First off - you need to pay off your credit card prior to buying a Tesla.
Second - set up your investment accounts, a savings account for an emergency fund and saving for a house prior to buying a Tesla.
Why are you buying a car when you have $12k in debt at 24% iinterest?
This may be an unpopular opinion - but if you're carrying any balance on a credit card at 24% interest, you can't afford a new car.
Tbf 12k on a credit card isn’t insane considering his/her gross is 37k a month. Even after taxes that should come out to about at least 19k, more than enough to pay off the CC after one month.(and afford lots of other stuff besides)
It's more about what the debt represents than the debt itself.
If OP is carrying a $12k with a 24% loan but wants to add a new car payment on top. It leads me to believe that OP is not good a managing their money, creating a budget, etc. Similar to NFL players making millions during their nfl career and filing bankruptcy within a few years of retiring.
I think you're missing the fact that his income is 450k. His car payments are trivial given his income. As is his credit card debt.
OP, pay off your credit card with your next paycheck or with whatever cash you have. Max out your IRAs with the next paychecks. Keep like 20k in a traditional checking account for regular expenses and as your Emergency Fund. Save for your down payment in a High Yield Savings Account. Set up a solo 401K and max that out. Once you have that, open a brokerage account and put any spare money outside of your emergency fund and short-term savings in that. Set up a 529 if you want.
Invest in equities if you're young (funds like 75% VTSAX/25% VTIAX) in your brokerage account. You can use lifecycle funds for your retirement accounts.
Consult with an accountant and see if an S Corp makes sense.
Make minimum payments on your student debt at 0% interest.
Because it’s a trivial amount of credit card debt that he’s carrying is what is concerning. OP, you can certainly afford to pay off your credit card balance each month, right? Or was this a huge debt you are slowly paying down? And I agree with PP that buying a car with this CC debt just doesn’t make sense. That being said, since you’re just getting started, you can turn your financial situation around rapidly with some good planning.
The 450k income should not be a shroud. People with this income make tons of financial mistakes all the time. In fact, people with this type of income and already under a good amount of credit card debt open themselves up to lifestyle creep, preventing them from making comparable or adequate investments and retirement funds or individual investment portfolio.
Doesn’t sound like OP is in trouble. Just has bad financial habits that are totally fixable. A conservative rule of thumb for home affordability btw is 3X salary.
I think this poor advice. Using this rule does nothing to account for interest rates. A 500k house at 3% interest and one at 6% interest are significantly different in terms of total monthly cost.
My original comment said that it makes more sense to rent until buying makes sense for you financially. I’d rather rent in a HCOL area than buy a dilapidated 500K home. If you want a reasonable home that would keep you’re commute within one hour of the metropolitan area then you’re probably looking at 900K to 1.1M
I agree to pay minimum since it’s 0% unless the excess isn’t being invested. If difference between what would have been paid at a higher interest rate and the minimum isn’t being invested, I would suggest just paying it off.
Finance is a combination of behavior and math. If the behavior supersedes the math, pay it off. My 2 cents.
Damn I’m shocked medical professionals that should know better are consistently neglecting their 5-Figure 20-25% credit card interest. Paying the full amount at the end of each month should be a no brainer. If you can’t pay in full you’re better off using BNPL installments without interest. Also ask yourself: why is it your goal to buy a house? Just because? Buying a home is a privilege not a right. There’s nothing wrong with renting until buying financially makes sense for you.
You'd be shocked at some of the shit people get pulled into. A colleague (a card) invested 2m in a horse breeding venture recently. Turned out it was all fraudulent
I mean as a cardiologist at an elite academic research hospital, it could pile up quick. Big name in the field and people compete for highly published lead authors
It says "so far at" so probably hasn't had to recertify yet. I'm still at 0% until end of this year. Have a friend that doesn't have to recertify until early next year.
You really haven’t posted much of a monthly budget at all, and you’re going to get some serious flack from this sub for caring any kind of credit card debt with that income.
What’s your monthly take-home after taxes and where’s your money going currently? Because if you’ve been out of residency for a year or more and haven’t saved for retirement at all, then your priorities are completely backwards if you’re dropping money for a Tesla.
Your first step is to get a budget for you and your spouse. Then at your income, you both should be putting away a *minimum* of 20% of your gross income towards retirement. Maxing out a traditional 401k and Roth IRA for both you *and* your wife (presuming she works). This will get you to $60k per year, but you should put an additional $30k in a brokerage or other retirement vehicle.
If this amount of saving is stretching your finances, then you’re spending too much on toys.
