MedSaver's Journal
Re: MedSaver's Journal
At some point you want that debt gone.
It might not be the best financial move (with an interest rate of 3.5%, it's likely that your investments on average will grow quicker than your interest).
But at some point you want that debt to stop dragging you down. My boyfriend paid off his debt ten years early because of this (it had a low interest rate, but he also had ten times the amount in net worth anyway). We're still in that ten year period and every now and then he tells me how happy he is that the debt is gone. And that he no longer has to deal with it and with the debt agency.
(I personally also paid down my student loans as fast as I could, but back then I didn't know anything about investing, so it wasn't a conscious decision of "debts or investments"; just: debts, be gone).
It might not be the best financial move (with an interest rate of 3.5%, it's likely that your investments on average will grow quicker than your interest).
But at some point you want that debt to stop dragging you down. My boyfriend paid off his debt ten years early because of this (it had a low interest rate, but he also had ten times the amount in net worth anyway). We're still in that ten year period and every now and then he tells me how happy he is that the debt is gone. And that he no longer has to deal with it and with the debt agency.
(I personally also paid down my student loans as fast as I could, but back then I didn't know anything about investing, so it wasn't a conscious decision of "debts or investments"; just: debts, be gone).
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Re: MedSaver's Journal
Couple things:
1) Great progress! I also had very high student loans (like an idiot) and it felt great to pay them off.
2) My sister's a doctor and I have several other doctor friends/acquaintances, so I'm somewhat familiar with what you went through (all the schooling and low pay years). Although your income looks impressive now, if you amortize over all those training years, it puts it in perspective. Have you projected what your average pay from the first year of medical school through retirement would be?
3) I don't know why you include insurance, professional expenses and debt payments in your expenses. To my mind, it artificially inflates your expense numbers because those numbers are related to working, correct? The debt is like a pre-paid professional expense and all the ongoing professional expenses should really be adjustments to income rather than expenses so that you're looking at them properly. They are the "cost of working" and not the "cost of living". They will go away once you downshift/quit.
1) Great progress! I also had very high student loans (like an idiot) and it felt great to pay them off.
2) My sister's a doctor and I have several other doctor friends/acquaintances, so I'm somewhat familiar with what you went through (all the schooling and low pay years). Although your income looks impressive now, if you amortize over all those training years, it puts it in perspective. Have you projected what your average pay from the first year of medical school through retirement would be?
3) I don't know why you include insurance, professional expenses and debt payments in your expenses. To my mind, it artificially inflates your expense numbers because those numbers are related to working, correct? The debt is like a pre-paid professional expense and all the ongoing professional expenses should really be adjustments to income rather than expenses so that you're looking at them properly. They are the "cost of working" and not the "cost of living". They will go away once you downshift/quit.
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Re: MedSaver's Journal
I'm stealing #3 suomalainen, that's a great way of looking at it.
Re: MedSaver's Journal
I, too, would say to just pay off the debt. The mental energy it takes to track it is not zero. I don't think you'll even realize how much it pulls from you until that weight is gone.
Re: MedSaver's Journal
Thanks for the feedback, all. I don't think there is a single best way to pay off this level of debt. We have about 2 years to go at our current pace, which means we will have paid off >$300k in 5 years (I started this journal with about $209k, but had by that time already paid more than $30k of it). I think this repayment is fast enough and allows us to grow our assets at the same time. While it's true that there is a psychological burden to debt, it doesn't keep us up at night (anymore) because we know that if we had to we could write a check for the full amount.
With regards to how our expenses are calculated, our opinion is anything that isn't money saved is money spent, which includes insurance and debt payments. Obviously these costs may change in the future, but that is true for anything. Our major professional expense is disability insurance, which we will probably keep because of the relatively low cost, our continued desire to work at least part time and the fact that it will still pay out (tax free) regardless of if we are working or not.
With regards to how our expenses are calculated, our opinion is anything that isn't money saved is money spent, which includes insurance and debt payments. Obviously these costs may change in the future, but that is true for anything. Our major professional expense is disability insurance, which we will probably keep because of the relatively low cost, our continued desire to work at least part time and the fact that it will still pay out (tax free) regardless of if we are working or not.
Re: MedSaver's Journal
September 2018 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $28,818
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $85,973
Assets:
IRA/Brokerage/403b/457/cash: $852,900
Net:+$738,109
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $28,818
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $85,973
Assets:
IRA/Brokerage/403b/457/cash: $852,900
Net:+$738,109
Re: MedSaver's Journal
October 2018 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $27,598
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $82,423
Assets:
IRA/Brokerage/403b/457/cash: $809,459
Net:+$699,438
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $27,598
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $82,423
Assets:
IRA/Brokerage/403b/457/cash: $809,459
Net:+$699,438
Re: MedSaver's Journal
Nice progress on the student loans.
