Here's a real life example of a new doctor's salary...

[armybound]

Well, he could've knocked his $1500 mortgage to $900. Then he could've taken that extra $600/mo and invested it instead of sinking it into his house.

more than likely his investment would gain less interest than the mortgage would accrue, so the better investment would be to pay off the mortgage as fast as possible.

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[tncekm]

Well, he could've knocked his $1500 mortgage to $900. Then he could've taken that extra $600/mo and invested it instead of sinking it into his house.

People are scared of [non-home] investments right now. It'd be hard to convince many people to do something like that.

 

[tncekm]

more than likely his investment would gain less interest than the mortgage would accrue, so the better investment would be to pay off the mortgage as fast as possible.

I was thinking about that, but the interest rates are pretty low right now. I'd have to crunch the numbers, i guess... But, I'd have to imagine you can get an average return (say, over 5 years) right now in the stock/bonds market than the 4.5% many people are paying in interest.

 

[armybound]

I was thinking about that, but the interest rates are pretty low right now. I'd have to crunch the numbers, i guess...

the stock market is pretty low, too

 

[tncekm]

the stock market is pretty low, too

The people who dumped their money when the DJIA was down at 6k are probably pretty happy right now (even though it's rising on a collapse of the dollar... how bass-ackward, eh?)

 

[armybound]

The people who dumped their money when the DJIA was down at 6k are probably pretty happy right now (even though it's rising on a collapse of the dollar... how bass-ackward, eh?)

I wish I had money to throw in when it hit rock-bottom. You know your company's either going to fold or your stock's going to appreciate.

 

[tncekm]

So true. And, at this age, if you lose some cash it's like "so...wtf?" LOL. Seriously... in a few years we'll have relatively large incomes and we're still pretty young. If we bombed now we'd still have a large monthly income, still have plenty of time to start over with a more conservative approach, etc.

 

[Moonglow]

The doctor described in the OP took a job at a large community hospital (with a residency program) in Miami, Florida - her condo is nearby. The hospital owned P.A. pays all of her professional expenses (malpractice insurance, CME, etc.) and she receives a full benefits package.

Her specific expenses may indeed be different than what's posted above, but not by much. Even if she can save but half of that $1600 per month, well, that's still a good chunk of cash after five year's time.

My point in posting this budget, mentioned above, is that you can handle your student loans and live nicely as a young doctor. Of course, I know that this is a simpler example than for some (others may be married, with children, have other life needs, etc.)

 

[armybound]

Well, the issue always comes down to what people think "nicely" means.

I think 7 days of 12s are brutal, and I imagine she's going to look to change that schedule up before too long.

 

[todds]

The doctor described in the OP took a job at a large community hospital (with a residency program) in Miami, Florida - her condo is nearby. The hospital owned P.A. pays all of her professional expenses (malpractice insurance, CME, etc.) and she receives a full benefits package.

Her specific expenses may indeed be different than what's posted above, but not by much. Even if she can save but half of that $1600 per month, well, that's still a good chunk of cash after five year's time. Again, this average budget is set for a well-trained newly employed Hospitalist.

My point in posting this budget, mentioned above, is that you can handle your student loans and live nicely as a young doctor. Of course, I know that this is a simpler example than for some (married, with children, other life needs, etc.)

Don't you think the taxes you calculated is a little too much. I'm not sure how it works in the States, but in Canada, there is graded tax system.
Furthermore, you are taxed on taxable income. Taxable income is minus deductions, so it should be much less.

Again, Im not sure how it works in the States, but in Canada, for example, this is not real numbers, but the first 20K of taxable income is not taxed, then the next 20K is taxed at 15%, then the next 20K is taxed 20% etc...

So I think the tax numbers should be much lower. Therefore, even HIGHER take home income and MORE savings

 

[tncekm]

Don't you think the taxes you calculated is a little too much. I'm not sure how it works in the States, but in Canada, there is graded tax system.
Furthermore, you are taxed on taxable income. Taxable income is minus deductions, so it should be much less.

Again, Im not sure how it works in the States, but in Canada, for example, this is not real numbers, but the first 20K of taxable income is not taxed, then the next 20K is taxed at 15%, then the next 20K is taxed 20% etc...

So I think the tax numbers should be much lower. Therefore, even HIGHER take home income and MORE savings

OP probably averaged appropriately. The highest tax rate in the US is something like 45% right now. And, we do have a graded tax system, but the average tax rate would probably be close to 35% (off the top of my head) for someone making $180k.

