Tuesday, March 12, 2013

the world's longest adolescence


I've been undergoing more frequent bouts of financial incontinence of late. I bought five sweaters in a recent end-of-season sale and a side table from Serena and Lily that is made of carved wooden swans. My husband describes this purchase as the Most Ridiculous Thing We Own. 

I can feel the end is in sight. I am almost done with my training, after which I will be making several times more money than I ever have before.  

Saturday morning I went to a financial planning seminar for graduating medical residents and fellows. After a brief introduction, the speaker guided us through a program he had developed specifically for medical trainees to calculate exactly what income was required to develop and maintain the life we projected to lead with our future salaries. 

I don't know what my salary is going to be next year. I am looking at positions that vary over $130,000 between them, adjusted for part time vs. full time, and private vs academic. So I entered a figure somewhere in the middle. It's even more difficult to project my husband salary as he owns his own company with a salary that varies month to month. He's gone months without a salary at all, which I've always thought taught us to live beneath our means. 

Beneath our means, but perhaps not beneath our expectations. 

It took about 90 minutes to complete the program.  There were a few numbers I didn't know how to estimate - like the expected rate of inflation and expected rate of return on our investments. There were some shocks along the way - the projected cost of a 4 year state education for my 1 year old son is $360,000 if tuition costs continue to climb. I entered the tuition cost for two kids at the most expensive elementary and high schools in the city, the cost for two weddings, and my medical school debt. I figured in the cost for a standard 3 bed, 3 bath house in our community with a 20% down payment. The program included costs I hadn't thought of before, like the cost of an accountant, orthodontia x 2, and home owners' insurance. It calculated the estimated yearly expenditure of feeding and clothing two kids. I felt pleased to enter the amount we've manage to save in retirement and savings accounts. 

I got to the end.

-$118,455

OMG. 

That's the amount of yearly income we lack in order to meet what I thought were fairly modest goals. 

I've heard medical training as the world's longest adolescence. I've never felt it to be as true as I do now, starting down the last few months of my training and still uncertain of what I am going to do next year. 

After a collective gasp, our speaker smiled and admitted to a slight "glitch" in his program - while the program took into account the rate of inflation, it did not adjust the physician salary for that rate of inflation. In other words, the cost of every itemized expense would go up, but our purchasing power would go down with time. 

That didn't seem right. Of course my salary would go up, perhaps to cover the gap between the estimated salary and the projected cost of our lifestyle. And then he made what I think was the most striking point of the presentation. The partners he left in private practice anesthesia in 1993 are making the same salary now as they were 20 years ago. 

OMG x 2. 

It is unlikely that physician salaries are going to go down, but it is highly likely that, with the restructuring in health care underway, salaries won't go up with inflation. I've heard that said before but didn't think too much of it. Now seeing a dollar amount placed on what had seemed like conjecture has given me pause. And in that pause seeped a now recurring frustration. 

How is it that I started med school a few short weeks of my 22nd birthday, I will graduate when I am 33 and I still can't decide what I want to do next year? What is in the best interest of myself, my family, and the longevity of this career I've been working for since I was 21? 

During my ongoing job hunt, I received the unwelcome advice to "not make any decisions based on money alone", which does seem like sound advice and in keeping with the best interest of my young kids, who would benefit from a mother who is around more, and my career should I decide on an academic path over the more lucrative private route. But in that room I started to re-appraise the relative benefit of the options ahead of me. If I work part time in academics, does that mean my kids don't go to college?

The exercise served to broaden what had been a frustration specific to not knowing myself to include the more generalized frustration that I don't know anything

And it put to rest any lingering consideration I'd had on the idea of a third child. 

11 comments:

  1. It may be regional but a lot of the things you mentioned are luxuries around here. I grew up with a physician mom in an apartment that never had more than 1 bath and attended public school. Private school is for rich people here (ie spine surgeons, law partners, ceos). I do live in a high cost of living area where public schools are thankfully very good. I went to private college and took out modest loans and my parents paid for half of my relatively cheap wedding.

    i'm in training but my husband currently makes an attending salary and has attending-sized loans and we live in a 2 bed 1.5 bath 1200 sq ft house with 1 kid but will bunk them if/when we have another. We spend money on some luxuries but we can't afford all the things you describe either.

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  2. Um. Didn't realize I would have to state the obvious. Yes, there are strong regional differences in the cost of living. It's part of why we don't live in an expensive urban center. MDs around here, even single income families, live in 3+ bed houses and some send there kids to private school. My parents paid for part of my wedding and sent to private high school. I would like to be able to do the same for my kids.


    I am more interested in people's reaction to the speculation that MD salaries won't rise with inflation.

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    1. geez. i cannot edit or spell. "their" and "me".

