Living within your means

[spaz]

Ahh the military..lovely. Yep, they are stuck. But those of you not in the military, you need to take where you will go into consideration. We never considered, visited, etc anywhere in the Northeast or California for that precise reason. I still shudder when I think about visiting my uncle who lives near San Francisco.. His house would have cost maybe 100,000 or so where I live. It was valued at 1.5 million... He works at a university and they have to give a subsidy to the profs who make under 250,000 so that they can afford a place to live... Schoolteachers live over an hour away because they can't afford to live there.. Ridiculous.

Another thing we did that works well is that we decided what our standard of living should be and chose for him to take that salary. We've stayed there. He actually makes 2 to 3 times that at this point. Every quarter he gets a check for the excess he's made. We make charitable donations and then put the rest in savings. It is never in the checking account for us to spend. We did the same in residency. We lived on his salary and put my teaching salary in the bank. We chose that standard of living.

[Sheherezade]

We do automatic deposit to our savings account and have an automatic transfer scheduled each month to pay us whatever we've determined will be used for the monthly bills and spending. That way, any changes to salary and any extra income is already in the savings account and unavailable.

On the whole COL situation, it IS a lifestyle decision. That said, there are reasons for living in a higher COL area. We moved from one (Boston) to a much cheaper area for attendinghood. It has made our financial life much easier and we've been able to enjoy more dinners out, vacations and extras. Still, there are many reasons beyond financial that people use to select where they spend their lives. It might be worth giving up extras, dinners and vacations to stay near sick family in a smaller home. The city also offers many, many, many more free activities for children and adults and cheap transportation. Heck, we walked most places and didn't own a car for a decade. My point is that the choice of where you live and how you spend your money is made based on what's important to you and what works for your family. It's an individual choice. People should make educated decisions but not all people thrive in low COL areas and the higher costs may be worth it to some.

[Thirteen]

We picked an area that has no state income tax, and a relatively affordable COL. However, DH is not super specialized, and is in demand, so I know we have the luxury of choosing our location, as many don't.

In residency, we lived with his parents in their house - I will say it saved us a ton of money in a very high COL area. At the same time, I can't say I recommend living with family for a few years, just to save some cash.




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[peggyfromwastate]

Yes, when you only get into med schools in high COL areas and can only match into residency/fellowship in a high COL area you are pretty much hosed, at least for a while. Do what you can to minimize the damage. Whether you could or couldn't go to a lower COL area in the past is all water under the bridge. But last I checked, just about any specialty can get a job in a low cost of living area as an attending. Lots of physician families are faced with the decision of living a middle class lifestyle in Manhattan or the Bay Area, or living a luxurious lifestyle in Indianapolis or Texas. If you decide to put down roots in San Francisco, it will have real consequences- no early retirement, smaller house, less money for college etc. It isn't that a doc family can't afford to live there, it's just that they won't live the same as they would in Reno or Eugene or Dallas or St. Louis.

Yes-- I was secretly hoping for an assignment to San Antonio for COL alone.

I'm pretty open here--- I'll tell you we had multiple options for med school. We knew the most financially sound one would have been staying in state at our really well regarded med school, taking on student loans, and staying civilian. We knew this-- so I really don't mean to whine. Because we chose this life. Dh wanted to be in the military, he wanted to serve, and he is pretty damn pleased with himself!! Lol!

So when he decided military, he jumped on the option for the military med school. We had great benefits and did not fall I to debt at all during school. We bought a modest home and lived within our means. We did have a HELOC that we used to help pay for some things (like broken down cars), but we were pretty good. We were stationed in Bethesda, MD and had to live about 20 miles away (a 1-2 hour commute) to afford our home.

Residency we were assigned to the same area-- did not move. It was fine-- but we did outgrow our home. Our salary increased only a tiny bit from med school to residency. Our expenses grew a lot as we had 5 kids during residency. Our choice to have so many kids!!! Not whining-- just pointing out that kids are expensive.

Dh made it thru residency and set his little heart on a very super super specialized specialty. In fact they only have 1 fellowship for this--- in Stanford. We went from metro DC COL to Bay Area. Wowza.

