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People with dual physician parents - are you rich?
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No one said anything about "richer," which by the way, isn't even a thing. Rich has a very specific meaning and it is a fact that someone making 200K is not rich just by virtue of making 200K. If you don't believe me, just wait til your first few years as an attending when your net worth is still in the negative because you don't own your house, have 300K in student loan debt, and god only knows what else in other kinds of debt. There are a lot of doctors out there who are not wealthy and certainly nowhere near financial independence.
As for people's accomplishments not being a manifestation of their own merit, fine, as long as you also accept that about yourself and about me and others who grew up with poor parents. Give my parents who, as poor as they were, stayed up all night with me to help me with my science project or edit my book report or check my math homework and make me do it over again if I didn't do my best or force me to write that semester-long paper I kept putting off til the night before it was due or grounding me for a D in 8th grade science, not because it was a D but because they knew I didn't even try. Give me those parents over the uber-wealthy ones who couldn't care less if little Johnny learns anything at all as long as he doesn't embarrass them and fail out of school. There are plenty of bad parents out there - rich and poor - and many don't give a damn if their kid gets into med school. Don't tear down others accomplishments just because their parents had money.
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We need an SDN ecyclabedia to make sure we keep all the labels straight.
Poor
Middle class
upper middle class
rich
working rich,
wealthy
old money
new money.
Probably a Bolshevik one and a Keynesian One.
Probably a Ven Diagram about who should go to medical school. Maybe give a scoring system to show the level of shame and responsibility they have for their outcome.
Poor
Middle class
upper middle class
rich
working rich,
wealthy
old money
new money.
Probably a Bolshevik one and a Keynesian One.
Probably a Ven Diagram about who should go to medical school. Maybe give a scoring system to show the level of shame and responsibility they have for their outcome.
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I have a physician parent - family medicine. Both my parents were immigrants so I was born poor, my physician parent trying to pass boards and match for several years while working in a lab and my non-physician parent sold insurance door-to-door in bad neighborhoods. We lived in a small apartment then, though I don't remember it well now.
Then he finally matched into a residency and drove us across the country, apparently making enough money as a resident to support us while my non-physician parent raised me and a sibling. I didn't feel poor then; I felt very comfortable. This was probably a lower middle to middle class lifestyle; we didn't really eat out or go on vacations but we weren't struggling to pay our bills either.
Physician parent took a good job in a low COL area and worked like a resident. We lived in a good neighborhood in a relatively rural/small city in a 2400sq foot home. This I've come to recognize was probably middle and upper middle class life. Went to public schools, tried to go on a vacation in the summer, and we could go out to eat without having to crunch the budget in front of the kids(usually domestic, unless we visited my family's nation of origin, usually drove, always flew coach, etc). Over time, physician parent made progressively more money; I'd say on the order of 300-350k per year. My parents built their dream home, a beautiful 5000sq feet with entertaining space, a second kitchen, the whole 9 yards. Definitely hit what I'd call upper class life. Physician parent is going to turn 65 this year and now that the home is paid off, can work only as much as desired, which is nice.
In the meantime, I left home. Went to a liberal arts school for undergrad because I liked the city, liked the campus, had some friends that were going, and it had a good premedical program. Got a good scholarship; parents helped cover some extra living expenses since I got the rest of attendance covered. Went to my state medical school afterwards, and got a scholarship to cover some, but not all tuition. Parents insisted on covering the rest, since they had higher education helped paid for by their parents (even though it's not really fair to compare since it was much more affordable in their country). Got through school, matched into my first choice residency program, and graduated.
Now I'm married, have a fantastic job, make more money than I ever thought I'd make, and we're thinking about having kids. If we want to buy a big home in the nicest part of our city, we can do it. If we want to drive Teslas, we can do it. I don't think we want the Teslas, but the freedom to do so puts me at a high class lifestyle already. Am I rich? By almost every other person's estimation I am. Do I feel rich? Not in every way, no. I have a low net worth relative to my income and age. I have to work for my wealth. If I lose my arms in a car accident, my lifestyle will take a hit as I live off of my disability insurance. I'll spend my entire career working to have the life I want for the remainder of my life and to give my children a chance at an even better life. The truly rich have a portfolio so large that the dividends of that wealth are enough to sustain the life they want.
