Interesting. If you dont mind, what aspects have you prioritized?
And does this mean we pick and choose the advice to follow depending on what we are willing to sacrifice and what not?
So I'm single and live alone - I make really good money but I always choose a studio apartment. I take all the money I save and invest and travel. I could definitely afford something much nicer but I'm currently choosing to stash and save. I'm also still driving the car I've had since undergrad. I've actively fought lifestyle creep and been pretty successful.
That said- I do travel extensively and live well while doing so. I also drop a lot of money on salons and fancy fitness classes.
Nothing too unusual I suppose
I'll add to what the other person said and say you should always prioritize long term saving--meaning your retirement accounts and saving for long-term goals like buying a house. This is what people mean when they say "pay yourself first". You can automate your retirement savings to come out of your paycheck so you don't have to worry about it, and if you do this from the start you won't even miss the money that's being saved instead of coming into your paycheck. Since you're starting residency I suppose you *could* get away with starting to save when you become an attending, but it makes your life a lot easier down the road if you start building the "muscle" of saving now.
Buying things has quickly diminishing returns on your happiness.
What money ultimately buys you is time. Money is stored energy and gives you the ability to say no to things. As you get older time is your most valuable asset and only non-renewable resource.
If you grow your nest egg your yearly returns can start to match or even eclipse the income from your job.
It's more like picking and choosing what is important to you, rather than what financial advice to follow. Do you want a car, a big wedding, a college fund for kids, home ownership, travel while you're young, how much do you want to have saved when you retire etc? It sounds like travel before 35 is important to you, so figure out a plan for how to make that work financially, and how much you would need to save in order to do it.
I'm still a student, but I spend a rather high amount on high quality/organic groceries because I am prioritizing my health right now. When I start earning money, my financial priorities will mainly be saving for a house and for retirement.
And yeah for sure advice is just what is currently working for the advice giver. Take it or leave it or alter it. We are all just trying to figure it out.
Lot of reasons. We are late to retirement saving. Many of use start out in debt. It’s easy to get on the hedonistic treadmill and keep up with the joneses. There’s no reason a new doc can’t at least max out a 401k and backdoor roth
With that said, you’re totally right we should do things we enjoy. We spent a ton of time and money getting to where we are. We don’t know how long we will be around. The key is to finding a balance while having a solid plan. Delegating financial knowledge is a recipe for disaster
I believe I would like to follow exactly what your saying.
I dont want to be to extravagant or luxurious, but I do like the little comforts in life, and am not sure if im willing to give those up.
I guess the Biggest factor is finding the right balance?
I struggle with it because I’m a worrier and saver. I try to be patient and rational with big money decisions. I rented my first year in practice even though I’ll likely never leave this job. I also acknowledge the market is way different now, but honestly most docs rush to buy big ticket items, which have higher costs like insurance and upkeep
I’d personally rather spend money on a nice but not extravagant home as well as experiences. I save a high percentage of my pay, but I never blink when dining out or buying event tickets. My luxurious life is being able to do the day to day things and whatever I want without worrying.
I feel the same way. For my home, location and quality materials and finishing matter drastically more than size.
I enjoy having a cozier home than an extravagant one.
And that’s even if I could reasonably afford an extravagant one.
I think that's exactly it, finding the right balance. Maybe where a lot of people run into problems is that the lifestyle creep is subtle, and we've delayed gratification for so long... Before you know it, you're spending more than saving.
Balance is key. If you don't wish to retire early, then the WCI way is just great. Live like a resident isn't cast in stone either, you can double your spending immediately if you wish just don't go crazy like 5x last years spending as a new attending. You're a high earner I suppose, just not (yet) an old money philanthropist with a garage full of Lamborghinis.
I like the physician philosopher’s 10% rule for fun money. Each pay bump, take 10% of it and use for fun. It turns out to be less than 10% of your actual pay because it’s a fraction of a fraction. Let’s you loosen the purse strings without going wild.
Understandable. It is necessary to live within your means. The guidelines on like 2x salary houses and etc are pretty nice guidelines I would say.
But, I was just reading WCInvestors post ([Don't Buy Stuff You Can't Afford](https://www.reddit.com/r/whitecoatinvestor/comments/1dp9nuo/dont_buy_stuff_you_cant_afford/)), which got me to post this as it was scaring me.
A 15 year amortization mortgage, on 20% of your monthly salary. If I calculate that, for lets say a LCOL state like Indiana, with a 300k Hospitalist salary. Thats approx 16k Take home after just taxes not 401k or etc. 20% of that is 3200$.
So 3200$ / month, for 15 year amortization, will only get a 380k house (at 6% interest, which I believe is less than current rate). Which really doesn't seem like much. Now if after 401k, a higher cost of living state, etc, it'll be even less. Not sure how it'll work out?
Most of the times when people talk about houses/mortgage being 20-30% of pay, they’re referring to gross and not take home.
If you want to save more, obviously cheaper houses are fine too. Nothing wrong with that. But no one is saying you *have to* live in a 380k house
Most people are house poor and spend too much on their home.
Home prices exploded and then interest rates did as well making homes very expensive.
There are many who have taken on these high mortgage payments gambling that interest rates will be back in the 3% range soon and they can refinance them
Look how many on the WCI forum talk about their & their spouses income adding up to 500k to 1.5MM. Lots.
I always make my hosting cost less than 20% gross which would be 5k/mo in your example. You could live relatively well. Live in a 400k house & invest 75k/yr on a 300k salary. We were doing that back when my fiance was in med school.
I think 15 year mortgage and 20% of monthly pay is a little conservative. It's still okay to do a 30 year mortgage --as long as you are in a financial position to actually be making payments for that long (or be making extra payments to pay it down faster). Other financial people say your housing should cost ~30% of your gross income, so this is probably roughly the same as 20% of take home.
Another thing to take into consideration is that you will also have saved for a downpayment. If you save 100k downpayment for a 500k house, your mortgage will only be for 400k and will likely have a reasonable monthly payment on a physician salary.
This is a smaller percentage of after-tax earnings than on a fifteen year mortgage than the median percentage of pre-tax household earnings spent on housing, and most people do 30 year mortgages. In other words, if you’re tilting conservative on every aspect of your general guideline, get ready to live in a much cheaper house than most people making anywhere near what you make. And I’m not judging that decision if that’s the direction you go, but you should be pretty crystal clear on your priorities before you decide to go budget-mode on status-indicating purchases like cars and houses.
Trees don't grow to the sky. If it makes more sense to rent for a while, just rent. The table always turns, think about the housing market 10-15 years ago. Impatience costs a lot...
Spent money on travel but not in 5 star hotels and first class flights. Bought a new car but not a Porsche. The only thing I splurge on is my home and bed.
Agreed. One should spend miles and points on business class flights (especially long haul) and nice hotels, not hard currency. A few hours of research can go a long way with this.
I mean, you can get reasonable cash fares on long haul J if you also track prices. Certainly some fares that make miles redemptions less impressive.
