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Best way to save, budget, and invest as military doc?

Discussion in 'Military Medicine' started by aaronrodgers, Sep 11, 2017.

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  1. aaronrodgers

    aaronrodgers Quarterback, Super Bowl MVP, Future Hall of Famer Gold Donor

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    I'm curious how military physicians best invest (for example in real estate, mutual funds, Thrift Savings Plan), how much money they might store into their savings account, how they budget their monthly earnings, What kind of insurance agencies are best for military physicians (home and auto). Essentially, I'd love to hear some anecdotal personal finance 101 advice? I am not interested in comparing between civilian vs military in depth within this thread. thank you!

    If anyone could also give some ideas on how a medical student should save/invest while attending USUHS with a 64K earning, that would be interesting to hear too.
     
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  3. Homunculus

    Homunculus SDN Caveman Administrator SDN Moderator 10+ Year Member

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    general financial principles, in no particular order:

    1) don't get divorced. conversely, think carefully before getting married.

    2) think carefully before buying a house, but don't dismiss it. take it with a grain of salt, but as a young O3 I asked some crusty old O6s a similar question as yours and was told by more than 1 to buy a place at each duty station. not a bad concept *if* the rental markets are good where you are stationed. we bought a place in DC and are renting it currently and watching it appreciate. capital gains exclusion can be extended beyond the normal 3 years if you are moved for military reasons. we have around 350k equity in it at the moment. and with the market in DC we could unload it in 2-3 days if we needed to. at our current duty station, we found another place that over the past 4 years has appreciated 6 figures as well. cheapest home on the nicest block is a good tactic.

    3) the TSP is actually a pretty good investment. sink a good amount into it into the more aggressive funds and forget about it for awhile. take advantage of the TSP matching that is part of the new blended retirement plan. (I'm sticking with legacy myself-- have been in too long not to).

    4) control your expenses. cannot emphasize this enough. identify "need" vs "want." just because you have the ability to take out giant loans doesn't mean you should.

    5) USAA offers great insurance products. not so much on the financing front for mortgages/cars. shop around.

    6) when shopping for deals, never tell them you are a doctor.

    just a few things off the top of my head.

    --your friendly neighborhood fiduciary caveman
     
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  4. aaronrodgers

    aaronrodgers Quarterback, Super Bowl MVP, Future Hall of Famer Gold Donor

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    Thank you for the insight! If I get accepted to USUHS and plan to matriculate there, I might consider investing in a condo to rent out when I am away potentially MS3 and beyond. Real estate investment seems to synergize well with military folks who move every 4-6 years.
     
  5. backrow

    backrow 60% of the time it works everytime Lifetime Donor 10+ Year Member

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    Except for some like me who got hammered by the market crash and are still 50k+ upside down and lose about 200-300/mo due to HOA fees/etc. oh, and it's been 10+ yrs of that....


    Sent from my iPhone using SDN mobile app
     
  6. sonofva

    sonofva 7+ Year Member

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    Dude just put as much as you can monyhly into your tsp.

    My wife and i also throw 500$ a month into a separate mutual fund that will be used for a post military down payment.

    Once able to moonlight i will be crushing tsp and trying to catch up.

    Sent from my SM-G930V using Tapatalk
     
  7. pgg

    pgg Laugh at me, will they? SDN Moderator 10+ Year Member

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    Maximum contribution to TSP is $18K per year. It would be hard for a single earner USUHS student to max that. But you should use ALL of that tax-advantaged space BEFORE dabbling in alternative investments. Don't even think about real estate or bitcoin or your friend's startup or anything else until you are easily and consistently maxing out TSP. Full stop.

    So the answer to your question is to
    1) spend less than you earn
    2) contribute some reasonable amount to TSP based on what you earn and what you need to live (the Roth flavor is probably the better choice at the income level of a USUHS student)
    3) within TSP, choose an asset allocation that is equity heavy because you're young and have high earning years ahead of you
    4) read the bogleheads getting started page
    5) read at least the first few chapters of Ferri's book All About Asset Allocation
    6) quit worrying about it and pass your classes


    In the short term, residential real estate is speculative and illiquid.

    In the long term, residential real estate roughly tracks inflation.

    There may be a place for rental homes as part of a portfolio but it's a bad place to start when you're young and have no assets or cash reserves to speak of. It ties up a HUGE amount of money in a volatile asset that may produce very negative cash flow for extended periods. Most military landlords become landlords by accident. The fact that many do it doesn't necessarily make it the best strategy.
     
