White Coat Investor

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  • #144696
    sahmdsahmd
    Participant

    I really like the White Coat Investor, a blog about doctors and their money (or lack thereof). A couple of recent columns mentioned prevention — how to avoid student loans too high to pay off, and how to avoid going into further debt as a resident — and I thought those might be useful to people here on MomMD who are in the early phases of their medical careers.

    The first column was about doctors with relatively low incomes, which can be a big problem if you have big student loans. The author said that some of these cases can be prevented. If you are planning to go into primary care, then don’t go to a super expensive school. He proposes a rule of thumb in the article: don’t borrow more than 2 times your expected attending salary. I thought that would be pretty helpful guidance for pre-meds choosing a medical school.

    The second column talked about residents who were having trouble paying their bills. One of the things he mentioned is that resident salaries are similar across the country, but cost of living varies a lot. So don’t choose an expensive area for residency, especially if you have a family to support.

    There are tons of other helpful ideas in these two posts, and in the blog in general. He is all about minimizing expenses and maximizing income and he knows exactly what that means to doctors in all stages of training and practice. You should check it out.

    #144697
    westcoastmdwestcoastmd
    Participant

    I second the notion that everyone should check it out. I really like his blog, too, and subscribe to it weekly. I’ve always felt like there is so much I should know about money/investing/paying off debt but that I just didn’t have the time to “learn” it in a way to be good at it. His blog & website are very useful and I wish I had found it before I went to medical school (as I can’t do much about where I went to school/cost now).

    #144704
    AmmaMDAmmaMD
    Participant

    Yeah, I like this site. There’s a ton of useful information and experience there.

    I find the tone a little infuriating at times (and the comments, of course, can be much worse) – there is not a lot of acknowledgement of “your situation may be legitimately different”, which rubs me the wrong way at times, but I understand this is (a) how blogs work, and (b) this is a way to get people to really think, perhaps.

    #144713
    sahmdsahmd
    Participant

    The tone is actually why I put it here in Debates. In case anyone is offended by him or by the people who comment, this would be the most appropriate place to argue about it. 🙂

    #144726
    clee03mclee03m
    Participant

    Holy cow, 20% for retirement?! He preaches pretty lofty goals.

    #144743
    AmmaMDAmmaMD
    Participant

    @Clee03m: yeah, you’re right. That’s kind of crazy, actually.

    Ok, just for kicks (and because I actually feel kind of strongly that our societal tendency to avoid financial topics in polite company comes with a high cost in terms of social mobility and should be actively battled against), here’s my system/principles (yes, I’m a nerd and I have a big spreadsheet with predicted #’s all the way out to retirement. I find it very comforting!):

    1) Make very conservative (although of course still with some risk) assumptions about rate of return on investments, how much to expect from social security, and how much you’ll need to be able to cover yourself of medical expenses when you’re older – but until we’ve achieved a comfortable standard of living in the now, I’m pairing this with planning for a standard of living that’s awfully modest beyond this. This way, if the financial picture turns out to be rosier than I’d feared, we’ll be better off in retirement – but if not, we’ll be ok. And in the meantime, I’m not interested in sacrificing the now more than absolutely necessary just so I can luxury I can’t afford now in retirement! More specifically, in my calculations I assume:
    – 3% return on investments beyond inflation (so, this is sort of like assuming 8% market returns, 3-4% inflation, and a pretty aggressive mix of stocks vs bonds in your accounts)
    – That I need $1 million in today’s dollars, not counting owning a home and beyond eg college savings for kids and such, as a floor for a basically secure retirement for a couple. Twice thsi would be what would be more likely to allow travel, etc.

    2) When I do this, for us, this ends up saying that more or less, saving on average 12% of our income annually will do us just fine (and that in fact 10% would make our floor, easily). But, there are a number of principles for prioritizing this:
    – At all costs, try to max out matched retirement accounts up to the max
    – Next goal: if at all possible, try to max out Roth IRAs when you’re in the income range where you can do this (these are the two things we do now, despite still being in the eating-bulk-purchased-dried-beans phase of life overall)
    – Beyond this, use the ~12% of income as a rough guideline for how much to save, but there’s more room to drop down a bit when covering college costs, increase a bunch after a new raise, etc.

