Spouse’s income/Finance question

[JustAPedicurist]

My fiancee makes $200,000. She has a lot of student loans as well. We combine for $500k in student loans. I’m about to take a job that makes $200,000 out of residency. What would you guys suggest is the best way to tackle our debt? Should we rent and go all out against the student loans for two years?

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[PODIATRYCRAZE]

Yes. The housing market is bad. No need to buy at this moment.

If for whatever reason the crypto bull run has not happened yet in mid to late 2024, throw some in there. That should help too.

Congratulations on the job offer.

I will be throwing everything I have at loans to be debt-free by 2026

 

[JustAPedicurist]

Yes. The housing market is bad. No need to buy at this moment.

If for whatever reason the crypto bull run has not happened yet in mid to late 2024, throw some in there. That should help too.

I have about $40,000 in individual stocks, ETF’s, mainly big tech and some growth stocks. No crypto… but I know the next bull run has to be soon.

 

[Shiyuan]

Pay off loans ASAP.

 

[Feli]

I would hit loans hard, yes.

Do basic E fund and Roth (since you can't do retro) or backdoor Roth... but the rest goes to loans. It is super boring and super effective... see WCI articles and forum.

If your jobs do 401/403 match, do that (beyond match is pointless when you're in debt). Learn stock market between that and Roth.

....If for whatever reason the crypto bull run has not happened yet in mid to late 2024, throw some in there. That should help...

Why?

What's the logic here? Bypass sure returns (7% student loans) and historical good gains (8% s&p and more nasdaq) to swing for the fences?

The fact that Winklevoss or a few very early investors got rich or some ppl who caught the crypto bubble to profit a few years ago doesn't change the fact crypto does nothing and many lost their shirt. Everything goes up for a bit with new $ coming in, but where is crypto money coming in now? Crypto market is dependant on new money and fomo; there are no fundamentals. It's not transactional. When the bail out monies (dem) or increased corp profits (rep) arrive, they don't help crypto. If anything, there may eventually be a USA digital dollar (or some type of currency reset) that will basically kill current cryptos. It sure won't be BTC or any of the existing coins; even the vast majority of "investors" holding them have never bought gas or coffee or done anything real with it. Big banks or ETFs or brokerage crypto fringe involvement means nothing to legitimize it; they will happily take commissions and money where and however they can (see 2007 housing).

 

[icebreaker32]

My fiancee makes $200,000. She has a lot of student loans as well. We combine for $500k in student loans. I’m about to take a job that makes $225,000 out of residency. What would you guys suggest is the best way to tackle our debt? Should we rent and go all out against the student loans for two years?

Max 401Ks, keep a healthy emergency fund.

Beyond that it gets pretty complicated based on your goals and the tax code and interest rates. Sometimes it actually makes more sense not to pay much on your school loans.

Also depends on if PSLF or have loan repayment assistance through employer.

 

[heybrother]

1. Save a big wad of cash. Short of something truly catastrophic, unexpected expenses should not phase you.
2. Ask yourself in the short term how integrated the finances should be of a couple who are unmarried. This is a subject where people on financial forums have strong opinions that you may feel are old fashioned. This may be less relevant if your marriage is imminent, but untangling your finances if you separated before marriage would be problematic. Worse still after marriage.
3. Make sure your future spouse is on the same page as you financially. Mine was dead set on a house when we graduated residency. Most Americans don't seem to be that bothered by crushing debt. Some people think they deserve a new car everytime they pay one off.
4. Maximizing tax advantaged accounts is a must for you (401k, backdoor ROTH, HSA if available).
5. The real question is - can you scavage up $100K (or something in that ballpark)/year for savings and debt pay down. If you read some of the FIRE threads and net worth threads in the physician forums on here people who aim to be millionaires start saving $100K+ a year as fast as they can. When people talk about living like a resident - that's the kind of savings they are talking about.

 

[Dean’s Chat]

Great question, get a financial planner - Interview 3 and go with the one who inspires the most confidence. The two of you are making substantial money and decisions today will impact you significantly in the future. Congrats!

 

[Retrograde_Nail]

I would hit loans hard, yes.

Do basic E fund and Roth (since you can't do retro) or backdoor Roth... but the rest goes to loans. It is super boring and super effective... see WCI articles and forum.