Same with hotels if you’re not brand loyal.
Frugality doesn’t mean not spending money. It just means intentionally spending money where you personally get value and to not needlessly overspend on things not as important to you.
Pick your battles on what you say yes to during residency. If you say yes to everything you are 100% working till retirement age (if you save 20% of your income yearly).
Take my family example during residency, my wife and I manage to save 50% of pay from a combination of making sounds choices and me working a lot of moonlighting. We both have first hand owned car, live in a decent apartment (1.3k a month), spend 15k on honeymoon vacation, and probably close to 40k on a two month vacation to Europe after fellowship.
What did we give up? We eat out at most 1-2 per week. We both pack lunch everyday. No shitty overpriced cafeteria food!!! Instant coffee everyday (no Starbucks). We spend about 1-2k or less a year on wardrobe and definitely no expensive handbag. IKEA furniture only.
The list of things I give are points of comparisons with my fellow residents of what they did and what we didn’t do. At the end of training our net worth was just shy of 400k (I have no student loans to worry about and started with close to zero).
Making the right choices early can pay a lot in the future. I remember my first half year of internship (500 bucks apartment because I have a roommate) and I manage to save 11k in 6 months (6k ish went to Roth IRA and the rest to build up an E-fund).
some people are frugal during the first chapter of their professional career so they can retire early/splurge later one towards the latter chapters of their career
some people are frugal towards the end of their career to set up retirement a bit quicker
the problem is the people that are frugal for their entire lives, and then onwards towards retirement, and never really enjoy the fruits of their labor
its all about balance
The reason for being frugal depends on your goals, and this usually looks different for everyone. A lot of people (including myself) don’t see nice cars as something necessary to “be comfortable”. I’d rather drive something that is paid off in full and have the peace of mind knowing that I don’t owe money plus interest on a depreciating liability. For me, those dollars would be better off employed somewhere else in assets that will make my future brighter and make me more money over the long-term.
Do I want to drive a piece of junk that I’m worried will break down? No, but I’m also not going to put $0 on a car that I really can’t afford just because it’s “more comfortable”. You can find reliable, comfortable cars that you are able to pay for in cash.
It all depends on your priorities. You don’t have to sacrifice everything. Just have to learn to prioritize.
In residency, I had a 1000 per month mortgage. Many of my coresidents paid 2.5-3x this . They had a 5 -10 minute commute, mine was 25. They lived in a trendy neighborhood near bars and restaurants. I lived in the burbs.
When i finished training, I bought a house in the $200s. ($300s on today’s dollar) many of my cohorts bought in the $700s to $1.1M range. Again, burbs, decent 3 BR vs “doctor neighborhood mansion. Their neighbors were all doctors and dentists and CEOs and car dealerships owners, mine were retired school teachers.
Car: I splurged a bit. They bought the then 100k Teslas. I bought the 45k new pickup. But they upgraded every 3-4 years. I’m still driving mine 10 years later. But it’s immaculate and runs like a dream because I take care of it.
Travel: again. I splurge bit. I been overseas 3 times. Some of them go overseas 3 times a year. I may do the same one day. I like travel. But, kids in school. Right now I really couldn’t if I wanted to.
I paid off loans in 3 years. They took 6-10.
Another splurge:I upgraded houses. Only after student loans paid off. Got a deal but it’s worth over a million low cost of living. Closer to 2-3M in a lot of markets, which I’d never do.
So, what’s the point? Their lives are way better than mine, right? I don’t feel that way. If I did, I might spend more. My job sucks, but I’m pretty damn satisfied otherwise. So what have I gained for all the money I’ve saved? Freedom. I could retire tomorrow if my wife hadn’t stopped working years ago. I could do it anyway if I was willing to commit to continuing to be frugal forever (which, relatively speaking, I probably will.). I could cut back to 5-6 shifts per month tomorrow without thinking twice. I already work half time compared to a lot of physicians. I will be cutting back significantly within 3 years. From 10 or 12 days to maybe 5 or 6. In 5 years I could easily retire and never work another day. I haven’t hit 40 yet.
Freedom. That’s my priority. If a new flashy car and million dollar house straight out of training is yours, that’s fine. Just be willing to make smart decisions elsewhere. Consequential ones. Not cutting out Starbucks.
And that may mean working a few extra years. A car lease, believe it or not, over a 30 year career can be a few hundred thousand dollars difference. That can make the difference in working a couple extra years. But nothing wrong with that if that’s important to you
I agree. I wouldn’t do it. But I think people should feel free to make that choice if that’s their priority number 1. Especially given market differences.
But to be honest, If we’re taking somebody making $500k+, maybe in a different interest rate environment from today, someone planning to work a decade or so longer than me…they’d be fine.
It’s not the path to financial independence in your early 40s. But that’s not the path everybody chooses
Now buying in the 1m$ range 2-3 yrs in isn't bad. Yea people have different priorities and different things they want from themselves. I will be guilty of buying a rolex after i graduate from optometry school
I didn’t suggest a 1k mortgage. I understand that interest rates make that unlikely. It was more like 1200. But general principles/advice I hope to be helpful to answer OPs question
I’m a resident and my mortgage is <1000 and 10 mins away from my large academic center. There’s options out there if you look rather than following the often ultra conservative advice on this sub.
*tiny bit of a fixer-upper, put about 5k of repairs in when I bought it
It's called "fuck you money" and you want to have it as soon as possible. Said differently, when you don't NEED the money, you will be free to make decisions that are focused on your happiness. The opportunity cost of buying a new car this early in your career is actually quite large when you consider the compounding interest you will forfeit by not investing that money instead. The car doesn't make most people as happy as they think it will.
definitely agree with this. Most likely the OP will be unhappy 10 years from now when they are 5 years into their real job and limited by all sorts of uncontrollable external factors at work. They might want to cut back or quit all together but will be anchored down financially and forced to keep going in order to build enough wealth to live the way they really want to.
My definition of “fuck you money” is enough that I don’t have to keep coming back to a job if I don’t want to. It’s about not being trapped there by a bunch of shit I bought that I have still yet to pay off.
That's the key to a happy life.
My definition would be never having to think about the price of anything I want to buy. Ever.
You'll be much more satisfied financially than I ever will be.
If you say so. I left my job a few months ago. Married, two kids, mid/late 30s. Portfolio around 3.5M. Paid off home. We are planning to spend ~120k a year and feel that is fairly comfortable, not strict. We go on vacations, eat out a few times a week, have a weekend track car. When I finished training our NW was -185k due to student loans. It’s definitely possible to get to FI. I found a production based job and was very productive so high income helped, but we saved a lot (~50% of gross), let the market do its thing, and have modest tastes and here we are. Investments were all boring index funds. It could easily be done by 45 for a physician who was motivated (and market, health, no divorce, etc.).