Well, I COULD of course NOT have sent my dd to preschool (a coop preschool bc that's about half the price of other), and I could have said "no" to my kids who wanted to do extracurriculars, like continue competitive swimming and do taekwondo (not all kids do all the stuff-- just some), and music lessons are a huge luxury, but dh and I feel like they should have these things. It doesn't impact our bottom line too much--and if we have 20k less in retirement because of it, so be it. We have kids who are active and learning the correlation between hard work and success.

So, we have not "gotten ahead" during fellowship, regardless of the fact that we are paid attending salary for military docs. It's hard on this salary.

We are assigned to Oahu now for military payback. (It's not in writing yet, but mostly a done deal. Uncle Sam can change his mind but we don't foresee a scenario where that might happen).

So I just think... Oahu... Schools are not known for being great, private schools are about $800 per kid per month (not feasible), and COL on everything is just through the roof.

We will make it, but I think traditional money strategizing is frustrating for me...

I am always struggling between wanting to feel "financially responsible" and not wanting to deprive my kids of experiences that I think can grow them as people and have lasting impact.

I really appreciate the advice given--- I definitely think there are areas that we could pinch pennies more.

My question is how to get the Dr husband to be interested in the finances? He's been so busy (you know) and doesn't really know what's going on. He isn't naturally interested in this either... How do you (White Coat Investor--- if you are still out there ) recommend approaching finances as a married couple?

[spaz]

Yep, kids are expensive..no doubt about that. I would like for all of the board members who are married to spouses in medical school to make sure that is part of their discussion: children and their financial and emotional toll. For us ( I realize other people made different decisions.....that is great for you just sharing what went into our thinking...) we decided to

1. Wait to marry until almost done with med school. ( Last year was pass/fail and 3 or 4 months off to interview so an awesome first year.) It also allowed me to finish my degree. We could have married 6 months after we met instead of nearly 3 years but financially we waited.

2. We waited until he was nearly through with residency to have our first child. I didn't want to raise it alone(last year as chief resident was much easier) and wanted to build up our savings... I am so glad we did. Our first had medical problems and we went through 4 1/2 years of saving because of medical expenses and the fact that I had to stay home.

Those two factors: delaying marriage and children helped our financial status. I know some people may not want to do that. But then you are making a choice ( not necessarily good or bad, just different)

As far as how to get hubby involved, maybe you just do what he did to me: He made up a sample budget and asked for my input. He then got a ledger book and we both put down every penny we spent. Each month he went over the numbers with me. During residency, I ended up taking that job over. But we still discuss things each month and he does all of the investing. But he asks if what he is thinking about buying is ok... There wasn't any question. We are in this equally and needed to know ( and handle). If one of us dies, it will not be a big deal in the financial department because we do things together... I will be eternally greatful for hubby's leadership in this area as I was pretty clueless when we married.

Hawaii will be hard to keep expenses down...

[ladymoreta]

My question is how to get the Dr husband to be interested in the finances? He's been so busy (you know) and doesn't really know what's going on. He isn't naturally interested in this either...

We struggle with this, too. DH *hates* (see that? asterisks, underlined, bold, and italicized!) talking about money. I usually start a week or two in advance warning him that we need to plan a budget discussion. Eventually I'll try to get him to set a date and time to talk about it with me. We'll usually put it off a time or two. When we sit down, I have to have a plan, spreadsheets ready, and get it over with fast! Haha!

[diggitydot]

I find spreadsheets really helpful, too. They clarify and get everything into black-and-white.

[Vishenka69]

Our expenses have snowballed in the last 6 six months or so. We always tend to spend more when we're going through a rough patch. Retail therapy is generally a very short term fix though. There are a number of categories we can cut but neither one of us is willing to pull the plug at the moment. It's kind of pointless to buy less take out and spend money on groceries instead, if I'm going to burn dinner or be forced to abandon it half way through. Kids activities are starting to add up too. I highly doubt we'd be able to have much in savings if we had 4-5 kids.

The main reason we're relatively well ahead is because we delayed having kids and I worked full time in med school and residency.

