Author Topic: 32 yo physician jumping into MMM  (Read 6886 times)

OccamsPhaco

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32 yo physician jumping into MMM
« on: April 02, 2018, 06:27:14 PM »
So my first post on here. Read all the old articles and have lurked on the forums for about a month now, and it didn't take me long to realize that this is how I've always wanted to live. Now, fairly early in my post residency career, it's been reinforced by orders of magnitude that I do NOT want to be seeing patients until I die. I came out of residency with no student debt (Thanks, grandparents and parents), and I started my own ophthalmology practice at the ripe old age of 30. It was easily the most exciting and difficult thing I'd ever done, and we were in the black by month 4. However, it became apparent that small town Louisiana life was not for us and that the area was slowly dying (town pop: 11,000 and shrinking), so I took an offer for a partner track position and closed my labor of love. The new job was in a bigger city and paid well enough, compared to scraping by doing surgery for $20 an hour.

So after two years as an employee, it came time to buy in, and the cost was outrageous. It's a successful practice, but not worth that. The potential partner and I butted heads as well, so I'm taking a new job 2500 miles away. Almost double the pay with much better benefits and about 5x the time off. And now it's time to get my financial shit together. So help me out, mustachians!

Life Situation: Married (she's 33), two kids ages 7 and 8, currently living in Louisiana but moving to Corvallis, Oregon in July 2018 as part of a huge lifestyle change/improvement.

Gross Salary/Wages: $220k/year until the move, then $330k/year base with incentives going up above $700k (this will take a few years to reach, if even possible). My wife has taken last year off, but can always find work in the $35k range without much trouble if we so choose.

Individual amounts of each Pre-tax deductions 401k (None! This was explicitly not offered at my current job. I will max it as soon as we move; IRA is maxed for my income, and we did the backdoor Roth for 2017.

Other Ordinary Income: Little things, surveys for cash - maybe $250 in a good month

Qualified Dividends & Long Term Capital Gains: Nothing I'm aware of

Rental Income, Actual Expenses, and Depreciation: Dental, Health insurance, maxing out 529 plans for the two kids

Adjusted Gross Income: Taking home about $5600 per paycheck

Taxes: Federal, state/local, and FICA.  I pay what I have to pay, see take home above. Nice to get out of FICA towards the second half of the year (thanks regressive taxation!)

Current monthly expenses, Big to little:
1. Mortgages on two homes (primary residence is $2150/month for the whole shebang, and I've never been able to sell the house I lived in during residency in Jackson, MS. Note is $800, closer to $1100 with T&I) is $3250 total. Rates are 4% and 4.5%, respectively.
2. Loans: $2500/month on the business loan (3.1%) and my first ever car note is 4 months old (my wife twisted my arm right before I found MMM) and is $520/month at 2.99%
3. School tuition: $1300/month but only for April and May and then NEVER AGAIN thanks to public school in Oregon
4. Groceries around $1000
5. Term life, disability, auto insurance at $850
6. Cutting everything else significantly - canceled gym memberships, biking to work, coffee in the breakroom only, turning off lights, we all wear old clothes, all that good stuff. This part is the easiest and comes most naturally for me.

Expected "emergency" expenses (two very big ones):
1. We are still underwater on the Jackson, MS house thanks to a shady mortgage that I was dumb enough to take (and not pay down quickly) and the abysmal real estate market in Jackson. Zero down balloon mortgage, designed especially for resident physicians. Bought the house for $159k in 2011 and will be lucky to get $129k for it. We've rented it in the past due to the cold market for $1300/month, but... the balloon payment comes due in July this year, and I owe $135k on it. So I've got two options I can see - attempt to refinance a house I'm underwater on which will certainly require a lump sum, or sell it for a loss which will also require me to write a check. Either way, I'm out about $20k. It's currently for sale as I don't want to manage it from a distance, but if it doesn't sell, I guess I'm stuck with it
2. Medical malpractice insurance is a racket, and I will owe $28k for "tail coverage" when I leave Louisiana. No monthly installments, just write the insurance company a check in case anyone decides to sue me after I'm gone.
3. Moving expenses covered by the new job up to $20k, so hopefully not much there

Assets:
1. Primary residence - purchased for $360k, owe $325k, hoping to get $370k, currently FSBO
2. Jackson, MS house - see above, owe $135k on a house worth $120-125k, currently for sale through realtor
3. Two cars, one without a note that we are planning to sell in the move, old and not worth more than $3k.
4. $75k invested in old 401k, IRA, 529's and a couple dollars here and there in taxable accounts
5. $30k or so in cash
6. One time sign on bonus with the new job of $20k before taxes in August

Liabilities:
1. Business loan, originally for $350k, currently at $191k, monthly note is $2500 which clears it by 2025. Rate is 3.1%
2. Car note, originally for $25k, now at $19k, monthly note is $517 until late 2021. Rate is 2.99%
3. That damn house in MS which I consider a liability.
No CC debt

Specific Question(s):
Alright, if you've stuck with me until now, thanks so much.

Here's the TLDR: Without current access to an employee retirement plan, and with my IRA and 529 contributions maxed, where is the next place money should go? My first instinct is to just pay the damn car note and be done with it, and I've been doubling and tripling up on the note the last couple of months (hair on fire). The rate is only 2.99%, but it's small, and I could kill it almost immediately.
Another option is to pay down the huge business loan, but that'll take awhile, and it's only 3.1%. I know the arguments between avalanche and snowball (avalanche wins) but will be taking snowball with these two when it's time to attack them.
I could throw extra money at the MS house (4.5%) which will help either when it sells or when the loan comes due and I have to refinance. Or I could look into taxable investing. Or do I drop all I can into a 1.5% Capital One savings account in order to be ready for those big hits mentioned above? Gonna need about $50k for the house and the tail coverage.