All of this oversharing to say that I've lived through a lot of different classes of wealth lifestyles in America. My parents worked hard, and I'm sure were the recipients of some small amount of privilege themselves in order to pursue their American Dream. The opportunities they provided me afford me an even greater level of privilege to get a start on my own American Dream. Make no mistake; I'm not saying I'm not rich. But I remain proud of multiple generations of work and luck that helped get me here.
Then he finally matched into a residency and drove us across the country, apparently making enough money as a resident to support us while my non-physician parent raised me and a sibling. I didn't feel poor then; I felt very comfortable. This was probably a lower middle to middle class lifestyle; we didn't really eat out or go on vacations but we weren't struggling to pay our bills either.
Physician parent took a good job in a low COL area and worked like a resident. We lived in a good neighborhood in a relatively rural/small city in a 2400sq foot home. This I've come to recognize was probably middle and upper middle class life. Went to public schools, tried to go on a vacation in the summer, and we could go out to eat without having to crunch the budget in front of the kids(usually domestic, unless we visited my family's nation of origin, usually drove, always flew coach, etc). Over time, physician parent made progressively more money; I'd say on the order of 300-350k per year. My parents built their dream home, a beautiful 5000sq feet with entertaining space, a second kitchen, the whole 9 yards. Definitely hit what I'd call upper class life. Physician parent is going to turn 65 this year and now that the home is paid off, can work only as much as desired, which is nice.
In the meantime, I left home. Went to a liberal arts school for undergrad because I liked the city, liked the campus, had some friends that were going, and it had a good premedical program. Got a good scholarship; parents helped cover some extra living expenses since I got the rest of attendance covered. Went to my state medical school afterwards, and got a scholarship to cover some, but not all tuition. Parents insisted on covering the rest, since they had higher education helped paid for by their parents (even though it's not really fair to compare since it was much more affordable in their country). Got through school, matched into my first choice residency program, and graduated.
Now I'm married, have a fantastic job, make more money than I ever thought I'd make, and we're thinking about having kids. If we want to buy a big home in the nicest part of our city, we can do it. If we want to drive Teslas, we can do it. I don't think we want the Teslas, but the freedom to do so puts me at a high class lifestyle already. Am I rich? By almost every other person's estimation I am. Do I feel rich? Not in every way, no. I have a low net worth relative to my income and age. I have to work for my wealth. If I lose my arms in a car accident, my lifestyle will take a hit as I live off of my disability insurance. I'll spend my entire career working to have the life I want for the remainder of my life and to give my children a chance at an even better life. The truly rich have a portfolio so large that the dividends of that wealth are enough to sustain the life they want.
All of this oversharing to say that I've lived through a lot of different classes of wealth lifestyles in America. My parents worked hard, and I'm sure were the recipients of some small amount of privilege themselves in order to pursue their American Dream. The opportunities they provided me afford me an even greater level of privilege to get a start on my own American Dream. Make no mistake; I'm not saying I'm not rich. But I remain proud of multiple generations of work and luck that helped get me here.
D
deleted849476
I would’ve thought from the thread title this post would just be utter trolling, but leave it to SDN to make this one of the most emotionally charged conversations on the forum rn lol. Post your reply to drop your blood in the shark tank
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I didn’t read all of this thread, but I thought I would offer some perspective as a pretty junior attending who is not that far removed from all kinds of fantasies about what having a physician income would mean.
I’m a psychiatrist and work in an academic setting. My contracted salary is something like $229k gross for 5 days/week, 40 hours/week, full-time work. I work one additional day/week and as many weekday evenings as I can in our ED for additional income. Last year, my gross pay was in the realm of $300k. About 25% of that goes to taxes, so my theoretical “take-home” pay is something like $225k. Take out money for health insurance, life insurance, disability insurance, and other “necessary” expenses, my actual, true take-home pay is something like $210k, keeping in mind I work 6 days/week, every week, for a total of about 50-60 hours/week. But wait, I save about 20-22% of my income, so I take home less. I pay something like $8k/month for my student loans. I completed residency with something like $140k in student loans and will have them paid off just about 2 years after completing residency. My wife and I have a house but have not paid off our mortgage (cost $210k when we bought it during my second year of residency). I’ve got about $225k saved for retirement, including about $40k that I saved during residency through my employer’s retirement program. About $70k of that is highly liquid that I could withdraw next week if needed. I could make more working elsewhere - probably 150%+ of my current salary - but I like working with trainees, and the truth of the matter is that I do relatively less work in the academic setting than I would elsewhere since I have trainees working with me, which allows me to achieve other important, non-financial goals.