[peggyfromwastate]

Living within your means

When I've tried to do that (spreadsheets) dh just drifts off. ADHD kicks in. He gets overwhelmed so fast!!

Hilarious-- he printed up his W2 and said to me, totally serious, "wow I didn't know we were so rich."

Lol!!!!

Could be bc the last paycheck he really looked at was 12 years ago. We are so not rich... He's just been in his bubble for so damn long. How to ease him out.... Lol.

So far my approach of: "you better just hope I don't die" hadn't been incredibly motivating. It's like tempting fate to him. If he figures out finances a little and how to.. You know... Pay bills and balance a checkbook, then maybe God will decide to just take me now!!!

Seriously he just loves doing his thing. Research and writing articles-- every night. I just need to force him to sit down with me to talk numbers.

[Ravenclaw]

Mint.com has been incredibly helpful in budgeting for me. There are a few other budgeting websites that are similar like Yodlee but Mint has been working well for me. Most of our spending is on credit cards, so it's easy to track where we are spending our money. It might not work as well if you spend a lot with cash.
Peggy, my DH is like yours. He was really excited in fellowship last year with when he got his W2; his income was the highest it's ever been for him because of moonlighting. (And was about the same as my entry level salary my first year out of college 12 years ago!) Poor guy.
Still not sure how to get him involved with our finances but at least a site like Mint makes financial planning more palatable.

[The White Coat Investor]

Yes-- I was secretly hoping for an assignment to San Antonio for COL alone.

I'm pretty open here--- I'll tell you we had multiple options for med school. We knew the most financially sound one would have been staying in state at our really well regarded med school, taking on student loans, and staying civilian. We knew this-- so I really don't mean to whine. Because we chose this life. Dh wanted to be in the military, he wanted to serve, and he is pretty damn pleased with himself!! Lol!

So when he decided military, he jumped on the option for the military med school. We had great benefits and did not fall I to debt at all during school. We bought a modest home and lived within our means. We did have a HELOC that we used to help pay for some things (like broken down cars), but we were pretty good. We were stationed in Bethesda, MD and had to live about 20 miles away (a 1-2 hour commute) to afford our home.

Residency we were assigned to the same area-- did not move. It was fine-- but we did outgrow our home. Our salary increased only a tiny bit from med school to residency. Our expenses grew a lot as we had 5 kids during residency. Our choice to have so many kids!!! Not whining-- just pointing out that kids are expensive.

Dh made it thru residency and set his little heart on a very super super specialized specialty. In fact they only have 1 fellowship for this--- in Stanford. We went from metro DC COL to Bay Area. Wowza.

Well, I COULD of course NOT have sent my dd to preschool (a coop preschool bc that's about half the price of other), and I could have said "no" to my kids who wanted to do extracurriculars, like continue competitive swimming and do taekwondo (not all kids do all the stuff-- just some), and music lessons are a huge luxury, but dh and I feel like they should have these things. It doesn't impact our bottom line too much--and if we have 20k less in retirement because of it, so be it. We have kids who are active and learning the correlation between hard work and success.

So, we have not "gotten ahead" during fellowship, regardless of the fact that we are paid attending salary for military docs. It's hard on this salary.

We are assigned to Oahu now for military payback. (It's not in writing yet, but mostly a done deal. Uncle Sam can change his mind but we don't foresee a scenario where that might happen).

So I just think... Oahu... Schools are not known for being great, private schools are about $800 per kid per month (not feasible), and COL on everything is just through the roof.

We will make it, but I think traditional money strategizing is frustrating for me...

I am always struggling between wanting to feel "financially responsible" and not wanting to deprive my kids of experiences that I think can grow them as people and have lasting impact.

I really appreciate the advice given--- I definitely think there are areas that we could pinch pennies more.

My question is how to get the Dr husband to be interested in the finances? He's been so busy (you know) and doesn't really know what's going on. He isn't naturally interested in this either... How do you (White Coat Investor--- if you are still out there ) recommend approaching finances as a married couple?

