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For today’s Money Snapshot, we’re talking salary, net worth, debt, and more with reader N, a doctor who lives in a HCOL area.
She noted, “My husband and I are both working on paying off our loans using Public Service Loan Forgiveness, as we both work for government agencies. We both have approximately five years left and are crossing our fingers, toes, really any body parts, that this government program continues and we will have our loans forgiven at the end of our 10 years of qualifying payments.
“I know there has been some controversy on high earners like physicians qualifying for the program, but I see it as an incentive to do the community-based work that I love, instead of working in private practice where I’d be making twice my income and not benefiting the community who need my services most!”
We got a few requests from readers to launch our own “money diary” series, so we’ve asked willing readers to fill out a form with lots of details about debt, spending, saving, and more! If you’d like to fill out the form and be considered for a future personal money snapshot, please click here to submit your response! You can see a PDF of the questions if you want to review them ahead of time. See others in the Personal Money Snapshot series here.
Please remember that this is is a real person who has feelings and isn’t gaining anything from this, unlike your usual friendly (soul-deadened, thick-skinned, cold-hearted, money-grubbing) blogger — so please be kind with any comments. Thank you! — Kat
Location: HCOL area
Household income: $320,000
Net worth: My husband’s and my net worth is around negative $600,000 (mortgage and student loans!).
Net worth when started working: As a physician, I “started” work as a resident at age 27; however, at that time I was renting (not owning) an apartment, and NOT putting money away for retirement as I felt I could not spare any due to living in a HCOL area, so net worth at that time was student loans, approximately negative $300,000.
Living situation: I own a 1,000-square-foot condo, and my monthly mortgage is $1,600 (with additional HOA/condo dues of around $500 per month).
Because N wrote her Personal Money Snapshot before the pandemic, we asked her for an update. Here’s what she wrote:
This was sent in a year ago, so life has definitely changed — thanks, 2020! My job transitioned to virtual telehealth appointments fairly well during the pandemic — some days I work from home and some days still go into the office (masked unless my office door is closed). There has been some concern that my job may be in jeopardy as state/local budgets might suffer for 2021 due to the pandemic, but for right now my income is steady and I’m hopeful for next year. The pandemic also helped me confirm that my decision to be child-free is the right one for me, I can’t imagine working from home while taking care of children and assisting with virtual learning like so many others have to do!
What does your debt picture look like?
Student Loans: $330,000 (As I am paying student loans with PAYE and will be meeting requirements for PSLF, my interest on student loans continues to go up, which is why this amount is more than I started with!)
Cars (one for me, one for my husband): $50,000
My student loans are from medical school. (I was very fortunate to get scholarships covering all my expenses for undergrad.) These are a necessary evil, as the loans have provided me with an education in order to have an immensely rewarding job that I love! I also currently have car loans, which I never thought I would have (I grew up with parents that carried no debt and always paid cash for new cars); however, the particular car I was looking at did not have much difference in price for new vs. a few years old, and I plan on driving it for 10+ years.
How much money are you spending each month to pay down debt?
To pay off the above (mortgage, student loans, cars), approximately $4,500.
How did you pay for school?
Loans, glorious loans!
Home debt: Share your theories and strategies with us.
I took out a 30-year adjustable rate mortgage for $300,000 that is set up to go up in interest rate next year. Luckily, due to my husband’s job, we did not have to pay PMI even though our down payment was small. We ended up with the ARM because we bought when I was still in residency training and knew that we could handle the increase in monthly payment when the interest went up, as this would be after I started working as an attending.
The interest rate is set to increase next year, but we are looking to refinance before then. At the time we bought our home, we were renting a one-bedroom apartment in our area, and every year rent would go up, so soon we were looking at small homes to buy, seeing that our monthly mortgage/home expenses wouldn’t be much more than our rent. I really love our home, and now that I make more money, I’m so glad that we bought a place that’s “cheap” for our area and will give us the freedom to save more money in the next few years (instead of upgrading and being house poor)!
Savings, Investments & Retirement
How much do you save for retirement?
$19,000 (max) in 401k. Employer doesn’t match, unfortunately. A small percentage of my paycheck is also taken out by my employer to contribute to a pension fund. (I plan to stay in this job long enough to be vested so I will have some sort of pension, though small, in retirement.)
How much do you save outside of retirement accounts?
My husband I save approximately $3,000 per month. Currently, we are just transferring it into a high-yield savings account, but when we build this up to a certain amount, we are looking to invest it.
Talk to us about investments.
We have met with a financial advisor twice and are looking at options to invest.
N updated us on her investment situation since submitting her Money Snapshot:
My husband and I put around $30,000 to ETFs, and also I maxed out a backdoor Roth IRA for this year. We also were able to pay off my car and a small private student loan that my husband had, too — so with those debts off the table for 2021 we have a goal of adding $1,500 monthly to ETFs.
Do you have an end goal for saving or are you just saving for a rainy day?
Saving for a rainy day! An eventual goal would be to move into an old, historic rowhome and do more luxury travel.
When did you start saving seriously? How has your savings strategy changed over the years?
Started saving seriously when I became an attending — by putting max in 401k. I am now looking into putting $6,000 into an IRA and also investing in the stock market.
What’s the #1 thing you’re doing to save money, limit spending, or live frugally?
I live pretty simply — not a lot of clothes shopping, no coffees/lunches out. I would rather have that money for vacations or investments. I also plan on increasing my savings/retirement accounts (getting an IRA) every time I get a raise in the future to avoid income creep.
How much do you have in cash that’s available today?
