- April 8, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Considering Upgrading to a $4k/month Apartment
As a 30F physician nearing the end of my residency/fellowship training, I am at a crossroads when it comes to housing choices. The apartment I am eyeing is $4k/month, a significant increase from my current $2.3k/month rent for a one-bedroom unit. The allure of a second bedroom for storage/guests, a balcony, and a trendy neighborhood is tempting me to splurge on this new place.
### The Dilemma
While I may not necessarily need a fancier apartment, the desire for a nicer living space is pulling me towards signing the lease. With a projected income of $390k/year and a comfortable post-tax income of $19k/month, budgeting for the rent is feasible. However, with student loan debt looming over me, with a reduced amount of $275k due to covid-related deferments, I am torn between upgrading my living situation or saving/investing for the future.
### AI Legalese Decoder to the Rescue
This is where the AI Legalese Decoder can come in handy. It can help me decipher the complexities of my student loan situation, calculate my projected loan payments, and provide insights on whether pursuing loan forgiveness through PSLF is a viable option. By analyzing my financial data and goals, the AI Legalese Decoder can assist me in making an informed decision about whether upgrading to a more expensive apartment aligns with my long-term financial plans.
### Seeking Advice
I am seeking advice on whether it is reasonable to indulge in an upgrade now or wait until I have a more substantial financial cushion. Balancing the desire for a nicer living space with responsible financial planning is crucial, and I appreciate any guidance or insights on the matter.
### Response and Gratitude
Thank you to everyone who has provided feedback and insights on my situation. Your input is invaluable as I navigate this decision-making process. Just to address some questions raised, I currently reside in Southern California and acknowledge that my budget for food/fun may seem high. I am also aware of the debate between renting and buying, but for now, I am opting to rent.
Overall, the considerations and advice shared here have been instrumental in helping me weigh my options and make an informed choice regarding my housing upgrade.
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You’re quadrupling your income. You can less than double your rent. Stay frugal in every other way you can and you’ll be fine.
Everyone speaking here is coming at this from a purely financial POV which is expected and warranted.
Giving you a pov as a fellow physician. Few people know what you’ve gone through over the last 8 years. The extra 1500-2k a month is not going to make a huge difference. If you’re happy in your place, yes, save and pay down your loans before interest kicks in.
If you need a change, that balcony is priceless for what it can do for your mental well being. That’s worth the 20k extra in rent. You can still live frugally in other ways, but a lot to be said for the peace the new place offers.
Don’t give away your twenties to get a job that pays well and then not spend the money when you get it. Enjoy the fruits of your labor.
This is wayyyy above my paygrade, I can’t imagine allocating $4k\mo for food and fun. But imo, if you have the ability to do that, the extra grand or two on a nicer place for yourself should be no factor at all. Congrats on your hard work and perseverance. Good luck out there!
Not years, but build up an emergency fund equal to 6 months of your desired lifestyle. ASAP.
If something catastrophic happens with your job, your planned lifestyle will knock you on your butt.
Make a budget. Make sure to increase your emergency fund, *dramatically* increase your retirement savings, and put aside any money you might have for any other large purchases that might matter to you.
After that, go nuts.
Make a list of what “enough” is and stick to it. Certain car? Certain accommodation? Certain watch? Whatever. Make sure it pencils out for savings. Then once you have reached “enough” don’t acquire new things without getting rid of something you already have. Also just generally shift focus from consumerism to meditation and try to focus on the things you already have and how great they are.
Zero interest for the next year while making $390k is an enormous opportunity. Give yourself some minor upgrades to celebrate your enormous pay raise and more importantly arrival in the club (this is important), but avoiding the massive interest costs on that debt now as you’re getting started will help set you up for the rest of your life. This isn’t an either/or game, so you can spend more without spending heavily.
Fwiw, balconies are only worth it if your neighbors don’t suck.
Also, have you considered buying a condo as an alternative? At least then your “rent” will be locked in. The amount you’d pay for your mortgage on a 2 bedroom might be less than renting.
Since you’re asking the personal finance subreddit, maybe your subconscious wants us to talk you off the ledge and save money? If you post on the physicians subreddit you may get a very different response. I think you know deep down that the financially responsible thing to do is to save money, and perhaps you want us to talk you into saving more.
You can definitely afford $4k/mo in rent, but of course the financially savvy thing to do is to save that money. Do you really need a 2nd bedroom? Perhaps you can find a 1BR for $3k/mo that has a balcony in a cooler neighborhood? I would prioritize location.
