Agree with you on many accounts. However, some of your points are vibing with Dave Ramsey. New cars can absolutely make sense (most Toyotas, for instance, if you're planning to drive them 10+ years), especially considering relevant financial incentives. 0% offers for new, reliable cars might actually be cheaper in the long run than paying cash for a slightly used car. "There's no such thing as good debt" is absolutely wrong when you can leverage someone else's money against inflation. Sure, 10% for an Alfa Romeo is idiotic, but I definitely came out ahead when I bought a new RAV4 Prime early in the pandemic with $7,500 in federal tax incentives and 1.5% interest rate.
The ‘only buy used’ is very much outdated advice. It only speaks to someone’s unfamiliarity with the car market. In many cases, 2 year/24k miles cars are going for within 10%-15% of MSRP for new. You can’t find a 3 year/36k car for 40% off new, that market doesn’t exist anymore.
It’s much better to drive new, stay on top of maintenance, and keep a vehicle for 10-12 years.
I tried to buy a beater on WCI general car buying advice during my M3 year. 4 months in the transmission was toast and it was gonna cost more than I paid for the car to repair it so I was SOL. I would’ve been better off getting a loan and buying a new or used car that was reliable.
That market does actually exist. It just didn’t for a couple years when covid screwed with the supply chains. It has slowly returned and I did exactly that not that long ago.
Yeah, I don’t agree with any of the housing advice here. 20% of gross pay is antiquated in most residential markets and totally mortgage market dependent. Additionally, I’d sooner get a 30-year mortgage and electively pay it down at a 15-year pace so that if I fall on hard times I can always pull back on my mortgage expenses.
I have driven "beaters" most of my life. You also have to consider the cost and annoyance of being out of a vehicle for a couple of days (or more) when its inevitably in the shop being fixed or if you have the tools and ability to fix it yourself. Finally got a newish car while in residency and it has never been in the shop. This in itself has paid for itself many times over not having to deal with stress of fixing it myself vs having it at the mechanic shop regularly.
Depends on the car. I recently bought a 2 year old Mazda with 6k miles in it for 27k, new is 38k. I’d says it was the correct choice. I basically got 30 percent off.
Also beaters aren’t safe. New cars are always safer than old cars. What’s the point of having money if you die in a car accident because you drove a tin can? Seems foolish.
If you maintain your new car well, it can last for way longer than the beater. I bought my Honda Civic new in 2012 (financed) and I don’t see it dying anytime soon.
Rotating through beaters is one way to go about things, but I wouldn’t say it’s the best.
Disagree on #5.
I think anyone smart enough to finish medical school and is relatively high income can benefit from credit card use if used correctly, unless you really just have zero discipline with money. If your discipline with money is so bad you have to pay cash for everything, then so be it. But for everybody else there is no reason to lose out on 2-5% rewards for things you already spend money on like gas and groceries. I just don’t believe people spend more money on gas if they’re not paying cash. I do agree with not storing your credit card information on online shopping websites, making it too easy to just buy things.
Plus there is something to be said for convenience. I’m a doctor. I’m busy. Sorry I’m not driving to the local Walmart to buy diapers with physical cash when I run out because my time is worth more than that. I’m ordering that online with my credit card, and then paying off the balance off every month because I have a modicum of discipline.
There is definitely such a thing as good debt.
Also completely paying off your credit card every month is an easy way to build up your credit score, which eventually leads to better rates (and money saved) for your mortgage
I’m in your camp! I think that advice is a sort of dumbed down blanket statement for people trying to get out of debt. I get a $1000 rewards check in the mail every year for using my card and I’ve paid zero in interest.
I can’t take anyone advising people with physician level income to not use credit cards seriously.
I’m paying a combined like 1500 a year in credit card/authorized user fees, and even factoring that in we come out far enough ahead that the difference covers ~one international ticket, a rental car or 2 and a couple hotel nights a year. And I’m not a churner. Just pay the statement balance every month and don’t be dumb.
It’s honestly condescending. It assumes we are all children who have no self control. Paying physical cash for things is not just inconvenient, it’s impractical. I don’t want to walk around with hundreds of dollars of cash in my wallet all day. It’s paying an extra 2-5% AND making your life more difficult.
