How much $$$ in Housing & Car

[Sivastraba]

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Hi people. I am about to start residency this July and was wondering what would be the highest amount recommended for a person to invest in a car and apartment, and still have spare money for other stuff. I have heard people recommending to either purchase a house or car. Otherwise, you get hit hard by IRS. I am thinking if buying a 25 K car and paying a rent in an apartment for $800-1000 would be ok? Am I dreaming? I am single...

 

[Laryngospasm]

Hi people. I am about to start residency this July and was wondering what would be the highest amount recommended for a person to invest in a car and apartment, and still have spare money for other stuff. I have heard people recommending to either purchase a house or car. Otherwise, you get hit hard by IRS. I am thinking if buying a 25 K car and paying a rent in an apartment for $800-1000 would be ok? Am I dreaming? I am single...

Youll probably take home somewhere around 2200 a month after taxes as an intern, this doesnt include health insurance which many people have deducted, which is about 100-150$ per month, so figure out what else you need to live on, car insurance, cell phone etc and you will have some idea, dont forget about credit card payments if you have them. 👍

 

[cchoukal]

There's a great website with all these financial calculators. Below is the link to the "take home pay" calculator:

http://partners.leadfusion.com/tools/choosetosave/paycheck02/tool.fcs

This should help you accurately estimate how much you'll have. Regarding your original post, I know that you can deduct mortgage interest, but I'm not sure how buying a car can keep the "IRS from getting you." I don't think you can deduct any of that interest, I suppose, unless you can prove it's a work-related expense. And I don't think commuting counts.

 

[alreadylernd]

"I have heard people recommending to either purchase a house or car. Otherwise, you get hit hard by IRS."


Here's a follow up question, how does someone afford a down payment on a home after graduating from medical school (assuming with some kind of student loan debt) and with a single salary of 40k? (Wouldn't they need a sizeable downpayment since the salary could not support a fairly large mortgage?)

I guess my same question applies to a car, although they cost less...

 

[mig26x]

so buying a Nissan Z is out of the question with a resident paycheck? damn!!!

 

[penguins]

"I have heard people recommending to either purchase a house or car. Otherwise, you get hit hard by IRS."


Here's a follow up question, how does someone afford a down payment on a home after graduating from medical school (assuming with some kind of student loan debt) and with a single salary of 40k? (Wouldn't they need a sizeable downpayment since the salary could not support a fairly large mortgage?)

I guess my same question applies to a car, although they cost less...

Mortgage companies do overlook your student loan/ education debt as long as your credit score is okay. They offer zero down mortgages as well.

 

[Plastikos]

Hi people. I am about to start residency this July and was wondering what would be the highest amount recommended for a person to invest in a car and apartment, and still have spare money for other stuff. I have heard people recommending to either purchase a house or car. Otherwise, you get hit hard by IRS. I am thinking if buying a 25 K car and paying a rent in an apartment for $800-1000 would be ok? Am I dreaming? I am single...

I dont understand how buying a car will get the IRS coming after you (seriously, please inform me if its true) just b/c you also own a home. Maybe b/c your single the taxes would be steeper, but i pay $1200/mo rent, and have two cars with 10K each left on the ledger. The IRS doesnt bother me much, but i am married with dependents.

 

[toxic-megacolon]

Location makes such a huge difference. If you are in San Francisco or New York, you're NOT going to be able to buy a house, and you should be prepared to pay a huge amount in rent. If you are in Houston or Madison, WI you'd be crazy NOT to buy. How much you wil budget will largely depend on where you end up.

 

[deleted50478]

Location makes such a huge difference. If you are in San Francisco or New York, you're NOT going to be able to buy a house, and you should be prepared to pay a huge amount in rent. If you are in Houston or Madison, WI you'd be crazy NOT to buy. How much you wil budget will largely depend on where you end up.

I'm no expert on the subject, but I question whether buying is really such a good idea. If you buy a condo and pay 900/month mortgage plus 350 in condo fees you gain the value of your home in 30 years while paying an extra 450 per month vs. $800 rent for example. Wouldn't you be better off in the long-term renting and putting $450/month in a Roth IRA for the next 4-5 years while your income is still low enough to make you eligible for a Roth? I think maximizing a Roth for 4-5 years of residency and then buying a home as an attending would probably leave you better off financially in the long term. Actually, I think that your Roth with 5 years of invesment and no further savings would still be worth more in 30 years than any home you might buy. Is this wrong?

 

[mpp]

Contributing to a Roth is a great idea. However, you cannot contribute $450 a month to a Roth. The limit for 2006 and 2007 is $4000 for the year. Because of the future tax advantages it makes a lot of sense to contribute the maximum to a Roth.

What you are not considering in your calculation is the tax advantages of owning a home (for most residents the mortgage interest deduction can save them $1000+ per year in federal taxes). Then you have to consider the increase in the value of your home. In recent years real estate appreciation has outpaced most other investments (but of course there is no guarantee that this will continue and there is the possibility of decreasing values but this goes with securities and other standard investments you might make out of your Roth).

If you are first time home buyer you can get attractive rates through the FHA that give you yet another advantage.

So there is more to consider. Ideally doing both would be nice. Purchasing a home (condo or otherwise) should be more a lifestyle decision than a financial one.

 

[masterMood]

hey all, I'm just lurking around the residency forums, but iw as wondering what type of advice can you give for a college student in terms of the financial aspects of a medical life? I am interested in learning the systems of proper investments like real estate, roths,and all taht fun stuff so I feel more comfrotable abou this stuff in the futuer.

 

[Pilot Doc]

One thing to keep in mind is that your year 2006 taxes will only include half a year's income. That, coupled with the lifetime learning credit (if you paid second semester tuition after Jan 1) should reduce your tax bill to near zero. This is especially true if you have dependents - you might even qualify for the earned income tax credit (i.e. govt pays you instead of vice versa.)

Overall point - owning a house for the 1st 6 months of internship has NO tax advantage. Consider deferring your purchase until after the 1st of the year to maximize the tax benefits.

 

[Pilot Doc]

invest in a car ... I have heard people recommending to either purchase a house or car. Otherwise, you get hit hard by IRS.

1) A car is not an investment. Investments grow in value. Spending more than you absolutely have to on a car is a discretionary expense.

2) The only tax benefit of owning a car is the deduction of property taxes. You have to itemize to take advantage of this.