How bad am I being taken advantage of

[slchino]

Hello all, recent new grad working as a 1099. Due to family issues and wife preference I am in a high cost of living area. The group I work for says it's democratic and everyone is paid equally. My hourly is 160/hr. And I'm seeing like 3/hr albeit a lot are nonsense pts and acuity is lower. I don't know how badly I am being taken advantage of. The patient population is very poor, literally the 80% medi-cal and or no insurance. This is the reason I am given why our reimbursement rate is low.. I know I'm taking a paycut to be where I am at and my wife is happier now that she is close to home. but how badly am I being robbed? I got a **** load of loans and based on my calculations I'll have to work 30 years and I'm not even living the dream lifestyle. Don't be shy to pm me or give it too me straight. I honestly feel like I'm worth more than this and the Dr's I work with are nice and all but their knowledge base and practice i feel is not std of care. Maybe I'm just naive and extremely conservative.

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[gro2001]

Hello all, recent new grad working as a 1099. Due to family issues and wife preference I am in a high cost of living area. The group I work for says it's democratic and everyone is paid equally. My hourly is 160/hr. And I'm seeing like 3/hr albeit a lot are nonsense pts and acuity is lower. I don't know how badly I am being taken advantage of. The patient population is very poor, literally the 80% medi-cal and or no insurance. This is the reason I am given why our reimbursement rate is low.. I know I'm taking a paycut to be where I am at and my wife is happier now that she is close to home. but how badly am I being robbed? I got a **** load of loans and based on my calculations I'll have to work 30 years and I'm not even living the dream lifestyle. Don't be shy to pm me or give it too me straight. I honestly feel like I'm worth more than this and the Dr's I work with are nice and all but their knowledge base and practice i feel is not std of care. Maybe I'm just naive and extremely conservative.

I think you'd need to share some more info for someone to give a really meaningful answer. Over all, sounds kinda low. But some key factors that may shape the answer of just how low on the spectrum of reimbursement you are:

-Which city? I am not too familiar with the California market, but I know some really desirable cities where $180/hr is the going rate for normal acuity ED work.
-Academics or Community?
-160/hr is your flat rate? Is there some productivity bonus as part of that and the base is even lower? Or is there a productivity bonus on top of that? A couple of jobs I looked at had a base rate around that much, with a productivity bonus that would be paid out on top of that but with a 3 months delay (contingent on RVUs, patient satisfaction, attendance at meetings, etc).
-Is there some differential for working nights or higher acuity areas?
-Is the rate low because you are buying into partnership in the group?
-Are you working the same mix of shifts as everyone else? Same number of nights, higher acuity shifts, splitting weekends/holidays etc?
-Are you BE/BC? Are your colleagues?

 

[GeneralVeers]

If you are in a desirable area where there is low demand for physicians, they will always take advantage of you. That is how economics work. You have to decide what is important to you. Do you want to live in the high cost area to make your wife happy, or do you want to make a lot more money but deal with an unhappy spouse? There is no right answer. Maybe explain the economics to her, and see if an extra $200K per year, plus lower cost of living would change her mind.

 

[Groove]

Sounds like a typical sweat equity partnership track. If you asked all the relevant questions prior to taking the job, none of this should be a shock to you. SDGs are always a calculated risk.

 

[slchino]

I think you'd need to share some more info for someone to give a really meaningful answer. Over all, sounds kinda low. But some key factors that may shape the answer of just how low on the spectrum of reimbursement you are:

-Which city? I am not too familiar with the California market, but I know some really desirable cities where $180/hr is the going rate for normal acuity ED work.
-Academics or Community?
-160/hr is your flat rate? Is there some productivity bonus as part of that and the base is even lower? Or is there a productivity bonus on top of that? A couple of jobs I looked at had a base rate around that much, with a productivity bonus that would be paid out on top of that but with a 3 months delay (contingent on RVUs, patient satisfaction, attendance at meetings, etc).
-Is there some differential for working nights or higher acuity areas?
-Is the rate low because you are buying into partnership in the group?
-Are you working the same mix of shifts as everyone else? Same number of nights, higher acuity shifts, splitting weekends/holidays etc?
-Are you BE/BC? Are your colleagues?

Thx for the response. Its 180 for nights. 160 fir days and afternoon shifts. Distribution of am shifts go mainly to the two guys but amongst the rest of the others it's nearly same.im board eligible but some are family practice grand fathered in. There is a incentive track contingent upon meetings rvu etc. Straight up community sd. I guess I just wanted validation for my choice in such a desirable hcol location but only I can make that.

