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  • Am I crazy?

    Just need to know if I'm out of line. Just accepted first post-residency attending position in a VHCOL. Combined expected income will be 350k with ample ability to boost up with extra shifts, and my wife has a pretty clear path to a large boost in the next 2 or so years. I have 295k in outstanding student loan debt (currently on hold, 6.8% interest). My wife and I (both 29yo) with our 2 young children, have a decent nest egg. We have 100k for a down-payment, and roughly 40k efund, with 135k divided between Roth, taxable, and 403b, roughly 10k in a 529. We lived incredibly frugal during residency, paid off our car, and consolidated to one car to save extra money, despite also being in a VHCOL area and are pretty proud of the saving we've done.

    The question is what to do with the cash? We have moved 6 times in 6 years, and are fed up as it takes a toll on family morale. Rent will be roughly 3600/mo, and we're eyeing a down-payment for a house in the next 2 years (housing starts around 750k). My wife hates to part with the house fund, but my gut is telling me to sink it all into the loans and just grab extra shifts to replenish quickly.

    Where should I start with this hot mess?

  • #2
    Hold the cash for a year, them decide on buying a house. Remember you'll have a lot of cash coming in so you can use that to pay off loans while still keeping a 20% down payment ready.

    I would not buy before you've even started your first real doctor job.

    Comment


    • #3
      if you can find spend 2 years living frugally, paying down debt, and then drop a $100k downpayment on a $750k house you are probably going to be in good shape tho.

      the way you wrote the post makes me guess this isn't going to be the plan.

      i don't think it's wise to be sitting on $100k when you have 300k at 7%.

      the smart play here is
      a) rent
      b) put $100k towards loans
      c) live like a resident until loans are paid off

      can rapidly rebuild downpayment or do an MD loan.

      Comment


      • #4
        Originally posted by MPMD View Post
        if you can find spend 2 years living frugally, paying down debt, and then drop a $100k downpayment on a $750k house you are probably going to be in good shape tho.

        the way you wrote the post makes me guess this isn't going to be the plan.

        i don't think it's wise to be sitting on $100k when you have 300k at 7%.

        the smart play here is
        a) rent
        b) put $100k towards loans
        c) live like a resident until loans are paid off

        can rapidly rebuild downpayment or do an MD loan.
        We're absolutely not looking to buy before I start my attending position, and are both on the same page that a home purchase will likely occur late in my second year as an attending. My wife just has a rough time parting with the money we had earmarked for a house. My gut was to drop a large sum, say 100k, whereas hers is to unload about 30k and keep the rest as a base for a down-payment. I understand that cash will flow more freely next year but it seems to be a struggle for her to come around to that realization. Especially when we'll be strapped with 3.6k in rent and roughly 3k in childcare.

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        • #5
          Originally posted by FishingMD View Post

          We're absolutely not looking to buy before I start my attending position, and are both on the same page that a home purchase will likely occur late in my second year as an attending. My wife just has a rough time parting with the money we had earmarked for a house. My gut was to drop a large sum, say 100k, whereas hers is to unload about 30k and keep the rest as a base for a down-payment. I understand that cash will flow more freely next year but it seems to be a struggle for her to come around to that realization. Especially when we'll be strapped with 3.6k in rent and roughly 3k in childcare.
          i think paying off those loans quickly w/ such high fixed expenses and a lack of desire to deplete the house fund is going to be pretty hard, but it wish you luck.

          just be careful your plan to pay down loans doesn't falter and then get combined w/ a $1.2M house purchase next year.

          having lived in several VHCOLA, $750k doesn't usually get you the kind of place a 2 professional couple w/ 2 kids wants to live.

          Comment


          • #6
            Dual doctors? She deserves it, let the money sit in cash for a year or two, you’re seriously going to be fine in the long run, even though all you can see is the short-term view right now. You have done a fabulous job of managing your money so far and I predict you are not going to have the financial issues in the future that a lot of dual doctor couples have. Pat each other on the back and relax about money just a tad.
            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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            • #7
              Originally posted by jfoxcpacfp View Post
              Dual doctors? She deserves it, let the money sit in cash for a year or two, you’re seriously going to be fine in the long run, even though all you can see is the short-term view right now. You have done a fabulous job of managing your money so far and I predict you are not going to have the financial issues in the future that a lot of dual doctor couples have. Pat each other on the back and relax about money just a tad.
              Thanks, actually single doc house. Spouse is actually in business. I'm leaning towards a compromise of putting a good chunk towards loans while continuing to save as aggressively as we can given our fixed expenses.

