Finance and Debt Help for future dual physician household

[TBG13]

Hello,
Starting to plan budgeting. Will both be graduating residency in a couple years. Two physician income in high paying specialties. Average income likely 1M between us two. However, tagged on to that is 600K in debt (loans) plus 250k (own house). PSLF not an option as both of us are doing private practice.

Looking for some financial advice on the short and long term.

Our plans were as follows:
1. pay down debt with one person’s salary, live off other
2. Once debt free, plan to invest one salary and live off other for roughly 15-20 years.

main question would be the aggressive debt payment vs investing and slowly paying off over time?

open to any other strategies as well to set up future retirement!

[bovie]

Depends on your interest rate and comfortability with holding debt, really.

But I'd wonder if it might be a consideration to work in academics first to get PSLF, then go private.

Depends on how long your training is, of course--very different time would be needed at 501(c)(3) post-training for dual FM versus dual surgical subspecialties--but it might be worth considering.

Otherwise your plan seems reasonable. But you don't really have to split it by whose salary is being used for what.

It's all one pot of money--split it between debt service / life expenses / retirement investing how you best see fit.

[JBME]

are the two salaries comparable? I would challenge you to live off the lesser one.

Put 20% to retirement straight out of residency, or at least fill up all personal tax-advantaged space (401ks/457s maybe, Roth). Put 30% towards paying off the student loan debt, more if you can...though that will eat in to live off the rest of the 50% (that 50% also includes the taxes you pay on the income)

[Turf Doc]

Whatever you do, just make sure you actually invest the difference. If you could refinance to something like <3% I think I’d want to just invest the difference and let that sucker ride. Only getting a 3% guaranteed return on 600+k of principle might be too little for me. If you only had like 200k of debt then I wouldn’t care as much about paying it off instead. Of course if you can’t refinance lower because of rates or whatever and you’re dealing with 5%+ then paying it down seems attractive.

since you’ll make so much, save more than 20% and don’t get used to the monster numbers. Going for a 1:1 ratio of save to spend and you’re bulletproof

[TBG13]

Depends on your interest rate and comfortability with holding debt, really.

But I'd wonder if it might be a consideration to work in academics first to get PSLF, then go private.

Depends on how long your training is, of course--very different time would be needed at 501(c)(3) post-training for dual FM versus dual surgical subspecialties--but it might be worth considering.

Otherwise your plan seems reasonable. But you don't really have to split it by whose salary is being used for what.

It's all one pot of money--split it between debt service / life expenses / retirement investing how you best see fit.

Both are surgeon sub specialties. Salaries likely 400-600 for us each, likely higher for her.

[TBG13]

are the two salaries comparable? I would challenge you to live off the lesser one.

Put 20% to retirement straight out of residency, or at least fill up all personal tax-advantaged space (401ks/457s maybe, Roth). Put 30% towards paying off the student loan debt, more if you can...though that will eat in to live off the rest of the 50% (that 50% also includes the taxes you pay on the income)

Both of us likely will make similar salaries as surgeons. Do you think it would be best to use a wealth manager (like Morgan Stanley for example)? I really don’t know much about stocks or retirement.

[altadoc]

The answer is doing both (paying down debt and throwing money into retirement) simultaneously. When you first start saving and investing, the only thing that matters is your savings rate. So save as much as you possibly can - especially in pre-tax accounts while your income taxes with be exorbitant.

If PSLF is not an option, prioritize paying off that debt. It's a considerable number, but you can get that debt paid off in 5-6 years with an approximately $10k/month debt payment, given your family's income.

Debt is limiting. You've taken on this debt to increase your earnings, and now you'll reap the rewards. But unlike other investment debt, the interest is not deductible. It's not worth carrying on your books. Pay it off while saving prodigiously!

[JBME]

Both of us likely will make similar salaries as surgeons. Do you think it would be best to use a wealth manager (like Morgan Stanley for example)? I really don’t know much about stocks or retirement.

no! do not use morgan stanley. If you feel you would benefit from a wealth manager (personally I'd just digest the blogs on this site for free instead but that's not for everyone) then go to the recommended list on this site:

https://www.whitecoatinvestor.com/financial-advisors/

[Tim]

no! do not use morgan stanley. If you feel you would benefit from a wealth manager (personally I'd just digest the blogs on this site for free instead but that's not for everyone) then go to the recommended list on this site:

https://www.whitecoatinvestor.com/financial-advisors/

Your biggest challenge is optimizing dual private practice careers. What is good for the goose is likely to be less good for the gander. Objective Home

Make sure you both have LTDI.
Follow the above, but live like residents for 5 years.
Save 20% for retirement (you will need a taxable as well), throw the rest at the debt.
PP earnings are not flat. At some point you will probably have partnership buy in (more debt).
Your goal should be living like a resident and getting debt free with two big shovels.
With a low cost of living, in 5 years you will be positioned to become very very wealthy.
Deferred gratification will melt the debt away and remove virtually all risk.
Consider risk before returns.

[bovie]

Both are surgeon sub specialties. Salaries likely 400-600 for us each, likely higher for her.

How long is your training in total (residency + fellowship) for each of you?

[TBG13]

My training ends 1 year, hers 2 years.

[Tim]

My training ends 1 year, hers 2 years.

Every situation comes down to this:
Comp-taxes-retirement @20%= spending

You can spend however you wish. That includes paying debt or investing which benefit your NW.
Investing: just use a broad market index low cost fund. No need for an advisor.
If you live like a resident until both reach 2 yrs in practice or partnership, your debt will disappear and your path completely clear.

[F0017S0]

Live like a resident the first few years after training; nuke the loans, while maxing out all tax-advantaged spaces (that will likely be less than 20% of your pay, so the remaining percentage would go to brokerage to ensure you are at 20% during debt wipe out).

With the loans all gone, then plow those funds into the brokerage.

You don't need a "wealth advisor"; said advisor will just advise himself to take form your stock market winnings.

[TBG13]

Every situation comes down to this:
Comp-taxes-retirement @20%= spending

You can spend however you wish. That includes paying debt or investing which benefit your NW.
Investing: just use a broad market index low cost fund. No need for an advisor.
If you live like a resident until both reach 2 yrs in practice or partnership, your debt will disappear and your path completely clear.

sorry for the dumb response but what does
comps, taxes, retirement @20% mean?

[Tim]

sorry for the dumb response but what does
comps, taxes, retirement @20% mean?

Gross compensation - your actual income taxes - your retirement savings amount that should be at least 20%s of your gross compensation = amount you can spend on anything else.
Spending can be anything else including any outstanding loans, savings for any other additional purposes like a car or house or big vacation and the typical budget of housing, food, transportation or even hookers and blow! Basically, pay your taxes and yourself first. Just math of the narrative you will find in the forum and the blog.