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Max % of salary to spend on rent as an attending

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  • Max % of salary to spend on rent as an attending

    I just finished up training and will be renting for a few years before purchasing. It is currently me, my wife, our young child (<2yo) and small dog. We will likely be having another child in the next 1-2 years. We are definitely going to rent for the next 1-3 years until I'm certain my attending job is long term. But in the meantime, my wife wants a little bit of an upgrade from what we lived in with residency. I was just curious what a reasonable rent is based upon a percentage of income.

    -Residency housing (for three of us) in moderate to low cost of living area: ~1550/month

    -Attending housing: we moved and now will be living in a MCOL area.

    My guaranteed salary as an attending (independent contractor) is 300k (hopefully will be more) which equates to ~25k/month. Student loans are already paid off so we are doing quite well compared to my peers. My goal was homes in the 2-2.5k range but some were approaching 3k/month. Was curious the thoughts from the group what a reasonable number would be.

  • #2
    Assuming you don’t have any other debt (credit cards, etc.) Can you afford to do it? Yes. At that cost with your salary, you won’t put yourselves in too tight of a situation.

    Should you do it-that’s your call. 3k/month in a moderate cost of living area is more than I would spend. I would try to compromise with your wife and save the difference for a n emergency fund (if you don’t have one), adown payment for a house, to go on a vacation or something else.

    The other thing to consider is if and when you buy your house, the lifestyle creep will likely continue with regards to your housing tastes. The house you purchase will most likely be nicer, and almost certainly not less nice, than the house you choose to rent now.

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    • #3
      3k is definitely fine.

      We're moving from a MCOL major metro area with really nice apartments and amenities to a LCOL area. The new area has less "nice" apartments, thus no real competition. We're renting a similar apartment size with worse finishes and paying more when we move. Our current rent is $1700 for two bed. It's going up to $2k when we move. It's frustrating but not much you can do when you have limited options.

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      • #4




        I just finished up training and will be renting for a few years before purchasing. It is currently me, my wife, our young child (<2yo) and small dog. We will likely be having another child in the next 1-2 years. We are definitely going to rent for the next 1-3 years until I’m certain my attending job is long term. But in the meantime, my wife wants a little bit of an upgrade from what we lived in with residency. I was just curious what a reasonable rent is based upon a percentage of income.

        -Residency housing (for three of us) in moderate to low cost of living area: ~1550/month

        -Attending housing: we moved and now will be living in a MCOL area.

        My guaranteed salary as an attending (independent contractor) is 300k (hopefully will be more) which equates to ~25k/month. Student loans are already paid off so we are doing quite well compared to my peers. My goal was homes in the 2-2.5k range but some were approaching 3k/month. Was curious the thoughts from the group what a reasonable number would be.
        Click to expand...


        <20% for housing is fine.

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        • #5
          300k as an IC isn't the same after tax/after expense income as 300k as a W2 with benefits. Just make sure you know what your income will really look like, as your '25k/mo' is different than someone W2 25k/mo with employer provided benefits.

          So you'll 1099 300k, out of that will come (estimates, modify to your situation) 75k for expenses and business deductions (health, dental, licensure and CME, etc plus solo 401k). Depending on where you live, we'll ballpark 55k between federal (including self employment) plus state/local.

          So, your take home is about 14k/month.

          So, yeah, you can swing rent of 3k/mo. Whether or not that is a prudent financial decision is a personal choice for you.

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          • #6




            Was curious the thoughts from the group what a reasonable number would be.
            Click to expand...


            I think you should sit down and figure out:

            -ballpark of downpayment you hope to make eventually when you purchase + moving expenses + initial move-in expenses

            -other major things you want to put $ to in the next few years (Efund, retirement, cars) etc.

            And then sit down as a family and figure out how much you need to save each month to get to get there in 1-3 years.  One of the few $ arguments I've had with my spouse was when she thought I was being miserly about how much to spend on rent once the attending bucks were rolling in.  Turns out, she was right...luckily we sat down and figured it out and ended up going for the more expensive rental.

            Happy wife, happy life.  So lay out the numbers, show her, and make a decision together.

             

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            • #7
              $3,000 is well within your budget. You’re $25,000 salary will probably be $17,000 or $18,000 after taxes, assuming your wife does not work. Saving 20% of gross income would be $5,000 a month, leaving you with $12,000. Saving $1,000 per month per kid for 529 brings you down to $10,000. So spending $3,000 would leave you with $7,000 for the rest of your living expenses, which probably means your end up saving extra.

              -WSP

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