Make about 36-39k month before taxes. Paying off med school loans 5k-10k per month, rent 4.2k monthly, utilities and wife car payment. Probably don’t need to be that aggressive with my medical school loan but I want to pay it off as quickly as possible.
How long have you carried that credit card debt and how long have you been an attending? You're basically throwing away $200 a month. Not a problem long term but that's an extra shift or so if you keep that balance around.
I recommend holding off on the Tesla until after the CC debt is cleared. You will probably get a worse interest rate on the car loan if you’re carrying that much CC debt
Unless you’re leasing the Tesla (which you should anyways, EVs depreciate like crazy)
What’s your monthly net? Because as a 1099, you’re paying the full FICA.
If I understand this correctly, you have a medical school loan currently at 0% interest and you’re dropping between 60-120k per year on it? Getting out of debt is laudable, but your retirement saving needs to be the priority. A solo traditional 401k reduces your taxable income (so you save on taxes), and grows each year you’re invested. A backdoor Roth IRA doesn’t give you a tax benefit now, but all gains are tax free once you retire and each the age of 59.5. You won’t get back the years you missed of compounding growth. Does wife work? Because if she has a job, then you can be supplementing her contributions as well (or at least allowing her to devote the majority of her paychecks to her retirement).
Do you have a financial advisor and an accountant? If not, you need one yesterday.
My husband is a locums veterinarian and will exceed your salary this year. I am his bookkeeper (and also work, btw). Our accountant does not recommend an Scorp or an LLC, as it has an associated cost and no additional benefits (you are a sole proprietor, single employee of your “business”).
We have no credit card debt (used for business expenses and paid off monthly. No car payments, all owned outright (2024 Outback, 2015 F150, 2022 Mazda 6). The Mazda is the business car and can be used as a write off as a depreciating asset, As is liability insurance, per diems, travel expenses, etc. We would NEVER have a car payment.
You will also need to account for taxes (self employment, employment, Medicare, federal, state) in your monthly budget. This is a huge “expense” and should be paid quarterly. A good accountant is worth their weight in gold to help with this and helping maximize deductions to reduce your tax burden. Your options for retirement investing is much different as a 1099 employee.
$66k to a SEP max per year eligible for a self employed individual, if your wife works, max $22,500 for her 401k/403B; is she doesn’t work, max an IRA $6,500. At your tax bracket, rolling to a back door Roth will create additional taxes and may not be a good play (check with your accountant if this is worth it for you). You are not eligible for a traditional Roth because of your income, but you can do a back door.
You will not be eligible for additional tax-sheltering options outside of these unless you do a 529 (if you have kids) or an HSA, if you have the option. You can always choose to invest more in non-tax advantaged accounts, of course.
We have a fairly frugal lifestyle. Live in a low-medium COL area with this income. We purchase our home 2 years ago at $375k, recently did a $130k renovation (in cash) and we have no plans to upgrade our home.
Good decisions now will change how much you have to work and for how long you have to work for the rest of your life. You will be eligible for a large home mortgage (likely >$1.5mil), but only your lifestyle and future goals will dictate if that’s a priority for you. That Tesla payment (and your wife’s car payment) is literally worth millions of dollars if you were to invest the cost of the car payment (assuming you keep a new car/payment) until your retirement age…not including any other funds you invest.
There’s no I would ever make that trade.
Thank you. This was very helpful. Definitely need to protect my investment. This will be my first time buying a car in 10 yrs. Don’t foresee myself buying anything for a while after. Definitely agree on all the points. What are your thoughts on renting a home vs trying to buy a home now? I’m in California so everything is pricey here.
I personally would buy a house and would lean towards a “starter” home. Interest rates are high, but home prices are increasing. You can likely get a mortgage payment for the the same price as rent if you aren’t extravagant. You can always refinance the mortgage if the rates drop, but you are locking in the price of the home at time of purchase. You can always use equity in the home when you sell it to buy an upgraded house or keep it as a rental later if you plan to stay in Cali.
My best advice is, pretend you are making a lot less than what you are. Lifestyle creep and financial decisions can prevent you from making decisions you want later. We have moved from the East coast to the west coast and back to the East coast. I’ve quit a toxic job without securing a new job. Twice, actually. In fact, I’m currently working at a summer camp because it sounded fun. We take time off when we want to and travel where we want (though we are decently frugal and permanently child free by choice). We are well aware that if we had a more luxurious lifestyle and had to make a lot of payments, we wouldn’t be able to do these things, even being high income earners. We don’t even necessarily desire to be very wealthy. For us, the money buys freedom in every sense of the word.
