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!