 

[VA Hopeful Dr]

If you are in a desirable area where there is low demand for physicians, they will always take advantage of you. That is how economics work. You have to decide what is important to you. Do you want to live in the high cost area to make your wife happy, or do you want to make a lot more money but deal with an unhappy spouse? There is no right answer. Maybe explain the economics to her, and see if an extra $200K per year, plus lower cost of living would change her mind.

You're just flat out wrong there. Any of us married guys know what the right answer here is.

 

[GeneralVeers]

You're just flat out wrong there. Any of us married guys know what the right answer here is.

I am married but me and my spouse see eye to eye on finances.......money first.

 

[VA Hopeful Dr]

I am married but me and my spouse see eye to eye on finances.......money first.

Hence the right answer: happy spouse. It just happens in your case to work out to also include more money.

 

[Apollyon]

You're just flat out wrong there. Any of us married guys know what the right answer here is.

My wife is laughing out loud as I read that exchange to her.

Happy wife, indeed!!

 

[Old_Mil]

Having made the same mistake coming out of residency, never ever pick a place to practice based on the geographic preferences of your spouse/family. Doing this can cost you hundreds of thousands of dollars in opportunity because of a high cost of living and taxes, expose your to unnecessary malpractice suits, and otherwise negatively affect your career and well being.

Find the right job in the right malpractice climate state with the right compensation and go there.

If your wife won't...find a new one who will. Finding a new one will be a whole lot easier than finding another good EM job if you turn one down.

 

[namethatsmell]

Pretty remarkable, the differences of opinions here.

OP -- the short answer is that there's almost no job where you aren't being taken advantage of in some way. Unless you own your own FSED exactly where you want to live or find the true rare unicorn job there will always be trade-offs. The big components to consider are: money, schedule, ED staffing, quality of ED leadership and your colleagues, quality of hospitalists/consultants/hospital resources, and location.

While all are important, their order is up to you. Unless you're drowning in debt or momma needs an operation, don't let money be the big factor.

I think your hourly is on the low side. As somebody said, going with an SDG is always a risk. I think if it's for 1-2 years then maybe it's worth it -- but the bigger question is what changes when you become partner? Will you be a truely equal partner (equal profit share, access to books, etc) or a baby partner? If it's the former it could work out great but if it's the latter I'd probably look for other options.

 

[Janders]

Its a bit hard to know without having all the details of your gig.

If it is 160/hr forever, I agree that is low. Some very nice areas of the country might pay this rate.

If it is 160-180/hr for 2 years "buy in period" then you get an annual partner bonus of $50-100k, well thats a bit different...

Otherwise agree with above, need clarity of desires of $ / location / family / etc

 

[VA Hopeful Dr]

Having made the same mistake coming out of residency, never ever pick a place to practice based on the geographic preferences of your spouse/family. Doing this can cost you hundreds of thousands of dollars in opportunity because of a high cost of living and taxes, expose your to unnecessary malpractice suits, and otherwise negatively affect your career and well being.

Find the right job in the right malpractice climate state with the right compensation and go there.

If your wife won't...find a new one who will. Finding a new one will be a whole lot easier than finding another good EM job if you turn one down.

A lot of us feel that family is more important than money. My wife and I are in the process of a move that is going to be less lucrative, but much closer to my enormous extended family. Honestly we're saving about 30 k a year in Nanny fees alone with this move not to mention the advantages of raising kids surrounded by family.

 

[The White Coat Investor]

I know a democratic partner that was making about that in California due to crummy payor mix. California can be a toxic wasteland for docs due to high taxes, high COL, and poor pay.

I guess what I'm saying is you may not be getting taken advantage of here. That might be your fair share of what the business is making.

 

[emergentmd]

Every situation is different and impossible to tell anyone if its a good deal or not as the hospital is staffed and I am sure some/many are happy making $160/hr.

But at 160/hr, I would say 8 out of 10 docs would look back in 5 yrs and wished they didn't take that job. I would never work at that rate unless I was looking at retirement.

But in your situation, all of these points are red flags for taking the job

1. High cost of living
2. Low pay
3. Huge student loans
4. Not a dream lifestyle which I take as living close to check to check. 160/hr which comes to around 250K for typical full time hours take home. 1099 means no benefits. Take away 25% federal, 10% state, Medicare Tax 3% and you are left with around 160K take home or 14K/month. Guessing loans be 3K/mo, 1K/mo in health insurance. So you have about 10k disposable income which living in nice cali area would put you about living check to check.
5. 3pph

What am I missing? Do this for 10 yrs and you will be in the exact same financial position you are now. Broke with student loans with very little in savings.

