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Reducing monthly contributions of gross income to retirement from 20% to 15%

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  • #31
    Originally posted by hraza2222 View Post

    Yep. I actually completely forgot about needing to rent for a year prior to buying a home. We're just so eager to have a nice home but should definitely wait.

    I don't know if I even qualify for a doctor's loan because I'm an IMG and am an MBBS degree, not MD.

    No, I do not have an emergency fund. My financial plan had me developing a 6 month emergency fund after I become an attending.
    wrong approach. you need an emergency fund today. It will grow when you become an attending. If you have existing down payment money, reclassify it as part of your 3-month emergency fund

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    • #32
      Originally posted by JBME View Post

      wrong approach. you need an emergency fund today. It will grow when you become an attending. If you have existing down payment money, reclassify it as part of your 3-month emergency fund
      Man, I feel like my wife would not be happy about that. She's already somewhat upset I don't want to decrease the retirement contributions to 15% to increase savings for a downpayment, and on top of that I want to eliminate the downpayment savings altogether and make it into an emergency fund?

      I'm having a hard time convincing my family that retirement isn't just "some thing to deal with in the way future". It's also the growth opportunities that exist in retirement funds too.

      Comment


      • #33
        Originally posted by hraza2222 View Post

        Man, I feel like my wife would not be happy about that. She's already somewhat upset I don't want to decrease the retirement contributions to 15% to increase savings for a downpayment, and on top of that I want to eliminate the downpayment savings altogether and make it into an emergency fund?

        I'm having a hard time convincing my family that retirement isn't just "some thing to deal with in the way future". It's also the growth opportunities that exist in retirement funds too.
        I think this statement has a much more troublesome predictive value for you financial future than any specific percentages that you are or are not putting towards retirement. The fact that you and your wife are not on the same page about saving for retirement, what else to save for and when, need for emergency fund/plan, etc. is the real problem here.

        I know this may be cultural and may not be a popular thing to say, but I can’t imagine getting married, not contributing financially at least initially, and making my husband feel stressed or worried about not allocating the money he is earning towards my personal goals. Perhaps there is a reason she is not working (disability, student, lack of work visa) but if that is the case her job needs to be figuring out how to economize and make due with less until you are able to comfortably save and pay for more and accomplish your goals together, as a team.

        I think the first step is to get on the same page with your spouse.

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        • #34
          Sounds more like fear that he's deprioritizing the financial goals that are important to her. Agree on getting on the same page.

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          • #35
            Originally posted by hraza2222 View Post

            Man, I feel like my wife would not be happy about that. She's already somewhat upset I don't want to decrease the retirement contributions to 15% to increase savings for a downpayment, and on top of that I want to eliminate the downpayment savings altogether and make it into an emergency fund?

            I'm having a hard time convincing my family that retirement isn't just "some thing to deal with in the way future". It's also the growth opportunities that exist in retirement funds too.
            well I was not one of those here saying you shouldn't decrease your retirement contributions to 15%. I agree with what Anne said....just be aware that it's a long process. I can tell you for years my spouse and I were not on the same page and we still aren't 100% but we've come a long way. It's been a combination of my wife finally being okay maxing out all retirement space as long as I also promised not to question every $100 here-and-there charge.

            Short-term why don't you try the "cut the difference solution." I think not have an emergency fund is a real problem. Sounds like your wife wants you to prioritize saving for a down payment. Why don't you agree to decrease retirement contributions from 20% to 15% and use that to build an emergency fund rather than taking "existing" down payment money to put into an emergency fund? Either way, your emergency fund and down payment money should be in a savings account. Money is fungible. If you're truly in a dire money situation and your wife has a heart and also has some logical sense, you can dip into the down payment fund to cover whatever the emergency is.

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            • #36
              If your roth is not back door, then aren’t you able to pull out the original contribution amount without penalty? that would make it an emergency fund as well.
              “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

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              • #37
                I thought you can't pull from any Roth without penalties unless you meet one of the few criteria (e.g. buying a new house), unless you're past age 59.5.

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                • #38
                  Originally posted by hraza2222 View Post
                  I thought you can't pull from any Roth without penalties unless you meet one of the few criteria (e.g. buying a new house), unless you're past age 59.5.
                  Again, no offense, I have a problem accepting the rationalization. Might be a cultural difference.
                  Your push back is always finding a way to repurpose funds to spend.
                  First retirement to house downpayment. Now Roth for emergency fund for what? Spending on an emergency.
                  You need to finish what your plan is according to the priorities agreed upon. Behavioral finance frictions exist. Retirement savings aren’t respected or valued. The result will be a disappointment that the end result will be less funds for retirement. Where did they go? They were spent along the way. There will always be something.
                  The only way retirement savings works is a consistent savings and prudent investment building of your financial capital. This is necessary for her retirement as well as yours.
                  Twenty to thirty years without fail. No withdrawals, no repurposing, stick to your plan.
                  You don’t pay for an “emergency” or a “house downpayment” out of retirement savings.

                  https://www.physicianonfire.com/tale-of-4-physicians/

                  The spouse needs a plan. She needs to support deferred gratification so she will have the savings expected when you retire.

                  No pass on the math. The above link illustrates the financial impact. You and her can end up poor or not where you planned. She needs to understand and support the endpoint. A comfortable retirement.