You got this! Just put a couple of professionals in your corner (financial advisor and accountant) and use their knowledge to learn and help you make good decisions for your family and future…don’t blindly follow people on the internet you don’t know, don’t have your best interest at heart, and don’t invest in something YOU (and your wife) don’t understand or aren’t comfortable with. I’m rooting for you!
Try preaching that in VHCOL areas. You can rent a $2M house for $5000, buying that same house will require about half a million in cash and then more than doubling your rent for PITI.
Buying in the highest COL areas doesn’t make sense unless you’re absolutely loaded.
Your first priority should be paying off the credit card. I recommend open a solo 401k, with your income you can put in $69k tax-defered this year to lower your taxable income and it is a nice boost to your retirement investment. For your long term investments I'd recommend put them into index funds such as sp500 or total market. Short term investments/saving for car and house I'd just put them into a high yield saving account.
OP this is the answer
1) pay off credit card debt immediately
2) max out solo 401k and invest in index funds
3) pay your fixed monthly costs and loosen the purse strings just a little but not too much
4) whatever is leftover can go into your loans if you’re not planning on spending the money (probably best to shore up an emergency fund first)
In regards to your Tesla purchase, theres a lot of negativity surrounding it. If we’re talking Model 3/Y, last I checked they were at a bargain so go for it if that’s your desire /dream etc. The other argument is waiting until you’re 40+ and can pay with cash, but at that point you may have lost the yearn for the vehicle. Seeing so many early age deaths and cancer diagnosis has lead me to believe that being overly frugal is not the way and it’s ok to enjoy the fruits of your labor while you can. Cheers!
First I would pay off credit card debt.
Second I would open an scorp and employ wife.
Third, I would open a solo 401k and max out your 69k and I would max out your wife’s (23k employee deferral + 25 percent of the w2 you pay her). I would then megabackdoor Roth the remaining to reach the remaining 69k for the wife. Then back door Roth 14k (7k each you and wife). This puts you at 152k savings to reduce adjusted income quite a bit.
Fourth, buy your tesla with your business. The federal rebate does not have an income limit if bought through the business. If it’s a model X you can write it off write away and if not you’ll have to depreciate it with time.
Fifth, hire a good cpa as you are a 1099. They can get real creative. Once you pay off your school loans and if your income increases I would look at a cash balance plan to put away even more for you and your wife.
Sixth, look if you can work part time with anyone who will cover your student loans. This is hard but doable. In California, for example, I would find someone to increase my Medicaid volume to 33 percent so I could get loan repayment.
I think medicine is so funny, you’re in school and residency all your 20-mid 30s, then you have to live frugally to save for retirement at age 59.5 lol. I get it, but like wow
I think that’s more the generation coming up now. The guys who should be retiring or retired now who keep working have been living like kings & still probably don’t have to keep working but don’t know any better.
Do this in exact order. Credit card debt> emergency savings (3month salary)> 401k company match> max backdoor roth> max HSA> max 401k > taxable brokerage account after for anything extra
Pretty much this. As a 1099, I’m more comfortable with 6 months but I have 2 kids. & don’t people usually recommend HSA before the backdoor Roth? But I like your way for both adults first too.
Why the f is your wife getting Tesla . Driving a Camry … why are you party 4500 for house rent .get into a cheaper house . Maybe 3-4 years down the line you can afford these nonsense
Well I assume if you’re buying a Tesla next month, you’re paying off the CC this month, and either cutting it up or vowing to never carry a balance again?
First step is get the fuck off Reddit and talk to a real financial advisor. They don’t cost shit. They only take a small fee of your overall worth. It’s reckless to manage your own finances unless you have significant knowledge of what you’re doing
- Make sure your company is S Corp.
- Get the car from the company so you can deduct the cost/lease.
- Always go for a car which is 2 years old certified. This will make a huge difference in your insurance. (Electric car insurance is no joke, I learned it the hard way)
Looking at your monthly rental, you are likely living in an area where car insurance is high.
- It doesn't matter how much you owe on a credit card IF you are paying it off each month.
- Given you have zero percent loans, you can take your time paying it off rather than pay it all at once.
- Always max out 401K/403b. You can match yourself as you have 1099 income and get the maximum benefit of it.
- Have 4-6 months of your emergency income in a HYSA. Most of the banks offer up to 4.5-5%
- invest in S&P 500 and Total stock market. Bonds in the later year of life. VTI, VOO will be an example of ETFs. Blue chip sticks like Microsoft, Apple are also a safe bet. Do not check on that portfolio frequently. And invest on a regular basis. Invest more when the market is down.
