people across the socioeconomic spectrum are convinced that Democratic (or liberal) policies would hurt them and vote accordingly.
 
Heday said:
Um well first you say you don't understand money and then you say "don't say student loans." What's your definition of rich? Before I spend time writing, I'd like you to answer that question.
Click to expand...

Well I from a house of 5 that makes less than 30k a year so anything more than that is rich to me...
 
blackkrim said:
What you're not taking into account is the lost income from all the years of training (~10 years for most specialties, not including undergrad) and the major hit to finances that debt takes. The most important thing in getting "rich," honestly, is time. Investing a modest amount in a Roth IRA index fund starting in your early-to-mid 20s will make you a millionaire by retirement. Doctors have to catch up to other professionals (lawyers, accountants, bankers, etc.) late, usually by 10 years or more. While they can contribute a lot toward retirement once they're earning and debt is paid down, time has already worked against them.

You're never going to be poor as a doctor, but if money is the main concern you're really better off going into another field.

As for why Democrats don't control the White House indefinitely-- just because you're poor doesn't mean you buy into their platforms. Whatever their actual merits (not going to debate that here), many people across the socioeconomic spectrum are convinced that Democratic (or liberal) policies would hurt them and vote accordingly.
Click to expand...

lol what is that?
 
Doctors make enough money to live comfortably and have a nice house and nice car.

They are not "rich." No doctor who makes his money from actually treating patients is going to have a summer house in the Hamptons, have a butler, ride around in a Bentley, have a private plane, etc.
 
listener23 said:
Well I from a house of 5 that makes less than 30k a year so anything more than that is rich to me...
Click to expand...

So if your household is making $30,000 a year, then you in the top 2% of income earners in the world. Congrats, you're rich! But really, I don't think you can do it by placing a dollar value on it.

Edit: I'll write an in-depth response later.
 
listener23 said:
lol what is that?
Click to expand...

If you're able, open a Roth IRA as soon as possible and invest the maximum you can. Put it into index funds, which track the overall stock market (and average ~7% annual returns when accounting for inflation), rather than individual stocks, bonds, etc. and have significantly lower fees than managed funds.

It's conservative, but there have been many studies done in finance supporting this as the best investment strategy for the non-professional.

EDIT: If you're interested, play around with this to see just how much of a factor time is compared to everything else:

http://www.bankrate.com/calculators/retirement/roth-ira-plan-calculator.aspx
 
Well first off, this article is hilarious. The claims this guy makes are outrageous and very ignorant of ACTUAL economic conditions.

"I remember making $550 a month working at McDonald’s for $3.50/hour, 20 years ago. With wages 3X higher now, I’d be pulling in $$1,650 a month or $20,000 a year! Tack on another side hustle that pays $1,200 a month and I’m in the top 50%. So where are these side hustles you say? You can find a plethora of opportunities on sites like Craigslist. - See more at: http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent"

Uh, heard anything about inflation? $3.50 back then has way more purchasing power than the $7.25 you get now through minimum wage. I have the feeling that this guy is actually full of himself and doesn't know what he's talking about.

It's not just about numbers and how much money you earn. What about poverty cycles compound with racial, political and social problems that make social mobility merely an illusion for the majority of the U.S. population? What about the fact that being born non-affluent and White male automatically pits you under systematic oppression? I mean obviously we shouldn't let that give us any sort defeatist mentality, but it's intellectually dishonest to ignore the multitude of complex factors that make economics more than just "money", because this is NOT just money - it's our lives.
 
blackkrim said:
If you're able, open a Roth IRA as soon as possible and invest the maximum you can. Put it into index funds, which track the overall stock market (and average ~7% annual returns when accounting for inflation), rather than individual stocks, bonds, etc. and have significantly lower fees than managed funds.

It's conservative, but there have been many studies done in finance supporting this as the best investment strategy for the non-professional.
Click to expand...