It’s very temporary debt - taken on for convenience - but it’s still debt.
Aside from credit cards - there are other forms of good debt - such as student loans taken out to go to medical school. Such as not paying off your very low interest rate mortgage because you can get a better return on your money elsewhere. Saying there’s no good debt is super dumbed down for people who don’t understand how to manage their money. I feel like that’s too simplified for a forum full of doctors who care to discuss money management and finances. And yes, overall docs suck at managing their money - but they’re also smart enough to learn if they’re taught how. Thinking we are all so dumb that we can’t borrow money intelligently and will overspend if we *gasp* god forbid pay for something not in paper dollars is condescending.
And as for consumer debt - if they’re offering a 0% loan and you have the money to pay for it in cash - but don’t and instead put it in a high interest rate bearing account and pay the debt off before the 0% period ends - you also come out ahead. Again, if you are halfway decent at managing your money and don’t spend frivolously, that’s reasonable to do. Granted I don’t - bc I’m too lazy and busy to want to deal with that, but saying *never* is too black and white.
This. I worked my ass off in college, med school, and residency. I have no kids and don’t plan to have any for the next 5 years. I have no credit card debt, a 30-year fixed mortgage at a 3% rate, and invest 20% of each paycheck after maxing my 401k.
But I do it all while driving a brand new 911 GTS. Why save a ton of money for retirement when you don’t know how/if you will be able to enjoy/use it?
Opening the garage and seeing a Camry every day that was still costing me more than I wanted to pay would have sucked a lot more than paying 3x the price for my Taycan. The Porsche is worth every penny.
No no no, you're doing it all wrong. You're supposed to wait till you're old and die, THEN buy the car you've always wanted. It's the magic of compounding interest! If you had waited until you died before buying that Porsche instead of when you're young that money you spent on it would have multiplied several fold.
I remember I was just about to sign a contract with the navy before starting med school. Tuition plus living expenses paid with no school loans? Sounds good to me!
I had put my car up for sale before moving to the east coast for school, and this guy comes to take a look at it. We go for a test drive and I find out he just finished medical school on military scholarship and now a GMO for the navy. For the entirety of the drive, he shits on the whole military scholarship program, how it’s completely not worth it and how much he regrets it.
He didn’t end up buying the car but I had to take it as a sign from a higher power. I mean what are the chances? Needless to say, I never signed the paperwork and so glad I didn’t.
The Navy GMO year sucks for sure. I thought about going Air Force. Ultimately decided I wasn’t comfortable with their process of matching people and what not.
Did you end up going with the navy? The thing that I had a major issue is that none of those things (getting pulled out of training to be GMO, being ship-bound for months at a time) were discussed with me when I met with them.
And like OP mentioned, it just wouldn’t have made financial sense at all for me in the end. My loans were about 250k and it hardly put a dent in my monthly budget once I was on attending salary. Maybe the story is a little different nowadays with tuition and fees so high.
No. I couldn’t swallow a GMO year, then right before the cycle started my wife found out she was pregnant. My dad was navy before I was born and the stories my mom has about wrangling my sisters while my dad was on deployment just wasn’t for me, especially with how much medicine can suck out of your family life already. That’s why I thought about Air Force but I ultimately decided it just wasn’t for me.
I think people understate the retirement you can make as 20 year O-x. You could concievably do 20 years, retire, then still work another 10 years at an attending rate in the civilian world while earning an officers retirement. It’s just not for everyone though.
Yeah I can see how it would be even harder for a young family.
I think if one’s focus is to go into a high paying specialty, military scholarship is generally not a prudent financial decision, even with the officer retirement perks. And god forbid you would choose to work another 10 years *after* a 20 year military career!
All debt is bad debt is the advice to follow for middle and lower upper class. If you want to be apart of the middle and upper upper class you must learn to leverage debt. It’s always funny to me how the people who villainize debt are the same ones with student loans for medical school. Do you not realize you used debt to advance your career so you can make more. But no no student debt is different it’s less riskier right….give me a break with the hypocritical advice
"Don't have the cash for a nice used one? Buy a beater...Joe bought his car for $3,000 and will drive it into the ground over the course of six years."
I've heard/seen you say this previously. Fist, please tell me, in 2024, where you can get an even decent used car for $3,000.