If your jobs do 401/403 match, do that (beyond match is pointless when you're in debt). Learn stock market between that and Roth.


Why?

What's the logic here? Bypass sure returns (7% student loans) and historical good gains (8% s&p and more nasdaq) to swing for the fences?

The fact that Winklevoss or a few very early investors got rich or some ppl who caught the crypto bubble to profit a few years ago doesn't change the fact crypto does nothing and many lost their shirt. Everything goes up for a bit with new $ coming in, but where is crypto money coming in now? Crypto market is dependant on new money and fomo; there are no fundamentals. It's not transactional. When the bail out monies (dem) or increased corp profits (rep) arrive, they don't help crypto. If anything, there may eventually be a USA digital dollar (or some type of currency reset) that will basically kill current cryptos. It sure won't be BTC or any of the existing coins; even the vast majority of "investors" holding them have never bought gas or coffee or done anything real with it. Big banks or ETFs or brokerage crypto fringe involvement means nothing to legitimize it; they will happily take commissions and money where and however they can (see 2007 housing).

You have no idea what you are talking about when it comes to crypto. Please stop. The crypto cycle has been pretty clear now since its inception. There are some life events that can throw off the trajectory (COVID, etc) but it is highly predictable.

BTC halving is in April 2024. There is like an 6-8 month lull after that when things really start to rocket. It has happened every cycle.

BTC ETFs are around the corner. Blackrock, Fidelity, Vanguard, etc are about to bring 30 trillion in assets to the crypto market. The current crypto market is 1.6 trillion. Do the math.

Their investors in the ETF get exposure to the BTC positive price potential but don't have to hold BTC in a wallet. For every $100 someone invests in Blackrock's BTC ETF they will buy $100 worth in BTC off coinbase and hold it in cold storage. They don't need to buy an entire bitcoin. They can buy portions of it which is infinite despite there being a hard cap of 21 million BTC ever. This will drive BTC to new prices never thought possible. This will be a hedge against inflation. Blackrock and all the big boys will make insane money on fees and transactions.

This is it. This is the moment we have all been waiting for. I suspect the price of BTC will rocket for the next 8-10 years due to this acceptance. Defer to the gold ETF charts to compare.

BTC will be a store of value. Blockchain will continue to build and be implemented in everyday businesses. This is like the internet starting all over again.

Projects like Cardano and other blockchains will bring legitimate use case for blockchain technology in the future. Just watch. Your arguments are soft and nonsensical. You're just a boomer who hasn't even made an effort to look into this stuff.

 

[air bud]

Great question, get a financial planner - Interview 3 and go with the one who inspires the most confidence. The two of you are making substantial money and decisions today will impact you significantly in the future. Congrats!

Well you are full of terrible information. Get a financial planner, go to Podiatry school. Why dont you suggest whole life insurance too while you are at.

 

[eyeeye_captain]

With all the talk about ROI on here, I think we can all agree that buying a ring was a sound financial decision

 

[Sweatshirt]

Do either of your jobs qualify toward PSLF?

 

[Feli]

Do either of your jobs qualify toward PSLF?

This is the podiatry forum.

 

[JustAPedicurist]

Do either of your jobs qualify toward PSLF?

No

 

[Sweatshirt]

No

Then I'd be aggressive with paying them back. I would also hold off on buying a house right now if you can. Maybe wait 1-2 years if possible. I only had to buy because I had a pregnant wife and growing family. Also there was no rental market in my rural town. Went from 2% interest rate in residency to 6.7% interest rate now

 

[Sweatshirt]

This is the podiatry forum.

Mine qualified

 

[Feli]

Mine qualified

Yeah, that's why you took the job.

That is what I was saying: pod jobs for PSLF are super rare, and even MDs with PSLF take them for that reasoning and with that plan for repay.

He wouldn't be asking if that were the case.

 

[Boba Foot]

Yall have a good combined income. Shotgunning your loans is probably possible. Depends on if you’re willing to “live like a resident” for 5 more years. I wouldn’t be— I put my time in, I’m ready to enjoy life. But everyone’s different.

