Tuesday, September 10, 2013

It's Like the Lottery, Only Different

From the moment you our your spouse/boyfriend/sister/brother contemplated joining the medical profession family and friends gently urged them on with sentiments along the lines of "one day it will be worth it". What they mean by worth it is "one day you will have enough money and all your problems will be solved".  How naive they are. How naive we are.

I think this type of thinking (money is the answer to all of life's problems) is more common than we acknowledge. If you read my last post it is has been scientifically measured that the happy number for income is $75,000. So why would well-meaning friends and family want anyone to marry or obtain an income above that figure if it won't have any measurable effect on their happiness? Hmmm, maybe they are hoping that we will attempt to increase our happiness by spending money on them or buying experiences that we share with them. Or maybe they don't really like us as much as we thought.

I do not doubt their motives, really. I think they believe that having a higher income somehow means some of life's difficulties will pass us by. And there maybe some truth to it, but what if is was as equally untrue? What if it didn't matter how much money you had? What if the honest truth was that regardless of your income bracket you would be faced with challenges, hardships, heartaches and tragedies on par with others who have significantly less than you? Would you believe it? I have a feeling this might be closer to the truth than we are willing to admit.

Happiness has been on my mind lately because what I thought would make me happier (because I believed the lie) hasn't made a difference. I was happy before, don't get me wrong - but I think I was expecting elation, ecstasy and carefree to be a more permanent sensation. And now even I am laughing at myself. Go ahead, you can laugh with me. Instead it has just stirred up a whole new set of feelings I wasn't prepared for.

So what is the verdict? Will more money make you happier? It's a trick question and there is a lot of fine print and exclusions. You don't believe me. I can tell. Why? Because we all want the opportunity to try out the theory for ourselves. We will be the exceptions!

I won't attempt to deceive you. The first paycheck was like winning the lottery!  But, that feeling lasts for just a moment. Why so short lived? Because you quickly realize that having a high income doesn't mean you actually have money. Quite the opposite. Now that you have money everybody wants it.

Call it sticker shock, call it post-traumatic stress syndrome - the first time you see the income taxes portion of your payroll you may need to call 911. That is if you are able to get to the phone. Just like winning the lottery, most of your income is gone, never to be seen again and there isn't anything you can do about it! Taxes are now our single largest expense several times over. A cool 39.61% of our gross income. Sure we knew we were going to be in a different tax bracket, but I never considered that we would pay more in taxes in one month than we did in the last three years combined. It's the truth, I checked our filings because I am curious like that. I know what a great problem to have, but it's still a problem.

We need to lower our tax burden in a hurry! That would sure help pay down our debt in a big way. But what is there that we qualify for at this point? More kids? The ones we have now won't help anymore. Student loan interest? No.  Don't you find it ironic that once you are finally able to start paying your loans back you don't get to take a deduction for the interest you do pay because you make too much? This is going to be a topic of discussion for our financial planner. I am sure it won't be the first time they will have a new doctor in their office claiming that something must be wrong and asking to have some of those loopholes they have heard about in the news. Where can I get a loophole? Is there a dispenser somewhere?

I hear the naysayers now "why are you complaining about taxes, you have plenty of money"? You'd think, but....

From the moment you start medical school you begin digging the hole we call debt. You ignore it while it is happening because there is no alternative. In residency it slowly starts to remind you that it is alive and growing and waiting for you. You start cringing when the statements come in the mail. By the time you get your first paycheck, often decades later, it shows up on your doorstep with suitcases and a long term lease agreement that must be honored.  That little hole you starting digging years ago has become a tunnel to China.

You'd like to make your student loan situation a distant memory in a hurry, but you also need to start saving for retirement. NOW.  Remember that pitch from the HR department about contributing to a 401(k) and that if you started saving only $100 a month starting at age 20 by the time you retired you would have 1 Million dollars? That might not be the exact number, but the principle was that money invested over time grows exponentially. Guess what this doctor doesn't have? Time!  Instead of having a working career that spans 45 years - we will have 25, unless he wants to work into his seventies! And we might just have to do that. Time is not on our side and we are digging ourselves out of a hole. A house size hole. A house nicer than any house we have ever lived in hole with a matching mortgage payment.

But it's not just the student loans. It's the realization that being a doctor is a very expensive career decision. Because you have invested so much money that didn't belong to you pursuing an expensive career, you now have to take precautions to protect that career so you can afford to pay your debts. What a sick relationship. Outside of medical malpractice insurance, your family has to guard themselves from people that will never be patients! To say my husbands hands are insured isn't much of an exaggeration. We have insurance in case he can't work as a surgeon. Insurance in case he can only work in a limited capacity. We have insurance in case he expires prematurely. We have insurance to protect our home, cars, property, and assets we hope to accumulate. We have liability insurance should someone sue us from an accident in our car, home, driveway, sidewalk, tree, or from looking at them wrong, etc.

So when I look at our new income I see money that has already been spoken for and lots of hands coming to get what is theirs and not as much left as I would like. Not because I am ready for a shopping spree, but because I sincerely want to be done with debt as quickly as possible so we can move on to other things. The reality is that if want to pay off our debt aggressively, save for a meaningful retirement at a normal age, and buy a family house while our children are still living with us, we'd be smart to live like we always have. Right now it is the only way to mathematically make it work in the short time we have. Or we just throw caution to the wind and enjoy today and let tomorrow take care of itself. I am on the fence most days.

There are some things I have dreamed about and anticipated for years that would make everything worth it. (If you've been down this road, you know the "everything" I am talking about. If you haven't, I can't begin to describe it in one post and if I tried you wouldn't believe me anyway.) One was having a home in a safe neighborhood with a yard where our children could run and play outside. The other was taking family and couple vacations, something we never did during school or residency. I think both of these things are in keeping with the proven methods of increasing happiness: spending money on others and experiences. These are two things I am not willing to let go of now.