I hope partnership adds another 150K to your income but from the sounds of the lower payer mix, they may bump you up another 50K.

 

[slchino]

thanks for all the insight everyone. I really appreciate your cumulative years of expertise, knowledge and personal life experiences.

I cant really pick a new wife per se. trying to follow the one house, one spouse philosophy, save as much as you can, live within your means and get out. I believe we are all equal partners however the bonus pay isn't 50-100k. he said it was more like 20-30k/yr. I guess I gotta talk to the wifey again and explain to her how bad it truly is.

-emergentmd you are spot on, everytime I run calculations and scenarios, 10 years down the line I don't see a big difference except. still paying off school loans with kids/house and still living like a resident (not to mention she has her own pvt student loans which are equivalent to mine and she makes less than me!)
-WCI your blog is the 2nd most important thing I read next to tintinalli's, maybe this is the going rate for my shop

 

[n2b8me]

Find the best job you can based on the geographic preference of your spouse and family.

Doing this will avoid multiple headaches/relocations in the future. It is so easy to find new ER jobs... finding a good wife can be literally impossible.

The hundreds of thousands of dollars are irrelevant if you are not happy at home. Make your wife happy and your dreams will come true. Don't worry about taxes, malpractice or other supposed deficits of your geographic choice.

 

[TheComebacKid]

Perhaps I'm really just a dumb resident who has no concept of money and has a lot of growing up to do, and will likely end up in the same place as you someday. But please someone enlighten me...

If you make 160/hr and work a 40 hour work week, you are making over 300K/annually. I know highly desirable places to live come with higher costs of living, higher taxes etc.

But if you make 300K before taxes in a place that is pretty expensive, you can still live a very good life, pay your bills (and loans). Sure you aren't living in Beverly Hills, but you can live in a decent neighborhood drive a standard decent car and have some degree of financial security.

There are people in this country who make 70K/year, live in a major metropolitan area, and still have money for an average family vacation once a year. Something here isn't adding up. Sure you have a lot more money to make if you work elsewhere, but it seems to me that you are being sucked dry in different ways. Yes you will get way less for money in terms of size of house/car etc, but I would think you could get a standard/comfortable living arrangement in ANY major expensive city with that salary.

One suggestion I have is that you could move somewhere else in the vicinity of family and save money. Maybe an hour drive away? Still be close but perhaps better financial incentives.

 

[shoal007]

Perhaps I'm really just a dumb resident who has no concept of money and has a lot of growing up to do, and will likely end up in the same place as you someday. But please someone enlighten me...

If you make 160/hr and work a 40 hour work week, you are making over 300K/annually. I know highly desirable places to live come with higher costs of living, higher taxes etc.

But if you make 300K before taxes in a place that is pretty expensive, you can still live a very good life, pay your bills (and loans). Sure you aren't living in Beverly Hills, but you can live in a decent neighborhood drive a standard decent car and have some degree of financial security.

There are people in this country who make 70K/year, live in a major metropolitan area, and still have money for an average family vacation once a year. Something here isn't adding up. Sure you have a lot more money to make if you work elsewhere, but it seems to me that you are being sucked dry in different ways. Yes you will get way less for money in terms of size of house/car etc, but I would think you could get a standard/comfortable living arrangement in ANY major expensive city with that salary.

One suggestion I have is that you could move somewhere else in the vicinity of family and save money. Maybe an hour drive away? Still be close but perhaps better financial incentives.

The money goes very fast. See the above comment.
33%+ to taxes, healthcare. Add $3k a month student loans. Add rent for a family. Add childcare (likely 2k/month) plus food and you're left with maybe a couple thousand a month for cars,gas,life,disability,retirement.

People who make 70k in these areas pay little to no taxes, many have little to no student loans, may be single and don't have the stress of bouncing from days to nights weekends.

A single young person making 70k, likely has more disposable income than an EM doc making 300k in a HCOL with student loans,1099 employee, 2 kids and a spouse.


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[DO2016EM]

Perhaps I'm really just a dumb resident who has no concept of money and has a lot of growing up to do, and will likely end up in the same place as you someday. But please someone enlighten me...

If you make 160/hr and work a 40 hour work week, you are making over 300K/annually. I know highly desirable places to live come with higher costs of living, higher taxes etc.