That is a lot of money. It’s more money than I had growing up. However, it is not infinite. If you’re keeping track, far less than 50% of my income currently is actually available for discretionary spending. I’m not complaining. I’m happy with my lifestyle and I don’t want for anything. But I think there is a very gross misunderstanding of how much money you will actually take home and whether or not you are “rich” as a physician. In a two-physician family, you will certainly be taking home plenty of money if you’re financially wise and don’t spend beyond your means. One of my buddies is a psychiatrist and his wife is a hospitalist - he’s 4 years older than me and they have a net worth of about $2 million, however they are very stingy and pretty minimalist and save the overwhelming bulk of their income. He still drives a beat up Ford Mustang that he’s had since medical school I think, though his wife got a new Tesla Model 3 last year that they paid for in cash.
My wife and I have a 3-month-old and she was able to quit working with very little impact on our finances, which is a blessing. I don’t worry about making sure we have everything that we need and even some luxuries and can buy them without much thought. We are in a good place financially and I don’t stress about it. All that said, it’s less money than I thought, and I imagine it’s less money than what many people fantasize about when they reach the end of the rainbow that is medical training.
I’m a psychiatrist and work in an academic setting. My contracted salary is something like $229k gross for 5 days/week, 40 hours/week, full-time work. I work one additional day/week and as many weekday evenings as I can in our ED for additional income. Last year, my gross pay was in the realm of $300k. About 25% of that goes to taxes, so my theoretical “take-home” pay is something like $225k. Take out money for health insurance, life insurance, disability insurance, and other “necessary” expenses, my actual, true take-home pay is something like $210k, keeping in mind I work 6 days/week, every week, for a total of about 50-60 hours/week. But wait, I save about 20-22% of my income, so I take home less. I pay something like $8k/month for my student loans. I completed residency with something like $140k in student loans and will have them paid off just about 2 years after completing residency. My wife and I have a house but have not paid off our mortgage (cost $210k when we bought it during my second year of residency). I’ve got about $225k saved for retirement, including about $40k that I saved during residency through my employer’s retirement program. About $70k of that is highly liquid that I could withdraw next week if needed. I could make more working elsewhere - probably 150%+ of my current salary - but I like working with trainees, and the truth of the matter is that I do relatively less work in the academic setting than I would elsewhere since I have trainees working with me, which allows me to achieve other important, non-financial goals.
That is a lot of money. It’s more money than I had growing up. However, it is not infinite. If you’re keeping track, far less than 50% of my income currently is actually available for discretionary spending. I’m not complaining. I’m happy with my lifestyle and I don’t want for anything. But I think there is a very gross misunderstanding of how much money you will actually take home and whether or not you are “rich” as a physician. In a two-physician family, you will certainly be taking home plenty of money if you’re financially wise and don’t spend beyond your means. One of my buddies is a psychiatrist and his wife is a hospitalist - he’s 4 years older than me and they have a net worth of about $2 million, however they are very stingy and pretty minimalist and save the overwhelming bulk of their income. He still drives a beat up Ford Mustang that he’s had since medical school I think, though his wife got a new Tesla Model 3 last year that they paid for in cash.
My wife and I have a 3-month-old and she was able to quit working with very little impact on our finances, which is a blessing. I don’t worry about making sure we have everything that we need and even some luxuries and can buy them without much thought. We are in a good place financially and I don’t stress about it. All that said, it’s less money than I thought, and I imagine it’s less money than what many people fantasize about when they reach the end of the rainbow that is medical training.
Physicians are in the working rich then...
How come you only pay 25% on a 300k salary?
You already have ~300k (Retirement + 'cash') save up after being an attending for < 3 yrs. I think it's safe to say that in 10 yrs your net worth will be 2-3 mil. Of course, you won't be Jeff Bezos., but you won't be average (aka... middle class) either. This is with one doc income.