Thanks in advance. Just have to get through the next four months or so!
« Last Edit: April 02, 2018, 06:37:19 PM by OccamsPhaco »

living small

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Re: 32 yo physician jumping into MMM
« Reply #1 on: April 02, 2018, 07:03:41 PM »
Hello! Welcome, from another healthcare professional!

I have to say, amazing to come out with no student loans!

I have been an associate my entire career, and it  varies with the retirement plans offered, so I know this all too well.

Out of curiosity, did you just close up shop? Or are you attempting to sell it? in my profession, even if you can't sell the practice, often the "charts" are sold to other providers so that they can absorb patients and cashflow.  What are the details that you can provide here?

Also out of curiosity, could you sell the car with a loan and buy a cheaper pre-loved vehicle to meet your needs?

Get your grocery costs down.
https://forum.mrmoneymustache.com/share-your-badassity/have-a-sub-$200month-grocery-budget/?topicseen
I mean, this is aspirational, but good info and strategies here

Can you negotiate moving costs with your new employer? This is definitely something that I commonly see in the med prof. Or use the sign on bonus. We recently moved, and we used  U-Pack, boxed everything up ourselves and spent about $6k,

Holy shit your malpractice tail coverage is larger than anything I have ever experienced in my life! Is that common to your profession in particular? I would ask a shit ton of questions here. The most expensive one I have run into ( and I have moved about 5 times over the course of a 13 year career- better gigs plus military husband) is about $3k.

Your Jackson, MS home, could you find other residents who would be interested in buying/renting? Could you Airbnb it?

How is the market for your primary residence?

https://www.airbnb.com/s/Jackson--MS--United-States/homes?refinement_paths%5B%5D=%2Fhomes&checkin=&checkout=&adults=1&children=0&infants=0&place_id=ChIJIRt0kH8rKIYRoDjwQeTNEwc&source=mc_search_bar&s_tag=tD15XSdE&allow_override%5B%5D=&section_offset=1

I would reeeaaally soul search on wants vs needs. 11k/month with all of your expenses is  not going to get you where you want to be. ( I mean the potential is there, but its already being spent) Which is why you are here, which is great. Are there things you could craigslist? Things you are holding onto for status reasons? Your  kids are old enough to do a lot for themselves, so is it time for your spouse to get serious on helping out with income? Can you moonlight?

I have been there. With student loans. And a divorce! You can do it!





OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #2 on: April 02, 2018, 07:20:30 PM »
Thanks!

Closed up shop after less than a year. The building was owned by a family member who gave me an incredibly cheap and flexible lease, and I sold off all the assets I could. Which is why I owe 190k on 350k two years later. Some things didn't sell, not much of a market for highly specialized stuff that I had already bought used. I'd read it costs about $1 million to open a new ophthalmology practice, so doing it for 1/3 of that felt good and didn't ruin my life.

I could absolutely sell the vehicle. I only bought it because my old Jeep was finished, and I bought it used (a year old and put down $10k, so I wasn't 100% dumb), but I should have gone cheap. Fell into the "I'm a doctor making six figures, I deserve this!" trap. Not smart. Selling it is something we're kicking around, but I think we'll sell the other one and try to be a one car family.

Need to work on groceries. The last hurrah of getting the wife on board...

Moving costs will be covered up to $20k. Should be all good.

Tail coverage sucks, especially for any kind of surgeon. I've gotten multiple quotes and was repeatedly told that the numbers I'm hearing are "the norm." It's awful. I am attempting to have it paid pre-tax through either the place I'm leaving or the new place. Or even just taken out of paychecks for a few months instead of a lump sum. But we'll see.

Always looking for new residents in MS, I bought from an outgoing resident. Crime has gotten bad, and even residents are moving to the burbs.
Primary house will move. Market is good enough. I'd like to do it without a realtor getting all my profit. Been listed for 2-3 weeks, gotten a few walkthroughs.

But yes, this is why we're making the big move. Huge raise, no more private school, selling a car, selling two houses (hopefully), will rent for awhile and make a good home purchase next time, wife is going back to work, going to pay down the loans ASAP. Basically, it's time to correct all the stupid bullshit that had to be learned after residency. And no, my current boss flat out squashed every moonlighting opportunity I approached him with. Bad contract. Next time...

living small

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Re: 32 yo physician jumping into MMM
« Reply #3 on: April 02, 2018, 07:54:25 PM »
Damned restrictive covenant!

As far as your DW is concerned:

https://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/

this is chock full of great info.

Sorry about the malpractice. I do a fair amount of surgical procedures and am still dumbfounded by that amount.

My hubby comes from a spendier background than I did, and I too am the breadwinner. I takes a while for mindset change for sure. He is there for the most part. We decided on a basic budget. We also agree to talk to each other on purchases that don't exactly qualify  within the budget. We tried to think about our lives together as a business...a business of getting to our retirement goals. Especially when you have both gone through the arbitrary crap life that is residency....it is really tempting to fall into the habits of "the good life"

you got this.


NoStacheOhio

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Re: 32 yo physician jumping into MMM
« Reply #4 on: April 03, 2018, 06:49:25 AM »
Damned restrictive covenant!

As far as your DW is concerned:

https://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/

this is chock full of great info.

Sorry about the malpractice. I do a fair amount of surgical procedures and am still dumbfounded by that amount.

My hubby comes from a spendier background than I did, and I too am the breadwinner. I takes a while for mindset change for sure. He is there for the most part. We decided on a basic budget. We also agree to talk to each other on purchases that don't exactly qualify  within the budget. We tried to think about our lives together as a business...a business of getting to our retirement goals. Especially when you have both gone through the arbitrary crap life that is residency....it is really tempting to fall into the habits of "the good life"

you got this.

+1 to this.

You don't have to make all the changes all at once, and you definitely need to be on the same page with your spouse. Moving across the country is already a huge life change.

Even with the low interest rates, the auto and biz loans sound painful.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #5 on: April 03, 2018, 08:55:15 AM »
Damned restrictive covenant!

As far as your DW is concerned:

https://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/

this is chock full of great info.