But if you make 300K before taxes in a place that is pretty expensive, you can still live a very good life, pay your bills (and loans). Sure you aren't living in Beverly Hills, but you can live in a decent neighborhood drive a standard decent car and have some degree of financial security.

There are people in this country who make 70K/year, live in a major metropolitan area, and still have money for an average family vacation once a year. Something here isn't adding up. Sure you have a lot more money to make if you work elsewhere, but it seems to me that you are being sucked dry in different ways. Yes you will get way less for money in terms of size of house/car etc, but I would think you could get a standard/comfortable living arrangement in ANY major expensive city with that salary.

One suggestion I have is that you could move somewhere else in the vicinity of family and save money. Maybe an hour drive away? Still be close but perhaps better financial incentives.

Do you want to work 40 hours/week as an attending?

 

[e30ftw]

OP let's be honest, if your spouse wants to stay you really have no choice.. but that said..

The most concerning part of your original post is that you expect to take 30 years to pay back your loans, all the time living essentially paycheck to paycheck.

That is a recipe for burnout.

30 years is a long time in EM, and you don't know how the marketplace will change in 5 years, let alone 30.

Now is the time to pay off your loans and become financially stable, while >$200+ / hr is considered "average".

Living like a resident is excellent advice to an EM doc for the first few years out, while paying off student loans, but imo is not acceptable for an entire career. There's more to life than this.. boats, filet whenever you want it, vacations whenever you can get away without worrying about the cost, owning a nice piece of private property, fine musical instruments, hifi audio, European sports cars etc.. and mainly just the general feeling that you're freely enjoying your life and don't have financial worries.

If you were going to be out of debt in 5 years and wanted to keep the $160/hr 1099 job I would say that's totally fine; your preference, happy wife happy life, etc, but 30 years? That's tough..

An average EM doc elsewhere in the country should be able to pay off 300k/student loans, make a big dent in the mortgage of a nice home, and save > $500k for retirement in the first 10 years out while easily living an upper-middle class lifestyle.

 

[CliveStaples]

I would consider showing us your budget, because I think that's really what lies at the heart of your question. Yes, 160/hr is lower than the national average but may not be egregious for where you live and if this is a pre-partner track. The problem is that you've crunched the numbers and seem to think you'll need to work for 30 years to pay off your loans. Without knowing your budget, something about that sounds fishy to me. You should be pulling something in the neighborhood of 250-275k per year on that salary. If you're living like a resident, where's all that money going? Yes, you may have higher than average taxes, but even with the highest marginal tax rate, in real terms you're probably paying ~25-29% of your income to taxes. If you're living off of another ~25%, there should still be half of your income to devote to attacking your debt and saving for retirement.

 

[shoal007]

I would consider showing us your budget, because I think that's really what lies at the heart of your question. Yes, 160/hr is lower than the national average but may not be egregious for where you live and if this is a pre-partner track. The problem is that you've crunched the numbers and seem to think you'll need to work for 30 years to pay off your loans. Without knowing your budget, something about that sounds fishy to me. You should be pulling something in the neighborhood of 250-275k per year on that salary. If you're living like a resident, where's all that money going? Yes, you may have higher than average taxes, but even with the highest marginal tax rate, in real terms you're probably paying ~25-29% of your income to taxes. If you're living off of another ~25%, there should still be half of your income to devote to attacking your debt and saving for retirement.

I live in a high tax state, make 350 and pay 110 in taxes... Employees though so only get 18k 403b and 18 457 to defer.

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[CliveStaples]

I live in a high tax state, make 350 and pay 110 in taxes... Employees though so only get 18k 403b and 18 457 to defer.

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Man, 31% really does hurt to see.

 

[emergentmd]

I don't need to see his budget. He has suffered and lived poor for atleast 7 yrs. At 250k/yr, in Cali, in Sought after place, high student loans would leave him very little to save/enjoy with. Sought after places in Cali homes run in the 700+ for a decent place/area.

I am sure OP has student loans of 300K+ if he is going to take 30 yrs.

All new grads need to understand that Low pay now is a HUGE opportunity cost. If OP is 30, even if he lives like a resident, and Pays off all of his loans in 10 yrs then he has not only costs 10 Yrs of his life living like a resident but also lost 10 years of savings.

Think about this.

If you even found and "avg" at 225/hr, that is about 100K more in income at 32 hrs/wk. Take away 40% in taxes and its 60K take home.

60K today, accounting for stock market appreciation of 8% thus doubling in 8 yrs, at age 62 yrs old he would double 4 times. He would have almost $1 Million when he in retirement age.