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                  • #39
                    To be fair, I mentioned the roth emergency fund possibility. i have 4k mentally earmarked in my roth from 20 years ago, pre-backdoor. Went through some tough times before training but never broke the glass. For some people it works.
                    “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

                    Comment


                    • #40
                      Originally posted by Tim View Post

                      Again, no offense, I have a problem accepting the rationalization. Might be a cultural difference.
                      Your push back is always finding a way to repurpose funds to spend.
                      First retirement to house downpayment. Now Roth for emergency fund for what? Spending on an emergency.
                      You need to finish what your plan is according to the priorities agreed upon. Behavioral finance frictions exist. Retirement savings aren’t respected or valued. The result will be a disappointment that the end result will be less funds for retirement. Where did they go? They were spent along the way. There will always be something.
                      The only way retirement savings works is a consistent savings and prudent investment building of your financial capital. This is necessary for her retirement as well as yours.
                      Twenty to thirty years without fail. No withdrawals, no repurposing, stick to your plan.
                      You don’t pay for an “emergency” or a “house downpayment” out of retirement savings.

                      https://www.physicianonfire.com/tale-of-4-physicians/

                      The spouse needs a plan. She needs to support deferred gratification so she will have the savings expected when you retire.

                      No pass on the math. The above link illustrates the financial impact. You and her can end up poor or not where you planned. She needs to understand and support the endpoint. A comfortable retirement.
                      That was a very helpful post. No offense taken at all. You're absolutely correct here.

                      Comment


                      • #41
                        Originally posted by blippi View Post
                        If your roth is not back door, then aren’t you able to pull out the original contribution amount without penalty? that would make it an emergency fund as well.
                        That is correct, you can pull out direct contributions the next day, the next year, the next decade, with no tax or penalty. But I wouldn’t depend upon investments for an e-fund.
                        Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                        • #42
                          Originally posted by hraza2222 View Post

                          Man, I feel like my wife would not be happy about that. She's already somewhat upset I don't want to decrease the retirement contributions to 15% to increase savings for a downpayment, and on top of that I want to eliminate the downpayment savings altogether and make it into an emergency fund?

                          I'm having a hard time convincing my family that retirement isn't just "some thing to deal with in the way future". It's also the growth opportunities that exist in retirement funds too.
                          Don't take it the wrong way but it clearly is a cultural difference and the priorities difference between you and your spouse. If you don't resolve it it can lead to more issues in the long run.

                          I too have MBBS as my basic degree. It is equivalent of MD in this country. I have a MD too, which is more akin to AB, (board certification in internal medicine ). I am not sure how it will affect physician loan. You visa status and whether you have a green card or US citizenship has more bearing.

                          You want to save for retirement and understand the power of compounding. You might even want to start 529 as soon as a child arrives. Unfortunately your spouse wants a nice house and not an apartment ( you talk about sharing mortgage - are you living with parents?) . She might like a nice vehicle to go with her doctor husband status. How to pull off both and keep all parties happy is the question. I have seen this craving for material things more common among IMG spouses ( both men and women ). No wonder every Indian doc and his wife want to drive a Mercedes or a Lexus ( surprisingly not much love for BMW).

                          Make sure you can meet in a middle ground without destroying your marriage. Good luck.




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                          • #43
                            Originally posted by Kamban View Post

                            Don't take it the wrong way but it clearly is a cultural difference and the priorities difference between you and your spouse. If you don't resolve it it can lead to more issues in the long run.

                            I too have MBBS as my basic degree. It is equivalent of MD in this country. I have a MD too, which is more akin to AB, (board certification in internal medicine ). I am not sure how it will affect physician loan. You visa status and whether you have a green card or US citizenship has more bearing.

                            You want to save for retirement and understand the power of compounding. You might even want to start 529 as soon as a child arrives. Unfortunately your spouse wants a nice house and not an apartment ( you talk about sharing mortgage - are you living with parents?) . She might like a nice vehicle to go with her doctor husband status. How to pull off both and keep all parties happy is the question. I have seen this craving for material things more common among IMG spouses ( both men and women ). No wonder every Indian doc and his wife want to drive a Mercedes or a Lexus ( surprisingly not much love for BMW).

                            Make sure you can meet in a middle ground without destroying your marriage. Good luck.



                            Yeah I've already discussed with her. She's very understanding and gets the plan. She doesn't 100% agree with me but she does understand the concept and is willing to compromise a little, as am I.

                            I'm a US citizen so hopefully that with the MBBS will allow a doctors loan if needed, but I will try to avoid the doctors loan as well.

                            She doesn't necessarily want me to drive a Mercedes or Lexus. We own a Nissan Rogue and she's OK with it.

                            Appreciate the help!

                            Comment


                            • #44
                              Originally posted by hraza2222 View Post

                              Man, I feel like my wife would not be happy about that. She's already somewhat upset I don't want to decrease the retirement contributions to 15% to increase savings for a downpayment, and on top of that I want to eliminate the downpayment savings altogether and make it into an emergency fund?
                              sorry, I am a little late to respond here... I was the one that asked about the emergency fund in the previous post. I am surprised to hear that you are saving 20% to retirement and saving towards a downpayment, but have no emergency fund? I'd suggest you re-read https://www.whitecoatinvestor.com/th...coat-investor/

                              As a stay-at-home parent with NO income (lots of work and not lots of getting paid ), I am shocked that your spouse would not want an emergency fund. Sounds like more discussions are needed in this area. I actually have to rein myself in and not be over conservative with the emergency fund. What if something happens to you the income owner? That should be #1 on your financial list - to provide for your family in case something happens to you. My husband (physician) is ok with us having a large (and probably too conservative) emergency fund because it helps me sleep at night. I have a plan for what I will do if he becomes disabled and one for if he dies and this plan does not include dipping into retirement funds (penalties etc - yes, taxable could be sold if necessary, but that is not what I am referring to here.). It is my responsibility to be prepared so that I can provide and take care of my children.

                              Also, based on " Yeah I've already discussed with her. She's very understanding and gets the plan. She doesn't 100% agree with me but she does understand the concept and is willing to compromise a little, as am I." It sounds like you are telling her the plan and the WHAT. She might be more receptive if you talk about the WHY and then set out the steps to get there together.

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