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Dangerously falling in love with first potential home purchase.

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  • #61




     Afterwards, I looked at online listings for a year (maybe not the healthiest habit) and there were at least 2 houses that would have been even a better fit.

     
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    This can't be emphasized enough, OP.  There is NEVER only one perfect house.  If you let this one go, another nice house will pop up on the market when you're truly ready to buy.  Or you can buy a lot and have the perfect house built.  This isn't a one-time-only opportunity (even though you may see it as one).

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    • #62







      This thread is making me scared.  Lol.  I just bought a million dollar house after 1.5 years at my first job.  I’m in a ton of debt and I absolutely love this house!  It’s a joy to come home to every day.  To each their own, though.  People on this forum tend to be very home buying averse.
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      Nah, most of the regulars are just skeptical of those who want to move to a new city, take a new job, and buy a doctor house all in one fell swoop.

      Difficult to assess tone on forums but with some financial experience under one’s belt one tends to catch a note of either panic or over-excitement in our younger colleagues who are doing this. Most of us move to a new job with a sense of real excitement and often that is well-founded. The problem is that you just don’t know what it’s like to live and practice in a place where you’ve never done either. Your boss might be a sociopath, your hospital might get sold, you may not fit in to the hospital culture, you might have a run in with an unreasonable colleague who turns out to chair every committee, you might discover that the more senior people are cheating you out of time or money. Stuff happens (trying to stay within forum rules).

      Dude I could borrow enough money to buy near the top of my neighborhood, I’d love that house too. The whole point of WCI and docs getting control of their money is to make higher-order decisions than “do I love this?” Loving all your expensive stuff is normal. Hospitals are slap-full of docs who love their car and house and are nowhere near being able to retire at 63.

      I’m not trying to attack you personally, just pointing out some of the stuff that I would guess goes through the minds of the forum regulars.

       
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      Definitely agree with this and I want to add to it.  Another big reason so many people on this forum are jumping all over this is because we are so familiar with posts from older docs who behaved exactly this way when they were young, who are now feeling pinched financially AND at the same time not enjoying their work as much any more and wishing they could cut back or retire soon.  Yet, because of their big old doctor house and all the big old expenses that come with it, they really can't afford to do either of those things.  It is such a common scenario that when we see a young doc heading directly down that same path, it raises red flags all over the place!

      Some people are bound to learn the hard way, so I'm not going to harass him over it.  I just hope everything works out well for them.

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      • #63










        This thread is making me scared.  Lol.  I just bought a million dollar house after 1.5 years at my first job.  I’m in a ton of debt and I absolutely love this house!  It’s a joy to come home to every day.  To each their own, though.  People on this forum tend to be very home buying averse.
        Click to expand…


        Nah, most of the regulars are just skeptical of those who want to move to a new city, take a new job, and buy a doctor house all in one fell swoop.

        Difficult to assess tone on forums but with some financial experience under one’s belt one tends to catch a note of either panic or over-excitement in our younger colleagues who are doing this. Most of us move to a new job with a sense of real excitement and often that is well-founded. The problem is that you just don’t know what it’s like to live and practice in a place where you’ve never done either. Your boss might be a sociopath, your hospital might get sold, you may not fit in to the hospital culture, you might have a run in with an unreasonable colleague who turns out to chair every committee, you might discover that the more senior people are cheating you out of time or money. Stuff happens (trying to stay within forum rules).

        Dude I could borrow enough money to buy near the top of my neighborhood, I’d love that house too. The whole point of WCI and docs getting control of their money is to make higher-order decisions than “do I love this?” Loving all your expensive stuff is normal. Hospitals are slap-full of docs who love their car and house and are nowhere near being able to retire at 63.

        I’m not trying to attack you personally, just pointing out some of the stuff that I would guess goes through the minds of the forum regulars.

         
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        Definitely agree with this and I want to add to it.  Another big reason so many people on this forum are jumping all over this is because we are so familiar with posts from older docs who behaved exactly this way when they were young, who are now feeling pinched financially AND at the same time not enjoying their work as much any more and wishing they could cut back or retire soon.  Yet, because of their big old doctor house and all the big old expenses that come with it, they really can’t afford to do either of those things.  It is such a common scenario that when we see a young doc heading directly down that same path, it raises red flags all over the place!