 

[todds]

OP probably averaged appropriately. The highest tax rate in the US is something like 45% right now. And, we do have a graded tax system, but the average tax rate would probably be close to 35% (off the top of my head) for someone making $180k.

I was just mentioning this because it seems that the OP just cut 35% from 180K. It just doesn't work like that though.

Even though the tax bracket is 35%-45%, this is taxed on TAXABLE income from the last tax bracket.

Thus, if the last tax bracket is 90K for example, and after deductions you taxable income is 155K, then you pay 35-45% tax on the difference of 155-90K, which is 65K * .45 = ~ 29K. Then you calculate the rest of the taxable income.

So in reality, the taxes paid should be much less, and the income according should be much higher which just enhances, i think, the OP's point.

 

[tncekm]

I was just mentioning this because it seems that the OP just cut 35% from 180K. It just doesn't work like that though.

Even though the tax bracket is 35%-45%, this is taxed on TAXABLE income from the last tax bracket.

Thus, if the last tax bracket is 90K for example, and after deductions you taxable income is 155K, then you pay 35-45% tax on the difference of 155-90K, which is 65K * .45 = ~ 29K. Then you calculate the rest of the taxable income.

So in reality, the taxes paid should be much less, and the income according should be much higher which just enhances, i think, the OP's point.

Yeah, I understand what you're saying. That's why I mentioned that the highest tax rate is near 45% (lowest, of course, being 0%) and her "average tax rate" was probably reasonably concluded to be 35%. Different amounts of her income would be taxed at many different gradiated values, but she'd eventually get an "average tax rate", and 35% is a reasonable one to conclude based off of her income.

 

[bigman225]

well if she has baby then chances are she'll have a husband too and that's an extra income.

Ya.. at the same hospital. They can alternate 7 day shifts and raise the kid!

 

[vinniekan]

OP probably averaged appropriately. The highest tax rate in the US is something like 45% right now. And, we do have a graded tax system, but the average tax rate would probably be close to 35% (off the top of my head) for someone making $180k.

45%? really guys? with minimal effort using google...

http://lmgtfy.com/?q=tax+brackets

1.) highest is 35%, and $180,000 actually falls into 33%, so whoever said taxes is about $44,000 because US tax system is progressive, they're right

2.) with 24%, there's still about ~7% SS & medicare/caid, plus state income, which would come close to 35%, there OP is actually pretty close


I did not know that if you sign with a hospital, they cover your malpractice...that's kinda sweet

 

[causalinference]

How common is it for physicians to have their malpractice insurance covered by their employer?

 

[armybound]

How common is it for physicians to have their malpractice insurance covered by their employer?

very

 

[Narmerguy]

How common is it for physicians to have their malpractice insurance covered by their employer?

Exceptionally. Most of the time when you see salary sites for physicians that is with the malpractice already taken out.

 

[thedoctor8706]

Thanks, this is an interesting thread!

 

[foster033]

No babies? That 34 year old uterus is starting to get a little long in the tooth. Those little kidlets can wreak havoc on your budget but they are worth it. Personally, I want the babies.

If you factor in babies, that budget goes to hell.

But she is a 29 year old female, unmarried and no kids. So in five years, she is a 34 year old single female, unmarried, no kids, with 100 grand in the bank and a professional job. Sounds bleak to me.

Perhaps she has a cat, a self sufficient cat who enjoys spending time alone.

Seriously?? What exactly sounds bleak about practicing the profession that you've spent x amount of years working towards?

just because she is a women children should be a priority? 34 is not that old if she chooses to have kids at that time or even a few years later... many women want to establish their careers before they start popping out babies...and there is nothing wrong with that. different people have different priorities.

being 34, making almost 200k a year with a professional job, a good amount of money in savings, a house and a car...sounds pretty successful to me.

 

[tncekm]

45%? really guys? with minimal effort using google...

http://lmgtfy.com/?q=tax+brackets

1.) highest is 35%, and $180,000 actually falls into 33%,

You're a bafoon. You're only looking at federal. There are state and federal taxes. Don't get all pissy over stupid stuff if you don't even know what you're talking about.

California state >10%, federal ~35%, total = 45%. Simple arithmetic.

 

[FlowRate]

You're a bafoon. You're only looking at federal. There are state and federal taxes. Don't get all pissy over stupid stuff if you don't even know what you're talking about.

California state >10%, federal ~35%, total = 45%. Simple arithmetic.

See: how you can tell someone has never paid real taxes, or even researched real taxes. (not the person I quoted, but the person they quoted)

Federal Tax + "Other Federal Taxes" (like SS) + State taxes = total overall tax.