Sorry about the malpractice. I do a fair amount of surgical procedures and am still dumbfounded by that amount.

My hubby comes from a spendier background than I did, and I too am the breadwinner. I takes a while for mindset change for sure. He is there for the most part. We decided on a basic budget. We also agree to talk to each other on purchases that don't exactly qualify  within the budget. We tried to think about our lives together as a business...a business of getting to our retirement goals. Especially when you have both gone through the arbitrary crap life that is residency....it is really tempting to fall into the habits of "the good life"

you got this.

+1 to this.

You don't have to make all the changes all at once, and you definitely need to be on the same page with your spouse. Moving across the country is already a huge life change.

Even with the low interest rates, the auto and biz loans sound painful.

Wife is getting there. Like I said, she's been off for a year, so she has a very complete understanding of what I want. She was able to dive headfirst into her art/painting to where it actually did well and made her some money. I think my jealousy was toxic though. It's been hard for me to see her getting to sleep late and do stuff with the kids and pursue her interests while I'm grinding out a job I dislike.

I could knock out the auto loan today, but I think I need to be liquid at the moment for all the upcoming stuff. After the second paycheck in Oregon, I'll probably erase that damn note though. But that's my main question,would it be better to do something else with that money?

NoStacheOhio

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Re: 32 yo physician jumping into MMM
« Reply #6 on: April 03, 2018, 08:58:27 AM »
https://forum.mrmoneymustache.com/investor-alley/investment-order/

This thread is sort of the boilerplate. You have a lot of moving pieces, but also a large income to allocate. It seems like you could do all of them within the next 12 months or so.

Proud Foot

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Re: 32 yo physician jumping into MMM
« Reply #7 on: April 03, 2018, 09:37:03 AM »
I am not a physician but there are two blogs by physicians that may be very helpful to you. These will give you information that you would find here but it is geared directly for physicians.

www.physicianonfire.com  ( @PhysicianOnFIRE )
www.whitecoatinvestor.com

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #8 on: April 03, 2018, 09:53:02 AM »
https://forum.mrmoneymustache.com/investor-alley/investment-order/

This thread is sort of the boilerplate. You have a lot of moving pieces, but also a large income to allocate. It seems like you could do all of them within the next 12 months or so.

Yeah, I like how simply it's broken down in that thread. I guess I'm just being overly eager to PAY DOWN ALL OF THE THINGS. Have to relax and run the marathon and not the sprint. Situation will be dramatically different in less than a year.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #9 on: April 03, 2018, 09:55:59 AM »
I am not a physician but there are two blogs by physicians that may be very helpful to you. These will give you information that you would find here but it is geared directly for physicians.

www.physicianonfire.com  ( @PhysicianOnFIRE )
www.whitecoatinvestor.com

Thanks for the recommendations, will check those out. I don't know that my job will have too much to do with specifics, but maybe I'm wrong. I know docs frequently are terrible with money and have more reason to carry disability insurance, and malpractice can cause huge headaches, but it's all just income - expenses = savings. But will definitely see if I'm missing any nuances. Thanks!

NoStacheOhio

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Re: 32 yo physician jumping into MMM
« Reply #10 on: April 03, 2018, 10:01:53 AM »
https://forum.mrmoneymustache.com/investor-alley/investment-order/

This thread is sort of the boilerplate. You have a lot of moving pieces, but also a large income to allocate. It seems like you could do all of them within the next 12 months or so.

Yeah, I like how simply it's broken down in that thread. I guess I'm just being overly eager to PAY DOWN ALL OF THE THINGS. Have to relax and run the marathon and not the sprint. Situation will be dramatically different in less than a year.

Yeah, I would say the initial stages are probably the hardest emotionally/psychologically. Eliminating debt can sort of feel like waiting for the plane to push back from the gate. You get antsy, even though it's really all the same thing.

living small

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Re: 32 yo physician jumping into MMM
« Reply #11 on: April 03, 2018, 10:14:21 AM »
^^^ Those are awesome blogs.  And a good investment thread!

I know that I might get a bit of blowback here, but, I have NEVER carried "own profession" disability insurance. Yes, you can continue to reap your salary if you are disabled.
Its just that, with my "pre-existing" health issues ( car accident related) my monthly payments would have been ridiculous, $1k+. I decided that the best insurance was regular disability, and to just pay myself first while living below my means.  I think that I should be on track to FIRE in about 5 years. Even if something goes wrong before then, I can still reduce expenses further and be fine and happy.

Ben Kurtz

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Re: 32 yo physician jumping into MMM
« Reply #12 on: April 03, 2018, 11:00:41 AM »
Congratulations on getting into a good sub-specialty, and with no student loan debt! My parents were both ophthalmologists and were very pleased to run their own practices, and did reasonably well financially off of it as well. So I've seen it up close.

But holy cow! You've quickly committed every sin in the post-medical school book!

You:

1. Bought a house near your residency even though the odds were good that you wouldn't stick around -- and now you're underwater on the mortgage.
2. Bought a Doctor House right off the bat in Louisiana ($370,000 gets you a Nice Big House in pretty much the entire state, excluding a couple pointlessly fashionable parts of New Orleans), before you were sure you'd end up with an ownership stake in a healthy, profitable practice or were comfortable in a long-term salaried position that you would be happy to stick with.
3. Jumped right into starting a practice without apparently having done enough market research, which you then sold at a loss leaving you with a six-figure debt albatross around your neck and no valuable asset to offset it. Consider that $191,000 liability to be your educational loan. 
4. Bought a fairly fancy Doctor Car on credit.
5. Manage to spend $1,000 a month on groceries.

I'm glad you found this website and have spent time reading it. But to date virtually nothing in your lifestyle suggests that you are on board the frugality / FIRE train. You've stumbled into a six-figure negative net worth despite graduating from medical school with zero debt and training into a lucrative and attractive sub-specialty. Go punch yourself in the face a dozen times and promise to do better in the future.