A few comments:

First, on being a military doc. You cannot be a military doctor and live a non-military doctor lifestyle. Military docs just don't make that much. That's just the way it is. My four years on active duty, and this is with all my board certification pay and allowances, we made $115-130K, not including a little moonlighting I did the last couple of years. You can't put the kids in private school, buy the big house, drive the fancy cars AND save an adequate amount on that salary. It's different if you're making $200-400K. Add in a high COL area, and you'd better be considering yourself very middle class- public schools, driving cheap cars, 2000 square foot house (maybe rented) etc. When I was in the military I drove a car that cost $1850 and we lived in a 1600 square foot townhouse that cost $130-140K. We were able to save and go on some great trips, but it was because we had no debt besides a tiny mortgage and kept our fixed expenses very low. If we'd swapped our $800 mortgage for a $3000 mortgage and added on a $500 car payment we would have neither saved nor gone on great trips.

Second, on getting a spouse involved. All I can do is emphasize the absolute importance of being united on this subject. You cannot do it alone. It simply cannot be done successfully. Now, one spouse can take the lead, and all the better if it is the spouse who has more time to dedicate to it, but the big picture must be agreed upon by both. I think most posters already know or recognize this. The question is HOW to get someone involved. I don't have any great answers other than start as early as possible. We started talking about money before getting married and literally can track pretty much every dollar we've ever spent. I've got 15 years of spreadsheets saved somewhere. After 10 or 20 of these discussions, they're pretty much on autopilot ("What's this $150 on Amazon? Does that come out of the family fund or your allowance?"), with the only significant discussions occurring around five figure purchases or significant changes in our spending. But the first couple of dozen times you do this, you learn a lot about each other and what really matters to each other (and to yourself.) Try to keep the focus on mutual goals and don't make it personal ("Why'd you spend money on this!") It helps if you each have at least a little money you can spend without consulting the other person. Then the discussion goes like this.

"What's this $100 for the nail salon?"
"I had my nails done."
"I don't approve."
"Fine, I'll pay for it out of my allowance. Next subject."
"Okay, what about this $200 at Costco?"
"That's the grocery bill. Do you like eating?"
"Okay, why'd we spend $600 eating out this month?"
"Maybe we should quit doing that so little Jimmy can play baseball and play the flute."
"I agree. We'll only spend $200 eating out next month."

Failing to plan is essentially planning to fail. It isn't difficult or complicated to become wealthy on a physicians salary, but you do have to make a few decisions correctly and you do have to defer some gratification and make a few sacrifices along the way. I can tell you this- a few minutes planning with the spouse makes far more after-tax/after-expense money for most couples than working an extra shift or taking an extra call.

[diggitydot]

The difficult part for us was getting DH to recognize his spending patterns. Dude didn't think about it when he'd had a craptastic week and went out to lunch every single day. It took a good 18 months for him to FINALLY recognize that his lunches were a HUGE part of our food expenses each month.

"Why is our food for this month over $1400? There's only 5 of us."

"Our food spending for the month for the fam was $800. The rest was your lunches."

"WHAT?!"

Yeah, we had that exact convo several times before he "got it".

[MAPPLEBUM]

The difficult part for us was getting DH to recognize his spending patterns. Dude didn't think about it when he'd had a craptastic week and went out to lunch every single day. It took a good 18 months for him to FINALLY recognize that his lunches were a HUGE part of our food expenses each month.

"Why is our food for this month over $1400? There's only 5 of us."

"Our food spending for the month for the fam was $800. The rest was your lunches."

"WHAT?!"

Yeah, we had that exact convo several times before he "got it".

Hahaha I must interject.

Start of Residency:
Me: you're not allowed to buy lunches every day.
DH: ok.

1 month later:
Me: dear god! Why are your 28 waist pants so big on you?
DH: I've been skipping lunch.
Me: ???
DH: I eat in the mornings and not again until I get home

Guess which feminist packs her husband lunch now

[diggitydot]

I actually don't mind if he's dining out for lunch occasionally so long as we're hitting our financial goals. Particularly on awful days when he really needs out of the office for a few minutes. The disconnect between his actions and his REactions was mind-boggling for a while, though.