 

[vinniekan]

You're a bafoon. You're only looking at federal. There are state and federal taxes. Don't get all pissy over stupid stuff if you don't even know what you're talking about.

California state >10%, federal ~35%, total = 45%. Simple arithmetic.

You obviously either never a.) held a real job in your life and had to deal with tax return and/or b.) taken a personal finance class

or c.) just never read the rest of my post because you're so full of yourself

there are only two things that are certain in life, death and taxes. Getting taxed for ~$44,000 for federal making $180,000, that is for certain

 

[tncekm]

See: how you can tell someone has never paid real taxes, or even researched real taxes. (not the person I quoted, but the person they quoted)

Federal Tax + "Other Federal Taxes" (like SS) + State taxes = total overall tax.

No idea. But, it bothers me that people can make this snotty little statements when they have no idea what they're talking about, just so they can prove some "point" that they're essentially uninvested in. It's nonsensical.

 

[tncekm]

You obviously either never a.) held a real job in your life and had to deal with tax return and/or b.) taken a personal finance class

or c.) just never read the rest of my post because you're so full of yourself

there are only two things that are certain in life, death and taxes. Getting taxed for ~$44,000 for federal making $180,000, that is for certain

a) worked all through college; not only file taxes, own a home

b) you're right

c) You quoted me, sounding very much like a jerk, because I said the highest tax rate is 45%. You followed up (needing to Google this information I might add) by saying that the highest tax rate is 35%.You've obviously got no idea that people pay state + federal taxes in most states in the US. What else was I supposed to read?

I never said that the making $180k wouldn't result in large taxes, I was simply defending the off-the-top-of-OP's-head estimate of 35% tax rate, and you decided to pick up on a statement I made that you were uninformed about, and still screwed up after you did your google search.

 

[randombetch]

You obviously either never a.) held a real job in your life and had to deal with tax return and/or b.) taken a personal finance class

or c.) just never read the rest of my post because you're so full of yourself

there are only two things that are certain in life, death and taxes. Getting taxed for ~$44,000 for federal making $180,000, that is for certain

Lol he never said you wouldn't be paying 44k for federal. He's saying you'll be paying an extra 18k on top of that, which is TRUTH.

 

[ChiDO]

Your Pay Check Results

Weekly Gross Pay $3,461.54
Federal Withholding $843.58
Social Security $214.62
Medicare $50.19
Florida $0.00 (no state income tax)
Net Pay $2,353.15 (* 52 weeks) = $122363 (Thus, total tax: $57636)

Calculation Based On Tax Year 2009
Gross Pay $180,000.00
Pay Frequency Weekly
Federal Filing Status Single
# of Federal Exemptions 0

Another thing I did not see was where she is saving for her 401k (tax free!). The limit is $16k, which obviously she should reach each year. Thus, we need to subtract that from the gross pay, and then run taxes on it. So her take home income will be a little less (less savings).

 

[tncekm]

Your Pay Check Results

Weekly Gross Pay $3,461.54
Federal Withholding $843.58
Social Security $214.62
Medicare $50.19
Net Pay $2,353.15 (* 52 weeks) = $122363 (Thus, total tax: $57636)

Calculation Based On Tax Year 2009
Gross Pay $180,000.00
Pay Frequency Weekly
Federal Filing Status Single
# of Federal Exemptions 0

And look at that... that works out to be a 32% tax rate. I'm not sure where you go the numbers, but they look spot on.

 

[randombetch]

Your Pay Check Results Bi-weekly Gross Pay
$6,923.08 Federal Withholding
$1,687.16 Social Security
$429.23 Medicare
$100.38 California
$558.96 CA SDI
$76.15 Net Pay
$4,071.20
*26 pairs of weeks = $105,851.20, 41.2% tax rate.

Not all states have 0% state taxes. If you want to live in California (like any sensible person (lol I'm kidding)), then you'll be paying 41.2% in taxes a year.

 

[Slack3r]

As part of my job, I work with Internal Medicine physicians who finished residency, and are looking for work.

Here's is a real example:

Female, unmarried, no children, 29 years-old - just finished three years of Internal Medicine residency at the hospital represented by my avatar. She decided to accept a five year contract to work as a hospitalist in another state starting November 1. Contract is with the hospital owned P.A. and stipulates: twelve hours per shift, alternating seven days on, seven days off (28 weeks of work time per year); she will work flexible hours, sometimes nights, others days. She wants the every other week schedule for personal reasons, and so that she can have the chance to do some clinical research. She has decided to pay off all of her student loans over the next five years; with interest, $240,000.