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              • #8
                I vote sink it into the loans at 6.8% or leave it in a money market/ short term bond tax free bond fund if you know you are going to use it for a house down payment in 1-2 years. I'd be eager to purchase a home if I had had 2 kids and my rent was 3,600 and I had to move 6 times in the past 6 years. Maybe purchase a home next year, but realize that it won't be your "forever" home. I'd probably just aim for a home to live in for 4-5 years while you pay down your student loans and build up a decent down payment for wherever you'd really like to live.

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                • #9
                  Marriage is about compromise and she's been through a lot as a young mom and resident spouse the past few years. So I don't think it's crazy to hold on to the 70k like she wants for the downpayment. Save 20% to retirement and throw as much as you can to the loans and see where you are in 2 years. If you're making good progress in what are likely to be some of your highest spending years (assuming no private school after daycare ends) you will be in fine shape to buy your first home.

                  Comment


                  • #10
                    Originally posted by jfoxcpacfp View Post
                    Dual doctors? She deserves it, let the money sit in cash for a year or two, you’re seriously going to be fine in the long run, even though all you can see is the short-term view right now. You have done a fabulous job of managing your money so far and I predict you are not going to have the financial issues in the future that a lot of dual doctor couples have. Pat each other on the back and relax about money just a tad.
                    What financial issues do you feel are common among dual doc couples?

                    Comment


                    • #11
                      Perhaps a naive question, but can you refi the loan for a better rate? At that rate, you’ve got to prioritize paying it down. At 3%, maybe you pay a little bit, invest a little bit and save a little bit for a house.

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                      • #12
                        Originally posted by Turf Doc View Post

                        What financial issues do you feel are common among dual doc couples?
                        Over spending, mostly, from which flows a variety of other issues. I’m not referring to most WCI readers, though.
                        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                        Comment


                        • #13
                          Originally posted by FishingMD View Post

                          My gut was to drop a large sum, say 100k, whereas hers is to unload about 30k and keep the rest as a base for a down-payment. I understand that cash will flow more freely next year but it seems to be a struggle for her to come around to that realization. Especially when we'll be strapped with 3.6k in rent and roughly 3k in childcare.
                          This is a relationship/risk tolerance question not a math problem. Your guts are telling you different things and neither gut is right or wrong.

                          You aren't crazy....but....you describe your situation as a "hot mess" when you're actually going to be fine regardless of what you choose if you two keep up the financial discipline you've developed during your training.

                          Try reframing it this way- Regardless of what you choose- putting all 100K into loans and building back up house fund with extra shifts VS keeping 70k house fund and paying off student loans with extra shifts - in a 5 years you'll look back and realize the difference is basically a rounding error in your overall financial position.

                          Doing it your wife's preferred way might actually leverage your gut to work for you- use the anxiety and urgency you feel to motivate you to pick up those extra shifts and watching the balance on the loans go down as you chip away at them may be more motivating for you than watching the house fund go up!

                          Best of luck starting the new job!


                          Comment


                          • #14
                            Originally posted by mpdoc View Post

                            This is a relationship/risk tolerance question not a math problem. Your guts are telling you different things and neither gut is right or wrong.

                            You aren't crazy....but....you describe your situation as a "hot mess" when you're actually going to be fine regardless of what you choose if you two keep up the financial discipline you've developed during your training.

                            Try reframing it this way- Regardless of what you choose- putting all 100K into loans and building back up house fund with extra shifts VS keeping 70k house fund and paying off student loans with extra shifts - in a 5 years you'll look back and realize the difference is basically a rounding error in your overall financial position.

                            Doing it your wife's preferred way might actually leverage your gut to work for you- use the anxiety and urgency you feel to motivate you to pick up those extra shifts and watching the balance on the loans go down as you chip away at them may be more motivating for you than watching the house fund go up!

                            Best of luck starting the new job!

                            That's actually an interesting point, and probably a realistic scenario for me. It just seems like a lot of money that's taken what seems like a while to accumulate while saving >50% of our salaries.

                            Comment


                            • #15
                              Why are your loans at 6.8%? are you planning on refinancing them once the payments start back up again?

                              I would use the money or at least a majority of it to pay down the loans and this is a perfect example of where a physician mortgage could be useful. You have better use for your money right now.

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