Let me repeat. If OP and Wife just sucks it up and lives in a "non desirable" place for 1 Year he will have 1 Million in the bank at retirement even if he goes back to the 160/hr job in a year.

Let that sink in.

I had only 100K in loans out of residency, paid it off in 1 yr. I have put in 52K/yr in retirement for the past 15 yrs. I could go work at 160/hr tomorrow just to pay the bills and retire comfortably.

 

[GeneralVeers]

Perhaps I'm really just a dumb resident who has no concept of money and has a lot of growing up to do, and will likely end up in the same place as you someday. But please someone enlighten me...

But if you make 300K before taxes in a place that is pretty expensive, you can still live a very good life, pay your bills (and loans). Sure you aren't living in Beverly Hills, but you can live in a decent neighborhood drive a standard decent car and have some degree of financial security.

I wouldn't say you are dumb, just naive. The OP is obviously in CA, and from the sounds of it his wife wants to live in an expensive hellhole like SF, LA, or SD. To live in those cities, you are putting down minimum $1 - 1.5 million for a DECENT house in a DECENT neighborhood. You're looking at a mortgage of $5-$8000 per month. If he's got a typical amount of student loan debt, he's likely paying $2000-$3000 per month for that. $300K is not a lot to live on in CA. After taxes you are barely looking at $18K take home which gets eaten up quickly in the People's Democratic Republic.

 

[slchino]

I wouldn't say you are dumb, just naive. The OP is obviously in CA, and from the sounds of it his wife wants to live in an expensive hellhole like SF, LA, or SD. To live in those cities, you are putting down minimum $1 - 1.5 million for a DECENT house in a DECENT neighborhood. You're looking at a mortgage of $5-$8000 per month. If he's got a typical amount of student loan debt, he's likely paying $2000-$3000 per month for that. $300K is not a lot to live on in CA. After taxes you are barely looking at $18K take home which gets eaten up quickly in the People's Democratic Republic.

No need to beat around the Bush. It's san diego America's finest city. I'm only scheduled 120hrs/month. My anticipated salary is 230-240k based on expected hrs to have for one years duration. So let's say 20k/mo pre taxes.
My budget is approximately 1/3 saved fir taxes.
3k for loans
2300 rent
200 car, insurance and gas
200 utilities
200 disability insurance
230 health insurance
4500k for solo 401k planned to max
1k to save for house
600 food this would be our vice.

Any excess would go to hsa or backdoor Roth. My loans are around 300k and my wife is paying off her loans of nearly 180k.

Am I calculating wrong? I feel like this budget isn't extravagant.

Even as a part of our profit sharing model I'd expect to only make 260-270 tops
-I think doing locums may be in my future.
-maybe move in with parent in laws and suck up commute to save for house faster

 

[GeneralVeers]

Am I calculating wrong? I feel like this budget isn't extravagant.

Even as a part of our profit sharing model I'd expect to only make 260-270 tops
-I think doing locums may be in my future.
-maybe move in with parent in laws and suck up commute to save for house faster

I actually quite like San Diego, and if I didn't rely on working there, or have to pay taxes I would move there in a minute.

That being said, $240K per year is $20K per month. I am assuming you are W2 so your employer pays most of your Payroll taxes. If you are 1099 the situation is a whole lot worse. Let's break it down:

$20,000/month
- $7000 state and federal taxes (your effective federal tax is 22.79% and CA state 7.87%)
- $4500 401K contribution
- $2300 rent (must be a small apartment!)
- $230 health insurance
- $600 other expenses
- $3000 for student loans

= $2370/month left over. I haven't included food, entertainment, or other expenses. While you can live an okay lifestyle, you certainly won't have a lot of disposable income. Your wife is not earning a salary yet?

 

[emergentmd]

I actually quite like San Diego, and if I didn't rely on working there, or have to pay taxes I would move there in a minute.

That being said, $240K per year is $20K per month. I am assuming you are W2 so your employer pays most of your Payroll taxes. If you are 1099 the situation is a whole lot worse. Let's break it down:

$20,000/month
- $7000 state and federal taxes (your effective federal tax is 22.79% and CA state 7.87%)
- $4500 401K contribution
- $2300 rent (must be a small apartment!)
- $230 health insurance
- $600 other expenses
- $3000 for student loans

= $2370/month left over. I haven't included food, entertainment, or other expenses. While you can live an okay lifestyle, you certainly won't have a lot of disposable income. Your wife is not earning a salary yet?