        Some people are bound to learn the hard way, so I’m not going to harass him over it.  I just hope everything works out well for them.
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        I think the main reason people jumped all over it is because it’s so obviously a bad decision to buy a house before starting a job and before ever living where you are buying the house.  When told this by multiple posters, OP basically responded with “that’s great, but I’m gonna buy me the most expensive house in the town because I’m a doctor now!”  To justify it, he even threw WCI’s own rule of thumb back at him after WCI posted, I guess thinking WCI must have forgotten.

         

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        • #64
          I think the main reason people jumped all over it is because it’s so obviously a bad decision to buy a house before starting a job and before ever living where you are buying the house.  When told this by multiple posters, OP basically responded with “that’s great, but I’m gonna buy me the most expensive house in the town because I’m a doctor now!”  To justify it, he even threw WCI’s own rule of thumb back at him after WCI posted, I guess thinking WCI must have forgotten.
          Click to expand...

          It could have something to do with the title of the thread, also.  

          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #65
            I was thinking about this post on my way to work this morning, driving through a variety of neighborhoods.  I think the whole idea of the "doctor house" is what gets people into trouble.  We are sold this and essentially told that if we don't have the expensive house, car, etc., that's indicative of our success in medicine.   For the most part, the general public is stretched super thin living in their midrange house, driving a few financed vehicles, etc. etc.  As doctors, we can easily afford the midrange house and the rest of the midrange lifestyle that goes with it.  Instead we stretch ourselves just like the general public does with the "doctor house" and the other high end accoutrements that go with it.  Sure, you can "afford" it if you want to be stuck having to make 500k+ until you're 65 or 70.  The other alternative is to be happy with the midrange lifestyle that most people have to stretch to afford, and be free to do whatever you want in your 40s or 50s.

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            • #66
              I hope original poster knew what to expect when he posted here.

              If you asked me to estimate how many follow wci type suggestions early on, I would say 25 percent? We have no idea how many buy fast cars and big houses and are perfectly content.

              Perhaps the same percent get into financial trouble and have regrets as the percent who frequent this website and live for early retirement.

              Best of luck to original poster. These decisions are not made in a vacuum and certainly there are many factors that go into long term success and happiness.

              Just because something is statistically likely doesn’t mean it will happen. Couple last comments. The acquaintances you mention who wished for different— it’s easy to hear their comments but really we don’t know their situation. Maybe they have family money. Maybe they have even bigger loans. But it could also be that they are following the script we lay out for you—buy an affordable house and then move up when job situation better known and finances in better shape. Have to make your own decisions.

              Good luck.

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              • #67


                Wish I’d been reading WCI longer…
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                Don't feel bad about not reading it longer.  It wouldn't have helped.

                After all, you're reading it now and you're ignoring his advice, so no need for regrets.

                Comment


                • #68
                  You may want to rent first to get an idea of the area. Sounds like you and your wife may be used to more of an urban feel. Be sure you're both OK with the rural setting before you decide to take the job. There's a reason why they offered the salary amount. It's a give and take. If you decide to work there, it's best to set a trial period to rent before you buy. Good luck!

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                  • #69





                    Wish I’d been reading WCI longer… 
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                    Don’t feel bad about not reading it longer.  It wouldn’t have helped.

                    After all, you’re reading it now and you’re ignoring his advice, so no need for regrets.
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                    Brutal.

                    Seriously though, I am amazed how many of us think we're exceptions to math. You can make lots of errors/expenditures and your income can make up for them, but those errors need to be infrequent and small. Buying the wrong house at the wrong time is a big rock.
                    Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                    • #70










                      Wish I’d been reading WCI longer…

                       
                      Click to expand…


                      Don’t feel bad about not reading it longer.  It wouldn’t have helped.

                      After all, you’re reading it now and you’re ignoring his advice, so no need for regrets.
                      Click to expand…


                      Brutal.

                      Seriously though, I am amazed how many of us think we’re exceptions to math. You can make lots of errors/expenditures and your income can make up for them, but those errors need to be infrequent and small. Buying the wrong house at the wrong time is a big rock.
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                      i don't think i'm an exception, i know i am. 

                      you really think people can't do math, or they just have a different value system and assign a different weight to various factors?

                      are they terrible at planning for the future?  for people who are terrible at planning for the future, are you able to meaningfully change their behaviors with education, or do they change it themselves when they are ready?  if you survey the people a year later, would you guess 10%, 33%, 66%, or 100% changed their behaviors meaningfully?  if they send you an email, they hopefully have recognized they need change and are looking for specific advice on how to change.   they've already made the leap.  how much of their problems were due to ignorance and inattentiveness rather than destructive behaviors?

                      please understand i think you are doing a great service for people out there.  this is in no ways a criticism.  more a reminder that different people view the world differently, and that long term behavioral change is extremely difficult.  a couple well written and intended posts are not likely to really change someone's mind, and i'm frequently uncertain what drives people here to post.  is it seeking external validation?  providing a data point?  personally i just enjoy the conversations, and i learn different ways of looking at things.  i know i'm wrong most of the time, but i have fumbled through life knowing i had a lot of people depending on me, so i saved a lot.  still made some really really monumentally stupid decisions.  but as you say, with good income, most can recover in ten years.

                      thanks!