You never know what’s going to happen tomorrow or 5 years from now. Maybe you croak the day after you send your final check to Mohela (or whomever) and you wasted your last years paying back the bank and US govt instead of enjoying it. You just never know.

 

[MoostashPod]

My fiancee makes $200,000. She has a lot of student loans as well. We combine for $500k in student loans. I’m about to take a job that makes $225,000 out of residency. What would you guys suggest is the best way to tackle our debt? Should we rent and go all out against the student loans for two years?

I'm just going to be Dave Ramsey today since you have an avatar of him. Your most powerful asset is your income, and you both have a wonderful income. A good to great "shovel to hole" ratio and you should tackle your student loans debt from smallest to largest and with a vengeance. That means you live like no one else so that one day you can live and give like no one else. I would rent for the next few years while you tackle this mountain of debt and as fast as you can. Make sure your fiancee is on the same page. Definitely save up for an emergency fund as a cushion. Just imagine not having any debt to pay, so now you can invest, have retirement planning, buy a house (a mortgage okay debt as it appreciates in value), etc.

In other words, just tackle it as if it's your worst enemy and be very intentional. Be debt free in a few years. You'll thank yourself. Some people are okay with debt. I just can't fathom building wealth while being in debt, but that's just me.

 

[NatCh]

Buy a new Porsche (for each of you). You've worked hard. You've earned it. Live a little...



J/K

 

[heybrother]

I'm going to own a Lexus someday. ie. my wife says I can have her's when she's done with it.

 

[Shiyuan]

I'm going to own a Lexus someday. ie. my wife says I can have her's when she's done with it.

Atta boy. I get car hand-me-downs from my wife too 😜

 

[Hybrocure]

You have no idea what you are talking about when it comes to crypto. Please stop. The crypto cycle has been pretty clear now since its inception. There are some life events that can throw off the trajectory (COVID, etc) but it is highly predictable.

BTC halving is in April 2024. There is like an 6-8 month lull after that when things really start to rocket. It has happened every cycle.

BTC ETFs are around the corner. Blackrock, Fidelity, Vanguard, etc are about to bring 30 trillion in assets to the crypto market. The current crypto market is 1.6 trillion. Do the math.

Their investors in the ETF get exposure to the BTC positive price potential but don't have to hold BTC in a wallet. For every $100 someone invests in Blackrock's BTC ETF they will buy $100 worth in BTC off coinbase and hold it in cold storage. They don't need to buy an entire bitcoin. They can buy portions of it which is infinite despite there being a hard cap of 21 million BTC ever. This will drive BTC to new prices never thought possible. This will be a hedge against inflation. Blackrock and all the big boys will make insane money on fees and transactions.

This is it. This is the moment we have all been waiting for. I suspect the price of BTC will rocket for the next 8-10 years due to this acceptance. Defer to the gold ETF charts to compare.

BTC will be a store of value. Blockchain will continue to build and be implemented in everyday businesses. This is like the internet starting all over again.

Projects like Cardano and other blockchains will bring legitimate use case for blockchain technology in the future. Just watch. Your arguments are soft and nonsensical. You're just a boomer who hasn't even made an effort to look into this stuff.

Who let Gary Vee into here

 

[Retrograde_Nail]

Who let Gary Vee into here

I can't wait until its the end of 2024 going to into 2025 to see where we are at in the markets.

Scared money doesn't make money.

 

[wakaflocka88]

Buy a new Porsche (for each of you). You've worked hard. You've earned it. Live a little...



J/K

If the market plays out well, I plan on a new 911. Already got a new Lexus recently.

 

[Hybrocure]

I can't wait until its the end of 2024 going to into 2025 to see where we are at in the markets.

Scared money doesn't make money.

True. As podiatrists we are already risk takers

 

[Feli]

You guys are crushing me.

My most valuable vehicle is 2-wheel and KBB of maybe $7k.
I've got nothing newer than a 2012 right now.

I just can't seem to find a Caddy or Range that pays dividends or appreciates 8-10% per year.

... Depends on if you’re willing to “live like a resident” for 5 more years. I wouldn’t be— I put my time in, I’m ready to enjoy life. But everyone’s different.

You never know what’s going to happen tomorrow or 5 years from now. ...

It all depends on one's philosophy... 'life is long' thinking vs 'eff-it' thinking.