Market decline hit you, too. Oh, well. Keep going!
Market decline hit you, too. Oh, well. Keep going!
Re: MedSaver's Journal
November 2018 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $26,411
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $78,830
Assets:
IRA/Brokerage/403b/457/cash: $832,770
Net:+$727,529
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $26,411
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $78,830
Assets:
IRA/Brokerage/403b/457/cash: $832,770
Net:+$727,529
Re: MedSaver's Journal
Annual Update
Another year down. How did we do?
MedSaver gross income 2018: $324,536 (2017: $345,448) , down 6%.
Net income 2018: $196,502 ( 2017: $212,622), down 8%.
Monthly net: $16,375
Even though W2 income fell slightly, I was eligible for profit sharing and received a disbursement of $54k. So total compensation is above last year.
Mrs. MedSaver gross income 2018: $159,466 (2017: $160,633), down <1%.
Net income 2018: $91,868 (this number is low again because we are maxing her pretax retirement accounts)
Monthly net: $7,656
Unforeseen business headwinds resulted in decreased pay for me. This is definitely changing in 2019 (for the better). Mrs. MedSaver had relatively stable income this year. I think I would be remiss if I did not also start to include our investment distributions which have grown to $11.500 this year.
Spending breakdown (monthly):
Food: $1000 (no change)
Rent: $1850 (no change)
Insurance: $840 (previously $735)
MedSaver student loan: $4540 (previously $4030). I paid off my highest interest loan (~$9000)
Fiancee student loan: $1300 (no change)
Utilities: $180
Gas: $180
Internet/cable: $127
Cleaning service: $80 (no change)
Cell phone: $65 (no change)
Travel: $3300 (previously $2500)
Other: $4484 (previously $4700)
Total 2017: $17,496 (previously $16,747)
Thankfully, the "Other" category decreased somewhat and again includes last year's tax bill, gifts, cash withdrawals, entertainment, family support, professional expenses, car maintenance, financial planner fees, investment fees, healthcare expenses, clothing, home maintenance, charitable giving, etc. We anticipate our federal tax bill will be substantially lower in 2019 (like $12k lower).
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $25,220 (Jan 2018 $38,217)
MedSaver loans
Student loans blended (5 year ~3.5% fixed) = $75,233 (Jan 2018 $126,507)
Assets:
IRA/Brokerage/403b/457/cash: $789,148 (Jan 2018 $673,387)
Net: $688,695 (Jan 2018 $508,663), which is + $15,003/month (previously $25,102/month). Overall, stocks took a dive at the end of the year, but we still made satisfactory annual gains. We maintain the trajectory to reach the lower margin of our FI number in 6 years.
*Edited to include profit sharing and equities distributions as income.*
Another year down. How did we do?
MedSaver gross income 2018: $324,536 (2017: $345,448) , down 6%.
Net income 2018: $196,502 ( 2017: $212,622), down 8%.
Monthly net: $16,375
Even though W2 income fell slightly, I was eligible for profit sharing and received a disbursement of $54k. So total compensation is above last year.
Mrs. MedSaver gross income 2018: $159,466 (2017: $160,633), down <1%.
Net income 2018: $91,868 (this number is low again because we are maxing her pretax retirement accounts)
Monthly net: $7,656
Unforeseen business headwinds resulted in decreased pay for me. This is definitely changing in 2019 (for the better). Mrs. MedSaver had relatively stable income this year. I think I would be remiss if I did not also start to include our investment distributions which have grown to $11.500 this year.
Spending breakdown (monthly):
Food: $1000 (no change)
Rent: $1850 (no change)
Insurance: $840 (previously $735)
MedSaver student loan: $4540 (previously $4030). I paid off my highest interest loan (~$9000)
Fiancee student loan: $1300 (no change)
Utilities: $180
Gas: $180
Internet/cable: $127
Cleaning service: $80 (no change)
Cell phone: $65 (no change)
Travel: $3300 (previously $2500)
Other: $4484 (previously $4700)
Total 2017: $17,496 (previously $16,747)
Thankfully, the "Other" category decreased somewhat and again includes last year's tax bill, gifts, cash withdrawals, entertainment, family support, professional expenses, car maintenance, financial planner fees, investment fees, healthcare expenses, clothing, home maintenance, charitable giving, etc. We anticipate our federal tax bill will be substantially lower in 2019 (like $12k lower).