    3) Pair this with reasonable insurance – our savings will not be robust enough to cover us / our kids securely if we are unable to work significantly earlier than expected. Life and disability insurance that have high coverage when we’re still earlier in our careers, but without paying a ton to get a high payout when we were already expecting our incomes to drop, matches these goals.

    What about others?

    #144744
    tr_tr_
    Participant

    Wow, I’m impressed. I admit to being a financial ignoramus. My husband handles all the finances. I know this is not a savvy way to operate.

    #144745
    sahmdsahmd
    Participant

    Well, now you know where to go to learn about it. 🙂

    #144746
    flustratedflustrated
    Participant

    Thanks for posting this, I have been enjoying the reading. It is solid advice that is hard to argue with- BUT there is an underlying assumption that the the economy is stable, markets aren’t being manipulated, and energy costs aren’t going up, up, up. For some sobering education, I think it is very educational to check out peakprosperity.com. There’s a new mini crash course that’s about an hour long that is worth checking out.

    #144748
    Emily2651Emily2651
    Participant

    I think the 20% ballpark probably makes sense for households where a) retirement savings starts later (hello, doctors!) and b) expenses won’t decline dramatically in retirement. 20% is fairly standard advice.

    Having said that, my approach is similar to yours, Amma. I’m actively working to avoid over-saving. The absolute last thing I want is to scrimp to save now — when I’m young and my children are babies and my husband is healthy and being alive feels so damn amazing — just so I can sit on a giant pile of money when I’m old and frail.

    Our household spending is structured such that we’ll have a pleasant retirement on less than half our current annual income — frankly we’d probably be *fine* on about a quarter of our current income assuming a) no kid expenses and b) paid off house. So there’s no need to plan for 80% replacement as many talking heads suggest. We save around 15%; according to every scenario I can think to feed into firecalc, including various stress tests (earlier retirement, less Social Security), that is likely to be plenty. For us, that’s 2 maxed out 401(k)s and some additional match.

    ETA: according to firecalc, if I want to spend 80% of current household income in retirement, assuming Social Security payments of about half the current value and retirement at age 65, I’d need to save 21% of income going forward. So I think that’s where that ballpark recommendation comes from, generally.

    #144749
    asunshineasunshine
    Participant

    I’m of the Dave Ramsey opinion – live like a resident the first 3 years out in practice and crush the debt. After that, hopefully 20-30% in savings (incl college and retirement and down payment). Hopefully somewhere in there, we’ll get a second car and give more to charity. Will keep y’all posted…

    Thank you all for sharing the above websites; good stuff to think about!

    #144750
    AmmaMDAmmaMD
    Participant

    @flustrated: Interesting site – perhaps it deserves it’s own post in this section! I have to admit to some paranoia along these lines, although I try to keep it in check.

    #144755
    clee03mclee03m
    Participant

    My husband and I have settled on 15% for retirement until we have all the short term financial goals reached. After, we are likely to save more, but we have a 10 year debt free plan so it would have to go along with that. Our financial goal is to be able to financially retire as soon as possible. Not saying I will not work anymore. But I want it to be 100% by choice and not forced by finances. I don’t like Ramsey’s investment advise and his method for paying off debt but I do love his anti-consumerism/anti-debt rhetoric. This liberal commie will read and listen to his stuff because he makes me consume and spend less 🙂

    I do wish I would have paid our debt off before getting used to our income. I really admire that. But since going part time, we have scaled way way back, and I hardly even notice that we never eat out, go on expensive vacations (we are checking out all the beautiful places in and around the state!), or buy much of anything at all. My kids think eating a home packed sandwich when we are out and about is totally normal. I am healthier and my house is less cluttered. My life is simpler and I think I am overall happier. That may not be the spending though. It may be due to working part time 😉

    #144756
    sahmdsahmd
    Participant

    clee03m, that reminds me of an older book, “Your Money or Your Life,” which really makes one think about all the time it takes to earn money. The book makes you wonder about things like: (1) do I really want to spend money on X, since it took me Y hours to earn this money? and (2) would I be happier if I had more time to do things that are important to me? I don’t think its investment advice is very robust, but it does get you thinking about what you are doing with your time and your money.

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