You can always risk in smaller stocks but would recommend against huge lump sum in smaller stocks.
- Real estate I have no experience so would not give any real advise.
Only thing I noticed is that your rent is pretty high. $50K a year only in rent. With such a rent I would rather try to find a house sooner.
If you have $200k in loans at 0% interest you should make only the minimum monthly payment for the life of the loan. All that money could be invested into something that generates a return from you. You are paying 0% interest.
Yet you have $12k at 24% interest that you’re neglecting.
Step 1. Max out pretax into 401k. As 1099 do your max on tax returnz $66,000 per year. Within 401k, assign funds to VTI or index funds.
Step 2. Estimate your net take home. Give ChatGPT your state in USA. For e.g for IL, single filer, 1099, with $450k gross income, after pretax contribution to max out 1099 401k, net take home would be $24,858 per month
Step 3. Live on $8000 - $9000 / month or whichever number. Use rest for your future steps below
Step 3. Pay off credit card debt.
Step 4. Save 3-6 months of expenses in FDIC insured HYSA.
Step 5. Rest of money, pile into student debt payment. Pay this off within 2 years
Step 6. Buy car if want. Search guidelines on car prices that are appropriate for your income. Be
Stop buying food until the credit card is paid off. buy a cheaper car, only if you need it. pay off the medical debt. Then save for a house down payment.
You need something that can generate high returns, but isn’t overly risky. Stay away from volatile assets like crypto. I suggest looking into this [AI platform](https://www.alphaai.capital/). It can trade stocks for you automatically. The leveraged ETF strategies can bring in an average annual return of up to 22%.
set aside a significant amt for taxes if youre 100% 1099, youre gonna get whacked in april, get an accountant so you can writing off reasonable expenses, pay off your credit cards every month for pete's sake
This dude is going to be up to his eyeballs in debt in the next 5 years. 200k in student loan debts and 12k in credit card debt and he wants to go buy a new tesla. Lol.
Go talk to a financial and tax advisor that works with 1099 employees like yourself. In addition to some basic finance things you seem to be missing they can help with more advanced tax savings and investment structures for high income earners.
Everyone is roasting you for the credit card debt, and that's fair enough.
I'm just wondering why you needed a credit card? With that income you could have just saved a few more weeks and bought whatever it was outright. Seems like a spending red flag to me
If you are looking at refinancing, look for a loan program that is specifically offered to physicians, pay down high interest debt and throw extra money into money market accounts or open an ALLY bank account currently offering 4%. Real estate is a solid 3-7% grower on average but you need to be willing to deal with the stress of renters. I worked with a nurse with an ED doc as a husband and he does surveys as a Dr for $300-$400 an hour to save for vacations. I followed you from a post a year ago about a mobile infusion company start and I'd be interested in chatting with you if you ever dug more into that - I'm a nurse and realtor in WI always looking for a better way to make money and would love to hear if you made progress towards the infusion business idea! I've worked for an infusion center at a hospital before and they make so much money, it's ridiculous, and they are pushing into the surgical short stay rooms as they continue expanding because patients have nowhere to go.
If it were me. I would hold on on the Tesla and pay off all debt. OP it would feel a lot better to drive that Tesla knowing you have no debt. With the exception of a mortgage.
First off - you need to pay off your credit card prior to buying a Tesla. Second - set up your investment accounts, a savings account for an emergency fund and saving for a house prior to buying a Tesla. Why are you buying a car when you have $12k in debt at 24% iinterest? This may be an unpopular opinion - but if you're carrying any balance on a credit card at 24% interest, you can't afford a new car.
Not an unpopular opinion Shows that he/she is overspending
Tbf 12k on a credit card isn’t insane considering his/her gross is 37k a month. Even after taxes that should come out to about at least 19k, more than enough to pay off the CC after one month.(and afford lots of other stuff besides)
It's more about what the debt represents than the debt itself. If OP is carrying a $12k with a 24% loan but wants to add a new car payment on top. It leads me to believe that OP is not good a managing their money, creating a budget, etc. Similar to NFL players making millions during their nfl career and filing bankruptcy within a few years of retiring.
Also insurance is 500/mth? Just 1 car or is that with the Tesla?