Just for everyone else, Roth IRA contributions are taxed when you put them in. When you take out money (during retirement), you won't have to pay taxes. Traditional IRA contributions are not taxed when you put them in, but when you take them out.

Edit: Also I agree with @blackkrim , put your money into an index fund with a low expense ratio. I think we should start a thread on the basics of investing and time-value of money.
 
Heday said:
Just for everyone else, Roth IRA contributions are taxed when you put them in. When you take out money (during retirement), you won't have to pay taxes. Traditional IRA contributions are not taxed when you put them in, but when you take them out.
Click to expand...

Thanks for clarifying that. For most of us, Roth IRAs are a better choice, since we pay lower rates now than we will in the future.

Also, if you can swing it there is nothing stopping you from opening a Traditional IRA once you've maxed your Roth IRA at $5500/year (if I recall correctly).
 
I view being rich or wealthy as never having to work again. I guess it's possible to achieve this as a physician, it just depends on your risk tolerance and how much you want to live on. If you lived frugally on a $200k/yr salary, you could invest $100k/yr from age 30 to 50 and 'retire' on whatever your annual returns are. Most people don't choose this route for obvious reasons.
 
Im still in undergrad and is there an economics class I can take that will teach me about IRAs and 401ks?
 
Heday said:
Just for everyone else, Roth IRA contributions are taxed when you put them in. When you take out money (during retirement), you won't have to pay taxes. Traditional IRA contributions are not taxed when you put them in, but when you take them out.

Edit: Also I agree with @blackkrim , put your money into an index fund with a low expense ratio. I think we should start a thread on the basics of investing and time-value of money.
Click to expand...

Yes do it!!!
 
listener23 said:
Im still in undergrad and is there an economics class I can take that will teach me about IRAs and 401ks?
Click to expand...

Not at most schools, unfortunately. Your school may offer lectures or seminars on these matter, though, so I'd inquire about that.

I also recommend the book "I Will Teach You to Be Rich" by Ramit Sethi: http://www.amazon.com/Will-Teach-You-To-Rich/dp/0761147489

It's got a goofy title but it's an easy read and full of very sound, conservative advice on personal finance, including stuff beyond just investments (e.g. negotiating advice, credit cards, etc.). Look for it at your library.

Heday said:
Edit: Also I agree with @blackkrim , put your money into an index fund with a low expense ratio. I think we should start a thread on the basics of investing and time-value of money.
Click to expand...

This would be great. Doctors are notoriously bad with money!
 
listener23 said:
I always read on SDN how physicians are in the top 5 percent of all earners. This can't be true because according to SDN, Doctors aren't rich. Then I looked it up and it is in fact true an maybe an understament http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/ . Anybody over 150k (i.e any attendant) is in the top 5 percent, hell a resident is in the top 30 percent. How can you say doctors aren't rich ?? Please don't say student loans because anybody who owes 300k or less and makes an attendant salary can payback student loans and interest in less than 10 years if there not an idiot ( which they are not because they made it through med schools). Also I know this is not a political website but really wanted to know: since there are so many "poor" people how come the democrats don't completely control the white house every year. It seems like the bottom 80 percent would have a a lot of voting power. I can't wrap my head around why wealth is distrubuted like this in this country...
Click to expand...
Money is the means by which we can have a functioning society. It's not perfect (life is not fair) but if you understand it you can use it to your advantage. Medicine does give you the means to use money to your advantage.

Doctors can have a high income but they also pay high taxes on that income since it's earned income (as opposed to capital gains). They also have high debt from school and start earning much later. It depends on what specialty one enters, too. If one were to enter, say orthopedics after going to a state school w/ scholarship, and saved diligently during residency, had a working career until 60 and then cashed in retirement, he/she could be very, very wealthy.

If one were to go to, say, a private undergrad and take out loans, go to a private medical school and also take out loans, not learn how to live cheaply (eat out everyday), and then become an IM doctor, they may have a different financial outlook but even then they will probably come out ahead of the majority of Americans.

