Another Loans During residency question…

[123doc]

Hi everyone, my wife and I have 4 kids and residency for surgical specialty (starting salaries im seeing around 400k+/-). Current total loans are 270k. Currently living in a mid to ever increasing cost of living city. We have enjoyed a very good rental opportunity paying well below the market averages but have just been informed by the land lord he will be repurposing the property and has given us 1 more year. After that I will have 2 years of training left.

Decided to browse apartments/houses for rent and couldn’t believe the prices. 3 bedroom close to the hospital (within 30 minutes) and in a safe (not “nice/fancy”) area are $2100-2400. My take home after tax is $3900. We can definitely make a 2 bedroom work with bunk beads which would help drop the price. But given the quite dramatic rise in prices, including housing, in our area my concern is 1 years time we may be in a pretty tight spot. I’m unable to moonlight at my program, and wife has considered working but childcare for 4 kids eliminates any benefit. We drive old paid off cars, we do subscribe to Disney plus (~$10/month), I have life/disability through white coat investor suggested providers, and otherwise don’t shop except to replace destroyed kids clothes. We also now qualify for WIC, which also will help.

I may be jumping the gun a bit, but trying to plan ahead. We are debt averse and will do what we can to avoid it, but any thoughts/ideas regarding this situation and the possibility of taking out loans to equal a few hundred bucks a month for 2 years? I almost Certainly could have family help without the expectation to repay, but I’m not sure how I feel about having family help.

Appreciate your thoughts!

[JBME]

you didn't say you'd entertain this but just to repeat the mantra here: don't buy a house. I would say you need to bite the bullet and live lean for 2 years. 2 years isn't long in the grand scheme of things. Consider not contributing to retirement beyond the match you might get. I wouldn't take a loan out to live your life. That means you can't afford what you got. Consider the bunk bed idea. Think that you've been getting quite the deal for years now and the jig is up. How old are these kids if you have 4? Aren't any in elementary school then? Could they do an after-school program , which is much cheaper than daycare? Put the youngest in daycare but you'd have less than 4 in daycare so your wife can work.

[123doc]

I’ll admit we did strongly consider buying a house at the beginning. We’d have a much lower monthly payment had we done that, but after further reading here (and after finding the good gig we’ve had until now) I talked myself out of it. Assuming the market keeps rising as quickly as it currently is in our area it may have been a good decision, but with so much Uncertainty both in the housing market and maintenance costs etc, im content with our decision not to.

Kids are young, only 1 is in school now, but the 2nd could begin around the time we’d need to move. So there is a possibility there for after school stuff like you mentioned. May be a tough sell as it’s very important to my wife, and me really, to be with the kids as much as possible during these early years. This has become more important to my wife with time as I have rarely been home with my schedule. Definitely a consideration though, especially part time. Or maybe find a couple with kids for some sort of babysitting swap.

A longer commute could also be a possibility and perhaps a necessity. We looked into a place where some friends live and rents have raised $300/month over the past year.

[Savedfpdoc]

You sure the no moonlighting thing is a hard rule? Maybe double check that. Don’t take out loans ! If family can help you out that may be the way to go.
also there are a lot of minimum wage type remote jobs right now, can you wife do some of those if can squeeze them in a few days per wk.

[White.Beard.Doc]

It sounds like the finances will be very tight for you until you finish training. I would recommend you consider the 2 bedroom option or the longer commute option to keep costs under control. Try to life hack to find a way to make it work for the next couple of years. Maybe leverage the fact that you are a doctor in training to get the new landlord to write you a long term lease that will carry you at a fixed rent until you finish your training. Having a reliable tenant is worth a lot to a landlord. Use that to negotiate.

Some friends of ours made the decision to live in some not so nice places for a few years to allow them to accumulate savings and build up their investments. They were both attending physicians but they lived on a very low budget. It was a conscious decision that allowed them to build their net worth and now they work part time and can easily afford a beautiful home. I mention this because being frugal can be challenging, and it goes against the typical American way to live it up and go into debt, but the frugal route can be so worth it when your plan to build financial freedom comes to fruition.

[CordMcNally]

You’re going to have to really write out your budget and it’ll be tight but I think it can be done.

