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  • #16
    Welcome OP!

    Moved 6 times in 6 years during residency? That's an indicator of taking at very least 2 years to hold and search for right home in right place.

    PSLF? Wondering why you haven't moved on the high loan rate to consolidate even if payments on hold as accrual still happening.

    VHCOL housing can be VERY expensive and $750k budget often doesn't get you past a condo in most VHCOL cities.

    Watch the temptation for spending. With kids getting older that'll be the primary source of spending creep.


    • #17
      Originally posted by FishingMD View Post

      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.
      It might be helpful to run the numbers (even back of the envelope/spreadsheet) and come up with projections for the two scenarios - pay off loans in one chunck vs keep savings liquid and pay off in smaller increments based on cash flow. You'll have to make a few assumptions including on whatever you're planning on for student loans (eg, refi and what rate you think you'd get), what amount/month you think you'll bring in doing extra shifts, anticipated savings per month after housing/childcare. I would be really surprised if the delta were more than a few thousand between the two. The 100K seems like a huge amount of money- and it is! - but the actual difference to your net worth based on these two choices is going to be much smaller. Once you do that then you can decide if the net cost/savings is worth the price of spousal happiness! Full disclosure - my spouse and I disagree over prioritizing paying off our primary mortgage (him - because he's highly debt averse) vs investing in taxable account (me - because math, obviously!) after maxing out all our tax advantaged space. When I start to get antsy about this I take a step back and realize 1.) we're going to be able to retire early and be just fine regardless of what we do and 2.) I realize that the possible unrealized gains don't keep me awake at night but the mortgage does keep him up and it's a small price to keep him happy.


      • #18
        Originally posted by StarTrekDoc View Post

        PSLF? Wondering why you haven't moved on the high loan rate to consolidate even if payments on hold as accrual still happening.
        Just an FYI, interest rates are set to 0% during the covid pause so no interest is currently accruing on fed loans.


        • #19
          Originally posted by goldenchimpy View Post

          Just an FYI, interest rates are set to 0% during the covid pause so no interest is currently accruing on fed loans.
          You have done very well. Reframe this discussion to past, present and future?
          Why are both of you relying on “gut feel”?
          That is crazy!
          $350k combined income. You are in for a gut check. Go figure your net. Taxes and 20% retirement, own occ, healthcare and insurance will take a big bite.
          Spending is what is left. That needs to cover living expenses and any debt.

          $295k student loans, and the answer is?
          $750k mortgage in two treat and the answer is?
          The question is how are you planning on financing $1,045k debt in two years?

          Going to add a second car (likely) go on vacation? Replace current car? Family entertainment? Vacations? Furnish the “new house”? Child care?
          How much property tax and maintenance on the new house?

          Debating how $100k should be split is crazy. You will have emotional debates and gut feel responses until your agree on a budget.

          Right now, student loans are approximately equal to mortgages. Hope is not a plan.
          Make a plan. I don’t care what interest rates are now, I care about making a plan you both Agee on. Do NOT confuse retirement savings with other savings. Mortgage should be 2x gross as a limit. You will debate car loan or paying of debt. The big rocks are student loans, housing (rent vs mortgage) and transportation (don’t plan on financing.

          In a VHCOL area, $350k doesn’t go as far as your or her “gut feelings”.

          Set goals and expectations on realistic numbers.
          Is there a difference between between $100k cash in two years? Yes, even physician loans can require some down payment and cash in the bank. You might not qualify for that mortgage and no one knows the interest or house price.

          Refi the student loans in Dec, Jan or even Nov.
          Actionable advice now. Purely a tactical decision. One or two months interest is insignificant.
          Plan your strategy for years, $350k comp it takes years to fund the startup cost for new attending. Things will be fine as long as trade offs are made according to the family plan.
          It is crazy to make $1m debt decisions on gut feel.


          • #20
            Originally posted by FishingMD View Post
            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?
            Not too big of a mess.
            New job? Smart move is to rent for a year. Make sure jobs are stable before buying.
            what would i do?
            1. save cash and as soon as they start charging interest again pay off loans. Guaranteed 6.8% is difficult / impossible to beat. I would refinance if you can get a lower rate but i would still put the 100k here.
            2. Rent for 1-2 years to ensure happy and stable with jobs
            3. invest (max out 401k etc.)(save 20% of gross)
            4. save slowly for down payment but this is last on my list.
            5. buy some flowers, something nice for wife. Take her to dinner. Explain you are renting to improve stability and mitigate risk, not to be a cheap rascal.


            • #21
              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.
              MPMD right here. (i mean correct, not a political position)
              More importantly, FishingMD, what type of fishing do you do?
              Salt? Fresh? Surf? Kayak? Boat?


              • #22
                I had a similar situation in my first 2 years out of residency. Loan burden was higher, but combined income was similar, and we were living in a VHCOL area. We had also lived in 5 different places over the prior 6 years.

                We decided to rent, and it was SUCH a great idea. This was going to be a more medium-term city that we thought we'd be living in, but we moved after 2 years. Between rent, childcare, and student loans, there wasn't a ton left over. However, we paid off my student loans in < 5 years, now are living in house we bought in a MCOL area, and have a significant increase in cashflow that we are using towards retirement/investing/fun.

                I definitely don't regret paying off the student loans, especially when we were living in a VHCOL area where money doesn't seem to go as far with your current income leve.


                • #23
                  Somewhat of an update. In the 2 months since I posted this, we managed to hustle and pay down 28k in loans while growing our investments an additional 30-35k. Loans are refinanced at 2.7% and I will continue to pay them down while reinvesting the rest to capitalize on the low-interest loan.

                  In the interim, wife got a large promotion with stock as well. We've decided to purchase over rent. Our reason being we haven't found anything for less than 4k/mo. 2 children and dogs limits our options. We're not afraid to put down roots since we will be near family, where we both grew up. Job opportunities are plentiful for both of us and public schools are first-rate.


                  • #24
                    Good luck with the home.

                    More importantly: what type of fishing do you do?

                    Salt? Fresh? Surf? Kayak? Boat?


                    • #25
                      Originally posted by Tangler View Post
                      Good luck with the home.

                      More importantly: what type of fishing do you do?

                      Salt? Fresh? Surf? Kayak? Boat?
                      Salt, have a boat and few kayaks as well. Mostly long island in the sound and near shore.