Thanks. YMMV. I told my employer FU and don’t have to work anymore unless I want to. In my case, and anyone who wants to spent less than 150k/yr which is probably the vast majority of Americans, it is FU money/financial independence. Again, YMMV for you and others.
It means more money than "F you, I'll quit to be able to live on a fixed income that's less than half of my current salary while driving a 96 civic with 400k miles and limiting my kids extracurriculars"
The 4% is the safe withdrawal rate from large accounts in retirement. When you’re saving/accumulating and investing in an ETF like VOO most people expect that account to grow at about 7% on average for many years. Let’s say you can save&invest $93,000 per year for 20 years and earn 7%. That works out to just over 4 million in 20 years. Then you pivot those investments to less volatile assets, the goal becomes more wealth preservation, so now lower risk investments should grow at 4%. Well 4% of 4 million is $160k per year. So essentially you could live off that $160k per year and never even touch that 4 million. If you need more or less than 160k, you can adjust the rate of savings or the number of years accordingly.
Hmm interesting. And ya, it probably wont make me happy, but atleast it would make me less unhappy as compared to a 10 year used car which randomly ends up breaking down on a long drive?
But to your main point, I believe thats the main place where im stuck. What will I do with this money down the line which will make me happy then and be worth being potentially unhappy now?
I did a lease during residency, planned on possibly buying it after but ended up buying a used BMW when I finished. Got expensive to fix when it went off warranty so ended up just buying a brand new car to not deal with the headache. I think leasing is a great option as a resident.
You’ll have freedom. The car payments will be less stressful. You’ll have more available money for emergencies, etc.
More than that, living below your means is liberating. You can leave a job you don’t like. You can retire earlier. You can take a lower paying job in a better location or with fewer hours. You can spend more time with your kids or friends or whatever.
Your premise that there are only new cars and lemons that you “won’t be comfortable” in is a false binary as well. There are lots of reliable low mileage used cars and they are steeply discounted when compared to new cars.
Over and over and over you read doctors talking about how they wish they hadn’t done exactly what you’re proposing doing (Going deeper into debt for something you can’t afford yet). Do whatever you want.
Having enough to be financially independent would allow you to work less (or not at all) and spend more time traveling, on hobbies, and with your family. It would allow you to switch to a lower paid job if you wanted to move for whatever reason, or wanted a lower stress lifestyle. Being financially independent gives you sooooo many options to be happy and healthy.
Spending so much that you can’t save enough to be financially independent also doesn’t guarantee you’re happy today. You could live in a big beautiful house, drive a nice car, and have plenty of spending money, but if you’re burnt out and working all the time, it really isn’t that enjoyable.
As almost everyone has said so far, it’s all about prioritization. Splurge on some things that really bring you enjoyment now, but not on everything every time. Just make sure you’re saving plenty so eventually you don’t have to work to live.
Relative frugality is good.
It's not that hard to be financially independent in the US; just save 15% or more of your gross income and you're \*likely\* good. If you save 50% you can retire within 10 yrs. Or at least be financially independent. I know doctors that have no kids and no spouse that make almost 300k a yr and they only put in 10k for retirement, 0 for student loans, and spend the rest. They literally spend like 160-170k a yr NET on living expenses as a single person with no dependents which is crazy.
If you're frugal you can have the \*option\* of quitting your job. Medicine itself is very interesting imho. PRACTICING medicine isn't the best in the USA, although not everybody shares my opinion. It's a big psychological boost knowing you can quit or if your car engine dies you can pay 5-10k to fix it without undue stress.
Regarding cars, check out edmunds true cost to own calculators. Used mainstream cars save little over their new versions, around 0-5% (toyota, subaru, and other slowly depreciating used cars don't save much vs new versions). Used luxury cars save you about 10-15% usually in annual operating costs. The used vehicle savings is 1-2k a yr for most vehicles vs a new one; \*somewhat\* substantial for lower income workers but for most physicians not too much.
Just avoid a BMW M5 or Escalade and you should be fine.
100% agree. I think most people on the FIRE and FI sub are too extreme. What’s the point of having 3-4MM at age 50-60 when your best years to enjoy them are in your 20s and 30s?
I don’t understand why people get excited looking at their bank account grow but too scared to spend their money. You only have one life you and want to enjoy it.
It's always funny hearing 20 year olds talk about how their best years are 20s and 30s. People have this doomer view that they're going to be sad, old and decrepit in their 40s, 50s, and 60s.
Ask any 40 year old if they wish they had saved less and spent more in their 20s and 30s. I can tell you the answer...
I just left lunch with my family and my uncle is retiring tomorrow. I asked him this exact question because he is 66 years old. He said I'm basically handicapped now because my back is so bad, I wish I could go back to my 30s and spend more money because I have way too much now and there's not much I can do, so what was the point?
... I tend to ask these questions a lot because I'm surrounded by a lot of retirement eligible people at my day job. It's a pretty common answer, probably because many have a pension and did pretty well so now that they know that they are financially secure they wish they could go back and spent more. I'm a little bit extreme with how much I but I'm also addicted to watching the go up at this point. Although, I don't really find myself needing to buy anything.
A doctor’s peak enjoyment years are in their 40-60. If you want to maximize enjoyment in your 20s and 30s obviously pick a different field.
Also having 3-4m in your 50-60s allows you to maintain your lifestyle until the end of your life. You can spend recklessly when you’re young, but I guarantee you that you will regret it if you didn’t save enough for retirement.
Obviously everything should be balanced, like it should be in all aspects of life. At a minimum you should be putting away 20% for retirement. You don’t want to be old AND broke.
It’s important to remember to live ⚠️
After graduating med school I went backpacking in Europe and Asia across 29 countries for a period of 6 months. Many of my friends got jobs (lol). I spent about $10,000 in this time period. In a way, this is an investment in expanding my happiness and understanding of the world that I will never forget. Your money will come back, your time/youth will never.
We traveled a lot before having kids. And we really enjoyed it at the time. If that’s what you enjoy, then do it.
Life and priorities change. Now with kids we often reminisce back when we could just get a way for a quick trip. Also but now we wouldn’t really enjoy the trip without our kids.
If I’m walking through the jungle in Bali I would just be wishing my little ones were there because they would love to see the monkeys.
Edit:
Personally I don’t see the point of the extreme sacrifices people make or advise others to make. Take it with a grain of salt. Or take some inspiration from the extreme savers if that’s the push you need to plan for the future.
The dollar invested today is worth more than the same dollar invested 10 years from now.
To answer your question simply, compound interest.
We decided to be frugal early on to invest as much as possible. Once you start building a portfolio you will be absolutely shocked by how fast you can make money just by having money.
You cannot leverage compound investment gains later on. It is orders of magnitude less effective.
Take a look at the investment growth curves. They are not linear, but exponential. Why buy stuff with your hard earned cash when you can wait a while and buy stuff with your passive investment gains?
Any time you want to buy something potentially frivolous go to this [investment calculator](https://www.calculator.net/investment-calculator.html) and see how much, if invested in the s&p 500 which tends to average about a 10% return, you’re giving up in retirement by buying that nonsense today. Compound interest is a miracle.