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $25,220 (Jan 2018 $38,217)
MedSaver loans
Student loans blended (5 year ~3.5% fixed) = $75,233 (Jan 2018 $126,507)
Assets:
IRA/Brokerage/403b/457/cash: $789,148 (Jan 2018 $673,387)
Net: $688,695 (Jan 2018 $508,663), which is + $15,003/month (previously $25,102/month). Overall, stocks took a dive at the end of the year, but we still made satisfactory annual gains. We maintain the trajectory to reach the lower margin of our FI number in 6 years.
*Edited to include profit sharing and equities distributions as income.*
Last edited by MedSaver on Tue Jan 01, 2019 4:26 pm, edited 1 time in total.
Re: MedSaver's Journal
Ah, so you hope to be student loans free by July 2020 or so, if you continue these payments... Nice!
Plus of course your investments and net worth will continue to increase as well.
Happy New Year!
Plus of course your investments and net worth will continue to increase as well.
Happy New Year!
Re: MedSaver's Journal
January 2019 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $24,030
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $71,627
Assets:
IRA/Brokerage/403b/457/cash: $859,153
Net:+$763,496
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $24,030
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $71,627
Assets:
IRA/Brokerage/403b/457/cash: $859,153
Net:+$763,496
Re: MedSaver's Journal
Nice progress again, and I think you're also seeing a partial recovery from last December's stock market nosedive?
Re: MedSaver's Journal
February 2019 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $22,832
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $67,986
Assets:
IRA/Brokerage/403b/457/cash: $868,099
Net:+$777,281
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $22,832
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $67,986
Assets:
IRA/Brokerage/403b/457/cash: $868,099
Net:+$777,281
Re: MedSaver's Journal
March 2019 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $21,627
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $64,340
Assets:
IRA/Brokerage/403b/457/cash: $895,161
Net:+$809,194
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $21,627
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $64,340
Assets:
IRA/Brokerage/403b/457/cash: $895,161
Net:+$809,194
Re: MedSaver's Journal
April 2019 Update
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $19,419
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $60,732
Assets:
IRA/Brokerage/403b/457/cash: $955,937
Net:+$875,786
Liabilities:
Credit cards = $0
Mrs. MedSaver loans
Total student loans (5 year fixed 3.5%) = $19,419
MedSaver loans
Student loans blended (5 year 3.5% fixed) = $60,732
Assets:
IRA/Brokerage/403b/457/cash: $955,937
Net:+$875,786
Re: MedSaver's Journal
Nice. Getting really close to $1 million in assets now; let's hope the stock market collaborates, but then you could see that by June or July.
Also it's nice to see the debt numbers drop; I'd say for Mrs. MedSaver it must have been quite the milestone to get below $20k. It looks quite doable now, right?
Also it's nice to see the debt numbers drop; I'd say for Mrs. MedSaver it must have been quite the milestone to get below $20k. It looks quite doable now, right?
Re: MedSaver's Journal
Nice! Congrats on all of this progress. The SL's are like almost gone which I'm sure must have been a ton of work to accomplish. It's like an exponential growth, right? So hopefully the time it'll take to get to that $4M is far shorter than what it took to get here? Any plans on moving after that point or an encore career perhaps? Maybe you mentioned, haven't finished reading your entire timeline yet.
Re: MedSaver's Journal
As you've stated, this all hinges on the stock market. Based on our income, we would need 1-2% growth to hit $1 million by June. We expect to pay off our loans in about a year (once they total around $20k, we will probably just end up paying a lump sum). It will be nice to have that burden lifted, but it will eventually be replaced by a mortgage.DutchGirl wrote: ↑Mon May 06, 2019 6:32 amNice. Getting really close to $1 million in assets now; let's hope the stock market collaborates, but then you could see that by June or July.
Also it's nice to see the debt numbers drop; I'd say for Mrs. MedSaver it must have been quite the milestone to get below $20k. It looks quite doable now, right?
We've been paying off our loans for so long, we don't even think about the ~$5k/month that goes towards it. It's gonna be weird having that extra money lying around to invest. As far as exponential growth, we are just now starting to see a best fit line that curves up. Hopefully the saying, "the first million is the hardest" is true, because it has been a real slog. I'm not sure exactly what happens after we reach FI. I think we'd both go to part time for a bit, save up a large emergency/health expenses fund and then fully retire/travel/rest.FRx wrote: ↑Mon May 06, 2019 9:23 amNice! Congrats on all of this progress. The SL's are like almost gone which I'm sure must have been a ton of work to accomplish. It's like an exponential growth, right? So hopefully the time it'll take to get to that $4M is far shorter than what it took to get here? Any plans on moving after that point or an encore career perhaps? Maybe you mentioned, haven't finished reading your entire timeline yet.