The good news is, you have very strong earning capacity as an ophthalmologist and -- here's the weird and wonderful thing about medicine -- the ability to earn more while paying less in living expenses by agreeing to move to the sticks and working at the Mt. St. Elsewheres of the world. Which is what you are doing. Right now, your task is mental and very personal to you and your wife -- to get into the right frame of mind about money spending while drawing up the right plans for your family -- more than it is to select the right asset allocation or send your wife back to work for an incremental 10% earnings on top of the very generous salary you will be earning. Those questions will come up, but later. For now, you simply need to stop being a doctor when it comes to your finances and become a sane human being.

You'll be writing some big checks soon to help clear away some of your past mistakes. Save up your next three months worth of surplus to do that. When you get to Oregon, rent for a year or two before you buy. Yes, you have a family. Yes, you have kids in school. Big deal. Families move in-town all the time with no long-lasting trauma to the kids. Learn the lay of the land first, before plunging into costly financial transactions. Get rid of the expensive car and replace it with something that costs $10,000 or less. For which you will pay cash. Live like a resident for a couple years while paying down your stupid debts from the past. Make sure you have a big $150,000 down payment ready for when you do buy a house in Oregon, because I can already tell that the good 4+ br "grown up" Doctor Houses in that area will run you $500,000+ (much better than NYC or SF, a fair bit worse than, say, El Paso). Beyond maxing-out your tax-advantaged accounts -- which for most people is a good rate of savings but for you will be a rather small percentage of your income -- I wouldn't worry about investment order, asset allocation or much else. Put everything in those accounts into any plausible mix of low-fee stock and bond index funds and leave it alone. The rest of your surplus will be going to help clean up your balance sheet a bit and building up a down payment so you don't over-lever on your next house purchase.

You haven't said much about your new setup, but one thing that will be very helpful is to understand advanced techniques in tax-protected accounts. I mean Keogh-style things and profit sharing plans and similar which allow you to set aside pre-tax money in excess of the usual $18,500 employee 401k limit. That stuff can be hugely helpful to doctors but is not well covered on this blog or forum.

Read Dr. Dahle's blog over at White Coat Investor for some additional inspiration (https://www.whitecoatinvestor.com/classic-blog/), as well as practical advice on investments, insurance and all the other high-income doctor-related stuff that will become relevant starting in your second or third year of living in Oregon. That's when you can sit down and come up with a more thoughtful asset allocation and all that secondary stuff.

I know I sound a bit harsh -- and I mean to. I'm a high-paid professional -- a bit older than you are, married, and much better paid than you are. I rent my home (because I did the buy vs rent math and stuck with the logical conclusion) and drive an old Volvo I purchased for three figures (not a typo), because I know what I need and what don't need to make myself and my family happy. I'm still saving up furiously to provide a big fat cushion (currently well into seven figures) that will allow me to take my foot off the gas sooner rather than later so I can enjoy more time with my family and friends, and spend less time working in stressful conditions. I walk the walk. It's not that hard once you learn how. And perhaps you've mentally made those adjustments in anticipation of the move, even if you haven't executed on anything big just yet. But I'm going to hold your feet to the fire until I see concrete evidence that you've really internalized what this is all about.   


OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #13 on: April 03, 2018, 11:30:13 AM »
Congratulations on getting into a good sub-specialty, and with no student loan debt! My parents were both ophthalmologists and were very pleased to run their own practices, and did reasonably well financially off of it as well. So I've seen it up close.

But holy cow! You've quickly committed every sin in the post-medical school book!

You:

1. Bought a house near your residency even though the odds were good that you wouldn't stick around -- and now you're underwater on the mortgage.
2. Bought a Doctor House right off the bat in Louisiana ($370,000 gets you a Nice Big House in pretty much the entire state, excluding a couple pointlessly fashionable parts of New Orleans), before you were sure you'd end up with an ownership stake in a healthy, profitable practice or were comfortable in a long-term salaried position that you would be happy to stick with.
3. Jumped right into starting a practice without apparently having done enough market research, which you then sold at a loss leaving you with a six-figure debt albatross around your neck and no valuable asset to offset it. Consider that $191,000 liability to be your educational loan. 
4. Bought a fairly fancy Doctor Car on credit.
5. Manage to spend $1,000 a month on groceries.

I know I sound a bit harsh -- and I mean to. I'm a high-paid professional -- a bit older than you are, married, and much better paid than you are. I rent my home (because I did the buy vs rent math and stuck with the logical conclusion) and drive an old Volvo I purchased for three figures (not a typo), because I know what I need and what don't need to make myself and my family happy. I'm still saving up furiously to provide a big fat cushion (currently well into seven figures) that will allow me to take my foot off the gas sooner rather than later so I can enjoy more time with my family and friends, and spend less time working in stressful conditions. I walk the walk. It's not that hard once you learn how. And perhaps you've mentally made those adjustments in anticipation of the move, even if you haven't executed on anything big just yet. But I'm going to hold your feet to the fire until I see concrete evidence that you've really internalized what this is all about.

Oh, I'm aware I did all the bad stuff. I'm just happy I've stopped digging. The offer to buy into the current practice was going to be a million dollar loan, more for the surgery center, which would have ensured that I'd be in this forever. Bullet dodged. Our actual expenses after loans and mortgages is less than $35k per year (almost all private school and groceries), so living frugally day to day isn't my challenge. My challenge is not making any more huge mistakes.

The big ones above come down to me being stupid and to taking bad advice:
1. "It's always better to own than rent!" "Take the zero money down balloon, you'll have sold it by the time it comes due anyway"
2. "You need to live on the golf course so you can meet the right people"
3. My practice? I'll take that one. It was fun and a chance most people don't get. I learned a great deal. It was profitable quickly and would have eventually provided an above average ophthalmologist income. BUT, it was done at the urging of my parents who dreamed of having their son and their grandchildren living in their town. They've always been emotionally and financially there for me, and I guess I felt like I owed them that. We loathed living there.
4. I hate, hate, hate every second I spend in that damn car. I'd never purchased a car from a dealership before. Couldn't figure out why the salespeople were all saying "congratulations" like something good was happening to me.