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  8. TheEnemyWithin

    TheEnemyWithin

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  9. TheEnemyWithin

    TheEnemyWithin

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    Hey all! So I'll assume you're a USU grad(yoo-shoos, lol). Personally, I think this is the best route for GPs, ODs, ER because they're considered the 'lower end' of the earnings spectrum - great way to get school paid for! But for nuclear medicine, cardio-thoracic surgeon, cardiologists, radiologists and neurosurgeons... You're shooting yourself in the foot, earnings-wise. The latter have much higher earning potential, even during a fellowship. DoD takes advantage of people when it comes to how much you make for what you end up doing. I was not a doc, I was an Army 18D (8 years AD) and did rotations through trauma and acute care while not on red cycle; performed every procedure an ER doc performs: chest tubes, trachs, crichs, even performed a pericardial aspiration on a cardiac tamponade WITHOUT ultrasound (that's what you call 'blind', kids - but that was in the field, trauma resulting from rear plate of a claymore hitting a troop's chestplate).

    OK...when it comes to TSP, throw your max contribution into the LATEST lifecycle (L-Fund). I think it's L-2050 right now (that's where my money is). I'm not sure if they let active duty take advantage of the matching; as a GS civilian (I was for 2-1/2 years), you'll get the matching. But really, the salary, diff and COLA isn't worth it unless you're a GP, ER, OD... Other specialties make MUCH more in the civilian sector. I hope that helps or at least gives you a few new angles to consider.
     
  10. Gastrapathy

    Gastrapathy no longer apathetic Lifetime Donor 10+ Year Member

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    What the **** are you talking about? Optometrists?

    It must be hard going to med school after performing a craniotomy with only a flashlight, leatherman and MRE.

    Never mind. I see that you aren't.
     
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  11. DrMetal

    DrMetal To shred or not shred? Lifetime Donor 7+ Year Member

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    You're so FOS, my phone stinks.
     
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  12. pgg

    pgg Laugh at me, will they? SDN Moderator 10+ Year Member

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  13. WernickeDO

    WernickeDO Mending tents 5+ Year Member

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    Wow, that escalated fast.

    OP, buy the White Coat Investor's book on Amazon. It's a good starting point.
     
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  14. Homunculus

    Homunculus SDN Caveman Administrator SDN Moderator 10+ Year Member

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    good advice. TSP is set it and forget it. but (you knew a but was coming, lol) the DC market is a unique animal with some opportunities if you are not averse to taking a little risk. not sure how it ties up a huge amount of money. TSP ties up your money, too. I supposed you could "break glass in case of emergency" and tap into TSP funds but both are fairly sequestered away.

    using a VA loan minimizes downpayment and if you find the right place (which is *key* and can't emphasize enough-- you have to buy with an eye toward future rentability) in that geographical area you can sell pretty quickly. the neighborhood we own our house in we could sell in less than a week. plus, a situation where the market collapses likely would find your real estate or TSP both impacted. I guess at least the TSP losses aren't really permanent if you hold onto it long enough, but DC is pretty insulated compared to the rest of the US.

    also, the IRS primary home definition changes for military. normally if you live at a primary home 2 out of the previous 5 years you can sell without paying capital gains. if you are military and have to move due to military orders, that window is suspended up to 10 years. so you can buy a place, live there 3 years, PCS, and rent for 10 and sell without paying capital gains (but the IRS does recapture depreciation). or, you could do a 1031 exchange and buy something somewhere else. or you can hang onto it and use the positive cash flow. the nice thing about the market there is in addition to your tenant paying the mortgage (and hopefully a little more) you're still getting steady appreciation of the property to further build equity. it's definitely more work than the TSP but I feel it's worth it.

    and, if a dirty bomb goes off in DC there are so many rich people there the govt will bail everyone out, lol.

    I also have an easier time dealing with tangible real estate than I do with people making money by moving it in a circle. :) but that being said I still sock away money into my TSP.

    also-- whitecoatinvestor.com is a great resource. he's an SDNer, to boot. :D

    --your friendly neighborhood diversified caveman
     
  15. jabreal00

    jabreal00 7+ Year Member

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    As a R2 we had a staff give us financial advise as part of one of the morning reports. One easy thing that all can do while in residency and pay back is to contribute as much to the TSP as well as opening a Roth IRA and trying to max it as much as possible. I would not bother with any other investments until you're maxing TSP and IRA.

    Buy a house if you anticipate being at a duty station for an extended period of time and/or can easily rent. The housing thing is a bit of a crap shoot. I do know people who gut lucky with the market timing and made off well (+$100K profit) however I know others who took a bath. These examples include my duty stations that were in hot markets (DC), medium markets (San Antonio) or in crappy markets (KY, MO). My wife and I were both military. We rented the entire time. We saved a ton of money during our time by renting for underneath our BAH. We're both out of the military and we've finally bought our first house. I am glad we did it this way. There's a lot of money involved into owning and maintaining a house that is not readily apparent.
     

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