OP states that he is 1099 so he pays for everything including higher Taxes but he gets more deductions.

Seriously, making 240K in his situation really makes very little sense. Also, I don't see much left over for retirement.

20K/mo - 3k loans - 7k taxes (low) - 2.3k rent - 1k (car/utilities/health insurance/disability) - 700 other expenses = 14K

With 6K left, you will be left with nothing to put into retirement. Trust me.

Travel fund 1k/mo (trust me you will be over this), Food/going out/restaurants (1K), Cell/Internet/directv - 400. Misc - 600

You have 3k.
Life happens, car breaks down, car insurance, license fees, clothes, house supplies, water, electricity, gas, Amazon, etc..... 3K/mo

Trust me... you will spend 1-2 k a month on stuff that makes life comfortable but prob can live with out.

Medical Deductible, medical emergencies, life emergencies.

What happens when you have a kid? They are 1-2K/mo if you don't have daycare. have daycare and add another 1-2K/mo

After a year of doing this, you will have saves nothing for a house, nothing in retirement.

You will be living check to check, have months where you are short and put things on credit card.

There are expenses that you have not even considered or thought about. Your budget is not detailed enough to account for "life stuff" that will be 1-2K easy.

 

[namethatsmell]

Rather than going all locums, one option is to work part-time locally (4-6 shifts a month) and then part time locums (4-6 shifts). Will give you a bigger paycheck and work flexibility while allowing you to spend more time in the place you actually want to be and with your family. I've gone from spending ~10 nights/mo away from home to ~5 nights/mo and it has made my wife significantly happier...which makes my life significantly easier.


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[em1234]

Not to pile on with everyone else, but you are in a tough spot.
I can commiserate as I was in essentially the same situation you are. You're future might be different, but this is what happened to me...(Wayne world wavy lines, Diddley do, Diddley do, Diddley do)

2011, my first job out of residency paid me about $140/h. long commute (65 miles each way, though done intentionally because this job paid quite a bit more than jobs in town) decent benefits, in a fairly high cost of living area. high state taxes, not as high a CA but too high to ignore. 250k loans. 2 kids. We chose to live in "our town", extended family, lots of life long friends, great social scene, but we were just barely scraping by. putting 18k away for retirement, big monthly loan payment, left with a few hundred or a thousand dollars every mo which always seemed to be eaten up by some sort of "adult life" snafu. My wife and I sat down and started to run the numbers, at my current pay we would be well paid poor for decades. Then the third kid showed up and the $1000 buck a mo we were squirreling away was eaten up by diapers/daycare etc and we were rolling paycheck to paycheck which led to me supplementing with more work, which in turn, led to some spousal resentment because I was never around to help with 3 little kids because I was always at work or in the car coming/going to work. my 9h shifts were basically 12h with clean up time and commute and I was starting to resent her for moving us here and thus making me work so damn much just to break above even. A bit about me, I don't super love our job. I like it, and I wouldn't want to live in any other house in medicine but I'm not part of the "This is my calling" clan and fully intend to retire out of medicine as soon as I am able. Obviously after 3 years of this hamster wheel of this work I started to burn out...hard.

At this point I was as crispy and fun as a deep fried tarantula, so my wife and I had an Algonquin roundtable discussion about what we wanted and where we were headed. We decided that our current situation was untenable. I was working effectively 18 12h shifts, spending 36h/mo in my car commuting. missing my children's childhoods. pissing off my wife. not being able to enjoy any of the fruits of my labor, when the whole delayed gratification bug was already biting me hard hearing about my friends from residency who chose more profitable, lower cost places to live, buying sweet houses, new cars and I was renting and driving my Camry with 240k miles on it and not really seeing any growth in my savings. We were going to be living like fellows (slightly better than residents) for life at our current pace. And as an added bonus, I was spending plenty of time seething and silently blaming my wife and squabbling over spending. A bit more backstory, I love my wife dearly, she is the greatest person I have ever met and she's a very rational person so we discussed all our options and we decided...we had to move.