[peggyfromwastate]

We live a very middle class lifestyle. I did not think doctors were considered upper class--- we have never lived in an area where that's the case, or at least where I thought that was the case. I grew up with a dad wo was an ER doc in what he called "the golden age of medicine". And we never had a new car, I never had brand name anything, and we all went to public school. I never thought doctors were a big deal. Just overworked people who tend to put job before family. Oh how I love medicine!!! Lol.

My husband does know a military doc in oahu who sent all 4 of his kids to private school using his moonlighting money alone. The military doc lifestyle does allow for moonlighting and most docs can supplement their income using that by at least $50 k a year. I'm hoping for a net profit from the moonlighting of around $20K--- Regardless of course our budget could not absorb paying for 1 college student plus 4 private school tuitions. Most likely I'm going to homeschool. The college student is taking the GI bill (dh transferred his benefit to her) and she has a very nice scholarship from the private school she's interested in. So either way we will not pay tuition for her. She will still be expensive but not as bad as it could be.

The military salary of a doc is a bit deceptive as you know. There are benefits that you can add that are significant-- health insurance completely paid for (with a diabetic son and a son with Tourette's this is huge-- their meds alone are over $2K a month) plus the non taxed BAH which is nearly $4k a month in oahu, and the oconus allowance also which for our family is around $800 non taxable dollars a month. Board certification exam fees are reimbursed, malpractice is covered, more vacation days than you can use, and retirement benefits since he's a lifer, etc.

He didn't go in this for the money and we aren't out there driving sports cars and taking on debt left and right. I do recognize that the kids extracurriculars are a disproportionate part of the budget, but I would rather take on debt than cut those out. So far we don't need to take on debt for that, just not take many trips, we don't ski, we are careful about eating out, etc. Our hobbies are going to swim meets and taekwondo testing. Haha.

Anyway...

What is a doctor lifestyle? Is this stereotype still out there among doctors themselves? I know what my kids' classmates think but that's just not that important to me. I don't see people rolling in cash here on these boards-- no posts like "should we get the Ferrari or the mazerhati? I can't decide!" This board is not that place--- everyone here is very real, cautious, and frugal.

The description you lay out of middle class is pretty much exactly where we are. we have not lived in a house of more than 2000sq feet, our kids have never done private school (outside of preK), and we have 2 cars with over 150K miles on them. Our main car is almost paid for also and we plan to drive it for at least another decade or until it won't go anymore. Or until my dh or dad total it which is a real possibility. I'm not considering moving to the next post as being any kind of jump in lifestyle either. So mentally we are already "middle class"...

Maybe I misrepresented my initial post on this topic and sounded like I was whining that the big pot of gold at the end of training didn't land in my lap. I was indulging on a bit of "medicine sucks, and we would've been better off had I gone to work as a chemist and he'd been an engineer." Useless to think of that, but sometimes we all say "what if".

Like I said, we crunched numbers back when we decided we were going to take the military route. We chose military knowing the future of medicine was uncertain (universal healthcare) and that dh wanted to serve. I'm not blasé about money. I'm not thinking this will be easy.

To be honest I chafe a little at the implication that I thought we'd be living some wealthy lifestyle. It's just not the case but I can certainly see how my original post indicated that. However I'm not quite so vapid nor so naive. Posting on the iPhone that we can not afford (but you bet your ass I'll take on debt for that ) sometimes leads to posts that are disjointed and don't convey intention well.

One thing I am curious about... WCI do you have kids? I think I know nothing about you. Perhaps you are an über wealthy doctor way up there in salary approaching 7 figures a year though.

JOKING.

I also think... Perhaps tiptoeing in here a but--- that sometimes financial planner type people make financial planning the main focus of life and disallow for fun at all. Is it really so terrible to LIVE now? And maybe not have saved quite as much for retirement? Assuming your basics are saved for of course. I meet so many elderly people who have plenty of money but regret not traveling when they could. They regret not living a little bit more... But due to the depression they were constantly working and saving. So, I think there needs to be some balance. Life is nuanced. Not such a formula that I think some financial planners like to try to apply.