Anyway, we'll get there. Your post was great advice. Keep trimming the smaller things, don't make any more big mistakes. We're certainly renting and are going to sock away a big amount for a down payment if the housing market ever cools off in Oregon. After 18 months of work, I'll be eligible for ownership stake in the business and can work on more advanced things, so I feel like that's a good target to be in much better financial shape. About 2 years from now.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #14 on: April 03, 2018, 11:43:33 AM »
And while it may sound like I'm attempting to shift blame for my situation I know that it is absolutely my fault and on me to fix it.
And I will fix it.

But damn, they need to throw in a few personal finance classes in med school or residency. Being a professional student until age 30 and then being started around $200k feels like sooo much money. And it feels like you've been living on ramen with roommates while all your friends have had jobs since age 21, so you think, "Screw it, I've arrived, I can finance everything. I'll be making $500-600k in five years, so who cares?" And then you're in a bind and have to work forever.

Coulda been worse. By 35, we'll be much, much better positioned and stashing a ton.

Ben Kurtz

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Re: 32 yo physician jumping into MMM
« Reply #15 on: April 03, 2018, 12:09:26 PM »
Quote
I'd never purchased a car from a dealership before. Couldn't figure out why the salespeople were all saying "congratulations" like something good was happening to me.

Don't ever do it again. There is no reason. I always buy my cars in the living room of the guy selling it to me. Much better that way.

You really do sound like you've seen the light and figured out what corner you need to turn. Good. Now go ahead, read Dr. Dahle's blog, and execute for the next 2-odd years on the plan and start getting ahead.


Phoenix_Fire

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Re: 32 yo physician jumping into MMM
« Reply #16 on: April 03, 2018, 03:12:04 PM »
As I was reading I had the exact same thought that Ben did, your professional business loan is your version of student loan. 

You are really better off paying the minimum on the car loan for now if you keep it (you already know you shouldn't, so we'll leave it at that), and all of your other loans.  Yes, you will pay slightly more in interest, but you need to get more cash on hand, especially with a $28k insurance bill coming due soon, and only $30k of cash savings.  Plus, you are going to need to cut a check when you sell your residency house.  My goal if I were in your shoes would be to have both houses sold by the time you move.  Even if you have to reduce the prices a bit, emotionally it will take a great deal of stress off of you to not have to worry about them when you are across the country.  Plus, when you do go to visit your parents, it will be an actual vacation without worrying about checking the houses.

I would agree with Ben again on renting for your first year in Oregon.  You will be new to the area, and you never know, you might hate your new employer as well and need to leave them.  Don't think so?  Check out @ReadySetMillionaire  and his thread on https://forum.mrmoneymustache.com/ask-a-mustachian/employment-dilemma-take-new-job/ He's having to go out on his own after only a couple months at a law practice.  Maybe you or your wife get afflicted with SAD and decide to jump again.  Renting will give you some flexibility.

Have you been able to talk to your wife about how you were getting jealous of her staying at home?  Not an easy conversation for sure, but maybe if she understood what was going on in your head, she might open up more to a frugal lifestyle.  Is she aware that you hate that car, and hate every second in it? 

Definitely check out the converting your SO thread, and search google for mmm and converting your SO.  There are a lot of threads on it.  It takes time.  You have seen the light and joined "the cult".  It even says it's a cult on the front page.  So go easy on the proselytizing, or she will be turned off to it forever. 

Abe

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Re: 32 yo physician jumping into MMM
« Reply #17 on: April 03, 2018, 09:13:36 PM »
Hey, i'm your age in a fellowship after general surgery. I have someone trying to sell a general surgery practice to me, but said no because of the high capital costs and high risks.

We've been following MMM for several years. I think you're on the right track with trying to get things in order. Here's my advice for what it's worth.

Liabilities:
1. pay down the business loan as you can.  Can you deduct this expense as a business loss?  It will likely preclude you buying a house for a while given all your debt. If you can rent a fairly cheap place and use the difference to pay this down, in a few years you'll be able to buy a house. My recommendation after moving several times is not to buy a house for a year or two after moving somewhere. You won't be rushed into a regrettable decision.

2. Sell the car. Even after you pay it off, you still have to deal with all the dumb unnecessarily expensive repairs/maintenance. Cost of owning an expensive car if you're not a mechanic is way more than a Toyota or Honda. My parents own Lexi (?) and always complain about the cost of repairs. I think the German cars are even worse. 
3. Ask the bank to buy the house in MS and pay off the difference. You don't have time to deal with that crap. It's mildewing as we speak. If your bank won't take it, see if another one, or a contractor that can flip it, will.

Your take-home pay: That is super low. Keep that as your budget in Oregon, and you will pay your debts quickly.

dmac680chi

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Re: 32 yo physician jumping into MMM
« Reply #18 on: April 03, 2018, 09:51:35 PM »
I am not a physician but there are two blogs by physicians that may be very helpful to you. These will give you information that you would find here but it is geared directly for physicians.

www.physicianonfire.com  ( @PhysicianOnFIRE )
www.whitecoatinvestor.com

Didn’t one of these people write a book about financial planning and investing for doctors?


Sent from my iPad using Tapatalk

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #19 on: April 04, 2018, 09:02:34 AM »
Hey, i'm your age in a fellowship after general surgery. I have someone trying to sell a general surgery practice to me, but said no because of the high capital costs and high risks.

We've been following MMM for several years. I think you're on the right track with trying to get things in order. Here's my advice for what it's worth.

Liabilities:
1. pay down the business loan as you can.  Can you deduct this expense as a business loss? 


Yes, I just learned that recently, and it is hugely beneficial. Every dollar I pay back increases my basis and allows more losses to be deducted. The losses being carried are big enough that any payment on loan is deductible, probably for the life of the loan. So there's a big incentive to pay that down. Great advice.

