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  • #16
    The trip isn't a problem by itself, BUT in conjunction with these other concerns, it might be:

    Why a house so soon?  Do you have family in the area?  If so, fine, but otherwise, I wouldn't have gotten a house until after making partner.

    How do you expect to be FI on $2 million?  At 4% a year, that's 80k a year.   Would you really be able to live like that for the rest of your life?  Yes, your loans might be gone, but that's still a very limited budget for someone who's taking a 10k trip right after residency.  Remember, 4% SWR  is based on a 30 year time horizon.  At 40 yo, you will have a 50 year retirement.

    Next, have you accounted for inflation?  In 10  years, 2 million will be 3 million.    What about kids?  Maybe you don't plan on having any, but if you do, I just don't see 80k being anywhere near enough.   I would plan on 4 to 5 million, at least.  And if you keep taking vacations, it will take you a lot longer to get to FI than you think.  You can have anything you want, just not everything.

    So by all means, take the vacation.  But I would take another look at your overall saving and spending and long term goals and make sure that they are realistic.  I get the sense that they are not.  You don't want to wake up 20  years from now and only then realize that you've been spending too much, too soon.

    Comment


    • #17










      I’m in my first year out of training, making low 300s currently. We have some significant debt – about 275K left in student loans (refinanced on 5 year plan at 3.5%, we are 6 months in), a little under $300K on our mortgage, and an expected partnership buy in a couple of years away. I’ve got about 150K saved in retirement plans so far.

      I strongly dislike debt. There are lots of personal finance articles about how it should be treated as an emergency – here is WCI’s version: https://www.whitecoatinvestor.com/your-debt-emergency/

      However, our future is promising. Our income is already good and expected to increase more with partnership. We live comfortably on 70-80K year. We drive old cars and will never need a bigger house than the one we already have. I mostly like my job. I made a detailed spreadsheet projecting our finances going forward – assuming 4% real return and no major disruptions to income, the student loans and partnership buy in will be gone within 5 years, and we’ll reach a FI number of $2M in about 10 years (in my early forties).

      So here’s the issue. I would very much like to take my family on an extended overseas vacation, with an estimated price of $10K. I’m between two schools of thought. The first says it’s foolish to spend $10K on a vacation when I have all that debt. The second says it’s foolish to deny myself something that will increase happiness just to save more money, when we’re already on track to be FI in my 40s.

      I imagine I’m not the only one who has been through this sort of debate. Any guidance from the veterans about finding the right balance?
      Click to expand…


      I wouldn’t and didn’t take a $10K vacation in that situation. I was living like a resident and residents can’t afford a $10K vacation. Did we take vacations the first year out of residency? Yes, lots of them. But all of them together didn’t add up to $10K. Now, could you take this vacation and still be all right eventually? Sure. Could you buy a brand new car on credit and still be all right eventually? Sure. Could you move into the “doctor house” right out of training and still be okay? Sure. Could you put the kids in private school and still be okay? Sure. Can you do it all and still be okay? Almost surely not.

      You’re only 7 months out of training, you have a negative net worth, and you’re already having trouble living like a resident. It’s your money, you can do what you want, but there are consequences to your decisions.

      https://www.whitecoatinvestor.com/choice-and-consequences/

      Situations like yours illustrate why I preach “live like a resident” so much. Because it’s hard. A resident makes $50K. You’re already spending $80K, a 60% raise and now you’re talking about going to 80% in your FIRST year out of residency. If you continue to inflate your lifestyle at this rate, you won’t be FI in 10 years. If you can somehow stop the hedonic treadmill at some point, then sure, $10K isn’t going to significantly change anything. But this is how lifestyle inflation/hedonic treadmill works. The future starts “looking promising” and all of a sudden you’re spending money you haven’t even made based on that promise, all while you’re still in actuality poorer than the bum living under the aqueduct. Earned income isn’t wealth, don’t confuse the two.