We looked at the south (where I did residency) and Texas. The rumors about Texas salaries alone were enough to pique our interest. add in no state income tax, tort reform, cheap housing, etc. I contacted a friend from residency who was there and confirmed the rumors. He was making about $250/h in a metro area, lived in a nice area about 20 minutes from the hospital and liked the work. So we went out, checked it out, and liked it enough. We struggled mightily with what we would miss by leaving but in the end we recognized, as previously stated, that even if we only did this for 3 years we would gross at a minimum 650k more than if we had stayed and it would alleviate the only real stressor in our lives. So in the summer of 2014 we packed up the family truckster and moved to Houston. Entering year 4 of the Texas experiment, truthfully we haven't regretted it. Doubling your salary changes your financial life which has absolutely improved our regular lives. Loans gone. 15y mortgage on a reasonable (by Texas standards) house is been shrinking. Solo401k maxed out every year. Roth converted IRA every year. 529s for the kids are growing. Taxable account growing. At the end of every mo, we still have plenty left over to do with as we please. we still have enough to fly home (we still call it home even though we live in Texas) whenever we want, or fly wherever we want. We go home for a week or so every couple of months and stay for a few weeks every summer. We speak frequently about moving back, but my wife and I firmly believe that right now is the golden age of emergency medicine and that it won't last forever. Physician salaries and reimbursement are clearly in the crosshairs of the populous as an idiotic "cost containment measure" and a hair cut is coming, but please spare the Hospital's Junior Vice President of Pencil Sharpening....don't get me started. So we want to make hay while the sun is shining and sock it away for a hopeful financial independence from medicine back on our front porch at "home".

I recognize that we made the extreme plunge and not all are willing to risk it. Happy wife/happy life is a good motto to live by but smoldering long term low level misery can really erode your martial bliss. As for a less extreme recommendation, you mentioned locums and if I might offer a suggestion look at travel locums in Texas. I have numerous friends that live all over the country in crappy paying areas, California, Arizona, Boston, Chicago, all of whom fly in and work 10 days in Texas and fly home. They make more in 10 days than they would have working full months in their respective home states and then they are off the rest of the month.

Hope this was in someway helpful. Best of luck with your situation.
-1234

 

[emergentmd]

I have a partner who lived in the bay area about 10 yrs ago.

Pre move he owned a tiny 2 bdrm condo about 1-2 hrs away with traffic. Had nothing to show by loans. Prob did this for 3-5 yrs

Fast forward 10 yrs and he has atleast 2 homes that are close to being paid for and valued at around 2 Mil. He also has socked in 52K in SEP for 10 yrs like everyone else does.

He never will go back. The majority of docs who comes to the high paying south does not go back. I actually know of very few that has left to take a 100/hr paycut.

I am 15 yrs into my career and have 13 renters with 50% equity. Once I get rid of the mortgages in 5 yrs, I will be taking in close to 200K in rent a yr and letting others pay for my retirement.

 

[MD Financial Services Scott]

No need to beat around the Bush. It's san diego America's finest city. I'm only scheduled 120hrs/month. My anticipated salary is 230-240k based on expected hrs to have for one years duration. So let's say 20k/mo pre taxes.
My budget is approximately 1/3 saved fir taxes.
3k for loans
2300 rent
200 car, insurance and gas
200 utilities
200 disability insurance
230 health insurance
4500k for solo 401k planned to max
1k to save for house
600 food this would be our vice.

Any excess would go to hsa or backdoor Roth. My loans are around 300k and my wife is paying off her loans of nearly 180k.

Am I calculating wrong? I feel like this budget isn't extravagant.

Even as a part of our profit sharing model I'd expect to only make 260-270 tops
-I think doing locums may be in my future.
-maybe move in with parent in laws and suck up commute to save for house faster

Depending on your age and benefit amount the disability might be kind of high cost....

 

[surfguy84]

How feasible is it for a doc to work 3 shifts a week somewhere more rural; i.e. inland empire, etc. then come back to SD to live? I'm assuming hourly rates would be much higher. Is it relatively easy to find a job like this that would also pay for a hotel, travel expenses?

 

[BJJVP]

How feasible is it for a doc to work 3 shifts a week somewhere more rural; i.e. inland empire, etc. then come back to SD to live? I'm assuming hourly rates would be much higher. Is it relatively easy to find a job like this that would also pay for a hotel, travel expenses?

LOL...you think the IE is rural?

In all seriousness, I knew many guys that did this but from what I hear, the pay is still lower than in other states outside of CA (Midwestern states, TX, etc).

 

[shopsteward]

Monthly net income of about $13k, right? You are in effect saving about $9k of that ($3k loan repayment, $4.5k retirement, $1k house. $500 other). Which is actually a pretty good savings rate. If you keep your current lifestyle and savings amount you'll be able to retire in 20 years or less, not 30 (see Mr. Money Mustache for retirement saving advice: you need 25 times your annual expenditure in retirement).