Compounding interest is working for or against everyone. It's often good to try to get to the former at some point.

Once you free up your whole earning potential (no more debt payments), you can really superfund retirement or raise your standards or whatever else you choose. The more that you pay on debt, the more power you will eventually free up. It is really only hard for the first few months of a more constrained budget; you adjust fairly fast... if you want to.

...Just imagine not having any debt to pay, so now you can invest, have retirement planning, buy a house (a mortgage okay debt as it appreciates in value), etc. ...

Yes. ^^^

 

[Weirdy]

If the market plays out well, I plan on a new 911. Already got a new Lexus recently.

What trim?
Was outfitting a 911 4S.
Maybe in another lifetime.

 

[Hybrocure]

What trim?
Was outfitting a 911 4S.
Maybe in another lifetime.

911s are the new corvette for boomer docs. Aim better

 

[wakaflocka88]

What trim?
Was outfitting a 911 4S.
Maybe in another lifetime.

Definitely at least a 4s.
Gotta enjoy life a little while we can.

 

[prepod2016]

If you have the need to ask people (not just people, but people who decided to be podiatrists) on sdn for financial advice , I pray for ya.

 

[Weirdy]

911s are the new corvette for boomer docs. Aim better

Lotus Evora GT 410 would be the other.

 

[DYK343]

Take advantage of all tax deferred retirements and max those out (IRA/401K/403B/HSA)

Save up 6 months emergency fund.

All rest goes towards loans.

I recommend renting.

 

[Feli]

Take advantage of all tax deferred retirements and max those out (IRA/401K/403B/HSA)
...

Max 401Ks....

...4. Maximizing tax advantaged accounts is a must for you (401k,...

What is the logic to max 401/403/etc (beyond employer match) while in debt? Serious question that'll help some ppl.

(Roth is different... obviously awesome with untaxed gains and freedom to buy whatever you want... for decades)

These days, with 7+ percent student loans, most 401/403 make sense up to match (if vest immediate or reasonable), but after that match amount (and to 23k limit), the 401/403 have really crappy ETF choices (or even mutual funds) with bogus dividends and high fees (relative to just indexing VOO or VTI or whatever in Roth or cash or any self-directed account). Beyond the match, it seems they're pretty unlikely to beat 7-8% sure return from paying off student loans (or any other higher interest consumer/CC debts)... 401/403 absolutely not guaranteed to do that rate, like the loan payment is.

...Is the thinking just to have various types of invest money? (pre tax 401/403/trad, post tax cash account, and all-taxes-paid Roth)
...To do a rollover with job change(s) and be able to someday buy better stuff than the dumb employer fund choices?

[solo and SEP 401k for biz owner is entirely different... since you can buy whatever you want and keep fees low]

 

[DYK343]

What is the logic to max 401/403/etc (beyond employer match) while in debt? Serious question that'll help some ppl.

(Roth is different... obviously awesome with untaxed gains and freedom to buy whatever you want... for decades)

These days, with 7+ percent student loans, most 401/403 make sense up to match (if vest immediate or reasonable), but after that match amount (and to 23k limit), the 401/403 have really crappy ETF choices (or even mutual funds) with bogus dividends and high fees (relative to just indexing VOO or VTI or whatever in Roth or cash or any self-directed account). Beyond the match, it seems they're pretty unlikely to beat 7-8% sure return from paying off student loans (or any other higher interest consumer/CC debts)... 401/403 absolutely not guaranteed to do that rate, like the loan payment is.

...Is the thinking just to have various types of invest money? (pre tax 401/403/trad, post tax cash account, and all-taxes-paid Roth)
...To do a rollover with job change(s) and be able to someday buy better stuff than the dumb employer fund choices?

[solo and SEP 401k for biz owner is entirely different... since you can buy whatever you want and keep fees low]

Because the 23k is tax free.
Max out all tax free accounts.
If you pay taxes on 23k you actually are taking home ~14k then paying student loans with the 14k.
9k lost investing potential

- -

Its a relative wash on paying student loans (~7%) verses investing (historic ~7% returns) BUT you have 9k more to play with because you werent taxed.

- -

OP is also getting close to the next tax bracket. Money into tax deferred accounts gives him more wiggle room.