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  3. MD salaries may not rise. But that does not really matter. What makes a lot of sense is to live like you are a resident for your first couple of years out of residency. Because there will be a lag in your income. And because paying off your debt early has huge dividends later. I finished training at 32. My husband (we married 2 years after I finished medical school) had a job, which helped. We lived on half of his income throughout residency/fellowship and my first two years on faculty. We paid off our substantial loans (me med school, he business school) 7 years after we graduated and one year after I finished training. To do that, we lived in a modestly nice apartment with my husband's college era furniture and a few pieces we got as wedding gifts. Our standard of living improved as my husband got pay raises. In the year after we paid off our loans, we put $100K in the bank. This allowed us to buy a house (and take a trip around the world, but that is another story) and set us up to feel comfortable for the past 20 years. So I know it feels like you have been living on nothing forever, but a couple more years are worth it to set you up not to feel pinched for the rest of your life.

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  4. paying off loans!!! Ha! I wish. My loans were $250,000 when I finished school. I am 5 years out of residency and have paid off $100K which given the fact that we own a home and that I just had my 3rd (and last) child is very impressive. We definitely live below our means, our old college furniture etc. Even with that I worry about other expenses and costs. private school is definitely not an option for my kids. I would love to have the option of the other things you mentioned and constantly try to streamline and adjust our budget.

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  5. Yep. Pretty much RH. Kids are expensive, especially (in my neighborhood) if you don't want to send them to elementary schools where 5th graders rape each other in the bathroom. I just want to be able to provide for my kid(s) the same as my parents provided for me. It definitely won't be possible on my (future) salary alone.

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  6. Great post. I'm going to save some money due to having good public schools in my town, but I'm still scared about college. It's crazy that just getting a college education is so ridiculously expensive. I'm praying my parents follow through on their promise to contribute.

    How much did you estimate for weddings? I accept paying for college, but if my girls want big, expensive weddings, they're going to have to pay for it themselves.

    I have no idea how we're doing financially. I feel like we live pretty cheaply, in that we don't go out much or travel, and we don't have a bunch of expensive stuff. Childcare is really the only big expense.

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    1. I put in 30k because that is what the guy running the work shop said the average cost of a wedding is now. I have a son and a daughter and it would be *nice* to think whomever they marry would also contribute, but who knows. It was a great/humbling exercise.

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  7. Oh, I could write a book here. Volumes. Fantastic post.

    Divorce and becoming partner in the same year (2010) gave me a huge crash course in finances, and how to save for the future. Having a good financial adviser is invaluable to me. And I had a bad one - one that confused me and met with me too often and made commission on a couple of policies that he didn't tell me about. I smelled a rat and bailed. I am much more involved online and less obfuscated in person by my new guy and his amazing wife/silent partner. And he only makes money if my nest egg grows. We are on the same team, not working against each other.

    Your dream is possible with careful planning. I agree - live within and below your means for a while. I have the smallest house of any of my partners (who cares? It's a house) except one who, 10 years into partnership, is finally building the house she dreamed of as a little girl growing up in the projects in D.C.

    I've had the giant house, the too much to clean and maintain, the headache lawn. I divorced it with my divorce. Go practical. Homey but within reason. My mortgage is reasonable so I make spend more decorating and making my space nice for me and my kids. I do a project a year - about to get rid of hand me downs in my son's room and my living room for this year's project. Save for what you care about - for me that is private school in my city (I don't knock public - many of my friends find good ones) and saving for college. Still driving the car that is paid off - not flashy but reliable. I am not a stuff person, but I am an experience person - I'd rather have travel than jewelry or latest fashion any day. But I too have had my swan table purchases - hey, you've gotta splurge every once in a while!

    I was turned off of academics, a great goal, by my residency experience, unfortunately. But there are still wonderful cases in private practice. And more collegiality than I had experience with in my training, from colleagues in pathology and otherwise. I love the intelligent and caring heme/oncs that I work with and text about tough cases. Not to turn you off academics, but to give you perspective there.

    Good luck. Be smart. You never know what the future entails. I've got 10 partners to look at, and I learn from seeing their patterns and spending habits. What works for me isn't for everyone, but frugality in moderation keeps me sane and happy, despite my bigger paycheck.

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  8. You are an optimist. I am praying my income won't go down with all the political changes. I am sending my kids to public school and don't really plan to save for a wedding. College is stressing me out though. I would like to be able to pay for most of college and help out during grad/professional schools. And we are trying for a third on my part time salary. BTW, my husband contributes minimally financially right now. Oh, well.

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  9. On the actual cost of raising children, this is a useful piece to read: www.kitchenstewardship.com/2011/08/03/does-a-child-really-cost-a-quarter-million-dollars/

    You don't *have* to pay for their wedding, or their college. They can get financial aid, and/or work part time. It's not "either I pay for them or they don't go to college".

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