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  • wideopenspaces
    replied
    Originally posted by Franky1882 View Post

    Many thanks - I am feeling a lot better about my situation after reading all the replies.

    - My match is 4%
    - I do have emergency fund of 3 months - although its very tempting to use against the student loan
    - Again I understand the other comments about a 0% student loan - but as you said I hate debt - I know I'm thinking emotionally rather than logically but I just want to get that thing off my back.
    - I agree with the comment of the mortgage loan its at 3.125%: so I will divert funds to retirement.
    Glad you're feeling better:-) you're in even better shape since you already have the EF. And that 4% match means you will be saving close to 50k/yr to retirement with your own 20% contribution. So that's great! You might look into refinancing again- we did it in July 2020 and got 3% and are refinancing again right now to 2.25%. Granted it's a 15 yr but that might be a good compromise for you instead of putting extra to your mortgage. Plus it would be paid off around the time the kids go to college so you'd have extra money to cash flow any of those expenses.

    Leave a comment:


  • Franky1882
    replied
    Originally posted by wideopenspaces View Post
    Op, you are doing great! I'm so impressed with how quickly you are paying down your debt. I hate debt too so I'd pay off the loans in 7 months. Then you'll have an extra 7k to work with each month. Do you have an emergency fund of 3 months of expenses? If not, take 3 months and put 21k to your emergency fund. Then increase your retirement savings to 20% of gross household income, so 42k/year. You are already contributing 9k, so you just need an additional 33k/ yr or 3k/ month. Also how much is your match? That leaves you with 4k/ month. Use some of that to start 529 accounts for the kids. Whatever is left can be used to take a vacation or whatever would increase your quality of life. Personally I would stop paying extra on the mortgage and put it to retirement instead but it's building wealth either way so do what helps you sleep at night. But as you can see, you are going to be just fine and so are your kids :-) strong work!
    Many thanks - I am feeling a lot better about my situation after reading all the replies.

    - My match is 4%
    - I do have emergency fund of 3 months - although its very tempting to use against the student loan
    - Again I understand the other comments about a 0% student loan - but as you said I hate debt - I know I'm thinking emotionally rather than logically but I just want to get that thing off my back.
    - I agree with the comment of the mortgage loan its at 3.125%: so I will divert funds to retirement.

    Leave a comment:


  • TXDoc21
    replied
    There has been some great advice here already. Imagine that you had figured this out at age 60 and not where you are now. You have your health and time. You’ve got this.

    Leave a comment:


  • wideopenspaces
    replied
    Op, you are doing great! I'm so impressed with how quickly you are paying down your debt. I hate debt too so I'd pay off the loans in 7 months. Then you'll have an extra 7k to work with each month. Do you have an emergency fund of 3 months of expenses? If not, take 3 months and put 21k to your emergency fund. Then increase your retirement savings to 20% of gross household income, so 42k/year. You are already contributing 9k, so you just need an additional 33k/ yr or 3k/ month. Also how much is your match? That leaves you with 4k/ month. Use some of that to start 529 accounts for the kids. Whatever is left can be used to take a vacation or whatever would increase your quality of life. Personally I would stop paying extra on the mortgage and put it to retirement instead but it's building wealth either way so do what helps you sleep at night. But as you can see, you are going to be just fine and so are your kids :-) strong work!

    Leave a comment:


  • Jack_Sparrow
    replied
    Originally posted by jhwkr542 View Post

    I wouldn't be doing this. Once it returns to 6.8%, just re-finance it to half that rate (or less). You need to prioritize your own retirement more, which means maxing 401k, Roth IRA (backdoor), and HSA (if applicable). Right now, that's an interest free loan that you can take advantage of.
    Yes refinance loans and put more in 401k. Remember taxes are huge. Just do the math, Making 180k means your probably in the 22-24% bracket. Throw on state and local taxes, and your probably paying ~30% taxes of those last dollars earned. So if you are using that 19.5k to pay down student loans. Your earning 25k, paying off 19.5k in student loans and sending ~5-6k to the government for taxes. If you stick 19.5k into your 401k, you keep that extra 5-6k a year. Net worth goes up by 5-6k a year because you've decreased that tax expense. Also that 5-6k grows @ 6-8% for 20 years.