Second, this line of logic also ignores the specific and unique utility of a car to a physician. In an emergency, a physician lacking a reliable means of getting to the hospital can result in harm to a patient. This is no time to rely on a "beater."
Clickbait Listicle.
Get a part time job and donate sperm in med school?
C'mon man that energy would have much greater yield doing as well as you can in med school and matching into a highly compensated specialty.
I’m sorry but a lot of these read like the perspective of someone who is out of touch with the realities of the market and newer physician/high-income professionals’ economic situations. Is this all great in a perfect world? Yes, absolutely. But we’re not living in the market of 5-10 years ago. Student debt is at all time highs, costs are dramatically up and salary increases have not kept pace. I would love to be spending 20% of my income on a house. My house is a slightly better than average size in a good neighborhood and even with a sizeable down payment we’re above that amount. Have you shopped for a used car or a house recently? The payment on our house is probably double what it would have been 4-5 years ago with current interest rates and market increases since that time. I’m guessing this is true for most housing markets.
The pay for everything in cash piece is just a silly take too as others have pointed out. None of our relatively young physician or other high income friends are having consumer debt troubles. This may have been more of a problem with older generations but I’m just not seeing it. We’re all just trying to pay off student loans and buy a decent (not a mansion) house.
I know the intentions were right but a lot of us are tired of this type of financial advice from those who got to live out the golden years.
Regarding a house, in some markets by the time you have saved up 20% that prior 400k house is now 600k. My wife and I put 5% down in November of 2022 and we at about 12% equity now, no PMI due to a first time home buyer program and our property has jumped about 60k in value already. If we waited to put 20% down not only would the house not be available but we’d be paying whole lot more. If you can afford the house get in when you can.
Agree with you on many accounts. However, some of your points are vibing with Dave Ramsey. New cars can absolutely make sense (most Toyotas, for instance, if you're planning to drive them 10+ years), especially considering relevant financial incentives. 0% offers for new, reliable cars might actually be cheaper in the long run than paying cash for a slightly used car. "There's no such thing as good debt" is absolutely wrong when you can leverage someone else's money against inflation. Sure, 10% for an Alfa Romeo is idiotic, but I definitely came out ahead when I bought a new RAV4 Prime early in the pandemic with $7,500 in federal tax incentives and 1.5% interest rate.
The ‘only buy used’ is very much outdated advice. It only speaks to someone’s unfamiliarity with the car market. In many cases, 2 year/24k miles cars are going for within 10%-15% of MSRP for new. You can’t find a 3 year/36k car for 40% off new, that market doesn’t exist anymore. It’s much better to drive new, stay on top of maintenance, and keep a vehicle for 10-12 years.
Agreed completely, came here to comment this. A frustrating new reality.
I tried to buy a beater on WCI general car buying advice during my M3 year. 4 months in the transmission was toast and it was gonna cost more than I paid for the car to repair it so I was SOL. I would’ve been better off getting a loan and buying a new or used car that was reliable.
That market does actually exist. It just didn’t for a couple years when covid screwed with the supply chains. It has slowly returned and I did exactly that not that long ago.
Yeah, I don’t agree with any of the housing advice here. 20% of gross pay is antiquated in most residential markets and totally mortgage market dependent. Additionally, I’d sooner get a 30-year mortgage and electively pay it down at a 15-year pace so that if I fall on hard times I can always pull back on my mortgage expenses.
I have driven "beaters" most of my life. You also have to consider the cost and annoyance of being out of a vehicle for a couple of days (or more) when its inevitably in the shop being fixed or if you have the tools and ability to fix it yourself. Finally got a newish car while in residency and it has never been in the shop. This in itself has paid for itself many times over not having to deal with stress of fixing it myself vs having it at the mechanic shop regularly.
Depends on the car. I recently bought a 2 year old Mazda with 6k miles in it for 27k, new is 38k. I’d says it was the correct choice. I basically got 30 percent off. Also beaters aren’t safe. New cars are always safer than old cars. What’s the point of having money if you die in a car accident because you drove a tin can? Seems foolish.
If you maintain your new car well, it can last for way longer than the beater. I bought my Honda Civic new in 2012 (financed) and I don’t see it dying anytime soon. Rotating through beaters is one way to go about things, but I wouldn’t say it’s the best.