About your political question, I suggest you talk to people and you will learn a lot about politics. You'll understand this country a lot more than asking questions on internet forums.
 
If you actually want to learn about personal finance, I'd recommend the following:

-Suzie Orman's The Money Book for the Young, Fabulous and Broke. Goes over the basics of personal finance as well as general advice for making good financial decisions. A lot of what's covered in there is pretty damn basic, but if you really have zero understanding of personal finance it's a good place to start. Our school gave everyone a copy at orientation. It's a quick and easy read.

-Benjamin Graham's The Intelligent Investor. It's an old book (originally written in the 50s) that has been revised and edited to stay relevant. I'll admit that I haven't read this in its entirety, but I have a copy and have enjoyed what I've gotten through so far. In contrast to the Orman book above - which places more emphasis on day-to-day personal finance - this book focuses more on generating and growing wealth over the long-term. Much of it won't be applicable to you as a student since you will have very little truly disposable income, but it would be a good read going into residency and especially when you start making attending money.

There are tons of free websites as well as other books about personal finance you can read to get similar info, but I found both of those pretty helpful.
 
Last edited:
listener23 said:
Also I know this is not a political website but really wanted to know: since there are so many "poor" people how come the democrats don't completely control the white house every year. It seems like the bottom 80 percent would have a a lot of voting power. I can't wrap my head around why wealth is distrubuted like this in this country...
Click to expand...

You deductive reasoning is completely outrageous. First, you are suggesting that ALL poor people vote Democrat, and then you say that 80% of people in our country is poor.
 
Also, if you can swing it there is nothing stopping you from opening a Traditional IRA once you've maxed your Roth IRA at $5500/year (if I recall correctly).[/QUOTE]

There is a limit that you can do between the Roth and Traditional, so you can do $5500 between both but not $5500 into both at the same time totalling $11,000. Depending on your income , however, you can put money in a retirment plan like 401(k) and still have a Roth IRA.
 
Concur. My clincian colleagues (both DO and MD) all have better cars than I do, and their condos are pretty nice too. Only 1-2 have a boat, but so does one of my PhD colleagues. Here, they're solidly upper middle class+, and not in the 1%.


jonnythan said:
Doctors make enough money to live comfortably and have a nice house and nice car.

They are not "rich." No doctor who makes his money from actually treating patients is going to have a summer house in the Hamptons, have a butler, ride around in a Bentley, have a private plane, etc.
Click to expand...
 
blackkrim said:
other professionals (lawyers, accountants, bankers, etc.) late, usually by 10 years or more. While they can contribute a lot toward retirement once they're earning and debt is paid down, time has already worked against them....
Click to expand...

lawyers have debt too, not to mention a pretty miserable job market.

I feel like this it too much "grass is always greener" thinking
 
listener23 said:
I always read on SDN how physicians are in the top 5 percent of all earners. This can't be true because according to SDN, Doctors aren't rich. Then I looked it up and it is in fact true an maybe an understament http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/ . Anybody over 150k (i.e any attendant) is in the top 5 percent, hell a resident is in the top 30 percent. How can you say doctors aren't rich ?? Please don't say student loans because anybody who owes 300k or less and makes an attendant salary can payback student loans and interest in less than 10 years if there not an idiot ( which they are not because they made it through med schools). Also I know this is not a political website but really wanted to know: since there are so many "poor" people how come the democrats don't completely control the white house every year. It seems like the bottom 80 percent would have a a lot of voting power. I can't wrap my head around why wealth is distrubuted like this in this country...
Click to expand...


Wow, I'm not sure where to start.

First, everyone has a different definition of "rich." You seem to think that making in the top 5% of incomes makes you rich, so to you all doctors are "rich." However, I'd wager that most people (especially those that have been in the working world) would disagree with 150k being "rich." 150k seems like a ton when you are in college and used to making minimum wage, but it really doesn't put you anywhere close to "rich."