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  • fatlittlepig
    replied
    easy: max 401K, after debt is discharged, put the 7K/month into an index fund, avoid financial advisors.

    Leave a comment:


  • Kamban
    replied
    1. OP you are doing very well. Many FMG's come here to USA in their late 30's and early 40's and are highly successful, both academically and financially by age 60. You too can do it at your age of start

    2. You are who you are. You can't compare to a derm or some of those high income, high savers on this board. But then again, you are so much better than families with 2 kids living on 50-60K income per year.

    3. Don't do anything rash or stupid to try and catch up. Maximize backdoor Roth and 401K and any other retirement plans. If in taxable after that, simple straightforward index funds. By age 65 you will have plenty, trust me.

    4. I get it that you can's see yourself paying 6.8% interest rate when the 0% free ride stops. Why don't you check to see if you can refinance to a lower rate. If so, do it when the free ride is over. If not, go ahead and pay it off. Nothing major lost in the long run.

    5. Kids who are well educated will do well in college and will get adequate scholarships in state colleges. Mine has to pay only <20K per year in state should she choose to go here. That is something you can easily afford by then once you know the boat is sailing along well.

    6. Finally enjoy life and pray for good health, which is more important now than good wealth.
    Last edited by Kamban; 02-26-2021, 06:17 AM.

    Leave a comment:


  • Hatton
    replied
    I will echo the comment to not compare yourself to others on the forum. There are several very high net people who post here. Remember that time is your friend when accumulating wealth. You will see that older posters have more because their money has compounded longer. You make more money than me BTW (I am retired). Salaries vary around the country and between specialities. I would also echo to focus your money on maxing the retirement accounts first.

    Leave a comment:


  • jhwkr542
    replied
    Originally posted by Franky1882 View Post
    Many thanks for the comments. My thoughts in regards to the student loan was to just get it cleared whilst it is still at 0% and before it returns to 6.8%. I appreciate the note on kids education - it is difficult to know what to prioritize.
    I wouldn't be doing this. Once it returns to 6.8%, just re-finance it to half that rate (or less). You need to prioritize your own retirement more, which means maxing 401k, Roth IRA (backdoor), and HSA (if applicable). Right now, that's an interest free loan that you can take advantage of.

    Leave a comment:


  • PedsCCM
    replied
    OP, first of all congratulations! You've developed excellent habits and you're working hard toward increasing your net worth. Agree with everyone above who said please don't compare yourself to a lot of the regular posters on this forum. It's a really niche, small subset of physicians and other high income folks who lean kinda hard toward FIRE and nerding out on finances.

    Second, I'm happy to be the contrarian as far as where to put your money. You're not buying universal life or wakeboats, you've chosen to pay down debts and then focus more on retirement savings. That's great! Maybe you end up with $2.0MM instead of $2.1MM in retirement by waiting 7 months to start saving that "wealth accumulating" money in retirement instead of paying debt. If paying off the debt is an important goal and psychologically motivating, then do that. The markets could go up a bunch or could be down in 7 months. We don't know. From your post, I would guess you would get fairly discouraged if you put the money into retirement, the market went down and your loans were still $50k.

    I'm going for the emotional and psychological win here every time and ignoring the very small math difference. That said, I would plan on maxing 401k by dramatically increasing my retirement savings in the last couple months of the year. 401k maxed. Loans paid off. Great way to keep moving forward.

    Leave a comment:


  • Nysoz
    replied
    Originally posted by Franky1882 View Post
    - My mortgage has been recently re-financed; its actually at 1.8K/month but we make extra payment on the principle.

    - I understand what you are saying about a 0% loan: I know its not logical but I have been working so hard to get rid of this thing and its hard to stop when its relatively so close to be cleared.
    It sounds like you're debt adverse. It's not bad but will slow down overall retirement growth at first. Definitely consider paying the minimums on very low interest debt (likely mortgage and if you choose to refinance student loan) and max out retirement accounts at the minimum. Every bit you contribute to your 401k is less in taxes you have to pay. Every bit you contribute to your and your partner's IRAs compounds tax free.