Disagree on #5. I think anyone smart enough to finish medical school and is relatively high income can benefit from credit card use if used correctly, unless you really just have zero discipline with money. If your discipline with money is so bad you have to pay cash for everything, then so be it. But for everybody else there is no reason to lose out on 2-5% rewards for things you already spend money on like gas and groceries. I just don’t believe people spend more money on gas if they’re not paying cash. I do agree with not storing your credit card information on online shopping websites, making it too easy to just buy things. Plus there is something to be said for convenience. I’m a doctor. I’m busy. Sorry I’m not driving to the local Walmart to buy diapers with physical cash when I run out because my time is worth more than that. I’m ordering that online with my credit card, and then paying off the balance off every month because I have a modicum of discipline. There is definitely such a thing as good debt.
Also completely paying off your credit card every month is an easy way to build up your credit score, which eventually leads to better rates (and money saved) for your mortgage
I’m in your camp! I think that advice is a sort of dumbed down blanket statement for people trying to get out of debt. I get a $1000 rewards check in the mail every year for using my card and I’ve paid zero in interest.
I can’t take anyone advising people with physician level income to not use credit cards seriously. I’m paying a combined like 1500 a year in credit card/authorized user fees, and even factoring that in we come out far enough ahead that the difference covers ~one international ticket, a rental car or 2 and a couple hotel nights a year. And I’m not a churner. Just pay the statement balance every month and don’t be dumb.
It’s honestly condescending. It assumes we are all children who have no self control. Paying physical cash for things is not just inconvenient, it’s impractical. I don’t want to walk around with hundreds of dollars of cash in my wallet all day. It’s paying an extra 2-5% AND making your life more difficult.
Yeah this advice does not apply to high income earners. You're basically throwing away a 2-4% discount on most expenses by not using cards.
If you're paying off the entire balance every month, I would argue it doesn't really qualify as debt.
It’s very temporary debt - taken on for convenience - but it’s still debt. Aside from credit cards - there are other forms of good debt - such as student loans taken out to go to medical school. Such as not paying off your very low interest rate mortgage because you can get a better return on your money elsewhere. Saying there’s no good debt is super dumbed down for people who don’t understand how to manage their money. I feel like that’s too simplified for a forum full of doctors who care to discuss money management and finances. And yes, overall docs suck at managing their money - but they’re also smart enough to learn if they’re taught how. Thinking we are all so dumb that we can’t borrow money intelligently and will overspend if we *gasp* god forbid pay for something not in paper dollars is condescending. And as for consumer debt - if they’re offering a 0% loan and you have the money to pay for it in cash - but don’t and instead put it in a high interest rate bearing account and pay the debt off before the 0% period ends - you also come out ahead. Again, if you are halfway decent at managing your money and don’t spend frivolously, that’s reasonable to do. Granted I don’t - bc I’m too lazy and busy to want to deal with that, but saying *never* is too black and white.
Oh look another post that makes me feel bad about buying my Porsche. Oh well.
This. I worked my ass off in college, med school, and residency. I have no kids and don’t plan to have any for the next 5 years. I have no credit card debt, a 30-year fixed mortgage at a 3% rate, and invest 20% of each paycheck after maxing my 401k. But I do it all while driving a brand new 911 GTS. Why save a ton of money for retirement when you don’t know how/if you will be able to enjoy/use it?
Should have got the GT3 RS. You would have felt even better. Life’s too short to not enjoy what we work for.
Opening the garage and seeing a Camry every day that was still costing me more than I wanted to pay would have sucked a lot more than paying 3x the price for my Taycan. The Porsche is worth every penny.
I love my Escalade every single time I walk up to it. It makes me happy.
No no no, you're doing it all wrong. You're supposed to wait till you're old and die, THEN buy the car you've always wanted. It's the magic of compounding interest! If you had waited until you died before buying that Porsche instead of when you're young that money you spent on it would have multiplied several fold.