Second, you can't hand waive away student loans. Seriously....you can't.

Third, poor people always voting democrat/ rich people voting republican is just an awful and inaccurate way to look voting.

Fourth, it's "attending."
 
masaraksh said:
lawyers have debt too, not to mention a pretty miserable job market.

I feel like this it too much "grass is always greener" thinking
Click to expand...

I'm not saying that being a lawyer is a great way to get rich either, only that most other professionals are able to earn and save money much earlier than physicians. Honestly, if money were my only concern, I'd go into accounting.
 
blackkrim said:
I'm not saying that being a lawyer is a great way to get rich either, only that most other professionals are able to earn and save money much earlier than physicians. Honestly, if I wanted to have the most boring job ever, I'd go into accounting.
Click to expand...
ftfy

Good software developers can start earning early, and earn well.

The problem is that there are not many top teir developers.
 
NickNaylor said:
If you actually want to learn about personal finance, I'd recommend the following:

-Suzie Orman's The Money Book for the Young, Fabulous and Broke. Goes over the basics of personal finance as well as general advice for making good financial decisions. A lot of what's covered in there is pretty damn basic, but if you really have zero understanding of personal finance it's a good place to start. Our school gave everyone a copy at orientation. It's a quick and easy read.

-Benjamin Graham's The Intelligent Investor. It's an old book (originally written in the 50s) that has been revised and edited to stay relevant. I'll admit that I haven't read this in its entirety, but I have a copy and have enjoyed what I've gotten through so far. In contrast to the Orman book above - which places more emphasis on day-to-day personal finance - this book focuses more on generating and growing wealth over the long-term. Much of it won't be applicable to you as a student since you will have very little truly disposable income, but it would be a good read going into residency and especially when you start making attending money.

There are tons of free websites as well as other books about personal finance you can read to get similar info, but I found both of those pretty helpful.
Click to expand...

Yes! Suzie Orman teaches you about personal finance very well. Highly recommend!
 
I honestly think there's a definition between being rich and wealthy. To me being wealthy is when you don't have to work and your money makes money. Most doctors are not wealthy and most are not rich. But compared to most of society who aren't making six figures it's easy to consider them as rich. Depending on what standard of living you're used to you can see doctors as rich or just comfortable *Kanye shrug*.
 
lumpyspaceprincess14 said:
I honestly think there's a definition between being rich and wealthy. To me being wealthy is when you don't have to work and your money makes money. Most doctors are not wealthy....
Click to expand...
This. Spending money doesn't make you wealthy. Saving money does. Physicians are notoriously bad at doing the latter. The irony here is that the guy with the nice house/car/boat/vacation home who looks wealthy because he has all these expensive things may in fact be living paycheck to paycheck, while the guy living more modestly and below his means is the one who is actually wealthy.

OP, another good book that hasn't been mentioned yet is "Rich Dad, Poor Dad." It does a nice job of explaining just what wealth is and is not. But here's another example. My goal is to be able to retire at age 50. That doesn't mean I'll actually stop working when I reach 50, merely that I'll be able to afford to do so if I choose. Wealth is what gives you that freedom to choose how much you want to work, or even whether you want to work at all. It's not at all related to the "stuff" you own, and it's only partially correlated with your income.
 
listener23 said:
I always read on SDN how physicians are in the top 5 percent of all earners. This can't be true because according to SDN, Doctors aren't rich. Then I looked it up and it is in fact true an maybe an understament http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/ . Anybody over 150k (i.e any attendant) is in the top 5 percent, hell a resident is in the top 30 percent. How can you say doctors aren't rich ?? Please don't say student loans because anybody who owes 300k or less and makes an attendant salary can payback student loans and interest in less than 10 years if there not an idiot ( which they are not because they made it through med schools). Also I know this is not a political website but really wanted to know: since there are so many "poor" people how come the democrats don't completely control the white house every year. It seems like the bottom 80 percent would have a a lot of voting power. I can't wrap my head around why wealth is distrubuted like this in this country...
Click to expand...
How? Because from the 0 to 99.9 percentile aren't rich. The rich are those pulling several millions a year, which are the 0.1%. What can you not understand about our system? It is based on propaganda, fear and ignorance while the 0.1% buy politicians to have more money.