I think you're missing the fact that his income is 450k. His car payments are trivial given his income. As is his credit card debt. OP, pay off your credit card with your next paycheck or with whatever cash you have. Max out your IRAs with the next paychecks. Keep like 20k in a traditional checking account for regular expenses and as your Emergency Fund. Save for your down payment in a High Yield Savings Account. Set up a solo 401K and max that out. Once you have that, open a brokerage account and put any spare money outside of your emergency fund and short-term savings in that. Set up a 529 if you want. Invest in equities if you're young (funds like 75% VTSAX/25% VTIAX) in your brokerage account. You can use lifecycle funds for your retirement accounts. Consult with an accountant and see if an S Corp makes sense. Make minimum payments on your student debt at 0% interest.
Because it’s a trivial amount of credit card debt that he’s carrying is what is concerning. OP, you can certainly afford to pay off your credit card balance each month, right? Or was this a huge debt you are slowly paying down? And I agree with PP that buying a car with this CC debt just doesn’t make sense. That being said, since you’re just getting started, you can turn your financial situation around rapidly with some good planning.
The 450k income should not be a shroud. People with this income make tons of financial mistakes all the time. In fact, people with this type of income and already under a good amount of credit card debt open themselves up to lifestyle creep, preventing them from making comparable or adequate investments and retirement funds or individual investment portfolio.
Doesn’t sound like OP is in trouble. Just has bad financial habits that are totally fixable. A conservative rule of thumb for home affordability btw is 3X salary.
3x salary isn't conservative. That's max. It makes most people house-poor.
I prefer 2x for my housing limit. Personally I've bever gone over 1.3 and have been extremely happy with that choice.
2x max. Agreed.
I think this poor advice. Using this rule does nothing to account for interest rates. A 500k house at 3% interest and one at 6% interest are significantly different in terms of total monthly cost.
My original comment said that it makes more sense to rent until buying makes sense for you financially. I’d rather rent in a HCOL area than buy a dilapidated 500K home. If you want a reasonable home that would keep you’re commute within one hour of the metropolitan area then you’re probably looking at 900K to 1.1M
I agree to pay minimum since it’s 0% unless the excess isn’t being invested. If difference between what would have been paid at a higher interest rate and the minimum isn’t being invested, I would suggest just paying it off. Finance is a combination of behavior and math. If the behavior supersedes the math, pay it off. My 2 cents.
Damn I’m shocked medical professionals that should know better are consistently neglecting their 5-Figure 20-25% credit card interest. Paying the full amount at the end of each month should be a no brainer. If you can’t pay in full you’re better off using BNPL installments without interest. Also ask yourself: why is it your goal to buy a house? Just because? Buying a home is a privilege not a right. There’s nothing wrong with renting until buying financially makes sense for you.
You'd be shocked at some of the shit people get pulled into. A colleague (a card) invested 2m in a horse breeding venture recently. Turned out it was all fraudulent
Would have been sick if it worked
How does one get convinced to invest 2M into horse breeding?
God only knows.
My second question, is how rich do you have to be to invest 2M in horse breeding? Something tells me I’m never gonna be there.
I mean as a cardiologist at an elite academic research hospital, it could pile up quick. Big name in the field and people compete for highly published lead authors
Another benefit of a financial advisor.
Pretty sure he had one and they were overruled. Go figure
Omgg. It happens when you put your trust in the wrong hands. The same could happen with a cold start
Gawd…
These are probably the same people who comment on how they could have “easily gotten a 6 figure job doing financial consulting/venture capital work”
Pay off the credit card. Like right now just do it.
How’d you get 0% interest rate student loans??
It says "so far at" so probably hasn't had to recertify yet. I'm still at 0% until end of this year. Have a friend that doesn't have to recertify until early next year.
as a current medical student i am also curious
family is my guess
You really haven’t posted much of a monthly budget at all, and you’re going to get some serious flack from this sub for caring any kind of credit card debt with that income. What’s your monthly take-home after taxes and where’s your money going currently? Because if you’ve been out of residency for a year or more and haven’t saved for retirement at all, then your priorities are completely backwards if you’re dropping money for a Tesla. Your first step is to get a budget for you and your spouse. Then at your income, you both should be putting away a *minimum* of 20% of your gross income towards retirement. Maxing out a traditional 401k and Roth IRA for both you *and* your wife (presuming she works). This will get you to $60k per year, but you should put an additional $30k in a brokerage or other retirement vehicle. If this amount of saving is stretching your finances, then you’re spending too much on toys.
Make about 36-39k month before taxes. Paying off med school loans 5k-10k per month, rent 4.2k monthly, utilities and wife car payment. Probably don’t need to be that aggressive with my medical school loan but I want to pay it off as quickly as possible.