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That’s just what my effective tax rate has been over the last couple of years. I don’t engage in any tax shenanigans but somewhere around 25-27% has been my effective tax rate since becoming an attending.
I doubt your timeline for net worth as my expenses will increase, but that’s neither here nor there. My intention wasn’t too complain but just to provide a relatively real-world example of what a $300k+ salary actually means in my case.
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Most med students don't understand this. They don't understand that medicine is a well-paying job but it requires actually coming to work and producing something every single day. It's not like being a middle manager in consulting doing make work all day. People like me who have been on both sides of this coin get it but many don't apparently.
Medicine is very blue collar in this regard. It looks like many people think you just become an attending and suddenly you just hang out at work and your life magically changes lol.
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As an attending 1.5-2 years out of residency—very true.
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Tax Strategies for High Income Earners | White Coat Investor
The rich do take advantage of their knowledge of the tax code to pay less in taxes. But six strategies higher earners use are available to everyone.
www.whitecoatinvestor.com
Here you'll see a chart where the effective tax rate of a couple making 300k, two kids, and saving 20% for retirement pay 16% in federal income tax. Not too shabby.
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I think what this thread boils down to is what the definition of rich is. Rich is a very relative term so a lot of people are gonna have different opinions of what it means to be rich. Basically, a majority of people on this thread are gonna disagree with each other.
A pretty standard definition of rich, provided by the Oxford English dictionary, is "having a lot of money, property and valuable possessions". This is of course going to mean a lot of different things to a lot of different people. Take the whole Nick Naylor thing for example. Someone making <$60,000 a year might think he's rich and rolling in dough, but Nick wouldn't think that based on expenses, loans, and mortgage. He just describes himself as living comfortably. He doesn't think he has a lot of money. Some people might describe being rich as making anywhere in the top 10% of the country (~118,000) while others might describe it as making in the top 1% (~$539,000+). Some people making ~$539,000>$1 mil might think that they're not rich based on if they live in an expensive city surrounded by people with way more money. It's all relative.
Some people just mix up the terms rich and wealthy. Being wealthy means having a sustainable source of income that will never (or at least rarely) disappear. Being rich means you have to work constantly to maintain a certain lifestyle. I don't think think OP's question will truly be answered the way they intended it to be answered because the term rich varies from person to person.
A pretty standard definition of rich, provided by the Oxford English dictionary, is "having a lot of money, property and valuable possessions". This is of course going to mean a lot of different things to a lot of different people. Take the whole Nick Naylor thing for example. Someone making <$60,000 a year might think he's rich and rolling in dough, but Nick wouldn't think that based on expenses, loans, and mortgage. He just describes himself as living comfortably. He doesn't think he has a lot of money. Some people might describe being rich as making anywhere in the top 10% of the country (~118,000) while others might describe it as making in the top 1% (~$539,000+). Some people making ~$539,000>$1 mil might think that they're not rich based on if they live in an expensive city surrounded by people with way more money. It's all relative.
Some people just mix up the terms rich and wealthy. Being wealthy means having a sustainable source of income that will never (or at least rarely) disappear. Being rich means you have to work constantly to maintain a certain lifestyle. I don't think think OP's question will truly be answered the way they intended it to be answered because the term rich varies from person to person.
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It's what happens when people assume people didn't need to put in effort to achieve what they did because they were born into a good background. With all the "REEEEE privilege" posts in this thread you'd think all a wealthy kid needs to do to get an A in a class would be to show a screenshot of their parents' bank balance to the professor.
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I don't think ive read anything emotionally charged in this whole thread...
And you have been an SDN member for 3 yrs... Interesting!
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What's your point... ?
My point was that there have been 100+ threads in here that are more emotionally charged than this one...
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I don’t understand what you’re saying. If you’re saying that other threads on SDN are more emotionally charged, I agree. That was my original point - in this entire thread I’ve hardly seen anything highly emotionally charged. However that was countering your original post were you said that this thread was very emotionally charged?
D
deleted849476
I wrote the comment you’re talking about, not Splenda.
read for example what words mass effect chooses in some of his last posts, “dude, seriously, get over it.” “Snarking” “seething with jealousy” not to single out one guy but you get the idea.