      Good luck with your decision.
      Click to expand…


      Thank you for your feedback. It is helpful for me to have to defend my position. My only quibble with your post is that I would not say I am “having trouble” living like a resident. I can and did live on about $50K per year in training, and that included a two week vacation in Europe. Living like a resident is not my goal anymore. We have a goal of baseline FI in ten years, did the math and made a conscious choice that roughly 75k / year until debt free would be a good level to enjoy some nicer things while still staying on track for our goal. To me that’s a lot different than being unable to stay within a budget. Even with the trip we’d probably be at about 80K annual spending, as baseline spending is high 60s and this trip would replace a couple of smaller cheaper vacations.

      Your points about hedonic adaptation and new cars, doctor house, private school etc are all valid. But those things have very little appeal to me. I don’t want a $10K dining table either. The relevant hedonic adaption would potentially be getting used to nicer travel, and if I reach FI at 44 instead of 42 because I took a bunch of nice vacations with my family, I think I can live with that trade off.
      Click to expand...


      I'm a big fan of knowing where you stand, knowing where you want to go, and making a conscious decision.

      Who are we trying to kid? You're going to take this trip no matter what anyone on this forum says. So go take it and enjoy it. And keep making informed, conscious decisions. Everything is a trade-off. Dining table or Paris vacation. FI at 44 and more travel or FI at 42 and less travel. There's no right or wrong. But beware that hedonic treadmill. It is very real. The slower you can grow into your income, the wealthier you'll be.
      Helping those who wear the white coat get a fair shake on Wall Street since 2011

      Comment


      • #18


        We have a goal of baseline FI in ten years, did the math and made a conscious choice that roughly 75k / year until debt free would be a good level to enjoy some nicer things while still staying on track for our goal. To me that’s a lot different than being unable to stay within a budget. Even with the trip we’d probably be at about 80K annual spending, as baseline spending is high 60s and this trip would replace a couple of smaller cheaper vacations.
        Click to expand...


        I suspect that achieving FI in your 40's may or my not be possible but then you need to consider what is important to you in life. Not everyone needs to achieve the FI in their 40's. It  is better to enjoy life along the way to your eventual retirement.

        As long as you have a plan to paying down the student loan and stick to it, that is fine. Maybe if you feel that you need to satisfy your inner conscience to OK that $10K trip, moonlight for 3-4 weekends and you will make up the money you spent.

        Comment


        • #19


          I wish I could find an extended overseas vacation for $10K. Most of mine cost three times as much if not more.
          Click to expand...


          I've taken what I think are a lot of great vacations, but I don't think I've ever spent $10k on one. Definitely not $30k.

          We honeymooned with an 11-day land & sea trip / cruise to Alaska. We did a Galapagos island hopping tour. We spent three weeks in Europe in my first year out of residency. More recently, we spent 9 days in Paris & Reykjavik ($4,300 for a family of four), and three weeks in Mexico.

          I would definitely take the vacation, but I'll bet you could have a wonderful time at half the price if you don't go for top-of-the-line accomodations / transportation / guided excursions, etc...

          Cheers!

          -PoF

          Comment


          • #20
            First off, I would question why you have to spend so much on your trip. I would absolutely go to Europe, but if you have the flights covered with points you should be able to spend a lot less. $100 a night or less with AirBnb, $100 a day on food and $50 per day on other stuff is easy. We are doing 12 days in Portugal this fall for about $1000 (flights covered with points) in fixed expenses plus food. In all likelihood it will be around $2000 since we like to eat well and have some other fun experiences. This past summer I went with my fiance to Indonesia after finishing residency. We splurged on 2 nights at the Ritz Carlton Reserve Mandapa for over $700 per night. It was great. But I had even more fun on a quirky little clunky wood pirate ship cruising around the Komodo islands all inclusive scuba diving, exploring remote islands etc for $75 a night. I'm glad I had that experience but doubt I'll go back to the big name places frequently and found I just like more down to earth accommodations. Even my 3 week stay for 2 in Indonesia was under 4k including some fancy hotels and multiple massages every day...so I really don't think you need 10k to have a good time.