lol this article is so stupid:
If you are in the bottom 50% of Americans who earn less than $33,048 a year, know that you can earn more if you want to. Half the battle is just moving to a vibrant location such as the San Francisco Bay Area where billions of dollars are flowing in due to technology innovation.
Click to expand...
Yes, just move to an area where you have to earn 140k to afford buying a house and the average rent is 4k monthly.
 
Last edited:
QofQuimica said:
This. Spending money doesn't make you wealthy. Saving money does. Physicians are notoriously bad at doing the latter. The irony here is that the guy with the nice house/car/boat/vacation home who looks wealthy because he has all these expensive things may in fact be living paycheck to paycheck, while the guy living more modestly and below his means is the one who is actually wealthy.

OP, another good book that hasn't been mentioned yet is "Rich Dad, Poor Dad." It does a nice job of explaining just what wealth is and is not. But here's another example. My goal is to be able to retire at age 50. That doesn't mean I'll actually stop working when I reach 50, merely that I'll be able to afford to do so if I choose. Wealth is what gives you that freedom to choose how much you want to work, or even whether you want to work at all. It's not at all related to the "stuff" you own, and it's only partially correlated with your income.
Click to expand...


I see what you are saying but I live by the saying " you can't take it all with you". The average black male in my state dies around 67-69 (males die quick in my family, they usually get on dialysis at around 60 and die a few years later, so I'm looking at around 63-65). I don't want to live modest for 50 years just to only get to enjoy life for 15. I want get a wife have 3 kids and go on lavish vacations and buy my wife a nice car while I'm around and able bodied
 
Last edited:
listener23 said:
I see what you are saying but I live by the saying " you can't take it all with you". The average black male in my state dies around 67-69 (males die quick in my family, they usually get on dialysis at around 60 and die a few years later, so I'm looking at around 63-65). I don't want to live modest for 50 years just to only get it enjoy life for 15. I want get a wife have 3 kids and go on lavish vacations and buy my wife a nice car while I'm around and able bodied
Click to expand...

Well, enjoy your life when you end up living longer than you expect and have $0 to rely on for retirement.


Sent from my iPhone using Tapatalk
 
listener23 said:
I always read on SDN how physicians are in the top 5 percent of all earners. This can't be true because according to SDN, Doctors aren't rich. Then I looked it up and it is in fact true an maybe an understament http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/ . Anybody over 150k (i.e any attendant) is in the top 5 percent, hell a resident is in the top 30 percent. How can you say doctors aren't rich ?? Please don't say student loans because anybody who owes 300k or less and makes an attendant salary can payback student loans and interest in less than 10 years if there not an idiot ( which they are not because they made it through med schools). Also I know this is not a political website but really wanted to know: since there are so many "poor" people how come the democrats don't completely control the white house every year. It seems like the bottom 80 percent would have a a lot of voting power. I can't wrap my head around why wealth is distrubuted like this in this country...
Click to expand...
For someone who says he doesn't understand money, you sure act like you do.
 
The definition of "rich" depends a lot on your personal experience and perspective. I also agree with the previous responses that being wealthy and rich are different. Wealth involves saving and making your money work for you and retaining it for future generations. Wealth is what you keep and grow. Being and living "rich" is having a lot of money coming in and spending it on lifestyle boosters.

But semantics aside, I understand where you are coming from.

I make ~$25K and I have roommates to help pay my mortgage. I save a little bit for retirement and a little in an emergency account, but generally it's hard for me to keep more than a couple hundred bucks in my checking account as a buffer because I NEED that money just to survive. I vote Democratic generally. I would feel extremely well off making $150K+ no matter how much was going out for debt repayment.