The salary here was below market average, and I took it assuming I would put my nose to the grindstone and show my boss what I was made of for two years. The guy I replaced had annual collections of $360k, which I grew to $850k in that time. Surely I'd be offered a generous buy in after two years of 45-50% growth? But it was insulting instead. Lesson learned. And that's after working without a retirement plan and SEVEN vacation/sick days per year. So yeah, a dumbass move from owning my own place. But we're fixing all that.

Thanks to everyone. Lots of good stuff here, actionable things. I've managed to negotiate my tail coverage being paid with pre-tax dollars since I posted this, so that saved about $7000 already. Sat down with the wife last night and discussed selling the Buick Enclave. There were some tears while she talked about never being able to buy seasonal clothes/shoes again, not sure how we got there... Enjoying whitecoatinvestor.


NoStacheOhio

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Re: 32 yo physician jumping into MMM
« Reply #20 on: April 04, 2018, 09:23:21 AM »
There were some tears while she talked about never being able to buy seasonal clothes/shoes again, not sure how we got there... Enjoying whitecoatinvestor.

I think maybe revisiting conversations like these later (let the emotions settle) could be helpful. "Never" is a really long time. If she has wants that can't be reasonably accommodated in the shared budget, then maybe taking some part time work is the answer. Just be careful to make sure you're both making these choices together. Otherwise your relationship could turn sour really fast.

poetdereves

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Re: 32 yo physician jumping into MMM
« Reply #21 on: April 04, 2018, 09:29:13 AM »
What part of Jackson is your home in? I live here and actually (most likely) work at the hospital where you did your residency and know quite a few people looking for homes. Sadly, I also know a few doctors trying to get rid of their homes that they bought in residency with no luck.

I know everyone just matched a couple weeks ago. Cross your fingers that a lot of people will be shopping around soon once they move here looking to do the same thing you did a few years back.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #22 on: April 04, 2018, 09:32:49 AM »
There were some tears while she talked about never being able to buy seasonal clothes/shoes again, not sure how we got there... Enjoying whitecoatinvestor.

I think maybe revisiting conversations like these later (let the emotions settle) could be helpful. "Never" is a really long time. If she has wants that can't be reasonably accommodated in the shared budget, then maybe taking some part time work is the answer. Just be careful to make sure you're both making these choices together. Otherwise your relationship could turn sour really fast.

Oh, I didn't say "never." And it's not like we'll never get nice shoes from time to time. But every time I tighten the belt a little bit, she panics. So I'm trying to go slowly and lead by example. Show how happy my bike commute makes me, take more joy in free activities and life in general, cut back on all my stuff first while maintaining a super positive attitude. We've come a long way from a couple months ago. And I get it, there has to be some anger when your partner says they want to cut everything to the bone when you thought now was the time we could finally be spending like there's no tomorrow. Even if you're a good person and not terribly caught up in the consumer culture, hearing that life isn't going to play out like you expected can be very jarring.

I think we've reached a compromise though. She'll go back to work and can do whatever she wants with that income. It'll be purely surplus because I'm going to be able to handle the rest. If I'm scaling back in 15 years and she hasn't saved a dime, she'll have to decide how much she values those shoes while I'm the one sleeping late.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #23 on: April 04, 2018, 09:37:22 AM »
What part of Jackson is your home in? I live here and actually (most likely) work at the hospital where you did your residency and know quite a few people looking for homes. Sadly, I also know a few doctors trying to get rid of their homes that they bought in residency with no luck.

I know everyone just matched a couple weeks ago. Cross your fingers that a lot of people will be shopping around soon once they move here looking to do the same thing you did a few years back.

Good old UMMC, got great training there for sure.
It's being shown three more times this week, so hopefully we can get rid of the damn thing! I'm still in touch with my residency program, but we only match 4 per year, so it's not a big pool there at all. Most residents seem to be heading out to Flowood, but that's a 30 minute drive when you get called out to the ER. House is 7-8 minutes from the hospital, north on I-55 just off exit 102. 5462 Pine Lane Drive. If you know anyone looking, price is negotiable

NoStacheOhio

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Re: 32 yo physician jumping into MMM
« Reply #24 on: April 04, 2018, 09:51:46 AM »
There were some tears while she talked about never being able to buy seasonal clothes/shoes again, not sure how we got there... Enjoying whitecoatinvestor.

I think maybe revisiting conversations like these later (let the emotions settle) could be helpful. "Never" is a really long time. If she has wants that can't be reasonably accommodated in the shared budget, then maybe taking some part time work is the answer. Just be careful to make sure you're both making these choices together. Otherwise your relationship could turn sour really fast.

Oh, I didn't say "never." And it's not like we'll never get nice shoes from time to time. But every time I tighten the belt a little bit, she panics. So I'm trying to go slowly and lead by example. Show how happy my bike commute makes me, take more joy in free activities and life in general, cut back on all my stuff first while maintaining a super positive attitude. We've come a long way from a couple months ago. And I get it, there has to be some anger when your partner says they want to cut everything to the bone when you thought now was the time we could finally be spending like there's no tomorrow. Even if you're a good person and not terribly caught up in the consumer culture, hearing that life isn't going to play out like you expected can be very jarring.

I think we've reached a compromise though. She'll go back to work and can do whatever she wants with that income. It'll be purely surplus because I'm going to be able to handle the rest. If I'm scaling back in 15 years and she hasn't saved a dime, she'll have to decide how much she values those shoes while I'm the one sleeping late.

You didn't say it, but she heard it.

I mean this (somewhat) gently and nicely, but quit being such a fucking doctor (I know way more doctors than is healthy for a human, sorry). Belt-tightening isn't something you (OccamsPhaco) do on behalf of the OccamsPhaco household. It's something OccamsPhaco and wife do together. Leading by example is great, and maybe I'm reading too much into it, but you're in it together. I'm not personally a huge fan of separate finances, and it's impossible in a single-income household. It's your joint income, and she's likely doing a ton of unpaid work while you're earning your paycheck. Just acknowledge that you're equal partners with complimentary skills who are working toward shared goals.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #25 on: April 04, 2018, 12:35:19 PM »

Quote

You didn't say it, but she heard it.