Here's her budget:

$180,000 gross in pay per year (plus annual bonus, ~ $5000)
$63,000 in taxes per year @ 35% rate
$117,000 take home pay per year

$9750 per month take home pay

----------------------------------------------------------

Average per month expenses:

$1800 mortgage/insurance for 2 bed, 2 bath upscale condo
$120 cable/internet
$150 gas/electric/water (higher per month in summer lower in winter)
$750 car payment/insurance
$150 gasoline
$120 cellphone
$400 food/dining
$200 misc entertainment (netflix, online music websites, movies, etc.)
$400 misc other (her consumer buying allowance, travel)
$4000 student loans

$8150 total

$1660 go into savings

----------------------------------------------------------

At the end of her five year contract she will be 34 years old, have five years of equity in her home, own her car, have her student loans paid, and have $100,000 cash in the bank.

Taxes are not a flat 35% rate, they are marginal. Taxes on $180k will be $41k.

Debatable about the "upscale" part of that condo, but I'll chalk that up to different part of the US.

$400/month for food is about $13/day. That's approximately $4 per meal. A f***ing Happy Meal at McDonalds will run you about $6, so unless she plans to eat ramen for 5 years, this is grossly underestimated.

 

[RogueUnicorn]

way to ruin a good thread tax guys.

 

[Slack3r]

I'm less concerned about the taxes than I am with a $400/month food allowance. I couldn't do it.

 

[LizzyM]

$400/month for food is about $13/day. That's approximately $4 per meal. A f***ing Happy Meal at McDonalds will run you about $6, so unless she plans to eat ramen for 5 years, this is grossly underestimated.

The federal gov't estimates a liberal monthly expenditure for food for a woman of that age to be ~$300 (for people living in poverty the allotment is less than half that). $400/mo is more than adequate.

Keep in mind that $300/mo does not include toiletries, paper products, cleaning supplies, etc that are commonly included in the "grocery bill". An extra $100 a month should cover the basics.

Frankly, I'd budget for a housekeeping service twice a month, too.

 

[XRanger]

$400/month for food is about $13/day. That's approximately $4 per meal. A f***ing Happy Meal at McDonalds will run you about $6, so unless she plans to eat ramen for 5 years, this is grossly underestimated.

well depends on your lifestyle. If you're planning to eat out everyday for breakfast/lunch/dinner, then yea it's gonna go way over 400/month, but if you cook then $400 is more than enough. When I go grocery shopping I usually buy a week worth of food and never cost me more than $40.

 

[Dr McSexy]

If you are single and can't eat on $400/month then stop eating like a horse.

 

[Slack3r]

well depends on your lifestyle. If you're planning to eat out everyday for breakfast/lunch/dinner, then yea it's gonna go way over 400/month, but if you cook then $400 is more than enough. When I go grocery shopping I usually buy a week worth of food and never cost me more than $40.

What exactly do you buy, if you don't mind me asking?

 

[jvesco22]

$400/month for food is about $13/day. That's approximately $4 per meal. A f***ing Happy Meal at McDonalds will run you about $6, so unless she plans to eat ramen for 5 years, this is grossly underestimated.

You couldn't be more wrong. I eat 4000 calories a day(on a bulk) and only spend about $200 per month on food, $300 at the max if I indulge.

I am a full-grown man at 6'2" 215lbs. I highly doubt this single female doctor would need to spend more than $400/month on food.

And what's with the McDonald's comparison, really? Food allowance is made for the grocery store...

 

[DrMom]

I'm less concerned about the taxes than I am with a $400/month food allowance. I couldn't do it.

My family of 3 (including a teenager) can eat on less than $400/month.

 

[Gallix23]

You couldn't be more wrong. I eat 4000 calories a day(on a bulk) and only spend about $200 per month on food, $300 at the max if I indulge.

I am a full-grown man at 6'2" 215lbs. I highly doubt this single female doctor would need to spend more than $400/month on food.

And what's with the McDonald's comparison, really? Food allowance is made for the grocery store...

I do the same when I'm bulking, and there are PLENTY of cheap ways to make balanced and healthy meals that would even put the Micky D's dollar menu to shame in quality, quantity, AND price.

 

[Slack3r]

Apparently I do it wrong. But if there's one thing I'd splurge on before anything else, it'd be food.

 

[jvesco22]

Apparently I do it wrong. But if there's one thing I'd splurge on before anything else, it'd be food.

No harm. Brotha gotta eat.