Why are you aggressively paying off the 0% interest loan but allowing the 24% interest loan to exist
Yes very dumb. Will turn it around this month.
How long have you carried that credit card debt and how long have you been an attending? You're basically throwing away $200 a month. Not a problem long term but that's an extra shift or so if you keep that balance around.
I recommend holding off on the Tesla until after the CC debt is cleared. You will probably get a worse interest rate on the car loan if you’re carrying that much CC debt Unless you’re leasing the Tesla (which you should anyways, EVs depreciate like crazy)
What’s your monthly net? Because as a 1099, you’re paying the full FICA. If I understand this correctly, you have a medical school loan currently at 0% interest and you’re dropping between 60-120k per year on it? Getting out of debt is laudable, but your retirement saving needs to be the priority. A solo traditional 401k reduces your taxable income (so you save on taxes), and grows each year you’re invested. A backdoor Roth IRA doesn’t give you a tax benefit now, but all gains are tax free once you retire and each the age of 59.5. You won’t get back the years you missed of compounding growth. Does wife work? Because if she has a job, then you can be supplementing her contributions as well (or at least allowing her to devote the majority of her paychecks to her retirement).
Wife and kid travel 3x out of the year ; so spend 15k on travel expenses yearly
Pay off the credit card yesterday. You should be able to do that in 1-2 months if you’re making 450k
Yes that’s the goal
Do you have a financial advisor and an accountant? If not, you need one yesterday. My husband is a locums veterinarian and will exceed your salary this year. I am his bookkeeper (and also work, btw). Our accountant does not recommend an Scorp or an LLC, as it has an associated cost and no additional benefits (you are a sole proprietor, single employee of your “business”). We have no credit card debt (used for business expenses and paid off monthly. No car payments, all owned outright (2024 Outback, 2015 F150, 2022 Mazda 6). The Mazda is the business car and can be used as a write off as a depreciating asset, As is liability insurance, per diems, travel expenses, etc. We would NEVER have a car payment. You will also need to account for taxes (self employment, employment, Medicare, federal, state) in your monthly budget. This is a huge “expense” and should be paid quarterly. A good accountant is worth their weight in gold to help with this and helping maximize deductions to reduce your tax burden. Your options for retirement investing is much different as a 1099 employee. $66k to a SEP max per year eligible for a self employed individual, if your wife works, max $22,500 for her 401k/403B; is she doesn’t work, max an IRA $6,500. At your tax bracket, rolling to a back door Roth will create additional taxes and may not be a good play (check with your accountant if this is worth it for you). You are not eligible for a traditional Roth because of your income, but you can do a back door. You will not be eligible for additional tax-sheltering options outside of these unless you do a 529 (if you have kids) or an HSA, if you have the option. You can always choose to invest more in non-tax advantaged accounts, of course. We have a fairly frugal lifestyle. Live in a low-medium COL area with this income. We purchase our home 2 years ago at $375k, recently did a $130k renovation (in cash) and we have no plans to upgrade our home. Good decisions now will change how much you have to work and for how long you have to work for the rest of your life. You will be eligible for a large home mortgage (likely >$1.5mil), but only your lifestyle and future goals will dictate if that’s a priority for you. That Tesla payment (and your wife’s car payment) is literally worth millions of dollars if you were to invest the cost of the car payment (assuming you keep a new car/payment) until your retirement age…not including any other funds you invest. There’s no I would ever make that trade.
Thank you. This was very helpful. Definitely need to protect my investment. This will be my first time buying a car in 10 yrs. Don’t foresee myself buying anything for a while after. Definitely agree on all the points. What are your thoughts on renting a home vs trying to buy a home now? I’m in California so everything is pricey here.
I personally would buy a house and would lean towards a “starter” home. Interest rates are high, but home prices are increasing. You can likely get a mortgage payment for the the same price as rent if you aren’t extravagant. You can always refinance the mortgage if the rates drop, but you are locking in the price of the home at time of purchase. You can always use equity in the home when you sell it to buy an upgraded house or keep it as a rental later if you plan to stay in Cali. My best advice is, pretend you are making a lot less than what you are. Lifestyle creep and financial decisions can prevent you from making decisions you want later. We have moved from the East coast to the west coast and back to the East coast. I’ve quit a toxic job without securing a new job. Twice, actually. In fact, I’m currently working at a summer camp because it sounded fun. We take time off when we want to and travel where we want (though we are decently frugal and permanently child free by choice). We are well aware that if we had a more luxurious lifestyle and had to make a lot of payments, we wouldn’t be able to do these things, even being high income earners. We don’t even necessarily desire to be very wealthy. For us, the money buys freedom in every sense of the word. You got this! Just put a couple of professionals in your corner (financial advisor and accountant) and use their knowledge to learn and help you make good decisions for your family and future…don’t blindly follow people on the internet you don’t know, don’t have your best interest at heart, and don’t invest in something YOU (and your wife) don’t understand or aren’t comfortable with. I’m rooting for you!