I mean this (somewhat) gently and nicely, but quit being such a fucking doctor (I know way more doctors than is healthy for a human, sorry). Belt-tightening isn't something you (OccamsPhaco) do on behalf of the OccamsPhaco household. It's something OccamsPhaco and wife do together. Leading by example is great, and maybe I'm reading too much into it, but you're in it together. I'm not personally a huge fan of separate finances, and it's impossible in a single-income household. It's your joint income, and she's likely doing a ton of unpaid work while you're earning your paycheck. Just acknowledge that you're equal partners with complimentary skills who are working toward shared goals.

Our situation is different (as I'm sure everyone says). My lovely, talented wife is horrible with money. And that's coming from someone who isn't currently doing great either. But she's the first to admit that she has never been able to live anything other than paycheck to paycheck, and poorly. Any windfall is spent, every raise is coupled with an elevation of expenses. About once or twice a year, I ask her if she is ready to have a joint account. She has been flat out refusing for 8 years now. This is a woman who financed a sofa and chair immediately after dropping out of college. Think her credit score is still around 500. The first year or two of marriage was debt collectors catching up to her (often for trivial amounts that I could just write a damn check for) and even a few warrants showing up for unpaid traffic tickets. I knew that when we got married, and all that has been squared away for years now. BUT that is still how she treats money. She realizes that she'd massively screw the four of us over if she had unfettered access to the finances.

So every few months, I ask. "Ready? It'll be a little in a joint account, something that won't cause real harm if it vanishes." "No, I still don't trust myself" 
She seems to be happier when she can work and all her money can be gone two days before her next check. And I know she does tons for me and the house and the kids. Hell, she was the only reason I was able to open that practice. She managed it and handled insurance providers and equipment companies and performed flawlessly. We frequently discuss how adroit she was as an office manager handling way more money and capital than she ever had in a personal account. It's weird.

NoStacheOhio

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Re: 32 yo physician jumping into MMM
« Reply #26 on: April 04, 2018, 12:46:50 PM »
Our situation is different (as I'm sure everyone says). My lovely, talented wife is horrible with money. And that's coming from someone who isn't currently doing great either. But she's the first to admit that she has never been able to live anything other than paycheck to paycheck, and poorly. Any windfall is spent, every raise is coupled with an elevation of expenses. About once or twice a year, I ask her if she is ready to have a joint account. She has been flat out refusing for 8 years now. This is a woman who financed a sofa and chair immediately after dropping out of college. Think her credit score is still around 500. The first year or two of marriage was debt collectors catching up to her (often for trivial amounts that I could just write a damn check for) and even a few warrants showing up for unpaid traffic tickets. I knew that when we got married, and all that has been squared away for years now. BUT that is still how she treats money. She realizes that she'd massively screw the four of us over if she had unfettered access to the finances.

So every few months, I ask. "Ready? It'll be a little in a joint account, something that won't cause real harm if it vanishes." "No, I still don't trust myself" 
She seems to be happier when she can work and all her money can be gone two days before her next check. And I know she does tons for me and the house and the kids. Hell, she was the only reason I was able to open that practice. She managed it and handled insurance providers and equipment companies and performed flawlessly. We frequently discuss how adroit she was as an office manager handling way more money and capital than she ever had in a personal account. It's weird.

Jesus.

My wife is/was similar when we started out. Not so much spendypants as it was growing up low-income and then falling into the predatory student loan thing. She missed credit card payments sometimes, had some crappy high interest student loans (the alternative was quitting college), and just generally didn't know a lot about how money works.

I handle pretty much all of the transactional finance work, but we talk about everything a lot. I still have to nag her about the handful of things that require her attention (IDR recertification coming up!), but she's in a much better place now than before.

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #27 on: April 04, 2018, 01:37:45 PM »
Snip...

Quote
Not so much spendypants as it was growing up low-income and then falling into the predatory student loan thing. She missed credit card payments sometimes, had some crappy high interest student loans (the alternative was quitting college), and just generally didn't know a lot about how money works.

I think this has a lot to do with it. Generational bad habits. You never see things done the correct way and don't even realize that there is a correct way.

The converse is true too though.
My long suffering father could have been a poster boy for early retirement in the late 80's if he hadn't married a spendypants. My mother has never had a job and has very expensive tastes, and my father has been ruthlessly made fun of for his entire life by friends and family for being overly cheap. Left to his own devices, he'd have hung it up before 40, but he's had to work forever instead. His father (my grandfather) was a high school dropout/self made millionaire back when that really meant something, and he still drove and loved a car that we all gave him a hard time about because it was held together by duct tape. He worked until he died, but that was because leaving money for his children and grandchildren meant more to him than retirement.

So I was taught a little of both. Namely, it's good to be frugal, and one can be happy without so much useless crap, but since you'll be working until the day you keel over, it's ok to dig a big hole at the outset of your career for houses and schools and "safe cars" for your kids. Turns out I don't like working nearly as much as my father and grandfather though. Maybe it's modern medicine, but getting out seems more valuable than anything else I could purchase.

living small

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Re: 32 yo physician jumping into MMM
« Reply #28 on: April 04, 2018, 05:15:10 PM »
A few words:
1. counseling. marital and just for your wife.  She is afraid. Maybe of being judged, maybe of being an adult in this area, maybe of something else. You love this woman, she presumably loves you, but this mismatch could totally drive the two of you to not good territory.