    Like others have said, just by being interested in your finances you're probably in the top 10-20% of physicians. Some/most of the active people on here are in the top 1-5% easily.

    Leave a comment:


  • Peds
    replied
    Originally posted by Franky1882 View Post
    I am fairly new to WCI and while it has given me some great info I can't help think that I am never going to achieve financial security that many have gained or are on their way to achieve.
    -- welcome.
    - you are in the top 5% or whatever of household incomes in America. so any failings you feel might be related to lack of education of how to best optimize your resources, and trying to compare yourself to the top <1% of households here on this board.

    Here is my situation
    - I am in my early 40's and became a physician later in life; my income is relatively low in comparison to a lot of people on here generating around 180K.
    - I have about 150K in a 401 but right now I'm only contributing 5% (just so I can get the match) and using all available funds to pay off my student loan before the 0% rate ends.
    -- personally would not be my plan.
    -- goal is 20% to retirement. so ~36K. 401k is 19.5, and 2x rIRA is 12K = 31.5K. plus call it 5K to taxable. so do that first.
    -- loans are 0% until oct or whatever. i would pay $0 until that changes. if then rates resume, refinance and pay off over 2-5 yrs. if it gets prolonged, you stay at 0. you have better use of your money.

    - I have no other debt apart from a mortgage (2.5k/month)
    -- refinance if its been a while. you dont list % but again, would not pay extra if <3-4%.
    - I am paying about 7K a month towards the student loan with 50K remaining so should be done in about 7 months.
    - I have 2 young children and have nothing saved for them.
    -- not a priority. your retirement first. then excess to loans, then their education is last.
    -- now if you live in a state with 529 deduction that might be worthwhile to start sooner, but only after retirement first.

    I really have no idea what to do after paying off the student loan.
    -- really? you just complained about it the whole thread: you are behind, so more to retirement, your kids so 529, im assuming youll buy a car, go on vacation, upgrade the house, so taxable......its not harder than that.

    It seems that the majority of people on here have a much greater salary, started earlier and have more in retirement at my age.
    -- yup. and.....? if you makes you feel better, im unemployed.....there, all good?

    My modest plan (after paying off student loan) is to increase 401K contributions to 20% and start 529's for my kids - Hopefully I can work another 20 years or so. To be honest don't know if this is a sufficient plan or not: Any input would be appreciated.
    again, welcome.

    36K to retirement. then efund, savings, etc. loans are last priority right now. pick up more shifts, go hunting for a different job if you want a bigger shovel

    you will be successful at 180K by literally doing nothing stupid. no you cant get 2 teslas, a nanny, buy a vacation house and go to italy for 2 weeks.......yet.

    Leave a comment:


  • Franky1882
    replied
    Some great points Nysoz.

    To answer a few questions

    - I feel like I'm generally already very frugal: I work as much as I can to already get that 180K so I don't think there is currently much room to make more money and decrease spending.
    - I do have the option of partnership in 6 months which would potentially increase my salary to around $230K but of course comes with a buy in cost.

    - My partner is in low income position; collectively we make about 210K

    - My mortgage has been recently re-financed; its actually at 1.8K/month but we make extra payment on the principle.

    - I understand what you are saying about a 0% loan: I know its not logical but I have been working so hard to get rid of this thing and its hard to stop when its relatively so close to be cleared.

    Leave a comment:


  • Shant
    replied
    7k a month is 84k a year going towards your net worth. 84k is 46% of gross income. That's a huge shovel. You will also have pretty decent Social Security with that many years working and it will replace a large percent of your 180k income. If you can keep on the path you're on now you'll be in great shape.

    Leave a comment:


  • MPMD
    replied
    Originally posted by CordMcNally View Post
    Don’t compare yourself to those on the forum. This is an unusual slice of physicians.
    heavily endorse this.

    OP you are in really good shape, great income, crushing your debt, and thinking about how to get rich.

    Cord is right, don't compare yourself to the lunatics on here (self included) for anything other than inspiration.

    Leave a comment:

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