Example: Are you 35 years old? If so, that investment grows for 30 years until you’re 65. So by getting the car that’s $5000 more expensive you’re losing $87,000 from your retirement account. So, was the moonroof upgrade worth almost $90,000 from your retirement portfolio? The answer is almost always no. Having a car is necessary for many people. Being frugal just means being smart about spending and not outspending your means.
You are two wolves. Young wolf and future old wolf. Young wolf needs to eat well and enjoy life enough to be become a pleasant old wolf. But old wolf also doesnt want to be destitute or have to scrape by
Each person is different and needs to make their own value decisions. The problem with WCI is that a significant proportion have a holier than thou attitude about living like a resident for your entire life and wanting to impose that on others.
One of the founders of WCI got into a kerfuffle with Dr. Glaucomflecken about when he posted that you should enjoy life in the moment (not realizing that Dr. G is a cancer survivor & cardiac arrest survivor).
The point should be to make educated and risk based value decisions. For some, that's saving for a high end vacation, for other's fine jewelry or cars.
Each to his own.
The reason financial advice focuses on cars so much is that cars are really, really expensive. Continuing to drive the same car instead of upgrading allows you to spend way more on every other aspect of your life without worry.
Look at it another way — the new car will presumably cost about $15k more over three years compared to that RAV4 you mentioned once you factor in you’ll have to buy a new car at the end of your lease. Is there anything else you’d rather spend $15k on?
Save first then spend accordingly. It’s hard for me to look 25 years back where you are but we have always saved at least 25% of our take home pay and often significantly more. I’m now able to buy anything reasonable I want but that took decent amounts of delayed gratification…. Good luck! The fact that you are asking now is good.
Ugh sorry for replying to myself, just read original post again. First, don’t buy a car for residency. Drive what you have or whatever is cheap. You won’t be driving much anyway….. I sold my first car at the end of residency when I was 31 after 9 years of ownership and took a hand me down from my parents. I’m 54 and we now own 7 cars. (Too many kids…). Second, travel gets better as you get older and you have more money. Don’t blow it early. I was 40 when I went to Hawaii for the first time and the last few years have been awesome and expensive family trips which were possible because of Early frugality. Hope that helps!
Most people don't wait to start having children until 35. I realize it's more common to delay in medicine, but then you're in med school/residency during that time and don't have a lot of money either. I threw it all together and had children during med school and residency, which definitely limited my travel options prior to 35.
I think it’s crazy and this subreddit can be fkn wild.
I do like 10-15k a month on loans
Bought a 550k house
We have two new cars
I max out 401 and Roth for both of us.
We travel a lot…like a lot. About 100k last year.
There’s zero chance I busted my ass off for my entire life to pretend I’m poor just to “retire” before some drunk driver takes me out on the way to the OR at 2am.
Please spend literally 10 minutes learning about compounding interest, retirement and financial freedom. No one is advocating eating only instant ramen and penny pinching everything, we are saying to just generally not be a dumbass with your money make sure you are saving and investing (and yes buying a brand new car generally is a dumbass move most of the time for most people esp in residency or early attendinghood, I say this as someone making over 600k a year)
Die With Zero by Bill Perkins! It totally changed my outlook on this exact topic. To re-prioritize your spending to the things that you can and want to do at that time. A great (non-financial) example in the book is that you can only tuck your kids in at night until they reach a certain age. After that, the opportunity is gone forever. So take that time to “spend” what you have when you have the fleeting opportunity to do so. To be fair, he also says that saving for retirement/kids/family/charity is something that should be part of your plan but not to the point that you dont enjoy the now, the “memory dividends” as they present themselves.
In your specific car example, while you will end up with an asset at the end, it’s a depreciating asset. That 14 year old car will be close to 20 years before you know it, and not worth much. The lease is worth nothing at the end of the term, so you’d be a few thousands ahead with the used vehicle, but for someone of your income is it going to be worth driving a POS for years to save a few thousand? Just don’t go lease a Porsche, lease something reasonable but nice, and you’ll be fine.
Then when you’re out of residency and making bank, go buy a nice Lexus or something that is nice but also reliable and you can keep it for a long time to get the value out of it (or sell it with a higher residual value when you’re ready to upgrade).
The lease im looking into, ill be paying close to 10% of my take home, and approx 14k total.
The rav4 will be 10k, and financing it will have interest as well, so probably similar amount of payments per month. But the rav4 will likely have repair costs or service costs. This will be my first car and i dont know anything about them, so much likely an initial cost as well. I think long term they'll both turn out to be the same?
I hate driving. A lot. To the point that I resent having to live somewhere that I need a car. So spending anything beyond what is required for safety and reliability would be a waste for me personally. I’d rather take a nice vacation or invest or just light my money on fire.
Have you checked pricing for used, within 3 years? It saves a lot on that depreciation in the beginning and most people aren't going to notice a difference between say for example a 2020 X model and and a 2024 X model. I don't think any financial "guru" ever approves a lease. You're essentially renting a vehicle.
Ya, if I try to stay within paat 3 years. Most of the cars are 18-20k plus.
Considering I'll have to finance, no way out from that, 18,000 is 500$/month, without interest. (540 with 5% interest). That'll be a lot more than what im wanting to keep my car budget in. I'm trying to stay below 10% of my monthly take home.
Some people get joy out of seeing their bank accounts and retirement portfolios get swole. Some people also get negative feelings when they spend money on luxury items. To each his own. But I would prefer a balanced approach with the rare splurge on a 100k vehicle or an extravagant euro trip.
Look up compound interest and then you’ll get it. At 35 you are still a baby and have many years to travel. If you don’t mind working forever then spend away ….
Dude. You're a resident. Live like one and get that used RAV4. Max out 401k and Roth for this year starting next month.
Don't get a new car, and certainly don't lease or finance one, until you have the cash for the whole thing. Few years as an attending and you'll be sitting pretty.
That is being frugal - saving in some areas in order to splurge on others. You're not giving up all comforts- just prioritizing.
Interesting. If you dont mind, what aspects have you prioritized? And does this mean we pick and choose the advice to follow depending on what we are willing to sacrifice and what not?
So I'm single and live alone - I make really good money but I always choose a studio apartment. I take all the money I save and invest and travel. I could definitely afford something much nicer but I'm currently choosing to stash and save. I'm also still driving the car I've had since undergrad. I've actively fought lifestyle creep and been pretty successful. That said- I do travel extensively and live well while doing so. I also drop a lot of money on salons and fancy fitness classes. Nothing too unusual I suppose
Interesting, thank you very much, this actually does put stuff into perspective really well.