[Tim]

Consider the farther out 2 bedroom. Depend on the parents and their situation, that is your potential backup plan. As long as they and you can actually handle the family dynamics.
I would avoid the complete non-repayment option. I decided to provide a monthly subsidy to my daughter. There is an amount. However, there is no repayment schedule or plan. $300-$500 per month for 2 years is not a ton. I did more for one year. I would repay it after you launch. I considered it an investment in her training. Act responsibly with the expenses, and I call it Dad’s Bank. The only term on the loan is she not “ghost” me or her mom. We just took a week in Cabo with her at her request. Still no payment on the subsidy, didn’t ask and never will. She is house hunting and likes her mom to go with her. We also “board” her dog occasionally. The family dynamics can work as long as both parties treat each other without expectations.

“close to the hospital (within 30 minutes) and in a safe (not “nice/fancy”) area ” This was extremely important to me. She was locked into less than desirable rental options and was headed that way.
I found out and she asked Mom come up. My terms were Dad’s Bank is open. Tell me how much monthly subsidy you need. Some parents truly want to invest in their children. It can work without strings.
There is a downside. Now as an attending she can afford expensive tastes. It’s her budget. She listened when I told her to save 20% for retirement. Probably because I listened to her need for an amount much smaller. I consider that an investment in her financial education as well as medical training.
Your family can be a viable subsidy option. Depends on the dynamics. Only you can judge if that works for your situation. That is a much better option than a third party loan. I highly value the 30 minute commute and safe but not fancy place, glad to subsidize.

[123doc]

Thanks for all the responses. Some really great ideas. I didn’t think about potentially negotiating a longer lease. We spent some time this weekend looking at places and were surprised to find some decent/safe pockets in what are generally considered not so great areas, and the 2 bedrooms are generous in size and the price is right. Commute is longer, and it’s one of the busier freeways, but it’s definitely an ok option and would require no additional money outside of my salary.

[Fugue]

Tough situation. The good news is you only have to get through two years, but the combination of one income and 4 young children makes this very challenging. I’m going to assume there’s no daycare opportunities at the hospital you work at, I know there are some hospitals that offer childcare at discounted prices.

-make a very detailed line by line budget, sit down with your wife, and be ruthless about cutting out anything that is not necessary

-I don’t know what your wife’s degree is in, but I would think creatively about ways she can generate even a small amount of income. Can she work from home? (Probably not practical with needing to attend to small children). If she can even offset the cost of childcare by a few hundred dollars, that could create some wiggle room for you. There are many freelance gigs that one can do if creative and flexible enough

-I understand wanting to spend quality time with children but you’re in survival mode right now, if there are afterschool programs take advantage of them

-if a second income does not work out, then I would look at the smaller house further out. I hate this option because assuming you’re working long residency hours a one hour commute is going to have a tremendous impact on the quality of life.

It’s temporary. make up the retirement savings and create a plan for your loans when you graduate, but right now it’s more about survival

[Tim]

“It’s temporary. make up the retirement savings and create a plan for your loans when you graduate, but right now it’s more about survival”

If the parents have any plans on leaving you in their estate, taking grand kids on vacation to Disney etc. , funding 529’s , any $16k gift tax exemptions, or even a sibling whose career has taken off, this is an example where my take is charity begins with family. Needed funds for a short term purpose sooner than later is an appropriate time for family to be generous.
The string I would have for you would be accepting any gift as a pay it forward. You have an obligation when an extended family has a need. One hour commutes would be a terrible price to pay in your situation. Does anyone in your family actually know about your need and might be inclined? If they don’t know, they can’t be generous.
My point is communication is not begging. My niece has a $200/mo separate guest house through family connections. Moving to Dallas, needs a place to stay, an unused guest house through an uncle. Perfect! I tell my kids, if you have a problem or quandary, tell me sooner than later. Does anyone (even mentors) know you are looking for housing? Cast a wide net. And pay it forward.

[123doc]

Yes pushing the commute out is worrisome for me. Really not sure what a long commute would feel like after being up 30+ hours, but maybe just like residency in general there are plenty of people who have done it and I’d be able to do it too.

Again, I appreciate all the help. I ended up being pretty concerned about this over the weekend but luckily it was my golden weekend and we got some time to see places and find some acceptable options. I think we are coming to terms with what survival means for us as well, as we have been pretty lucky in our current spot.

[Tim]

I received early morning phone calls after 30+ hr shifts. “Just talk to me, keep me awake”. 1 hr sucks and is dangerous. Call me any hour of the day.
I would rather get a call sooner than from someone else later. Call your wife, I am sure she feels the same way. “Getting into the car.”
Glad it’s working out.