EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook about Investing. Stay tuned to get first crack at the NEW EBOOK; and it’s FREE to my readers.
The following is a guest post from Crystal at Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.
Free Money Finance (FMF) had this post which went over an article from Yahoo that listed the worst paying jobs for doctors. The absolute worst paying position still brought in $175,000*.
Well, based on past posts at FMF and others I’ve seen online, some commenters argue that doctors still carry high debts because they “have to” live in the nicest neighborhoods, drive the best cars, and send their kids to expensive private schools. They also have student loans.
FMF’s post argued that even with liability insurance and student loans, a doctor should be able to build wealth quickly. I completely agree.
Let’s say a doctor has to spend 50% of his/her salary on insurance, taxes, and expenses like that. That would still leave the worst paid doctor with about $87,500 a year. I’ll also say that this hypothetical doctor has $150,000 in student loans as the average college debt for doctors was listed at $140,000.
Well, if I made $87,500 a year, I’d live and save a little off of $40,000 and put the other $47,500 towards my student loan debt. I’d be debt free in less than 4 years. Then I could send that extra towards my average $200,000 mortgage in Texas (paying it off in less than 5 years) or even add more to retirement savings.
This would mean that I could be completely debt free within 9 years of graduating and own a really nice house to boot. I’d also have $2 million saved for retirement within another 21 years if I could get an average return of at least 6%.
What about the nice car and expensive private schools?
Well, do you know what your doctor drives? I have no idea. That $40,000 a year budget could easily include a car payment of $350 a month (ours did). If I was a doctor, I’d drive whatever I’d like that could comfortably and consistently get me from Point A to Point B. I like the Toyota Prius, so I’d buy one of those with cash or use my awesome credit to get a low rate in the beginning when I’m strapped. I’d still have it bought outright within my first 2-3 years out of college.
I don’t have kids, but even if I did, the public schools where I live currently are one of the highest rated districts in Texas. My kids could go there. If they needed more mind stimulation, I could hire them a personal tutor or even afford to send them to private school with cash by the time they were in middle school. I might have to drive a worse car or retire on less or push back retirement a few more years, but I could remain debt free.
Some of you may argue that it is impossible to live on $40,000 a year. It’s not – we do it and live pretty happily. We make about $60,000 a year after taxes, insurance, and benefits. We save about 40% of that ($24,000) – 30% for retirement and 10% for shorter-term goals. We live on the other $36,000 a year. We have a pretty nice house (1750 sq.ft. 3 bedroom that was built in 2004), 2 cars, and even fun extras.
This article made me regret not liking science, math, or college enough to pursue a medical degree. 😉
*That $175,000 is an average and doesn’t take into account the doctors that make scraps working for charities or non-profits – please don’t yell at me for them. 🙂
How about you, could you build wealth pretty quickly by taking home “just” $87,500 a year?
YAKEZIE SHORT CARNIVAL
Enjoy this personal finanance reading; stop by their sites to read more.
How to Create a Budget-Setting Goals at KNS Financial
How do you know if you are rich? at Living Financially Free Ministries
Crank Up Your Money Saving Goals With SmartyPig at Free From Broke