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                      • #71
                        I think of the verse from Percy Sledge's When a Man Loves a Woman when reading this:

                        When a man loves a woman
                        Deep down in his soul
                        She can bring him such misery
                        If she is playing him for a fool
                        He's the last one to know
                        Loving eyes can never see

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                        • #72
                          I will often inquire in various ways before making a big decision.  I like to hear all the contrarian viewpoints to give me some time to think things through.  If I do decide to go ahead, I do it with eyes wide open.

                          I remember asking a realtor all the things that can go wrong with a for sale by owner before going ahead with a purchase.  I knew that the realtor was going to tell me everything they could think of that would go wrong in an attempt to tell me not to do it.  Free education! Hahah!

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                          • #73
                            It's not about doing the math, and it's not about having a different set of values.

                            It's about not having basic common sense.

                            It's not grasping that in order for this situation to work, all of the following have to work out just right:

                            1.  His wife has to like living in this new, unfamiliar, rural area.

                            2.  He has to like living in this new, unfamiliar, rural area.

                            3.  He has to like his job enough to stay there for many years.

                            4.  His employers have to like him enough to keep him there.

                            The odds of this working out in favor of staying are poor.

                            Also, he has no clue as to how expensive owning a home is.  He has no idea how much of a time sink it will be.  He doesn't realize how much work and/or money it will take to maintain 20 acres.

                            He doesn't realize that the 200k he thinks he's saving by buying this house will go towards increased interest costs on all his loans.  And despite what his father in law thinks, it's probably not a bargain in this area.  There are no bargains.  If it was such a great bargain, the real estate agent would buy it and flip it.

                            He doesn't realize that it will probably take a very long time and big loss to be able to sell this house.  Expensive houses like this can sit empty for years.   I'll bet the real estate agent knew exactly what house to sell him as soon as he came to town.

                            He doesn't realize that there will be a better house for sale in 3 or 4 years, when he's ready to buy, in the unlikely event that he still wants to stay in the area.

                            On top of all that there's some math:  The opportunity cost.

                            But as PT Barnum ( never really) said:  There's a sucker born every minute.

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                            • #74
                              I am empathetic to the OP though...When I was a new attending my wife and I were just as starry eyed about wanting a house and just as naive about money.  There was literally nothing that could have convinced us otherwise at the time.  We had to learn the hard way.

                              Fortunately for us we didn't have super expensive tastes and even though we delayed student loan payback, our house isn't a stretch for our income at all (we're at around 0.8X salary for the mortgage).  And we're really lucky we bought when home prices were still very low back in 2012.  Our situation was a bit different though in that we bought an old house in the city in need of total restoration.  I'm just thankful we weren't interested in big, expensive suburban homes.  That would have resulted in us wanting to buy something a lot more expensive like the OP.

                              If he were going for more of a "starter home" for lack of a better term, that was well under his budget (1X or less) and wouldn't hinder his ability to tackle his loans, etc, than I don't think it would be much of a problem.  Also, if he had already started working and could tell us he loved his job and his colleagues and that his wife loved the area, etc, then it would all be a different story here.  However, literally everything he's telling us is a red flag.

                              It's tough though once a couple has their hopes up and have even gotten to the point of shopping and visiting houses.  There's probably no turning back for them at this point.  Hopefully he'll get lucky and all the stars will align and things will work out just fine.  But, I do think at some point, regardless of how it works out, he'll wish he had delayed this purchase a bit.  Probably when the concept of net worth sinks in and he looks at his for the first time.  That's what did it for me.

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                              • #75
                                no reason why the OP cant wait one year and take his extra money (the difference from attending salary and his fellow salary) and put half for loans and half for down payment. If did this for one year (more time to understand location and see if likes job) then would be in better position to buy the house.

                                I agree with above posts as well, if he wants to jump from the ledge, let him. Some have to learn the hard way (assuming that they learn)

                                 

                                 

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