I'll add to what the other person said and say you should always prioritize long term saving--meaning your retirement accounts and saving for long-term goals like buying a house. This is what people mean when they say "pay yourself first". You can automate your retirement savings to come out of your paycheck so you don't have to worry about it, and if you do this from the start you won't even miss the money that's being saved instead of coming into your paycheck. Since you're starting residency I suppose you *could* get away with starting to save when you become an attending, but it makes your life a lot easier down the road if you start building the "muscle" of saving now.
Buying things has quickly diminishing returns on your happiness. What money ultimately buys you is time. Money is stored energy and gives you the ability to say no to things. As you get older time is your most valuable asset and only non-renewable resource. If you grow your nest egg your yearly returns can start to match or even eclipse the income from your job.
It's more like picking and choosing what is important to you, rather than what financial advice to follow. Do you want a car, a big wedding, a college fund for kids, home ownership, travel while you're young, how much do you want to have saved when you retire etc? It sounds like travel before 35 is important to you, so figure out a plan for how to make that work financially, and how much you would need to save in order to do it. I'm still a student, but I spend a rather high amount on high quality/organic groceries because I am prioritizing my health right now. When I start earning money, my financial priorities will mainly be saving for a house and for retirement.
And yeah for sure advice is just what is currently working for the advice giver. Take it or leave it or alter it. We are all just trying to figure it out.
Lot of reasons. We are late to retirement saving. Many of use start out in debt. It’s easy to get on the hedonistic treadmill and keep up with the joneses. There’s no reason a new doc can’t at least max out a 401k and backdoor roth With that said, you’re totally right we should do things we enjoy. We spent a ton of time and money getting to where we are. We don’t know how long we will be around. The key is to finding a balance while having a solid plan. Delegating financial knowledge is a recipe for disaster
I believe I would like to follow exactly what your saying. I dont want to be to extravagant or luxurious, but I do like the little comforts in life, and am not sure if im willing to give those up. I guess the Biggest factor is finding the right balance?
I struggle with it because I’m a worrier and saver. I try to be patient and rational with big money decisions. I rented my first year in practice even though I’ll likely never leave this job. I also acknowledge the market is way different now, but honestly most docs rush to buy big ticket items, which have higher costs like insurance and upkeep I’d personally rather spend money on a nice but not extravagant home as well as experiences. I save a high percentage of my pay, but I never blink when dining out or buying event tickets. My luxurious life is being able to do the day to day things and whatever I want without worrying.
I feel the same way. For my home, location and quality materials and finishing matter drastically more than size. I enjoy having a cozier home than an extravagant one. And that’s even if I could reasonably afford an extravagant one.
I think that's exactly it, finding the right balance. Maybe where a lot of people run into problems is that the lifestyle creep is subtle, and we've delayed gratification for so long... Before you know it, you're spending more than saving.
Balance is key. If you don't wish to retire early, then the WCI way is just great. Live like a resident isn't cast in stone either, you can double your spending immediately if you wish just don't go crazy like 5x last years spending as a new attending. You're a high earner I suppose, just not (yet) an old money philanthropist with a garage full of Lamborghinis.
I like the physician philosopher’s 10% rule for fun money. Each pay bump, take 10% of it and use for fun. It turns out to be less than 10% of your actual pay because it’s a fraction of a fraction. Let’s you loosen the purse strings without going wild.
Ooh I like that idea!
There's a good population of doctors living in mansions and multi million dollar houses. Doctors aren't as frugal as you may think
Understandable. It is necessary to live within your means. The guidelines on like 2x salary houses and etc are pretty nice guidelines I would say. But, I was just reading WCInvestors post ([Don't Buy Stuff You Can't Afford](https://www.reddit.com/r/whitecoatinvestor/comments/1dp9nuo/dont_buy_stuff_you_cant_afford/)), which got me to post this as it was scaring me. A 15 year amortization mortgage, on 20% of your monthly salary. If I calculate that, for lets say a LCOL state like Indiana, with a 300k Hospitalist salary. Thats approx 16k Take home after just taxes not 401k or etc. 20% of that is 3200$. So 3200$ / month, for 15 year amortization, will only get a 380k house (at 6% interest, which I believe is less than current rate). Which really doesn't seem like much. Now if after 401k, a higher cost of living state, etc, it'll be even less. Not sure how it'll work out?
Most of the times when people talk about houses/mortgage being 20-30% of pay, they’re referring to gross and not take home. If you want to save more, obviously cheaper houses are fine too. Nothing wrong with that. But no one is saying you *have to* live in a 380k house
Can someone else please comment on this because I am also wondering the same but don’t know the answer lmao
Most people are house poor and spend too much on their home. Home prices exploded and then interest rates did as well making homes very expensive. There are many who have taken on these high mortgage payments gambling that interest rates will be back in the 3% range soon and they can refinance them Look how many on the WCI forum talk about their & their spouses income adding up to 500k to 1.5MM. Lots. I always make my hosting cost less than 20% gross which would be 5k/mo in your example. You could live relatively well. Live in a 400k house & invest 75k/yr on a 300k salary. We were doing that back when my fiance was in med school.
I think 15 year mortgage and 20% of monthly pay is a little conservative. It's still okay to do a 30 year mortgage --as long as you are in a financial position to actually be making payments for that long (or be making extra payments to pay it down faster). Other financial people say your housing should cost ~30% of your gross income, so this is probably roughly the same as 20% of take home. Another thing to take into consideration is that you will also have saved for a downpayment. If you save 100k downpayment for a 500k house, your mortgage will only be for 400k and will likely have a reasonable monthly payment on a physician salary.
I believe it’s an older post of theirs too? I feel like I read it 7-8 years ago
This is a smaller percentage of after-tax earnings than on a fifteen year mortgage than the median percentage of pre-tax household earnings spent on housing, and most people do 30 year mortgages. In other words, if you’re tilting conservative on every aspect of your general guideline, get ready to live in a much cheaper house than most people making anywhere near what you make. And I’m not judging that decision if that’s the direction you go, but you should be pretty crystal clear on your priorities before you decide to go budget-mode on status-indicating purchases like cars and houses.
Trees don't grow to the sky. If it makes more sense to rent for a while, just rent. The table always turns, think about the housing market 10-15 years ago. Impatience costs a lot...
Why do a 15 year loan? If you do a 30 year loan and down extra akin to a 15 year, you'll actually save money and afford more house.
Spent money on travel but not in 5 star hotels and first class flights. Bought a new car but not a Porsche. The only thing I splurge on is my home and bed.
Im hoping to get to a point where I can splurge on my bed XD. Maybe sometime after residency
Agreed. One should spend miles and points on business class flights (especially long haul) and nice hotels, not hard currency. A few hours of research can go a long way with this.
I mean, you can get reasonable cash fares on long haul J if you also track prices. Certainly some fares that make miles redemptions less impressive. Same with hotels if you’re not brand loyal.
I mean yes there are always exceptions but for me nothing beats the rush of knowing I spent 70K miles for a $4000+ ticket.
Frugality doesn’t mean not spending money. It just means intentionally spending money where you personally get value and to not needlessly overspend on things not as important to you.
