MedSaver's Journal

Where are you and where are you going?
DutchGirl
Posts: 1209
Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: MedSaver's Journal

Post by DutchGirl » Mon Sep 03, 2018 12:21 am

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).

suomalainen
Posts: 733
Joined: Sat Oct 18, 2014 12:49 pm

Re: MedSaver's Journal

Post by suomalainen » Mon Sep 03, 2018 7:41 am

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.

2Birds1Stone
Posts: 822
Joined: Thu Nov 19, 2015 11:20 am
Location: Earth

Re: MedSaver's Journal

Post by 2Birds1Stone » Mon Sep 03, 2018 12:17 pm

I'm stealing #3 suomalainen, that's a great way of looking at it.

CS
Posts: 398
Joined: Sat Dec 29, 2012 10:24 pm

Re: MedSaver's Journal

Post by CS » Mon Sep 03, 2018 12:45 pm

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.

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Mon Sep 03, 2018 7:07 pm

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.

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Fri Sep 28, 2018 12:07 am

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

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Wed Oct 31, 2018 11:25 pm

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

DutchGirl
Posts: 1209
Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: MedSaver's Journal

Post by DutchGirl » Sun Nov 04, 2018 9:34 am

Nice progress on the student loans.

Market decline hit you, too. Oh, well. Keep going!

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Sat Dec 01, 2018 12:22 am

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

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Tue Jan 01, 2019 1:13 am

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.*
Last edited by MedSaver on Tue Jan 01, 2019 4:26 pm, edited 1 time in total.

DutchGirl
Posts: 1209
Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: MedSaver's Journal

Post by DutchGirl » Tue Jan 01, 2019 5:44 am

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!

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Fri Feb 01, 2019 12:34 am

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

DutchGirl
Posts: 1209
Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: MedSaver's Journal

Post by DutchGirl » Mon Feb 11, 2019 2:16 pm

Nice progress again, and I think you're also seeing a partial recovery from last December's stock market nosedive?

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Thu Feb 28, 2019 10:18 pm

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

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Thu Feb 28, 2019 10:56 pm

DutchGirl wrote:
Mon Feb 11, 2019 2:16 pm
Nice progress again, and I think you're also seeing a partial recovery from last December's stock market nosedive?
Yeah, downturn in December was no bueno, but February was nice.

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Thu Mar 28, 2019 10:06 pm

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

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Sun May 05, 2019 12:30 pm

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

DutchGirl
Posts: 1209
Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: MedSaver's Journal

Post by DutchGirl » Mon May 06, 2019 6:32 am

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?

FRx
Posts: 195
Joined: Tue Sep 02, 2014 3:29 pm
Location: Portland Or

Re: MedSaver's Journal

Post by FRx » Mon May 06, 2019 9:23 am

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.

MedSaver
Posts: 74
Joined: Tue Nov 24, 2015 1:04 am

Re: MedSaver's Journal

Post by MedSaver » Mon May 06, 2019 9:03 pm

DutchGirl wrote:
Mon May 06, 2019 6:32 am
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?
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.
FRx wrote:
Mon May 06, 2019 9:23 am
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.
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.

Post Reply