My view is that you don't have an earnings problem, per se, you have an expenditure problem. And there are three elements to that expenditure problem -

1. High taxes. Only way to deal with this is to move to a lower tax location.
2. High student loans (holy crap, nearly half a million between you and your wife). Nothing to be done with this now except suck it up and pay them off as quickly as you can, possibly looking to refinance to a lower interest rate if you can. But loans this size will be a big drag on your finances wherever you live and whatever you earn.
3. High property prices. Saving $12k a year isn't going to get you much of a house in San Diego.

Moving out of state could deal with the taxes but you would still be dragging the loans with you, and property prices depends where you go.

I hope your wife isn't going to get pregnant until she's paid off her loans. Add kids to your current situation and your retirement would be in serious question.

 

[Birdstrike]

Monthly net income of about $13k, right? You are in effect saving about $9k of that ($3k loan repayment, $4.5k retirement, $1k house. $500 other).

You consider payments toward student loans or a house, “savings”?

I suppose you could view the portion that goes towards paying down principle in that light, but the only entity that should rightfully consider the portion that goes towards interest, which is most most of each payment in the early years of any loan, as “savings,” is the bank that holds your note. Although paying off debt is certainly better than not paying it off, and it's certainly better than pure consumption spending or spending on depreciable assets, when you make a $1,000 payment towards a house loan, you're not getting $1,000 richer, in the same way you are if you were paid $1,000 and put it in the bank or your 401K. Yes, you gain some equity (assuming you don't have an interest-only loan, and depending on whether you have a 30-year loan, 10-year loan, and where you're at in those loans) and you may get some appreciation on the house that month (maybe) but don't equate a $1,000 house or loan payment as making you $1,000 richer every month. If that was the case, ever increasing borrowing, would be the easiest and quickest way to wealth. It's not.

 

[shopsteward]

You consider payments toward student loans or a house, “savings”?

I suppose you could view the portion that goes towards paying down principle in that light, but the only entity that should rightfully consider the portion that goes towards interest, which is most most of each payment in the early years of any loan, as “savings,” is the bank that holds your note. Although paying off debt is certainly better than not paying it off, and it's certainly better than pure consumption spending or spending on depreciable assets, when you make a $1,000 payment towards a house loan, you're not getting $1,000 richer, in the same way you are if you were paid $1,000 and put it in the bank or your 401K. Yes, you gain some equity (assuming you don't have an interest-only loan, and depending on whether you have a 30-year loan, 10-year loan, and where you're at in those loans) and you may get some appreciation on the house that month (maybe) but don't equate a $1,000 house or loan payment as making you $1,000 richer every month. If that was the case, ever increasing borrowing, would be the easiest and quickest way to wealth. It's not.

You are right about the interest payments, of course. I plead guilty to over-simplification there.

But yes, payments of principal to loans are a form of savings, as they increase the net worth of the payer. Calling them savings points up how far behind you are if you start with $480k in loans: you save all that money out of your income, for years, only to get to a net worth that is no longer negative. And all that time compound interest is working against you rather than for you.

I read the $1k a week OP was putting towards a house as their saving for a deposit?

 

[The White Coat Investor]

No need to beat around the Bush. It's san diego America's finest city.

I've got a partner that came here from San Diego two years ago. I can assure you he doesn't regret taking the "two-year prepartner" hit.

 

[The White Coat Investor]

Not to pile on with everyone else, but you are in a tough spot.
I can commiserate as I was in essentially the same situation you are. You're future might be different, but this is what happened to me...

This story deserves more publicity than it will get here. I'm going to cross-post it to the WCI forum if you don't mind. Here's a link:

Leaving a HCOL for a LCOL

 

[em1234]

This story deserves more publicity than it will get here. I'm going to cross-post it to the WCI forum if you don't mind. Here's a link:

Leaving a HCOL for a LCOL[/QUOTE
Happy to have anyone learn from our experience.

 

[emergentmd]

You are right about the interest payments, of course. I plead guilty to over-simplification there.

But yes, payments of principal to loans are a form of savings, as they increase the net worth of the payer. Calling them savings points up how far behind you are if you start with $480k in loans: you save all that money out of your income, for years, only to get to a net worth that is no longer negative. And all that time compound interest is working against you rather than for you.

I read the $1k a week OP was putting towards a house as their saving for a deposit?

I can see the angle that paying off a student loan is a form of saving but IMO it is just paying off debt and NOT saving. Saving increases your buying power. Putting 100K and lowering your debt from 500k to 400k gives you no more buying power.