- -
Also 401k employer can commit more than 23k yearly total. So you invest 23k and they invest x% match (which it appears you agree with).

 

[air bud]

Because the 23k is tax free.
Max out all tax free accounts.
If you pay taxes on 23k you actually are taking home ~14k then paying student loans with the 14k.
9k lost investing potential

- -

Its a relative wash on paying student loans (~7%) verses investing (historic ~7% returns) BUT you have 9k more to play with because you werent taxed.

- -

OP is also getting close to the next tax bracket. Money into tax deferred accounts gives him more wiggle room.

- -
Also 401k employer can commit more than 23k yearly total. So you invest 23k and they invest x% match (which it appears you agree with).

I mean you gotta pay the taxes one day.....tex deferred not tax free

 

[DYK343]

I mean you gotta pay the taxes one day.....tex deferred not tax free

yes correct. Wrong terminology on my part.

But it grows tax free. Which is huge. Thats still an extra yearly 9K that can grow through a lifetime/until retirement.

 

[Feli]

yes correct. Wrong terminology on my part.

But it grows tax free. Which is huge. Thats still an extra yearly 9K that can grow through a lifetime/until retirement.

Yeah, you pay standard fed + state tax on all 401/403 distributions when withdrawn... both the gains (like cash stock account) and also the original (since not taxed going in) .

The logic is just that one's tax bracket may be lower in retirement... and tax rates in the future could be same or lower or higher.

Im not sure 401 (after match) achieves anywhere near 7% with fees and limited choices, but it depends what company and funds the employer offers. 401 also gets a ton better if you leave the job (or SEP) and can buy what you want. It'll also be a matter of whatever the markets do and what tax tables end up being in 20xx retirement.

...The student loans, right now, are a guaranteed 7% or more instant return (plus psychological weight of eliminating debt and rebuild credit to get better rates elsewhere). It's nowhere as good as Roth truly tax free growth or the early 401 thats matched 100% some employers, but slam dunk 7% is nothing to dismiss. Plenty of very rich people chase returns like that with REITs or bonds or dividend or utilities stocks that are far from guaranteed.

Student loan interest paid has up to $2500/yr tax deductible. Any podiatrist will smash that for years and years after residency.

 

[Forcewielder]

My fiancee makes $200,000. She has a lot of student loans as well. We combine for $500k in student loans. I’m about to take a job that makes $225,000 out of residency. What would you guys suggest is the best way to tackle our debt? Should we rent and go all out against the student loans for two years?

Congrats on the job. White coat investor has some good stuff to read on their blog.

1) Rent for 2-3yrs minimum. The biggest reason is the flexibility it provides. Even if this is your dream job, something else could come along, COVID 2.0 could hit and you get released, etc... use the time to ensure you're where you want to be with the job and that the commute isn't unexpectedly awful. They may even send you to a new location and you'll wish you were in a different suburb.

2) Get an emergency fund of 3-6mo of expenses. Have it in a separate account you don't look at.

3) Live like a resident. Don't let the checks sit in your bank account and make you feel eager to spend it. Allocate what you used to live off of and the rest pay towards debt.

4) Keep grinding. Don't let up. It's easy to let up and spend more. It's nearly impossible to do the opposite without catastrophe.

Good luck and congrats again

 

[DYK343]

Yeah, you pay standard fed + state tax on all 401/403 distributions when withdrawn... both the gains (like cash stock account) and also the original (since not taxed going in) .

The logic is just that one's tax bracket may be lower in retirement... and tax rates in the future could be same or lower or higher.

Im not sure 401 (after match) achieves anywhere near 7% with fees and limited choices, but it depends what company and funds the employer offers. 401 also gets a ton better if you leave the job (or SEP) and can buy what you want. It'll also be a matter of whatever the markets do and what tax tables end up being in 20xx retirement.

...The student loans, right now, are a guaranteed 7% or more instant return (plus psychological weight of eliminating debt and rebuild credit to get better rates elsewhere). It's nowhere as good as Roth truly tax free growth or the early 401 thats matched 100% some employers, but slam dunk 7% is nothing to dismiss. Plenty of very rich people chase returns like that with REITs or bonds or dividend or utilities stocks that are far from guaranteed.