            Second, do you have the chance to moonlight or take on extra shifts? Do an extra 1-3 shifts (or 5-10 if you really want to take you 10k vacation) in the next few months and then you have it paid for. No delay in your trip towards financial independence and financial stability.

            I'm getting married in April and likely spending about 20k total between wedding and honeymoon. I hate spending all that money but doing 17 shifts instead of 15 per month in EM for the last 6 months will likely even it out and not affect long term planning too much.

            Comment


            • #21





              I wish I could find an extended overseas vacation for $10K. Most of mine cost three times as much if not more. 
              Click to expand…


              I’ve taken what I think are a lot of great vacations, but I don’t think I’ve ever spent $10k on one. Definitely not $30k.
              Click to expand...


              Time to start taking better vacations!  Just don’t tell your readers  :P

              Comment


              • #22




                The trip isn’t a problem by itself, BUT in conjunction with these other concerns, it might be:

                Why a house so soon?  Do you have family in the area?  If so, fine, but otherwise, I wouldn’t have gotten a house until after making partner.

                How do you expect to be FI on $2 million?  At 4% a year, that’s 80k a year.   Would you really be able to live like that for the rest of your life?  Yes, your loans might be gone, but that’s still a very limited budget for someone who’s taking a 10k trip right after residency.  Remember, 4% SWR  is based on a 30 year time horizon.  At 40 yo, you will have a 50 year retirement.

                Next, have you accounted for inflation?  In 10  years, 2 million will be 3 million.    What about kids?  Maybe you don’t plan on having any, but if you do, I just don’t see 80k being anywhere near enough.   I would plan on 4 to 5 million, at least.  And if you keep taking vacations, it will take you a lot longer to get to FI than you think.  You can have anything you want, just not everything.

                So by all means, take the vacation.  But I would take another look at your overall saving and spending and long term goals and make sure that they are realistic.  I get the sense that they are not.  You don’t want to wake up 20  years from now and only then realize that you’ve been spending too much, too soon.
                Click to expand...


                Yes, we are near family in a low cost of living city. Obviously no guarantee on making partner, so that was a risk, you're right.

                Short answer is yes I think we could live on 80K forever. That's more than the US median household income, and it won't include a mortgage. Longer answer is I find it hard to believe I'll never make another dollar after my early 40s. So I consider 2M "baseline" FI and the plan is to adjust for more if I get close and find I want to increase spending, or if health insurance costs have completely blown up, or some other unknown variable pops up. Part time work may be appealing in that scenario.

                Comment


                • #23













                  I’m in my first year out of training, making low 300s currently. We have some significant debt – about 275K left in student loans (refinanced on 5 year plan at 3.5%, we are 6 months in), a little under $300K on our mortgage, and an expected partnership buy in a couple of years away. I’ve got about 150K saved in retirement plans so far.

                  I strongly dislike debt. There are lots of personal finance articles about how it should be treated as an emergency – here is WCI’s version: https://www.whitecoatinvestor.com/your-debt-emergency/

                  However, our future is promising. Our income is already good and expected to increase more with partnership. We live comfortably on 70-80K year. We drive old cars and will never need a bigger house than the one we already have. I mostly like my job. I made a detailed spreadsheet projecting our finances going forward – assuming 4% real return and no major disruptions to income, the student loans and partnership buy in will be gone within 5 years, and we’ll reach a FI number of $2M in about 10 years (in my early forties).

                  So here’s the issue. I would very much like to take my family on an extended overseas vacation, with an estimated price of $10K. I’m between two schools of thought. The first says it’s foolish to spend $10K on a vacation when I have all that debt. The second says it’s foolish to deny myself something that will increase happiness just to save more money, when we’re already on track to be FI in my 40s.

                  I imagine I’m not the only one who has been through this sort of debate. Any guidance from the veterans about finding the right balance?
                  Click to expand…


                  I wouldn’t and didn’t take a $10K vacation in that situation. I was living like a resident and residents can’t afford a $10K vacation. Did we take vacations the first year out of residency? Yes, lots of them. But all of them together didn’t add up to $10K. Now, could you take this vacation and still be all right eventually? Sure. Could you buy a brand new car on credit and still be all right eventually? Sure. Could you move into the “doctor house” right out of training and still be okay? Sure. Could you put the kids in private school and still be okay? Sure. Can you do it all and still be okay? Almost surely not.