 

[RogueUnicorn]

Apparently I do it wrong. But if there's one thing I'd splurge on before anything else, it'd be food.

also, food prices vary wildly depending on location. 400 in minnesota != 400 in manhattan, etc.

 

[coldweatherblue]

if anyone wants to know i did this for a medical student:

Average per month expenses:

$400 rent for apt in ****ty area of town with 2 roommates
$0 cable/internet
$20 gas/electric/water (split 3-ways)
$70 car insurance
$30 gasoline
$30 cellphone
$80 food/dining
$0 misc entertainment (all this is free from the internet which is also free)
$~100 misc other (lift tickets, skate shoes, etc)
$4000/mo MEDICAL SCHOOL

there ya have it.. ~$700 a month on living and $4k on med school. lol as long as I keep my CC bill under $300/mo I can make rent, if not I have to take out more loans (don't wanna do).

 

[mvenus929]

that's pretty good and some people with 200K+ debt usually go with 10-20 year plan, which makes the monthly student loan around 2K, so lets say if she went with 10 year plan, she would had $3,600 savings at the end of the month.

You shouldn't save money in lieu of paying off debt. You will end up paying more in interest for the debt than you will be saving. Build up enough savings to pay a month's of expenses, and then put everything towards your debt.

My brother stupidly did a 15 year mortgage on his house instead of a 30 and he's not even paying $1800.

How is that stupid? Again, you're going to be paying interest on the money you have taken out in loans. Why not cut down that interest by paying off those loans as quickly as you possibly can?

Well, the issue always comes down to what people think "nicely" means.

I think 7 days of 12s are brutal, and I imagine she's going to look to change that schedule up before too long.

Ditto this. Heck, nurses generally only work 3, maybe 4 days in a row when they do 12 hour shifts, and from other people in the hospital, I hear the day off after that stretch of 12s is spent catching up on sleep because you really can't do much else on the days you work.

$400/month for food is about $13/day. That's approximately $4 per meal. A f***ing Happy Meal at McDonalds will run you about $6, so unless she plans to eat ramen for 5 years, this is grossly underestimated.

$6 in the grocery store will pay for a lot more food than is provided in a Happy Meal at McDonalds. And it's better quality food. I certainly hope you don't eat out every meal....

 

[foster033]

You shouldn't save money in lieu of paying off debt. You will end up paying more in interest for the debt than you will be saving. Build up enough savings to pay a month's of expenses, and then put everything towards your debt.

Not always true...it really depends on a whole variety of factors...interest rate on your loans, amount of money you're making on your savings/investment, does your employer match funds for retirement/401k, rate of inflation, etc.

As long as you have a relatively low interest rate there is usually not a financial reason to pay off your loans as quickly as possible.

 

[vickpick]

$240K loan + interest?
wow.. a lot!

if not in a big city... a upper class house would cost abt $2500 a month w/ insurance and taxes...

$200 misc entertainment? wow.. i would drool if i even had forth of that for entertainment a month

 

[turkeyjerky]

$240K loan + interest?
wow.. a lot!

if not in a big city... a upper class house would cost abt $2500 a month w/ insurance and taxes...

$200 misc entertainment? wow.. i would drool if i even had forth of that for entertainment a month

yeah, I bet you do a lot of drooling

 

[Viper15]

Well, he could've knocked his $1500 mortgage to $900. Then he could've taken that extra $600/mo and invested it instead of sinking it into his house.

If she invested it, he would have lost it in the latest downturn of the stock market; it is much more secure to have a paid off house. Also if you calculate how much money you save if you pay off a mortgage in 15 years as opposed to 30, there is a significant amount saved and for the next fifteen years the total 1500 can be invested.

The budget seems to be pretty good, except she needs to plan for kids if they are desired.

I put the $1600/mo into a future value calculator and at 7.5% (not counting inflation) she would have just over $2,000,000 saved after 30 years. If she marries and when the house and student loans are paid off, the extra income can be saved and that is where a lot of money can be made. If she were to save the $4000 after that loan is paid off then after 30 years at the same interest rate she would have $7,500,000. My point is that paying off any loan early is the smart way to go.

 

[tncekm]

yeah, I bet you do a lot of drooling

So what if he used "a" instead of "an" and "forth" instead of "a fourth", we all make typose.

 

[tncekm]

$4000/mo MEDICAL SCHOOL

there ya have it.. ~$700 a month on living and $4k on med school. lol as long as I keep my CC bill under $300/mo I can make rent, if not I have to take out more loans (don't wanna do).

I believe the $4k/mo was b/c the intent was to pay off the debt in 5yrs. (OP forgot to calculate interest into that $240k though).