There’s just an overall tone of “Nuh-uh!” —> “Yuh-huh!”
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oh ok true. I guess you’re right and I have always thought that SDN was not some “mean” place like everyone mentions so maybe I’m just mean myself, lol
still don’t get splendas point about being an SDN member for 3 years...
I misread what you were saying...
Thought you were saying that you have not seen an emotionally charged thread as this one in SDN...
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Don't really have much to add to this thread except a funny story back in the day when my wife was still a medical student.
She was working a fundraiser/bake sale, one of her classmates went to buy some baked goods and gave her a hundo and said, "sorry, I don't carry bills < $100."
Needless to say, we both lol'd.
She was working a fundraiser/bake sale, one of her classmates went to buy some baked goods and gave her a hundo and said, "sorry, I don't carry bills < $100."
Needless to say, we both lol'd.
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Are we not all rich because of the friends we made along the way?
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But what about the people with no friends??????????????
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Well, I guess we know who the poor people are now.
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This reminds of a fortune I got in a fortune cookie that said: "Happiness is the true measure of wealth". I remember thinking, lol so I'm broke twice?
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The bottom line is if you can’t live a comfortable lifestyle as a physician (realizing that comfort is relative), you are probably doing it wrong and generally just really bad at managing money that literally no job or salary could fix (think the lottery winners who end up penniless... or MC Hammer).
By those general metrics, physician, as a job, is associated quite easily with wealth.
By those general metrics, physician, as a job, is associated quite easily with wealth.
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Even a single FM physician household will classify an average sized family as rich.
Nah.. 250k/yr is ok (not great) for a family of 4 since student loan repayment will eat a large portion of it...
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Too lazy to read the entire thread but I will respond to the question posed in the title. My long-term SO and I are both medical students. We would have to choose a pretty narrow combination of specialties AND location to not be in the top 1% of household income as attendings with a few years of experience ($531k/yr as a household is top 1%). So I can comfortably say that our future kids will have rich parents. Based on the top 2-3 specialties we are each interested in, it would not at all be unreasonable for our combined income to be >$1MM as attendings. And we aren't interested in crazy competitive stuff, just "average" to "above average" competitiveness.
As someone said in this thread when I was skimming, the hardest part in terms of risk of failure is getting into a US MD school. After that, it is still a grind of medical school and residency and then working a "blue collar" attending job, but the failure rates along the way are quite low. The failure rate is basically 0% if you show up every day, don't have a personality disorder, and are lucky enough to stay physically and mentally healthy. You can stack the odds in your favor of having good mental and physical health if you make a conscious effort at it and have a good partner and support system.
We plan on saving/investing >50% of our income as attendings for a multitude of reasons. That is more of a tangential topic, but it might make our kids feel like we are less "rich" than we actually are. Until I retire at 45
As someone said in this thread when I was skimming, the hardest part in terms of risk of failure is getting into a US MD school. After that, it is still a grind of medical school and residency and then working a "blue collar" attending job, but the failure rates along the way are quite low. The failure rate is basically 0% if you show up every day, don't have a personality disorder, and are lucky enough to stay physically and mentally healthy. You can stack the odds in your favor of having good mental and physical health if you make a conscious effort at it and have a good partner and support system.
We plan on saving/investing >50% of our income as attendings for a multitude of reasons. That is more of a tangential topic, but it might make our kids feel like we are less "rich" than we actually are. Until I retire at 45
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Too lazy to read the entire thread but I will respond to the question posed in the title. My long-term SO and I are both medical students. We would have to choose a pretty narrow combination of specialties AND location to not be in the top 1% of household income as attendings with a few years of experience ($531k/yr as a household is top 1%). So I can comfortably say that our future kids will have rich parents. Based on the top 2-3 specialties we are each interested in, it would not at all be unreasonable for our combined income to be >$1MM as attendings. And we aren't interested in crazy competitive stuff, just "average" to "above average" competitiveness.
As someone said in this thread when I was skimming, the hardest part in terms of risk of failure is getting into a US MD school. After that, it is still a grind of medical school and residency and then working a "blue collar" attending job, but the failure rates along the way are quite low. The failure rate is basically 0% if you show up every day, don't have a personality disorder, and are lucky enough to stay physically and mentally healthy. You can stack the odds in your favor of having good mental and physical health if you make a conscious effort at it and have a good partner and support system.