So for now, don't expect any debt-free announcements this decade.

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19 comments:

  1. I appreciate your honesty in sharing your raw feelings. I think it's important to remember that there is a balance between happiness and paying necessary bills. We are almost at the end. We have many doctor relatives generations ahead of us telling us "it will be worth it in the end". However these doctor relatives don't drive fancy foreign cars or live on estates. They have a comfortable existence and significant life experience and we could NOT be where we are today without their help however we have dug our own incredible tunnel to China we are responsible for as well. The tax thing is something I KNOW about and will experience for the first time when we have to pay it next April. I cringe at the thought but I also realize it's only fair. Should doctors get tax breaks? YES. Do they? NO. Which is why I don't have a problem with people being sour grapes about how big my husband's salary "has to be". They have no idea what it's like to walk a day in our shoes. Just hang in there. Stay focused on what matters and do your homework. Regardless of what "financial advisors" tell you rest assured the best thing you can do for your retirement and future is pay off all debts asap. Easier said than done especially when children are involved. I'll let you know if I find the key to unlock the holy grail of financial freedom. Living like a poor teenage mother is not an option any more. Sorry....I like looking showered, smelling good and a modest outfit from this decade. Nothing to feel guilty about in my book.

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    1. Yes, when you find the key let me know. I did get a shower today. I hear you about the sour grapes...

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  2. We paid our loans off in our 40's and that was way ahead of schedule. That expense was replaced with college tuition for the eldest daughter. It's a never ending cycle. Something is always coming and grabbing whatever disposable income we seem to have. Yet, somehow, we seem to get it all paid. Bills, and vacations. You know what they say... Where there's a will, there's a way!!

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    1. Perhaps it feels so daunting because DrH didn't even start his first day of work until he was in his 40's. Oh, to be young again! I feel so behind the savings game. It seems like we will finish paying off loans just in time to move the retirement community. I am going to have to dust off my "will" and make a way!

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  3. We actually moved from Canada to the USA to help pay off our loans! The exchange rate made it so that as soon as we crossed the border it was cut by 30%!! That wouldn't happen today because we are pretty much on par. How about that for a drastic measure to decrease debt:)

    Idea: Move to the UK so it is instantly decreased - pay it off in pound sterling after working there for a year or two (or three) and then move back to the US debt free?! Ha!

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    1. That's is creative! Our contract here is up in 3 years, we could go to the UK and move back debt free:-) In a few years there will be a PBS Frontline special about the number of doctors fleeing the United States so they can pay back their loans.

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  4. You put into words wonderfully what I am always trying to explain to people who say, "Oh you're going to be making lots of money soon!" Yes, that's true, but most of it is spoken for! I agree- what really gets me is not being able to take the tax deduction on all that student loan interest! Makes me fume just thinking about it! We got disability insurance in residency because I was so scared that something would happen and the hubs wouldn't be able to operate- what a nightmare! We will definitely be increasing our coverage as soon as we can afford it.

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    1. I have had the same nightmares, only because I have heard so many stories of medical students, residents, and new doctors involved in tragic and often fatal accidents. I still have nightmares, but at least now I know if something does happen we won't be destitute.

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  5. This is so well written, thanks for being so honest.
    At the end of the day, we know money will never be fulfilling and careers shouldn't be chosen based on what we expect to make one day (because, as you pointed out...it's actually a much different story than what everyone says it will be.) I cringe when people say "it will be worth it."

    I wonder that one year from now, you'll feel a bit more settled and able to grapple with the finances. Things may begin to smooth themselves out naturally and make more sense (especially if your adviser can find some loopholes!!)

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    1. I know you are right. Everything looks better after you've had some time to get used to it (I hope). Thank heavens he is happy at work!

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  6. Thank you so much for writing this and being so honest. It makes me cringe inside whenever friends or family say "One day you're going to be so rich money won't even be a problem for you!" and they have no idea what the reality is for the future. My husband and I are both in school right now and I can hardly even look at our loan info without having palpitations, not to mention the fact that we have zero money coming in that we won't have to pay back (along with a horrifying amount of accruing interest) eventually since I can't work right now. I hadn't even considered going into a different tax bracket and everything along those lines once we DO have an income! Yikes.

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    1. Like fingernails on a chalkboard every time I hear it. You are both in school right now? Best of luck to you both!

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  7. Amen. I guess the debt battle never really goes away...once what you have from medical school and residency is gone, then it's college, retirement, taxes and other things that suck it out of you. I don't think we will ever be able to explain to the non-medical career people out there how it all feels and we certainly won't be able to convince them that it's not always smooth sailing. But the good news for you is that you are out of the weeds and onto the next chapter of your family's life and that is so exciting :)

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    1. Yes, it is good news. And I need to focus on that part of the equation and enjoy the bumpy ride:-)

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  8. Holy gawd! This is LITERALLY what I just talked to my therapist about. I pay everything off early. The thought of having no money for retirement b/c we have to pay for a house/yacht/ferrari that is actually my husbands MIND (in the form of school loans) - makes me sick. For realz. And if one more person tells me that it will pay off in the end, I will throat punch them with my over 40 and still functional fist. HAHAHA!! Good post!

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    1. Maybe I need a therapist:-) My husband would love a sports car (and I think in his mind he thought he was going to actually have one) but I remind him that he should have started working 10 years ago for that. You know, 40 and still functional would make a great title for a book, blog, song... you should copyright it.

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  10. What about going thru military med school? No debt, you get money for residency. Do you think that would have been worth it? I've seen that it used to be but isn't now.

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