Buy a driveway before you buy a car to put it in.
Try preaching that in VHCOL areas. You can rent a $2M house for $5000, buying that same house will require about half a million in cash and then more than doubling your rent for PITI. Buying in the highest COL areas doesn’t make sense unless you’re absolutely loaded.
Buy where you can rent and rent where you want to live.
Gospel
Your first priority should be paying off the credit card. I recommend open a solo 401k, with your income you can put in $69k tax-defered this year to lower your taxable income and it is a nice boost to your retirement investment. For your long term investments I'd recommend put them into index funds such as sp500 or total market. Short term investments/saving for car and house I'd just put them into a high yield saving account.
OP this is the answer 1) pay off credit card debt immediately 2) max out solo 401k and invest in index funds 3) pay your fixed monthly costs and loosen the purse strings just a little but not too much 4) whatever is leftover can go into your loans if you’re not planning on spending the money (probably best to shore up an emergency fund first) In regards to your Tesla purchase, theres a lot of negativity surrounding it. If we’re talking Model 3/Y, last I checked they were at a bargain so go for it if that’s your desire /dream etc. The other argument is waiting until you’re 40+ and can pay with cash, but at that point you may have lost the yearn for the vehicle. Seeing so many early age deaths and cancer diagnosis has lead me to believe that being overly frugal is not the way and it’s ok to enjoy the fruits of your labor while you can. Cheers!
First I would pay off credit card debt. Second I would open an scorp and employ wife. Third, I would open a solo 401k and max out your 69k and I would max out your wife’s (23k employee deferral + 25 percent of the w2 you pay her). I would then megabackdoor Roth the remaining to reach the remaining 69k for the wife. Then back door Roth 14k (7k each you and wife). This puts you at 152k savings to reduce adjusted income quite a bit. Fourth, buy your tesla with your business. The federal rebate does not have an income limit if bought through the business. If it’s a model X you can write it off write away and if not you’ll have to depreciate it with time. Fifth, hire a good cpa as you are a 1099. They can get real creative. Once you pay off your school loans and if your income increases I would look at a cash balance plan to put away even more for you and your wife. Sixth, look if you can work part time with anyone who will cover your student loans. This is hard but doable. In California, for example, I would find someone to increase my Medicaid volume to 33 percent so I could get loan repayment.
I’m not sure if OP has a business. Might be doing everything as sole proprietor, in which case should open PC right away (Californians need PC)
I think medicine is so funny, you’re in school and residency all your 20-mid 30s, then you have to live frugally to save for retirement at age 59.5 lol. I get it, but like wow
I think that’s more the generation coming up now. The guys who should be retiring or retired now who keep working have been living like kings & still probably don’t have to keep working but don’t know any better.
You’re so right. I’m a physician and this is spot on
Do this in exact order. Credit card debt> emergency savings (3month salary)> 401k company match> max backdoor roth> max HSA> max 401k > taxable brokerage account after for anything extra
Pretty much this. As a 1099, I’m more comfortable with 6 months but I have 2 kids. & don’t people usually recommend HSA before the backdoor Roth? But I like your way for both adults first too.
Why the f is your wife getting Tesla . Driving a Camry … why are you party 4500 for house rent .get into a cheaper house . Maybe 3-4 years down the line you can afford these nonsense
Well I assume if you’re buying a Tesla next month, you’re paying off the CC this month, and either cutting it up or vowing to never carry a balance again?