2. A more fun topic: "Capsule wardrobe" or "curated wardrobe" find stuff on youtube, pinterest, or google. This changed my life. I have never felt compelled to buy clothes for the hell of it after finding this concept.

fuzzy math

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Re: 32 yo physician jumping into MMM
« Reply #29 on: April 04, 2018, 05:25:14 PM »
Yikes. Given your DW's background and current credit score, she may be a very tough sell for the MMM lifestyle. She married a doctor! Now she's secure for the first time in her life and yet somehow she's still making mistakes to the point of being 100% unable to get credit with that score. If she was married to to OP when he was a resident, there may also be a large portion of entitlement due to her also having to live like a pauper.

I disagree with previous commenters who think you're taking an overly controlling role here. Anyone with a credit score in the 500s is not capable of making financial decisions completely on their own.

(I'm female btw before anyone jumps down my throat)

Dragonswan

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Re: 32 yo physician jumping into MMM
« Reply #30 on: April 05, 2018, 10:04:14 AM »
There were some tears while she talked about never being able to buy seasonal clothes/shoes again, not sure how we got there... Enjoying whitecoatinvestor.


I think we've reached a compromise though. She'll go back to work and can do whatever she wants with that income. It'll be purely surplus because I'm going to be able to handle the rest. If I'm scaling back in 15 years and she hasn't saved a dime, she'll have to decide how much she values those shoes while I'm the one sleeping late.

This is a good plan.  This way you can concentrate on the budget and she can earn the play money for the seasonal clothes she wants. That came from the car discussion because she knows you and knows the car is just the beginning.  You've already admitted you're going slowly a little at a time.  So she's thinking today the car, tomorrow the clothes and I don't know if I'll get to have a nice house ever again. 

If it's true you'll be able to haul in 500-700K after a few years, consider working a year or two past your FI number to give her a few luxuries she thinks are important.  Remember, you're the radical one in this situation.  No one expects a physician to walk away from years of schooling after a decade in practice.  She had a reasonable expectation of a luxurious lifestyle based on your profession.  And the way she handled your private practice and is willing to move across country away from family demonstrates she's willing to support you in your profession.  So cut her some slack and keep the car  if it will keep the peace (because if you divorce you'll be working to regular retirement age while she can spend half the degree you earned).  In the grand scheme of things, with your potential, the car isn't the problem.  It's the business loan. So be patient and reasonable and the savings will come.

shelbyautumn

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Re: 32 yo physician jumping into MMM
« Reply #31 on: April 05, 2018, 03:35:52 PM »
There were some tears while she talked about never being able to buy seasonal clothes/shoes again, not sure how we got there... Enjoying whitecoatinvestor.

I think maybe revisiting conversations like these later (let the emotions settle) could be helpful. "Never" is a really long time. If she has wants that can't be reasonably accommodated in the shared budget, then maybe taking some part time work is the answer. Just be careful to make sure you're both making these choices together. Otherwise your relationship could turn sour really fast.

Oh, I didn't say "never." And it's not like we'll never get nice shoes from time to time. But every time I tighten the belt a little bit, she panics. So I'm trying to go slowly and lead by example. Show how happy my bike commute makes me, take more joy in free activities and life in general, cut back on all my stuff first while maintaining a super positive attitude. We've come a long way from a couple months ago. And I get it, there has to be some anger when your partner says they want to cut everything to the bone when you thought now was the time we could finally be spending like there's no tomorrow. Even if you're a good person and not terribly caught up in the consumer culture, hearing that life isn't going to play out like you expected can be very jarring.

I think we've reached a compromise though. She'll go back to work and can do whatever she wants with that income. It'll be purely surplus because I'm going to be able to handle the rest. If I'm scaling back in 15 years and she hasn't saved a dime, she'll have to decide how much she values those shoes while I'm the one sleeping late.

True story: I first freaked out (and cried) when I realized I couldn't get manicures and pedicures with my friends every month. Then I bought my own gel manicure kit for $40 and realized that I REALLY like doing it myself.

Now finding ways to save money feels like a game. She'll come around, it just takes time. Seeing my mortgage and student loan balances go down and savings balances go up helps me a lot. I check Mint daily for my net worth. Maybe if your wife could see that her temporary sacrifices are currently providing for a better future, she'd feel better?

living small

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Re: 32 yo physician jumping into MMM
« Reply #32 on: April 05, 2018, 07:49:21 PM »
Oh! forgot something else that my husband and I  agreed upon together: fun money.

This is great when one spouse is spendier. They still get a bit of money to Play with so to speak, but its not the main budget.

We have rules, like, if you don't have any "fun money" you can't spend anything in that category. Also, anything that money is spent on cannot have other recurring expenditures attached. These are our guidelines, but you can make your own.

We set up our own independent checking accounts separate from all other finances. Each pay period, we each would place the same amount of cash into these accounts for each of us- we called it fun money. This was money that either of us could do what we wished with no spousal discussion. If we wanted something big and not on the regular budget, we saved our fun money for it.

This gives a bit of autonomy to each spouse and keeps us on budget. I don't know if this could help, but it helped us a lot!

OccamsPhaco

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Re: 32 yo physician jumping into MMM
« Reply #33 on: April 06, 2018, 08:06:39 AM »
Thanks everybody, all good advice, and I know I'm in need of some face punches.

I also don't doubt that I'll work a couple of "extra" years, but that's ok. Knowing you have the money to walk away probably feels almost as good as actually walking away. I imagine work is MUCH less stressful and more enjoyable when your back isn't to the wall.

Going to bookmark this and check beck periodically to see how much life changes over time.

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Re: 32 yo physician jumping into MMM
« Reply #34 on: April 07, 2018, 03:28:43 PM »
I wouldn't say it feels almost as good but that probably depends on how well you like your job and what you have planned for post-work.

FU/FI money does give you the ability to stand up for yourself more. Boss tells you that you're going to travel for the 3rd week in a row? Sorry, can't do it, I've got things to do around the house. Company is moving offices and Lumbergh wants you to come in on Saturday to pack your files and monitor? Eh, I'll pack my things on Friday instead.

 

Wow, a phone plan for fifteen bucks!