Have you thought about savings in the context of maximizing your retirement benefits and HSA, building an emergency fund to cover 3-6 months expenses, and then having enough cash for medium-term goals like a down payment? I would then work backwards from there to see if your $10k/mo savings plus then the resumed interest payments on your loans would help you achieve those aims.
I wouldn’t upgrade until you see how much time you have on your hands as well. You might upgrade and spend very little time at home enjoying it.
If it were me, I’d stay where you are at for at least a year. Use the savings to dump money into your finances. Remember, as a physician, you start out behind on retirement savings. Other professionals have been saving & investing for the last 8 years while you were in med school / residency. Take one year and use your insane new income to bridge that gap.
What came first, knowing your budget will be expanded or seeing this apartment?
How many apartments have you come across?
Are you looking to move anyway?
If you haven’t used one, find an interest calculator online that tells you how much you’ll pay in total interest over the life of the loan. Then see how much you save in interest by putting down $1K/mo starting now.
>What do you guys think?
Wait a year. Bulk up the savings and get some of that debt resolved *then* worry about spending that doctor money
Airline pilot weighing in. Struggled on very little for about 7 years getting in to this career and now I’m on a pretty good upward arc…
Two things I would offer:
Any time your income increases divert a good portion before you get used to it hitting your bank account. Depends on your situation but max out your 401k, HSA, increase loan payments, set up automatic deposits in to an investment vehicle…things like that. Whatever makes the most sense for your situation.
After that…Don’t beat yourself up too much for enjoying your new income. Set a reasonable budget, but allow yourself to enjoy the fruits of your hard work and the sacrifices you’ve made.
The math is 4k apartment+1k car+4k food/fun+10k/save+3k school loans=$22k/month which is above the $19k/month you’re estimating. Something needs to be cut.
For being 30, I guess the savings is okay but I personally would need more to cover my lifestyle expenses for a few months.
If you are expected to pay your loan in full, I would focus on that when you’re making a higher salary.
The difference with your rent is only $20k/year. If you can cut down in some other areas and focus on paying your loan, I think it can work. However, I would be concerned about rent after the first year and what your income trajectory looks like.
Honestly, your salary is almost quadrupling. I think you can afford the extra $1,700 a month in rent. Just don’t fall into the trap of buying all new furniture, a new Mercedes, a luxury vacation, a boat, etc. You are obviously intelligent. This stuff isn’t too hard to figure out on a spreadsheet. Just “pay yourself first” and treat your savings like you would any other bill. You might want to set it up on auto-deposit.
Read up on tax-sheltered savings vehicles (401ks, IRAs, Roth IRAs) and learn about the low-cost ETFs offered by Vanguard. Be suspicious of “financial planners” and life insurance salesmen. If you enjoy working with numbers, read The Intelligent Asset Allocator by William Bernstein.
Congratulations on becoming a physician!
I did wait a couple of years and spent more like I did when I was resident, although I also moved to a HCOL area so my spending did go up. I do think the upgrade in your living quarters is worth it as you should have a lot more time at home as an attending (I do at least). I love living in a cool neighborhood and was worth the extra cost for me. It’s also worth making sure you have a guest room as you will have more time for friends and family to visit. I think you have the same mindset about PSLF as I do—nice if it works out but also prepared to pay everything off myself.
Congrats first off. Others have given good advice, my recommendation would, if possible, find a median. A guest bedroom is nice, but do you really need it? A place with a larger closet or storage space, that still has a balcony, will be cheaper while still providing a nice upgrade to treat yourself for the new salary and previous hard work.
Speaking as someone who recently got into big tech I can tell you I was in the same boat. My partner was not onboard. It’s the voice that says tomorrow is not guaranteed and I’ve worked hard.
So what helped me was actually taking a look at long term goals. I had a few financial goals in mind but never put it down in writing. It’s so dumb and adulty but looking at the potential of retirement + personal investment return helped me see my true priorities. Laid everything out and if this new place is still your priority all things considered, go for it.
Everyone trying to tell you to pay off your debt aggressively and forego PSLF are nuts. Your remaining payments to qualify won’t even hit 200k paid. Absolutely do not pay off your student loans aggressively.
4k rent is reasonable and you have the means to do so. You will still have enough to invest, save for a down payment, and build up an emergency fund. As long as you’re not furnishing it with new, expensive furniture and upgrading your car too, you’re going to be fine. My SO and I are graduating residency/fellowship and have no reservations about stepping up into a nicer place to live to reward ourselves, you shouldn’t either.