We plan on saving/investing >50% of our income as attendings for a multitude of reasons. That is more of a tangential topic, but it might make our kids feel like we are less "rich" than we actually are. Until I retire at 45
This is pretty much my exact situation... we'll have to update the thread in a few decades
I don't know that many not competitive specialties in which the average doc can make 500k. One can say anesthesiology and EM but the average doc in these specialties make 400k and 350k respectively.Too lazy to read the entire thread but I will respond to the question posed in the title. My long-term SO and I are both medical students. We would have to choose a pretty narrow combination of specialties AND location to not be in the top 1% of household income as attendings with a few years of experience ($531k/yr as a household is top 1%). So I can comfortably say that our future kids will have rich parents. Based on the top 2-3 specialties we are each interested in, it would not at all be unreasonable for our combined income to be >$1MM as attendings. And we aren't interested in crazy competitive stuff, just "average" to "above average" competitiveness.
As someone said in this thread when I was skimming, the hardest part in terms of risk of failure is getting into a US MD school. After that, it is still a grind of medical school and residency and then working a "blue collar" attending job, but the failure rates along the way are quite low. The failure rate is basically 0% if you show up every day, don't have a personality disorder, and are lucky enough to stay physically and mentally healthy. You can stack the odds in your favor of having good mental and physical health if you make a conscious effort at it and have a good partner and support system.
We plan on saving/investing >50% of our income as attendings for a multitude of reasons. That is more of a tangential topic, but it might make our kids feel like we are less "rich" than we actually are. Until I retire at 45
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During the 4-5 years it takes to knock out the loans, you will be in the 2nd quartile of household income (50-75th %tile) in the US, if you have a stay-at-home spouse. If your spouse makes even 50k/yr, that could help a lot, depending on childcare costs in your city...it could easily end up being a wash if your spouse doesn't earn much and childcare is insanely pricey. So yeah, straight out of FM residency, you aren't going to be "rich" by any means. Once you get out of student loan debt, you will be doing great financially...just don't live in New York or SF lol. Still not what I would consider "rich" necessarily, but at least very comfortable and you can retire before age 60 if you finished medical school before age 35ish.
Most general surgery fellowships, anesthesiology, radiology, heme/onc, GI, cards, critical care, some OBGYN fellowships all have 75th percentile MGMA >$500k and I consider all of those fields "average to above average competitiveness" and not "crazy competitive" which was my phrasing. 75th MGMA is not realistic straight out of residency, but with a few years of experience/becoming a partner and geographic flexibility (we already prefer the South and Midwest due to family and friends), 75th percentile MGMA is not "unreasonable" which was also intentional wording on my part.
Edit: also, one of us making median/slightly below median and one of us making 75th percentile in any mixture of those fields I listed could combine to be >$1MM. So we both don't need to find 75th percentile jobs...just "above average" paying jobs in a "below average" location.
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Most humans don't understand this. Go on any thread that talks about healthcare and you're bound to find more than a handful of comment threads talking about how doctors "make too much" and nurses and mid-levels "don't make enough." Completely ignorant of the sacrifices and debt that we have to go through (and will continue to go through) to make the money we do. All the REEEEEdditors see is the dollar sign and nothing of what produces it.
I mean, they're also the same camp who think that $1M is "**** you" money. Sure, if that person is making 10x that yearly. But net worth of $1M will sustain a middle-class family for maybe 20 years at best. Not even enough to carry their baby from birth to adulthood to death. Hoh yea, that $1M sure is ****ing a lot of people!
But you know what they say: people who don't work for their money have no concept of it. I certainly was guilty of that as a kid, thinking that my parents could just buy me whatever I wanted without realizing how much they sacrificed to make that money.
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I can say that I make less than $250K annually, have a family of 5 and have a significant nest egg at this juncture (as well as college savings for my 3 kids). I don't live in a mansion or drive a Maserati... but some people have just terribly unrealistic expectations.
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Financial advising for physicians and other professionals with similar income summed up in one sentence
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That's true.
But most of the time those discussions on Reddit are about people in the US.