Student loan interest paid has up to $2500/yr tax deductible. Any podiatrist will smash that for years and years after residency.

I agree.Which is why I suggested max out retirement. Build emergency fund. And plug all the rest towards student loans which is a guarenteed 7% return.

Personally I feel the government takes way to much of my check every month. I prefer not to give them any more than I have to.

 

[Forcewielder]

I agree.Which is why I suggested max out retirement. Build emergency fund. And plug all the rest towards student loans which is a guarenteed 7% return.

Personally I feel the government takes way to much of my check every month. I prefer not to give them any more than I have to.

I agree with you. It's not universally good advice, but if you can avoid lifestyle creep and stay committed then I prefer putting a lot in retirement, even while in debt.

I'm in the 35% federal bracket. By putting 4k/month into tax deferred retirement accounts for just the next 10 years and then making literally zero other investments I should conservatively have around 3mil in retirement by 65. I'd rather not lose that time in my compound interest calculator. I completely get the sentiment of crushing my debt ASAP, but there are many ways to be financially successful. You just have to choose what you'll stick to personally.

 

[DYK343]

Just checked. I made a crazy 17% returns this year on my 401k.
Thats a crazy amount
We did have a weird year where markets started in gutter and now back to booming.


Also, tomorrow is last day for backdoor roth conversion. If you dont know what that is you need to learn now.

 

[Feli]

Just checked. I made a crazy 17% returns this year on my 401k.
Thats a crazy amount
We did have a weird year where markets started in gutter and now back to booming...

That is crazy, but not in the way you think.

You should be up about 26.x% for 2023 (nearly 25% shares + roughly 1.5% dividends) if you're indexing. S&p 500 and total USA were nearly equal this year, as they tend to be.
... Google 's&p total returns' or 'spx ticker.' That was the s&p TR for the year (Last year Ukrainian war 2022 was -18.x%).

That's the problem with 401/403: limited fund choices, fees, drag. If you were indexing, fees ate a third of your 401k gains.

 

[DYK343]

That's the problem with 401/403: limited fund choices, fees, drag. If you were indexing, fees ate a third of your 401k gains.

yes but at the cost of ~40% tax?

Immediately out the door need to make back 40% tax withdrawl plus 17% on index fund investment to break even.

 

[Feli]

yes but at the cost of ~40% tax?

Immediately out the door need to make back 40% tax withdrawl plus 17% on index fund investment to break even.

You will pay tax on 401 later.
I think you're misunderstanding tax 'free' and tax deferred.

It's fine, though... important part is you're happy with the returns/ result.

 

[Feli]

If you have the need to ask people (not just people, but people who decided to be podiatrists) on sdn for financial advice , I pray for ya.

This is a post of the year nominee.
Kudos.

 

[air bud]

If you dont have an emergency fund and "lose" your job you might be forced to take a job you don't want. Source: trust me bro.

 

[Feli]

If you dont have an emergency fund and "lose" your job you might be forced to take a job you don't want. Source: trust me bro.

2nd, been there.^^

...ditto for if you or partner is attached to an area. You will likely be stuck with ok, bad, worse options.

Never tell PP boss or employer in general you bought a house, kids in school, love the area. Unless you dont like contracting power.

 

[DYK343]

You will pay tax on 401 later.
I think you're misunderstanding tax 'free' and tax deferred.

It's fine, though... important part is you're happy with the returns/ result.

I am not misunderstanind tax deferred. I did make a typo above but yes still gotta pay taxes on gains for 401k. Big thing is youre not investing money you paid ~40% tax on. Still gotta pay taxes on index fund gains too (after being taxed 40% at the start)...

 

[dtrack22]

I think you're misunderstanding tax 'free' and tax deferred.

401/403 money goes in tax free, grows tax free, and only gets taxed as “income” upon withdrawal. Your gains aren’t taxed which you misstated or misrepresented previously.

And I’ve never had a 401k that didn’t have low fee index funds that perform as well as other index funds. Fees in my current 403B aren’t an issue.

There is another advantage for tax deferred accounts that everyone has ignored. There are plenty of people who currently pay state income taxes but upon retirement can/will relocate to a state without a state income tax. There are significant additional savings with putting away your money pre-tax in that scenario.