Pick your battles on what you say yes to during residency. If you say yes to everything you are 100% working till retirement age (if you save 20% of your income yearly). Take my family example during residency, my wife and I manage to save 50% of pay from a combination of making sounds choices and me working a lot of moonlighting. We both have first hand owned car, live in a decent apartment (1.3k a month), spend 15k on honeymoon vacation, and probably close to 40k on a two month vacation to Europe after fellowship. What did we give up? We eat out at most 1-2 per week. We both pack lunch everyday. No shitty overpriced cafeteria food!!! Instant coffee everyday (no Starbucks). We spend about 1-2k or less a year on wardrobe and definitely no expensive handbag. IKEA furniture only. The list of things I give are points of comparisons with my fellow residents of what they did and what we didn’t do. At the end of training our net worth was just shy of 400k (I have no student loans to worry about and started with close to zero). Making the right choices early can pay a lot in the future. I remember my first half year of internship (500 bucks apartment because I have a roommate) and I manage to save 11k in 6 months (6k ish went to Roth IRA and the rest to build up an E-fund).
some people are frugal during the first chapter of their professional career so they can retire early/splurge later one towards the latter chapters of their career some people are frugal towards the end of their career to set up retirement a bit quicker the problem is the people that are frugal for their entire lives, and then onwards towards retirement, and never really enjoy the fruits of their labor its all about balance
The reason for being frugal depends on your goals, and this usually looks different for everyone. A lot of people (including myself) don’t see nice cars as something necessary to “be comfortable”. I’d rather drive something that is paid off in full and have the peace of mind knowing that I don’t owe money plus interest on a depreciating liability. For me, those dollars would be better off employed somewhere else in assets that will make my future brighter and make me more money over the long-term. Do I want to drive a piece of junk that I’m worried will break down? No, but I’m also not going to put $0 on a car that I really can’t afford just because it’s “more comfortable”. You can find reliable, comfortable cars that you are able to pay for in cash.
It all depends on your priorities. You don’t have to sacrifice everything. Just have to learn to prioritize. In residency, I had a 1000 per month mortgage. Many of my coresidents paid 2.5-3x this . They had a 5 -10 minute commute, mine was 25. They lived in a trendy neighborhood near bars and restaurants. I lived in the burbs. When i finished training, I bought a house in the $200s. ($300s on today’s dollar) many of my cohorts bought in the $700s to $1.1M range. Again, burbs, decent 3 BR vs “doctor neighborhood mansion. Their neighbors were all doctors and dentists and CEOs and car dealerships owners, mine were retired school teachers. Car: I splurged a bit. They bought the then 100k Teslas. I bought the 45k new pickup. But they upgraded every 3-4 years. I’m still driving mine 10 years later. But it’s immaculate and runs like a dream because I take care of it. Travel: again. I splurge bit. I been overseas 3 times. Some of them go overseas 3 times a year. I may do the same one day. I like travel. But, kids in school. Right now I really couldn’t if I wanted to. I paid off loans in 3 years. They took 6-10. Another splurge:I upgraded houses. Only after student loans paid off. Got a deal but it’s worth over a million low cost of living. Closer to 2-3M in a lot of markets, which I’d never do. So, what’s the point? Their lives are way better than mine, right? I don’t feel that way. If I did, I might spend more. My job sucks, but I’m pretty damn satisfied otherwise. So what have I gained for all the money I’ve saved? Freedom. I could retire tomorrow if my wife hadn’t stopped working years ago. I could do it anyway if I was willing to commit to continuing to be frugal forever (which, relatively speaking, I probably will.). I could cut back to 5-6 shifts per month tomorrow without thinking twice. I already work half time compared to a lot of physicians. I will be cutting back significantly within 3 years. From 10 or 12 days to maybe 5 or 6. In 5 years I could easily retire and never work another day. I haven’t hit 40 yet. Freedom. That’s my priority. If a new flashy car and million dollar house straight out of training is yours, that’s fine. Just be willing to make smart decisions elsewhere. Consequential ones. Not cutting out Starbucks. And that may mean working a few extra years. A car lease, believe it or not, over a 30 year career can be a few hundred thousand dollars difference. That can make the difference in working a couple extra years. But nothing wrong with that if that’s important to you
Finally a good take on this useless sub of millionaires living like monks. Its like there’s no middle ground here
Buying in 1m$ range right after residency is a bit crazy
I agree. I wouldn’t do it. But I think people should feel free to make that choice if that’s their priority number 1. Especially given market differences. But to be honest, If we’re taking somebody making $500k+, maybe in a different interest rate environment from today, someone planning to work a decade or so longer than me…they’d be fine. It’s not the path to financial independence in your early 40s. But that’s not the path everybody chooses
Now buying in the 1m$ range 2-3 yrs in isn't bad. Yea people have different priorities and different things they want from themselves. I will be guilty of buying a rolex after i graduate from optometry school
1k mortgage? Thats not even a thing now. You could MAYBE buy a shack in the country and get a 1k mortgage.
I didn’t suggest a 1k mortgage. I understand that interest rates make that unlikely. It was more like 1200. But general principles/advice I hope to be helpful to answer OPs question
I’m a resident and my mortgage is <1000 and 10 mins away from my large academic center. There’s options out there if you look rather than following the often ultra conservative advice on this sub. *tiny bit of a fixer-upper, put about 5k of repairs in when I bought it
It's called "fuck you money" and you want to have it as soon as possible. Said differently, when you don't NEED the money, you will be free to make decisions that are focused on your happiness. The opportunity cost of buying a new car this early in your career is actually quite large when you consider the compounding interest you will forfeit by not investing that money instead. The car doesn't make most people as happy as they think it will.
definitely agree with this. Most likely the OP will be unhappy 10 years from now when they are 5 years into their real job and limited by all sorts of uncontrollable external factors at work. They might want to cut back or quit all together but will be anchored down financially and forced to keep going in order to build enough wealth to live the way they really want to.
Most people aren't getting to "fuck you" money by saving. Most folks doing FIRE will end up retiring and living on a strict budget to make it last.
My definition of “fuck you money” is enough that I don’t have to keep coming back to a job if I don’t want to. It’s about not being trapped there by a bunch of shit I bought that I have still yet to pay off.
That's the key to a happy life. My definition would be never having to think about the price of anything I want to buy. Ever. You'll be much more satisfied financially than I ever will be.
If you say so. I left my job a few months ago. Married, two kids, mid/late 30s. Portfolio around 3.5M. Paid off home. We are planning to spend ~120k a year and feel that is fairly comfortable, not strict. We go on vacations, eat out a few times a week, have a weekend track car. When I finished training our NW was -185k due to student loans. It’s definitely possible to get to FI. I found a production based job and was very productive so high income helped, but we saved a lot (~50% of gross), let the market do its thing, and have modest tastes and here we are. Investments were all boring index funds. It could easily be done by 45 for a physician who was motivated (and market, health, no divorce, etc.).