Doctors are notoriously bad with money. Doctors, lawyers, tech employees and dentists. Notoriously bad with finances. People in these fields tend to fall into the, “I have a large income so I am a financial genius” trap. Having a large income does not make a person a financial genius. High income, no net worth; or high income, negative net worth are very common in these fields.
Go watch Remit Sethi’s Youtube, particularly the high income folks. You can start [here](https://www.youtube.com/watch?v=hymi4IjLh7k&list=PLPZCUlZ2z01lvgC4lquCWOoVsCzTOxIqz&index=45) with the doctor who makes $300/k a year and is worried her family might end up homeless because of their financial situation.
If your current place isn’t terrible why not stay there an extra year and put the difference towards loans or other investments. Once the interest kicks in again that $275k is going to balloon quickly. Even with a high salary, having $7000 a month at minimum in fixed costs is going to suck and only goes up from there on any of your other expenses.
You’re going to be a very high income earner, so the average person will balk at what would be proportional expenses for you. What I will say is that it would probably make more sense to stay put for a year or two and use the savings toward a home purchase in the near future, that way some of that $4K per month will be building equity.
It’s reasonable to upgrade, but do yourself a favor and wait.
The difference just in rent alone on a 1 year lease is an extra $20,000 you can put towards your dream condo.
Well, the title says talk me out of it…so I’m not going to tell you to do it.
​
It’s a waste of money. Save your money and get your own property. Renting fucking sucks, why would anyone purposefully rent to never own? Also, you’re acting like life doesn’t happen. You never know what can happen in the future that makes you wish you didn’t randomly decide to double your rent payments. You say you’re fine where you’re at? Well, if it ain’t broke don’t fix it. There are other things you can spend your money on.
I married a physician and our household income is a bit more than yours.
We don’t regret our choice to pay off her debt aggressively one bit. I wouldn’t say we were frugal, but we budgeted to make it happen.
Lots of the other commenters don’t understand how $400k becomes a lot less after taxes and savings. And even less when there are infinite social pressure to upgrade every aspect of your lifestyle (and pick up the tab whenever you’re out to eat, and support charities with big checks, and and and).
Something that worked for us is deciding *where* to splurge with a lot of intentionality. For us when we were laying down debt that meant sensible travel and things that bought us time: housecleaning, takeout, and a short commute. You might value different things, which is fine. But the important thing to remember is that you can’t have it all. You have to pick what’s important. And unless you’re 100% sure on student loan forgiveness that has to be part of the plan. As does aggressive retirement savings (we’re our mid 40s and are GLAD to be on track to dictate our own schedules very shortly whether or not we keep working).
If I were you I’d probably upgrade the apartment to a single room with a balcony in a great neighborhood. Guest rooms are empty almost all the time and cost a lot more than just putting people you care about up in a hotel. But you do you!
If you can live like a hungry student for as long as possible, you’ll be a lot further along in your financial goals, and your future you will thank you.
Problem with lifestyle creep is that it’s VERY hard to downgrade lifestyle.
Do a “utility check”–on a scale of 1-10, what is the real value of the balcony? Of the second bedroom? Also, what are the utilities of any alternatives? Can you go up to the roof in your current building? Is there a park nearby? It’s less about the actual dollars to me and more about the utility/value. Balconies sound cool but may be what keeps you out of the park or off the roof deck where you get more sun and exercise. I have the second bedroom and it’s a nice TV room, but far from essential. Also do you have any sense that some of this is a “NEVER AGAIN” pandemic reaction? I know some people really struggled in 1-bedrooms during the pandemic and didn’t get out enough, but are you perhaps over-valuing these bad memories now? Good luck!
Congrats on the contract!
For sure you want to live somewhere convenient and low stress (close to work? close to fun/friends? Safe? Nice views?). Any extra money, I would prioritize attacking your loans if the rate is any greater than 6%. Being debt free is very good feeling
How much time do you actually spend in your apt or just in this cool area to justify the upgrade?
It’s more of is that the lifestyle creep that makes sense vs the lifestyle creep item itself. If you wanted to travel more, makes sense and say do it. An apt, eh. You don’t work from home, you may work longish hours, etc to the point that the increase in rent doesn’t make sense. Think about that and if the apt is where your lifestyle creep should be. Saving isn’t everything and maybe it makes more sense to get someone to make healthy meals for you or a cleaner, etc.
Sounds like you’ll be making enough to be fine no matter what you choose, and by all means, do you.