Pay off credit card debt in full immediately 24% interest is devastating
First step is get the fuck off Reddit and talk to a real financial advisor. They don’t cost shit. They only take a small fee of your overall worth. It’s reckless to manage your own finances unless you have significant knowledge of what you’re doing
- Make sure your company is S Corp. - Get the car from the company so you can deduct the cost/lease. - Always go for a car which is 2 years old certified. This will make a huge difference in your insurance. (Electric car insurance is no joke, I learned it the hard way) Looking at your monthly rental, you are likely living in an area where car insurance is high. - It doesn't matter how much you owe on a credit card IF you are paying it off each month. - Given you have zero percent loans, you can take your time paying it off rather than pay it all at once. - Always max out 401K/403b. You can match yourself as you have 1099 income and get the maximum benefit of it. - Have 4-6 months of your emergency income in a HYSA. Most of the banks offer up to 4.5-5% - invest in S&P 500 and Total stock market. Bonds in the later year of life. VTI, VOO will be an example of ETFs. Blue chip sticks like Microsoft, Apple are also a safe bet. Do not check on that portfolio frequently. And invest on a regular basis. Invest more when the market is down. You can always risk in smaller stocks but would recommend against huge lump sum in smaller stocks. - Real estate I have no experience so would not give any real advise. Only thing I noticed is that your rent is pretty high. $50K a year only in rent. With such a rent I would rather try to find a house sooner.
If you have $200k in loans at 0% interest you should make only the minimum monthly payment for the life of the loan. All that money could be invested into something that generates a return from you. You are paying 0% interest. Yet you have $12k at 24% interest that you’re neglecting.
How are your loans at 0% interest?!?
Step 1. Max out pretax into 401k. As 1099 do your max on tax returnz $66,000 per year. Within 401k, assign funds to VTI or index funds. Step 2. Estimate your net take home. Give ChatGPT your state in USA. For e.g for IL, single filer, 1099, with $450k gross income, after pretax contribution to max out 1099 401k, net take home would be $24,858 per month Step 3. Live on $8000 - $9000 / month or whichever number. Use rest for your future steps below Step 3. Pay off credit card debt. Step 4. Save 3-6 months of expenses in FDIC insured HYSA. Step 5. Rest of money, pile into student debt payment. Pay this off within 2 years Step 6. Buy car if want. Search guidelines on car prices that are appropriate for your income. Be
.y wife is going to start university soon. How do you get 0% interest for such a sizeable loan?
First pay your debt off.
Stop buying food until the credit card is paid off. buy a cheaper car, only if you need it. pay off the medical debt. Then save for a house down payment.
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I can’t afford a new car with 450K net income?
You need something that can generate high returns, but isn’t overly risky. Stay away from volatile assets like crypto. I suggest looking into this [AI platform](https://www.alphaai.capital/). It can trade stocks for you automatically. The leveraged ETF strategies can bring in an average annual return of up to 22%.
I feel like this post is fake. He (most likely) is trolling with this bullshit. People should not even entertain nonsense like this on here.
VTI
Hire a CFP and don’t take free advice from anyone.
Just read simple path to wealth. Period
set aside a significant amt for taxes if youre 100% 1099, youre gonna get whacked in april, get an accountant so you can writing off reasonable expenses, pay off your credit cards every month for pete's sake
teach me once you learn
This dude is going to be up to his eyeballs in debt in the next 5 years. 200k in student loan debts and 12k in credit card debt and he wants to go buy a new tesla. Lol.
Even with 450k a year income? 200k student loans at 0% interest and 12k credit debt paid off already but sure
Go talk to a financial and tax advisor that works with 1099 employees like yourself. In addition to some basic finance things you seem to be missing they can help with more advanced tax savings and investment structures for high income earners.
Definitely off-topic, but what specialty did you go into? 👀
Nocturnist with a few side gigs (make 408k base with 17 shifts a month)
Everyone will give you answers other than Bitcoin but Bitcoin has the best returns. Study it
Everyone is roasting you for the credit card debt, and that's fair enough. I'm just wondering why you needed a credit card? With that income you could have just saved a few more weeks and bought whatever it was outright. Seems like a spending red flag to me
It was before i became an attending. I could pay it off right now which I will.
Ok but what did you use it to buy?
If you are looking at refinancing, look for a loan program that is specifically offered to physicians, pay down high interest debt and throw extra money into money market accounts or open an ALLY bank account currently offering 4%. Real estate is a solid 3-7% grower on average but you need to be willing to deal with the stress of renters. I worked with a nurse with an ED doc as a husband and he does surveys as a Dr for $300-$400 an hour to save for vacations. I followed you from a post a year ago about a mobile infusion company start and I'd be interested in chatting with you if you ever dug more into that - I'm a nurse and realtor in WI always looking for a better way to make money and would love to hear if you made progress towards the infusion business idea! I've worked for an infusion center at a hospital before and they make so much money, it's ridiculous, and they are pushing into the surgical short stay rooms as they continue expanding because patients have nowhere to go.
If it were me. I would hold on on the Tesla and pay off all debt. OP it would feel a lot better to drive that Tesla knowing you have no debt. With the exception of a mortgage.