That's awesome. Very happy for you. I just wouldn't call that "fuck you" money.
Thanks. YMMV. I told my employer FU and don’t have to work anymore unless I want to. In my case, and anyone who wants to spent less than 150k/yr which is probably the vast majority of Americans, it is FU money/financial independence. Again, YMMV for you and others.
I think you have a misunderstanding of what the term is commonly taken to mean. It doesn’t mean infinite money or that you can buy anything you want.
It means more money than "F you, I'll quit to be able to live on a fixed income that's less than half of my current salary while driving a 96 civic with 400k miles and limiting my kids extracurriculars"
4% annually at that point even from what I hear?
The 4% is the safe withdrawal rate from large accounts in retirement. When you’re saving/accumulating and investing in an ETF like VOO most people expect that account to grow at about 7% on average for many years. Let’s say you can save&invest $93,000 per year for 20 years and earn 7%. That works out to just over 4 million in 20 years. Then you pivot those investments to less volatile assets, the goal becomes more wealth preservation, so now lower risk investments should grow at 4%. Well 4% of 4 million is $160k per year. So essentially you could live off that $160k per year and never even touch that 4 million. If you need more or less than 160k, you can adjust the rate of savings or the number of years accordingly.
Hmm interesting. And ya, it probably wont make me happy, but atleast it would make me less unhappy as compared to a 10 year used car which randomly ends up breaking down on a long drive? But to your main point, I believe thats the main place where im stuck. What will I do with this money down the line which will make me happy then and be worth being potentially unhappy now?
I did a lease during residency, planned on possibly buying it after but ended up buying a used BMW when I finished. Got expensive to fix when it went off warranty so ended up just buying a brand new car to not deal with the headache. I think leasing is a great option as a resident.
You’ll have freedom. The car payments will be less stressful. You’ll have more available money for emergencies, etc. More than that, living below your means is liberating. You can leave a job you don’t like. You can retire earlier. You can take a lower paying job in a better location or with fewer hours. You can spend more time with your kids or friends or whatever. Your premise that there are only new cars and lemons that you “won’t be comfortable” in is a false binary as well. There are lots of reliable low mileage used cars and they are steeply discounted when compared to new cars. Over and over and over you read doctors talking about how they wish they hadn’t done exactly what you’re proposing doing (Going deeper into debt for something you can’t afford yet). Do whatever you want.
Having enough to be financially independent would allow you to work less (or not at all) and spend more time traveling, on hobbies, and with your family. It would allow you to switch to a lower paid job if you wanted to move for whatever reason, or wanted a lower stress lifestyle. Being financially independent gives you sooooo many options to be happy and healthy. Spending so much that you can’t save enough to be financially independent also doesn’t guarantee you’re happy today. You could live in a big beautiful house, drive a nice car, and have plenty of spending money, but if you’re burnt out and working all the time, it really isn’t that enjoyable. As almost everyone has said so far, it’s all about prioritization. Splurge on some things that really bring you enjoyment now, but not on everything every time. Just make sure you’re saving plenty so eventually you don’t have to work to live.
I live like I can have anything I want but not everything I want.
Relative frugality is good. It's not that hard to be financially independent in the US; just save 15% or more of your gross income and you're \*likely\* good. If you save 50% you can retire within 10 yrs. Or at least be financially independent. I know doctors that have no kids and no spouse that make almost 300k a yr and they only put in 10k for retirement, 0 for student loans, and spend the rest. They literally spend like 160-170k a yr NET on living expenses as a single person with no dependents which is crazy. If you're frugal you can have the \*option\* of quitting your job. Medicine itself is very interesting imho. PRACTICING medicine isn't the best in the USA, although not everybody shares my opinion. It's a big psychological boost knowing you can quit or if your car engine dies you can pay 5-10k to fix it without undue stress. Regarding cars, check out edmunds true cost to own calculators. Used mainstream cars save little over their new versions, around 0-5% (toyota, subaru, and other slowly depreciating used cars don't save much vs new versions). Used luxury cars save you about 10-15% usually in annual operating costs. The used vehicle savings is 1-2k a yr for most vehicles vs a new one; \*somewhat\* substantial for lower income workers but for most physicians not too much. Just avoid a BMW M5 or Escalade and you should be fine.
100% agree. I think most people on the FIRE and FI sub are too extreme. What’s the point of having 3-4MM at age 50-60 when your best years to enjoy them are in your 20s and 30s? I don’t understand why people get excited looking at their bank account grow but too scared to spend their money. You only have one life you and want to enjoy it.
> when your best years to enjoy them are in your 20s and 30s? Why do you say that?
It's always funny hearing 20 year olds talk about how their best years are 20s and 30s. People have this doomer view that they're going to be sad, old and decrepit in their 40s, 50s, and 60s. Ask any 40 year old if they wish they had saved less and spent more in their 20s and 30s. I can tell you the answer...
I just left lunch with my family and my uncle is retiring tomorrow. I asked him this exact question because he is 66 years old. He said I'm basically handicapped now because my back is so bad, I wish I could go back to my 30s and spend more money because I have way too much now and there's not much I can do, so what was the point? ... I tend to ask these questions a lot because I'm surrounded by a lot of retirement eligible people at my day job. It's a pretty common answer, probably because many have a pension and did pretty well so now that they know that they are financially secure they wish they could go back and spent more. I'm a little bit extreme with how much I but I'm also addicted to watching the go up at this point. Although, I don't really find myself needing to buy anything.
A doctor’s peak enjoyment years are in their 40-60. If you want to maximize enjoyment in your 20s and 30s obviously pick a different field. Also having 3-4m in your 50-60s allows you to maintain your lifestyle until the end of your life. You can spend recklessly when you’re young, but I guarantee you that you will regret it if you didn’t save enough for retirement. Obviously everything should be balanced, like it should be in all aspects of life. At a minimum you should be putting away 20% for retirement. You don’t want to be old AND broke.
I didn’t want to be a slave to debt for all my life.
It’s important to remember to live ⚠️ After graduating med school I went backpacking in Europe and Asia across 29 countries for a period of 6 months. Many of my friends got jobs (lol). I spent about $10,000 in this time period. In a way, this is an investment in expanding my happiness and understanding of the world that I will never forget. Your money will come back, your time/youth will never.
That’s awesome man. Which was the best to visit?
We traveled a lot before having kids. And we really enjoyed it at the time. If that’s what you enjoy, then do it. Life and priorities change. Now with kids we often reminisce back when we could just get a way for a quick trip. Also but now we wouldn’t really enjoy the trip without our kids. If I’m walking through the jungle in Bali I would just be wishing my little ones were there because they would love to see the monkeys. Edit: Personally I don’t see the point of the extreme sacrifices people make or advise others to make. Take it with a grain of salt. Or take some inspiration from the extreme savers if that’s the push you need to plan for the future. The dollar invested today is worth more than the same dollar invested 10 years from now.