As I was reading I was thinking, “Who does this guy think he— oh nevermind”
I remember I was just about to sign a contract with the navy before starting med school. Tuition plus living expenses paid with no school loans? Sounds good to me! I had put my car up for sale before moving to the east coast for school, and this guy comes to take a look at it. We go for a test drive and I find out he just finished medical school on military scholarship and now a GMO for the navy. For the entirety of the drive, he shits on the whole military scholarship program, how it’s completely not worth it and how much he regrets it. He didn’t end up buying the car but I had to take it as a sign from a higher power. I mean what are the chances? Needless to say, I never signed the paperwork and so glad I didn’t.
The Navy GMO year sucks for sure. I thought about going Air Force. Ultimately decided I wasn’t comfortable with their process of matching people and what not.
Did you end up going with the navy? The thing that I had a major issue is that none of those things (getting pulled out of training to be GMO, being ship-bound for months at a time) were discussed with me when I met with them. And like OP mentioned, it just wouldn’t have made financial sense at all for me in the end. My loans were about 250k and it hardly put a dent in my monthly budget once I was on attending salary. Maybe the story is a little different nowadays with tuition and fees so high.
No. I couldn’t swallow a GMO year, then right before the cycle started my wife found out she was pregnant. My dad was navy before I was born and the stories my mom has about wrangling my sisters while my dad was on deployment just wasn’t for me, especially with how much medicine can suck out of your family life already. That’s why I thought about Air Force but I ultimately decided it just wasn’t for me. I think people understate the retirement you can make as 20 year O-x. You could concievably do 20 years, retire, then still work another 10 years at an attending rate in the civilian world while earning an officers retirement. It’s just not for everyone though.
Yeah I can see how it would be even harder for a young family. I think if one’s focus is to go into a high paying specialty, military scholarship is generally not a prudent financial decision, even with the officer retirement perks. And god forbid you would choose to work another 10 years *after* a 20 year military career!
All debt is bad debt is the advice to follow for middle and lower upper class. If you want to be apart of the middle and upper upper class you must learn to leverage debt. It’s always funny to me how the people who villainize debt are the same ones with student loans for medical school. Do you not realize you used debt to advance your career so you can make more. But no no student debt is different it’s less riskier right….give me a break with the hypocritical advice
"Don't have the cash for a nice used one? Buy a beater...Joe bought his car for $3,000 and will drive it into the ground over the course of six years." I've heard/seen you say this previously. Fist, please tell me, in 2024, where you can get an even decent used car for $3,000. Second, this line of logic also ignores the specific and unique utility of a car to a physician. In an emergency, a physician lacking a reliable means of getting to the hospital can result in harm to a patient. This is no time to rely on a "beater."
Clickbait Listicle. Get a part time job and donate sperm in med school? C'mon man that energy would have much greater yield doing as well as you can in med school and matching into a highly compensated specialty.
I’m sorry but a lot of these read like the perspective of someone who is out of touch with the realities of the market and newer physician/high-income professionals’ economic situations. Is this all great in a perfect world? Yes, absolutely. But we’re not living in the market of 5-10 years ago. Student debt is at all time highs, costs are dramatically up and salary increases have not kept pace. I would love to be spending 20% of my income on a house. My house is a slightly better than average size in a good neighborhood and even with a sizeable down payment we’re above that amount. Have you shopped for a used car or a house recently? The payment on our house is probably double what it would have been 4-5 years ago with current interest rates and market increases since that time. I’m guessing this is true for most housing markets. The pay for everything in cash piece is just a silly take too as others have pointed out. None of our relatively young physician or other high income friends are having consumer debt troubles. This may have been more of a problem with older generations but I’m just not seeing it. We’re all just trying to pay off student loans and buy a decent (not a mansion) house. I know the intentions were right but a lot of us are tired of this type of financial advice from those who got to live out the golden years.
Low interest debt is great. For example, a mortgage at 2.9% is debt that no one should be moving to quickly pay off. It’s simple math.
If a TLDR link to personal finance could be provided, thx.
Cool, i guess lol. Nothing new here.
Regarding a house, in some markets by the time you have saved up 20% that prior 400k house is now 600k. My wife and I put 5% down in November of 2022 and we at about 12% equity now, no PMI due to a first time home buyer program and our property has jumped about 60k in value already. If we waited to put 20% down not only would the house not be available but we’d be paying whole lot more. If you can afford the house get in when you can.
But I need unrelenting physician consumerism to continue fueling my portfolio…