                  You’re only 7 months out of training, you have a negative net worth, and you’re already having trouble living like a resident. It’s your money, you can do what you want, but there are consequences to your decisions.

                  https://www.whitecoatinvestor.com/choice-and-consequences/

                  Situations like yours illustrate why I preach “live like a resident” so much. Because it’s hard. A resident makes $50K. You’re already spending $80K, a 60% raise and now you’re talking about going to 80% in your FIRST year out of residency. If you continue to inflate your lifestyle at this rate, you won’t be FI in 10 years. If you can somehow stop the hedonic treadmill at some point, then sure, $10K isn’t going to significantly change anything. But this is how lifestyle inflation/hedonic treadmill works. The future starts “looking promising” and all of a sudden you’re spending money you haven’t even made based on that promise, all while you’re still in actuality poorer than the bum living under the aqueduct. Earned income isn’t wealth, don’t confuse the two.

                  Good luck with your decision.
                  Click to expand…


                  Thank you for your feedback. It is helpful for me to have to defend my position. My only quibble with your post is that I would not say I am “having trouble” living like a resident. I can and did live on about $50K per year in training, and that included a two week vacation in Europe. Living like a resident is not my goal anymore. We have a goal of baseline FI in ten years, did the math and made a conscious choice that roughly 75k / year until debt free would be a good level to enjoy some nicer things while still staying on track for our goal. To me that’s a lot different than being unable to stay within a budget. Even with the trip we’d probably be at about 80K annual spending, as baseline spending is high 60s and this trip would replace a couple of smaller cheaper vacations.

                  Your points about hedonic adaptation and new cars, doctor house, private school etc are all valid. But those things have very little appeal to me. I don’t want a $10K dining table either. The relevant hedonic adaption would potentially be getting used to nicer travel, and if I reach FI at 44 instead of 42 because I took a bunch of nice vacations with my family, I think I can live with that trade off.
                  Click to expand…


                  I’m a big fan of knowing where you stand, knowing where you want to go, and making a conscious decision.

                  Who are we trying to kid? You’re going to take this trip no matter what anyone on this forum says. So go take it and enjoy it. And keep making informed, conscious decisions. Everything is a trade-off. Dining table or Paris vacation. FI at 44 and more travel or FI at 42 and less travel. There’s no right or wrong. But beware that hedonic treadmill. It is very real. The slower you can grow into your income, the wealthier you’ll be.
                  Click to expand...


                  Ha! You're right, I'm leaning towards going. But I haven't made a final decision or booked anything yet.

                  It is interesting that the responses have shifted from an initial "only 10K?" to now several "why so much?". We are traveling with kids so the cheap vacation ways of our past are somewhat over. I don't want to stay in a hotel. The 10K estimate would be three weeks in a nice kid-friendly place in a major city in Europe. Keeping the trip but changing the city is definitely an option though to lower the overall cost. I freely admit, we don't need to spend 10K to have a nice trip. It's a luxury.

                  Comment


                  • #24




                    To get







                    Dayman, are you the fighter of the Nightman?

                    Champion of the Sun ?

                    A Master of Karate?

                    https://www.youtube.com/watch?v=0V784AiYtG8
                    Click to expand…


                    i genuinely feel bad for people who don’t get this.
                    Click to expand…


                    To get it…


                    Click to expand...


                    The most Sunny move possible is to just keep talking about this while the rest of the members of the forum discuss the question at hand.

                    We're both men of the law. We spar and jabber but ultimately we respect each other.

                    Comment


                    • #25
                      I think the most important thing people have said here is to beware the treadmill.  I did well for years at being careful of the treadmill while I was paying off my loans.  Then I paid off my loans, and within 2 years, i fell face-first onto the treadmill in some ways that I can't really undo at this point (house being the big one, and a $25k car I didnt need but doesn't make a lot of sense to sell, having incurred the off-the-lot depreciation).   Woke up and realized I had gone from being pretty frugal to spending more than $100k a year without really realizing it.  I'll be fine if I don't let it get worse (or constrain it--it will get worse, because I have a kid on the way), but beware the treadmill!