How much do you have in cash that’s available in a week?
How much is in your “emergency fund,” and did you include it in the previous question?
Yes, $25,000 available immediately in a separate savings account.
How much do you have in retirement savings?
$30,000 in mine, $100,000 combined
If property values (home, car) are included in your net worth, how much are those worth?
Only have about $30,000 equity in our home; no other property values included in net worth.
How much do you spend on the following categories on a monthly basis?
Restaurants, bars, takeout, and delivery: $300
Clothing and accessories: $200
Rent/living expenses: $3,000
Health care – premiums and other costs: I am not sure how much I pay for health care, as it is automatically taken out of my paycheck, but it’s around $75 monthly.
What’s your spending range for these things? What’s your average?
Vacations – Range: $1,000-$6,000
Vacations – Average: $3,000
Charity – Range of donations: $500–$1,000
Charity – Average donation or giving amount: $750
Individual items of clothing – Range: $10–$100
Individual items of clothing – Average: $50
Apartment or house – Range: $1,500–$2,000
Apartment or house – Current main residence: $2,000
Car or other vehicle – Range: $20,000–$50,000
Car or other vehicle – Current main vehicle: $30,000
Any other large personal expenses?
I have one dog, and per month I pay around $230 for his expenses ($180 for dogwalking, $50 for pet health insurance.)
My husband has a personal trainer that is around $800 monthly (this is the only way he makes himself work out, so we see it as an investment in his health), and I belong to a yoga studio ($100 per month) and also take adult dance classes ($100 per month.)
Also, I have three separate insurance policies:
1. One whole life insurance policy (approximately $300 per month)
2. One term life insurance policy ($200 per month) — More expensive, because if I outlive the policy I will get back the cash amount I put in the policy; I think of it as a “stuffing money under the mattress” plan, as it would be better off invested, but if I die in the next 30 years then the payout to my husband will be large.
3. A disability income policy ($200 per month)
We asked N if she had any advice for readers about insurance decisions:
I made my decisions on life insurance because I am the breadwinner in my marriage, so though I don’t have kids to worry about if I pass away, I want my husband to be able to pay off the mortgage and have enough money to take some time off of work, if needed. Now that I am a year wiser I realize that the whole life insurance is a bad investment (would rather put that money into ETF investments); however, I haven’t cancelled the policy yet. As far as disability income insurance — again, as the breadwinner, I wanted to make sure that my husband and I could maintain our current expenses/quality of life in case I become disabled and cannot work in my current field. It feels difficult to part with several hundred dollars a month for “nothing” but peace of mind, which I guess is worth a lot!
Fill in the blank on this question: I could save _____ if I stopped ______, but I don’t because _______.
I could save $1,000 if I (and my husband) stopped our fancy gym memberships/training, but I don’t because these fancy things are the only things keeping us working out/active!
If you’re married: When was your wedding, how much did it cost (total), and how much did YOU pay?
5+ years ago — it cost around $5,000 and we paid for it all.
Tell us about your wedding!
We had a very small wedding! Just our immediate family and a few close friends for attendance in the ceremony and a “beer and cupcake” reception at a local bar for our in-town friend group. We decided to do this as my husband has a very large family (and has a culture in which the bride/groom are responsible for paying for lodging for those traveling in from out of town for weddings) and the expense would have been astronomical, especially as I was still in residency training and our family was not chipping in money. (This turned out to be a good thing, as it was our money and so I could do whatever I wanted; no one else had a say because they weren’t paying!) I wore a beautiful dress, my husband had his custom-fitted tux, we got amazing pictures, and I loved every minute of it.
At any point in your life to date, has inheritance played a role in your money situation?
My father died when I was five years old, so my mother received SSI benefits for me and my sister until we were 18 years old. I almost count this as an “inheritance” because this money helped my mother/stepfather buy a home in an area where the public schools were very good (we came from an inner-city school system that wasn’t great) and allowed me to flourish in high school and get a full ride to my college, thus setting me up for a secure future with a good job and less school debt.
Do you have a general money strategy?
I grew up without a lot, so I have to force myself to spend money, so I would say my money strategy right now is “treat yo’ self, you can afford it!” (but this doesn’t always happen due to guilt.)
We asked if N could elaborate on her feelings about money:
Ooof — this is a tricky one. I feel guilty everyday about my immense privilege — I make a ton of money for very little work. (I grew up with parents/extended family who did intense physical labor for very little pay, so in comparison my work is EASY.) The guilt got worse this year as my husband and I have gone about our life as “normal” as possible during the pandemic — we both are able to mostly work from home, our jobs/income aren’t in immediate jeopardy, our retirement accounts/investments have done well, and we have saved money since no travel and very minimal eating out.
This year we did lean into donating more money/time to various causes including BLM and local food banks — this helps somewhat with the guilt. Also, I try not to think of my circumstances as normal; how I live is NOT normal nor attainable for the vast majority of the people in the world, and I can use my position to help lift others up, either by donating my time and money or by using my voice to lift up marginalized communities.
Time vs. money — do you spend money to save time (e.g., cleaning service)? Do you donate your time instead of money? What else does this phrase mean to you?
Yes! I sometimes go on the toll expressway to save time commuting (can be up to $20 or so), and also we have a biweekly cleaning service at $220 monthly.
What are your favorite resources for personal finance?
I love blogs such as this one, also The White Coat Investor (for the physician crowd).
What advice would you give your younger self about personal finance?
I wish I would have put some (any!) money in retirement during residency training. Luckily I am somewhat catching up now, but the little bit extra would have helped!
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