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It's always amazing to be how bad people are at managing finances... physicians included. You set some future retirement goal with associated investments, you see your income, you minus expenditures, you create a rainy day fund, you set aside some discretionary spending. I mean, it's not rocket science.
But then I see physicians driving these expensive cars. I mean, I guess if that's what you really want, but of course, you could also use that money to wipes ones own butt and get the exact same ROI. Actually, the most financially savvy people tend to drive POSes and live in modest houses in my experience.
What is a modest house for a doc making ~300K?
The truth of the matter is: The physicians that I am close with that have been practicing for 10+ yrs, all of them have homes that worth 700k+
I guess it's all relative.
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I think my house is "worth" that according to Zillow, but we bought it for substantially less. Though it's really not the house, but the land which has appreciated substantially since we bought it. I have a longer commute but that's worth the trade in value.
Houses should be viewed as investments, not the shiny trinkets some people want them to be.
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Zillow says our value has gone up 20% in right at 4 years.
Real estate is weird sometimes.
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Yes, the real estate market is especially weird. I mean, we are still in a recession yet the real estate market is still booming. I don't think the value of our house will continue to go up... actually, I think it will contract some, but that's why it should be viewed as an investment, because usually investment having fluctuations with some inherent risk.
I knew an attending, relatively fresh out of a very protracted training course (triple boarded anesthesiologist) who went out in the late 2000s to become the proud new owner of their dream home. They were house poor, but it was theirs. But then of course, the market collapsed after the subprime mortgage crisis and the value of their home was cut in half and they were underwater on their mortgage. I mean, of course, they couldn't see that the collapse was coming, but buying the most expensive dream home just cause they could at the time wasn't smart.
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That seems reasonable. I disagree with a LOT of what Dave Ramsey says, but his "How much house can I afford?" calculator is very conservative which I like. $300k gross salary and a $700k+ house is still affordable using his calculator. Using a take home pay of $17,000/month ($300k gross and married in a moderately taxed state like NC, maxing out 401k with $19.5k/yr), here are the results copied from the website:
MAXIMUM MORTGAGE PAYMENT $4,250
HOW MUCH HOUSE YOU CAN AFFORD Based on a 4% interest rate on a 15-year fixed mortgage.
- $638,407 home with 10% down ($63,841)
- $718,208 home with 20% down ($143,642)
- $820,809 home with 30% down ($246,243)
- $957,611 home with 40% down ($383,044)
And $700k is going to buy you a big, luxurious house in north Florida or SC or WI, but will buy a much more European sized place in Boston or DC. Still plenty of space to raise 2-3 kids, you just have to adjust expectations based on your location.
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I agree. Spoke with a realtor 2 yrs ago and was told my house was worth about 100k less than I thought. Recently a house in our hood sold for 60k above asking. The highest price ever sold around here. The house is about 1,000 sq ft smaller than mine.. Real estate is all about timing.
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I think that thinking of a house as an investment rather than an expense usually leads to poor behavior though... if it's an investment, maybe it's a good idea to spend 1 mil instead of 500k on my house then? It's an investment after all! Totally ignores that people WANT to live in the 1 million dollar house because it's nicer. These same people would not be as excited to invest an extra 500k in index funds... so clearly it's not really about it being an investment.
I think thinking of your house as an expense is better because it makes you realize what you're giving up to buy it - cars, vacations, early retirement, etc. Yes by the end you'll have more equity in an expensive paid-off house, but it came at the expense of investing in other more liquid assets and at the expense of spending on other things.
Also, I'm from a HCOL area, the (normal) houses in my neighborhood are like 700-900k. Don't know a single physician who lives there; I think where I'm from physicians live in houses that are at least 1M+
I guess I am a lot more conservative than Dave Ramsey... No way in hell I would buy 700k+ home on a 300k/yr salary. The max would be 500k for me. I also prefer 15-20 yr mortgage instead of 30.
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Cars and vacations are an expense. A house is not the same as those things. The money you put into a car or a vacation is gone, you're never getting it back.
So yes, a house is an investment. That isn't to say all investments are good though. If you buy a $1 million house and expect it to appreciate by date X, that is bad investment decision making. But, people make terrible investments all the time. Have you heard of $GME? What you want to put your money in is a house that is more the index fund and less the meme stock.