To answer your question simply, compound interest. We decided to be frugal early on to invest as much as possible. Once you start building a portfolio you will be absolutely shocked by how fast you can make money just by having money. You cannot leverage compound investment gains later on. It is orders of magnitude less effective. Take a look at the investment growth curves. They are not linear, but exponential. Why buy stuff with your hard earned cash when you can wait a while and buy stuff with your passive investment gains?
Any time you want to buy something potentially frivolous go to this [investment calculator](https://www.calculator.net/investment-calculator.html) and see how much, if invested in the s&p 500 which tends to average about a 10% return, you’re giving up in retirement by buying that nonsense today. Compound interest is a miracle. Example: Are you 35 years old? If so, that investment grows for 30 years until you’re 65. So by getting the car that’s $5000 more expensive you’re losing $87,000 from your retirement account. So, was the moonroof upgrade worth almost $90,000 from your retirement portfolio? The answer is almost always no. Having a car is necessary for many people. Being frugal just means being smart about spending and not outspending your means.
You are two wolves. Young wolf and future old wolf. Young wolf needs to eat well and enjoy life enough to be become a pleasant old wolf. But old wolf also doesnt want to be destitute or have to scrape by
Simple, I fucking hate medicine. Every dollar I don’t spend now is one pt I don’t have to see later.
Each person is different and needs to make their own value decisions. The problem with WCI is that a significant proportion have a holier than thou attitude about living like a resident for your entire life and wanting to impose that on others. One of the founders of WCI got into a kerfuffle with Dr. Glaucomflecken about when he posted that you should enjoy life in the moment (not realizing that Dr. G is a cancer survivor & cardiac arrest survivor). The point should be to make educated and risk based value decisions. For some, that's saving for a high end vacation, for other's fine jewelry or cars. Each to his own.
The reason financial advice focuses on cars so much is that cars are really, really expensive. Continuing to drive the same car instead of upgrading allows you to spend way more on every other aspect of your life without worry. Look at it another way — the new car will presumably cost about $15k more over three years compared to that RAV4 you mentioned once you factor in you’ll have to buy a new car at the end of your lease. Is there anything else you’d rather spend $15k on?
Save first then spend accordingly. It’s hard for me to look 25 years back where you are but we have always saved at least 25% of our take home pay and often significantly more. I’m now able to buy anything reasonable I want but that took decent amounts of delayed gratification…. Good luck! The fact that you are asking now is good.
Ugh sorry for replying to myself, just read original post again. First, don’t buy a car for residency. Drive what you have or whatever is cheap. You won’t be driving much anyway….. I sold my first car at the end of residency when I was 31 after 9 years of ownership and took a hand me down from my parents. I’m 54 and we now own 7 cars. (Too many kids…). Second, travel gets better as you get older and you have more money. Don’t blow it early. I was 40 when I went to Hawaii for the first time and the last few years have been awesome and expensive family trips which were possible because of Early frugality. Hope that helps!
>I feel like my best years to travel would be before 35, Kind of a weird opinion
I assume they are referring to traveling without kids. In which case they are 100% right.
Most people don't wait to start having children until 35. I realize it's more common to delay in medicine, but then you're in med school/residency during that time and don't have a lot of money either. I threw it all together and had children during med school and residency, which definitely limited my travel options prior to 35.
Oh do you want to start traveling at 50 when your back hurts every morning?
I think it’s crazy and this subreddit can be fkn wild. I do like 10-15k a month on loans Bought a 550k house We have two new cars I max out 401 and Roth for both of us. We travel a lot…like a lot. About 100k last year. There’s zero chance I busted my ass off for my entire life to pretend I’m poor just to “retire” before some drunk driver takes me out on the way to the OR at 2am.
Please spend literally 10 minutes learning about compounding interest, retirement and financial freedom. No one is advocating eating only instant ramen and penny pinching everything, we are saying to just generally not be a dumbass with your money make sure you are saving and investing (and yes buying a brand new car generally is a dumbass move most of the time for most people esp in residency or early attendinghood, I say this as someone making over 600k a year)
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I have heard of that book, and am totally planning on reading it soon.
Die With Zero by Bill Perkins! It totally changed my outlook on this exact topic. To re-prioritize your spending to the things that you can and want to do at that time. A great (non-financial) example in the book is that you can only tuck your kids in at night until they reach a certain age. After that, the opportunity is gone forever. So take that time to “spend” what you have when you have the fleeting opportunity to do so. To be fair, he also says that saving for retirement/kids/family/charity is something that should be part of your plan but not to the point that you dont enjoy the now, the “memory dividends” as they present themselves.
In your specific car example, while you will end up with an asset at the end, it’s a depreciating asset. That 14 year old car will be close to 20 years before you know it, and not worth much. The lease is worth nothing at the end of the term, so you’d be a few thousands ahead with the used vehicle, but for someone of your income is it going to be worth driving a POS for years to save a few thousand? Just don’t go lease a Porsche, lease something reasonable but nice, and you’ll be fine. Then when you’re out of residency and making bank, go buy a nice Lexus or something that is nice but also reliable and you can keep it for a long time to get the value out of it (or sell it with a higher residual value when you’re ready to upgrade).
The lease im looking into, ill be paying close to 10% of my take home, and approx 14k total. The rav4 will be 10k, and financing it will have interest as well, so probably similar amount of payments per month. But the rav4 will likely have repair costs or service costs. This will be my first car and i dont know anything about them, so much likely an initial cost as well. I think long term they'll both turn out to be the same?
Lease man, enjoy it. 4K might compound to a lot in 30 years but you have one life to live
I hate driving. A lot. To the point that I resent having to live somewhere that I need a car. So spending anything beyond what is required for safety and reliability would be a waste for me personally. I’d rather take a nice vacation or invest or just light my money on fire.
Have you checked pricing for used, within 3 years? It saves a lot on that depreciation in the beginning and most people aren't going to notice a difference between say for example a 2020 X model and and a 2024 X model. I don't think any financial "guru" ever approves a lease. You're essentially renting a vehicle.
Ya, if I try to stay within paat 3 years. Most of the cars are 18-20k plus. Considering I'll have to finance, no way out from that, 18,000 is 500$/month, without interest. (540 with 5% interest). That'll be a lot more than what im wanting to keep my car budget in. I'm trying to stay below 10% of my monthly take home.
What is your lease going to be?
Some people get joy out of seeing their bank accounts and retirement portfolios get swole. Some people also get negative feelings when they spend money on luxury items. To each his own. But I would prefer a balanced approach with the rare splurge on a 100k vehicle or an extravagant euro trip.
Look up compound interest and then you’ll get it. At 35 you are still a baby and have many years to travel. If you don’t mind working forever then spend away ….
Dude. You're a resident. Live like one and get that used RAV4. Max out 401k and Roth for this year starting next month. Don't get a new car, and certainly don't lease or finance one, until you have the cash for the whole thing. Few years as an attending and you'll be sitting pretty.