                      Comment


                      • #26
                        Spending money on family holidays is the one "luxury" that I always include in my budget, twice per annum. You're on the right track toward FI and I don't think this will slow your progress based on your expenses and income mentioned above. Enjoy your vacation and time with family. Just be mindful of your 10K budget. European vacations can creep up in price fast.

                        Comment


                        • #27
                          You do you.   You have the numbers -- make sure all the savings and basics are covered -- including those two little ones future and your retirement.  IMHO, $2M isn't FI.

                          You may not feel doctor life creep comes up, but you're already hitting a $10k vacation.   Future ski trips aren't cheap nor european anything vacations.

                          That said, plan the plan and execute that plan.  Your Debt is NOT an emergency, but I wouldn't really call yourself debt adverse to allow for it to be around for several years and taking a pretty good vacation.

                          Walking the 'live like a resident' line is very hard.  The slide often starts with that vacation.....

                          Comment


                          • #28
                            Saving >20% plus paying off the school loans in 5 yrs or less then taking a one time splurge is not "jumping on the treadmill". Setting up a huge mortgage with financed furniture and buying a new luxury car on payment is. We don't all have to be millionaires in our 30s. I like the option myself but we are showing some forum bias here. I think the OP should be given major props for having a FI plan in place (the 4% real return is fair). Dave Ramsey is wrong. No debt is good but you have no emergency. Add the interest into your trip to make it a more rational decision. If at 4% interest it would mean you lose $400/yr by not paying into the loan and delaying the trip. Is the timing worth it to your family?

                            Comment


                            • #29


                              The 10K estimate would be three weeks in a nice kid-friendly place in a major city in Europe.
                              Click to expand...


                              Well, that changes everything. That's not just a vacation -- that's borderline slow travel / micro-sabbatical like we're doing a few times a year now. We're heading to Hawaii for 23 days in February. I think of it less as a vacation, and more like where we'll be living in February.

                              One thing about a trip of that length is that you'll be spending much, much less back home. You'll still have the mortgage, but you won't be using your vehicles, your utility bills will be lower, you won't spend a dime on food back home, etc... So maybe it's a $10,000 trip, but it may only cost $5,000 or $6,000 more than just staying put.

                              With AirBNB / VRBO, you can save quite a bit by staying outside of the city center in a more residential area and taking public transportation into the city or wherever you want to go. When you only have a week, staying right in the heart of the city makes good sense, but when you've got the luxury of time, you can spend a little time on a train.

                              Best,

                              -PoF

                               

                              Comment


                              • #30





                                The 10K estimate would be three weeks in a nice kid-friendly place in a major city in Europe
                                Click to expand…


                                Well, that changes everything. That’s not just a vacation — that’s borderline slow travel / micro-sabbatical like we’re doing a few times a year now. We’re heading to Hawaii for 23 days in February. I think of it less as a vacation, and more like where we’ll be living in February.

                                One thing about a trip of that length is that you’ll be spending much, much less back home. You’ll still have the mortgage, but you won’t be using your vehicles, your utility bills will be lower, you won’t spend a dime on food back home, etc… So maybe it’s a $10,000 trip, but it may only cost $5,000 or $6,000 more than just staying put.

                                With AirBNB / VRBO, you can save quite a bit by staying outside of the city center in a more residential area and taking public transportation into the city or wherever you want to go. When you only have a week, staying right in the heart of the city makes good sense, but when you’ve got the luxury of time, you can spend a little time on a train.

                                Best,

                                -PoF

                                 
                                Click to expand...


                                Yes, that's exactly how I want it to be. Just going to live somewhere else for a little while. This is something I've always planned on doing "someday", but recently that thought has changed to "what am I waiting for?"

                                Have a great time in Hawaii!

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