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For the new grads, EmedPA's post #20,000


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Wise words, thank you.

 

Many of us that are starting our job search are thankful to get pointers like this from you and the others that have been in the field long enough to give us direction. We don't get a lot of information like this during our education. Maybe we will in the last month prior to graduation, by then it could be too late. When searching jobs, looking at contracts, negotiating - quite frankly most of us have no idea what we're doing without help.

 

 

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I agree 100% with everything EMED has written. I often think that the profession would benefit from a book filled with a Chapters from mutiple highly experienced PAs of EMEDs generation. I thought of this a few months ago when JMJ11 (I hope the attribution is correct) created a series of youtube video on the challenges of starting and managing a practice. I think that the book "The DO's : The history of Osteopathic Medicine" was a terrific read to help me understand the DOs. Likewise, a similarly well researched book on PAs would be terrific. In the meantime, thank you for the contributions, even when I may disagree. 

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Im not a PA-C yet but I agree with this list wholeheartedly.

I particularly #4, 5, and 6 and believe they should be applied to any period of life. In the end you will remember the experiences that got you were you are, not the BMW.

 

Thank you for taking the time to write this out, and for all the input you have given us over the years!

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Congrats on the 20K posts.  Might I suggest you take a vacation to a remote island where there is no internet??  :-)

 

Some slight disagreement with a few points:

 

#4. Don't buy a $30K car until you're a millionaire.  NEVER EVER EVER go into debt for a car, cause they ALWAYS go down in value.  You can get a very nice, reliable car for $10K.  In a year it's worth $8K, another year it's worth $6K, another year it's worth $4k....then trade it for another $10K car.  The $30K car turns into a $22K car in just a year, then it's a $15K car.  Then it's the $10K car the next year.   
 

#5. New grads with high student loan burden should either RENT until they are out of debt (and have an emergency savings built up).  When you're out of debt, then ONLY buy the house you can afford with a 15 year fixed rate mortgage....then pay it off in 7 years.
 

#10:  Agreed....unless they compensate you enough to make up for not providing those benefits.  I would rather take $90/hr without benefits (and control of my schedule for vacations) than $60/hr with benefits (with no control of my schedule)

The rest of it is spot-on, and should be mandatory reading.


 

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Funny thing about getting "old".......others recognize it way before you. I know EMDPA and compared to me he is still a youngster. But compared to a brand new 24'year old PA........

I could be the father of a 24 yr old PA....sigh.....yup, getting some white in the beard and wearing reading glasses now, but still can beat most 24 yr olds in a marathon, 50 mile, or 100 mile ultramarathon.

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Boats- regarding car/hgouse prices above- I agree that it is best to pay less than 1/3 of your salary for a car( I drive a Honda, my wife drives a Subaru), and pay off debt before assuming a mortgage, however I was presenting these as upper limits for spending, not recommendations for how much to spend. as I mentioned, too many folks buy the new audi, the million dollar house, etc right out of school.

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If you plan on staying in an area renting is throwing money away.

 

Buy a house on a 30 year and maintain it. It will cost roughly the same as renting, it typically appreciates in value (particularly if you maintain it) and you can deduct the interest against your taxes (in addition to your student loan interest). When you are done paying you loans attack the mortgage and pay it off asap. Interest rates are still historically fantastic.

 

The only reason to rent is if you think that you may want to move in the next 5 years.

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... and you can deduct the interest against your taxes (in addition to your student loan interest). ...

 

 

As far as I know, and have been able to claim- a PA salary is beyond the limits of deducting student loan interest. Please tell me if I am wrong and exactly how to fix it- I would love to cut $7000 off my taxable income this year.

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Why would you want to double the price of your house, and stay in debt for 30 years?

Better to rent small place while you work like mad to get out of debt, save up a big down payment, and then take a 15 year mortgage. Pay that off in 7 years....then your golden!

Why would you stay in debt for 30 years? This would be no different than buying on a 15 year and paying off in 7 except while you are paying your student loans your minimum mortgage contribution is smaller.

 

Get the 30 so you can make huge student loan payments and then shift the money to the mortgage when the loans are paid. in return you get access to an appreciating asset, tax deduction and the flexibility to own for less than rent while paying down your student loans. Once the student loans are paid off you can start paying the mortgage down faster.

 

Renting only makes sense if you can't get a mortgage or you plan on moving in less than five years.

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This would be no different than buying on a 15 year and paying off in 7 except while you are paying your student loans your minimum mortgage contribution is smaller.

 

Get the 30 so you can make huge student loan payments and then shift the money to the mortgage when the loans are paid. in return you get access to an appreciating asset, tax deduction and the flexibility to own for less than rent while paying down your student loans. Once the student loans are paid off you can start paying the mortgage down faster.

 

Renting only makes sense if you can't get a mortgage or you plan on moving in less than five years.

I wouldn't keep student loans for 10 years either.

 

Instead of a $2500 house payment, and $10k/year maintenance, on a nice house you want to live in forever....you pay $1000/month rent and throw the extra $1900/month towards your debt.

 

Then, once your OUT of debt, keep living like a pauper another year as you save up 20% (or more) down and take out a 15 yr fixed on the home of your dreams....then pay it off in 7 years.

 

This gets most people out of debt and owning their dream home in about 10 years.

 

Your plan leaves them burdened with debt for more than ten years.

 

Ever seen a bank foreclose on a paid off home??

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I wouldn't keep student loans for 10 years either.

 

Instead of a $2500 house payment, and $10k/year maintenance, on a nice house you want to live in forever....you pay $1000/month rent and throw the extra $1900/month towards your debt.

 

Then, once your OUT of debt, keep living like a pauper another year as you save up 20% (or more) down and take out a 15 yr fixed on the home of your dreams....then pay it off in 7 years.

 

This gets most people out of debt and owning their dream home in about 10 years.

 

Your plan leaves them burdened with debt for more than ten years.

 

Ever seen a bank foreclose on a paid off home??

 

 

There is no difference between my plan and yours except my plan has me owning an appreciating asset sooner with a tax write off on a portion of my "rent".  

 

There is NO reason to have a $2500 mortgage straight out of school.  On a 30 year mortgage at 4% that is nearly a $400,000 home, or almost $300,000 on a 15 year loan.... No reason for that at all.  None.  There is NO reason to spend $10k/yr on maintenance.  Your numbers are designed to bolster your argument.

 

$150,000 home on a 30 year loan with PMI, insurance and property taxes escrowed is $1000/month or thereabouts.  Chop another $75-100 off if you have the means to avoid PMI straight out of school.  Rent for a modest 2 bedroom apt in/around Raleigh, where I live, runs at least $1000+ a month.  Why would I pay the same amount of money to rent a modest apartment as I would to own a modest home that is appreciating and simultaneously reducing my taxable income?  

 

I throw as much as I can for a few years at my loans, and then turn my attention to the mortgage... the exact same way as you would if you are renting, except in those few years that I am paying off my student loans I am still chipping (minimally) away at the principle on my mortgage and receiving a tax write off.....  or I could rent and pay someone else's mortgage.

 

 

Renting only makes financial sense if you are looking to stay mobile or plan on moving in the next 5 years.  Otherwise, if you have the means to obtain a mortgage you are almost always better off buying unless you buy a dump AND get seriously unlucky with market timing or major repairs.

 

 

Sorry to hijack your thread EMED

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