My parents, on the other hand, probably bring in 10x that much ... in retirement. The vote Republican. They are very, very concerned about their taxes. They can go out and spend $75 on dog toys the same day I am scraping together $40 to buy basic groceries. Their concern is keeping their money. They are good savers and they were hard workers (as well as very educated Baby Boomers who hit a few breaks in terms of when they joined the workforce/began invtesting) and they are reaping the rewards of that. They think the amount I am borrowing and will be paying back is ludicrous.

Different strokes.
 
You may see that, in time, your MD will open up many doors for business endeavors. I know many physicians using their MD to attract business offers.

The business endeavors that open up due to having a medical degree can prove to be far more lucrative than the actual application of your medical knowledge in a clinical setting.
 
osckey said:
You may see that, in time, your MD will open up many doors for business endeavors. I know many physicians using their MD to attract business offers.

The business endeavors that open up due to having a medical degree can prove to be far more lucrative than the actual application of your medical knowledge in a clinical setting.
Click to expand...

Like doctor oz and the other sale out tv doctors?
 
:eyebrow: I guess...
 
Last edited:
listener23 said:
Like doctor oz and the other sale out tv doctors?
Click to expand...
You can invest in commercial real estate, businesses, and a myriad of other adventures. I know of physicians who've started or invested in restaurants, spas, commercial real estate and development, and even fireworks who've all done quite well for themselves while maintaining a full time practice. You need the start-up funds, the time, knowing what you're getting into, and the potential risks involved.
 
listener23 said:
I qualified for the voting age 2 years and still hadn't ever voted yet. But my basic understanding was, vote democrat if you want the united states wealth more evenly distrubuted and tax breaks on the poor and middle class. vote republican if you are rich and want to hold on to your money and not get taxed so much. So when I see people like ben carson I just assume the money changed them and he forgot what it like being in the 80 percent .
Click to expand...

I'm glad you haven't voted yet, given the rest of this post.
 
Rich Dad Poor Dad was the first financial book I ever read!!!! I think I was like 10-12ish and found it laying around my house.

Also thread is major lolyzy. OP says " Help me, I don't understand money, then makes numerous statements about money."
 
WillburCobb said:
You can invest in commercial real estate, businesses, and a myriad of other adventures. I know of physicians who've started or invested in restaurants, spas, commercial real estate and development, and even fireworks who've all done quite well for themselves while maintaining a full time practice. You need the start-up funds, the time, knowing what you're getting into, and the potential risks involved.
Click to expand...

I have no intrest in private practice or investments.
 
listener23 said:
I have no intrest in private practice or investments.
Click to expand...
Every physician I know who did this worked for hospitals/health care systems. Investing this way is just another option beyond playing the stock market. Also, the firework guy covered his tuition and living expenses all through med school just by running a fireworks stand for a month every summer. After residency he moved back to the area and resumed and expanded his firework business. It still only operates for about 1 month out of the year, but he makes much more selling fireworks in that one month than he does as an attending anesthesiologist. If you're really that worried about money, and educate yourself on the risks and what it takes to invest smartly you have the potential to do fairly well for yourself.
 
Last edited:
You must log in or register to reply here.

Similar threads

TheRealBibFortuna
Help me understand: the struggle against patients going AMA
Replies
5
Views
1K
mistafab
mistafab
C
How much of a disadvantage am I if I don't take aamc preview?
Replies
2
Views
758
chillstill
C
H
Getting a job outside of healthcare so I don't wind up homeless
Replies
9
Views
1K
sardinetoast
S
R
MMI Interview Help
Replies
1
Views
371
CDaFutureDocMan
CDaFutureDocMan
M
Explaining W's to schools who don't ask on secondaries?
Replies
9
Views
942
Mr.Smile12
Mr.Smile12
Top