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EMEDPA

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

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Regardless of the disagreements on the specifics, let's not lose sight of the broad overall agreement that post-school frugality and paying down debt as fast as possible is an excellent way to achieve financial freedom.  The real reason for financial freedom as a PA is that when you can just walk away from your job, your SP has no hold on you, cannot make you put up with poor patient care, unethical practices, or fraudulent billing.  Not always an issue, but often enough an issue for new grads that it bears mentioning.

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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

There is a big difference.  It's called RISK. 

 

Other differences that your plan doesn't consider is the cost of purchasing, maintenance costs, cost of moving, and then quality off final house.

 

First, and biggest, is risk.  Put 20% down on a house and then lose your job (get sued, become disabled, etc) and you run the risk of losing your 20%.  Plus the risk of large/catastrophic repairs to a house (yes, it happens).  Yes, houses (usually) appreciate in value, and yes the interest rate is tax deductible (but paying interest is still bad), but they can also be a huge burden.

 

Second is cost of purchasing.  You buy a $150K home you will likely incur 2-5% closing costs, so $3-$6K.  Less if you shop around and have plenty of money to put down, more if you don't.  That's no big deal if you're going to stay in the house for the rest of your life, but that is real money if you're only going to stay there 3-4 years.  How much equity do you build up on a home in 3-4 years making minimum payments?  Virtually NONE!

 

Then there is maintenance costs.  $10K annual maintenance on a $400K home is not unreasonable at all.  I currently own four homes and I can promise you that, if you want nice homes, they take maintenance.  2.5% annual maintenance costs is about average FOR AN UPDATED HOME.  It will be much more if you buy a "fixer-upper".  For a $150K home, that's another $4K a year.  Oh, and don't forget about that appreciation....that $4K goes up a little bit every year.   You don't have those maintenance costs with renting.

 

Then there is the cost of moving.  If you are renting, and know that you're only renting for a few years while you pay off student loans and build a down payment, you may fill your apartment but you will fill it with less things than if you buy your own $150K house.  That means it will be cheaper to move from that apartment than it will be to move from your own home.  

 

And that leads to my last point - why would someone who's making $100K+ a year buy a $150K house?  Especially if they have a spouse making good money as well.  Okay, $150K might be a nice house (certainly is in my area).  But if you're OUT OF DEBT, then you should be able to quickly save up a 20% down payment on a $300K or $400K house and then easily manage those payments. 

 

There's nothing wrong with renting for a short period of time (few years) while you work hard getting out of debt and saving for a large down payment on your dream house.  Of course, there's also nothing "wrong" with buying a modest home during that time frame to build some equity....but realize that the risk may offset the small financial benefit.

 

The most important thing though, like Vent said, is to live WELL below your means as you work hard to pay off ALL your debt as soon as you possibly can.  No new cars, no extravagant vacations, etc....build up an emergency savings and then throw everything you've got at your debt.

 

Once you are debt free and not sending payments to student loans, credit cards, car payments, personal loans, or even your mortgage....you will realize how nice of a paycheck you actually have.

 

 

 

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the other advantage of paying off debt and living below your means is the ability to work less and spend more time doing what you want. I'm now working 12 days/month(hopefully soon to be 10) and doing 2-3 medical missions/yr plus multiple vacations, cme conferences/vacations, seeing a bunch of concerts, etc. Doing this takes a lot of planning. I'm at one of my rural jobs today and just scheduled shifts here through the end of august, that's 6 months lead time.

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I think it bears repeating his point of not signing non-compete clauses.  Having said that, EVERY job contract I see now has one and getting them removed is almost impossible.  So what do you do?  Make darn sure you want that job in that area, because the myth that "non-competes are never enforced" is just that...a myth.  I have seen them enforced here in Texas and they are devastating financially trying to defend it.

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Agree with living within your means, etc. We do that anyway.

What I agree with but also struggle to implement is the "don't take a job that doesn't pay ____" (fill in the blank). I live in middle Tennessee. There are at least 2 medical schools, 2 (soon to be 3) PA programs, and at least 4 NP programs all within a 45 minute drive of each other.  The pay for EVERY job I have ever interviewed for has been sub-par in my opinion. And when I HAVE been offered a decent salary (once), there have been zero benefits included with said decent salary. 

How do you say "no, I'm not working for that" when NO one is offering what is considered reasonable? I can't force an employer's hand. Do I look outside of the metropolitan area? More rural opportunities? Has anyone else dealt with the saturation of the job market in larger cities? Thoughts? 

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6 hours ago, akjean said:

 

How do you say "no, I'm not working for that" when NO one is offering what is considered reasonable? I can't force an employer's hand. Do I look outside of the metropolitan area? More rural opportunities? Has anyone else dealt with the saturation of the job market in larger cities? Thoughts? 

YES. present them with a reasonable salary and if they low ball you look elsewhere. if enough folks do this, salaries will go up.

when I went from urban to rural I got raises of $20/hr, $26/hr, and $35/hr at 3 different places to see fewer patients and enjoy my life more. win/win.

If you are stuck in one particular town with no options for moving or no job within a 90 min commute due to local sick parents, etc  you may be stuck with what they are offering in your town or consider moving or doing locums work elsewhere(2 weeks on/2 weeks off, month on/month off, etc). best of luck.

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