FWIW tho, if you can save and afford a downpayment on a mortgage, you could be getting double that sqft for half the monthly cost.
This is a perennial problem for newly-minted MDs, because you have to live like monk (except no sleeping) for years and years, and you are dying to live like a rockstar.
Bad move–keep the current apartment, drive a beater and keep attacking that debt–take any surplus you have and knock down that principal–your future self will be grateful.
Otherwise the interest will crush you.
I would put that additional money on my student loans. $275K is a big number. I would throw every additional dollar at that debt. I get it, we all want nice things, but you are still sacrificing to be a doctor. You can upgrade to a million dollar home, when that debt is gone.
Im glad you have figured out that part of residency fellowship qualifies for PSLF. I am assuming you were resident fellow at a university and that is why. I am going to say this and you probably wont agree. If you are not buying a house you are burning money. you can get a doctor loan with 0 down. after a few years refinance because of equity and get a great reduction in payment or years. If you hate the doctor job that you get you can sell your house or rent it. The one thing i see docs do especially after res fellow, is get involved with a group that makes it impossible to fulfill your rvu’s, or are promised a level of guidance for the first year and your soon to be retiring co-attending does a vanishing act. Good luck to you but i really hope you buy a house and not waste your money. You will be shocked what you can afford, go and get preapproved and start looking.
As someone who makes about what your offer is just be careful of the trap of future money. Its easy to tell yourself let me indulge myself today on some credit because I will easily be able to pay it off next month etc. That has/is a challenge for me getting accustomed to making a lot of money like that. Be mindful of a budget and try your best to stick to it but also remember to treat yourself for all your hard work.
The best thing I’ve done is split my paycheck directly from my employer. I take an amount that I need for all my financial responsibilities plus a little bit for anything fun I may want to do. The rest goes directly to a high yield saving account. I do not touch the savings account.
1. Congratulations on completing your residency and getting an excellent job.
2. Spend some time thinking about your long game. Where you want to be, what you want to be doing, and how these decisions play into it.
3. Get your splurge on with something. Maybe a one-time purchase like a vacation to mark the occasion.
Lastly, watch the recent episode of last week tonight. There are lots of details on things to pay attention to with your student loan.
Why the hell would you want to spend more money on rent? At that point go get a mortgage
Retired financial professional here who says treat yourself and enjoy! You’ve worked hard and long and you deserve it and more importantly, you can afford it!
You clearly track your money and are reasonable about it, and isn’t this one of the reasons you’re in a high paying profession, so that eventually, during your time off, you can begin to enjoy what you’ve accomplished?
The whole point of working hard and making money is to have a nicer life. There would be no point to waste so much time working and getting yourself such a solid career if you didn’t have desires, get that apartment bro
You need to buy a very good disability insurance policy ASAP if you haven’t yet, and it won’t be cheap. Group LTD from your employer is not sufficient.
You’re answer to lifestyle creep (in the short term) is that YOU ARE $275,000 IN DEBT.
You’re a doctor. Treat your financial situation like a patient. You wouldn’t tell your client with a 290 cholesterol to feel free to keep eating that double cheeseburger because he knows he’s going to go on a diet in 3 months for this trip he’s planning to take. You’d tell him to start that diet, and go for a run, every day (or something along those lines) until that cholesterol is normal.
Get rid of your debt. As fast as possible, then build up your savings as much as possible. You never know what tomorrow is going to hold.
Don’t do it. I’ve used my balcony a handful of times in the few years I’ve owned my house and the novelty wears off quickly. Focus on maxing out your 401k, mega backdoor Roth, backdoor Roth, HSA, emergency fund, brokerage, and/or downpayment for a house.
Get that student loan paid off before you make an expensive move. You are at 0 interest. This shouldn’t be a party spending time. This is when you should be chipping away at the loan.
Doctor, you and I (also a doc, but in a lower paying specialty) have a unique insight into just how badly life can fuck you over. I’m sure you’ve taken care of patients who did everything “right” only to be hit with a devastating disease that eliminates their ability to enjoy retirement if they even live to it. And like me you trained under COVID, I lost track of how many 50-somethings I failed to resuscitate. And there were plenty in their 20s, 30s, and 40s too.
You worked hard, you now make great money. Enjoy life while you can. That’s not to say you shouldn’t save and plan for your future. But we’re in the position to do both. Now it might be worth considering buying a home instead of renting. But I realize in California that might be tough even if you’re making 400k
Remember that most of the comments here are from people who haven’t even broken a 6 figure income, so they can’t fathom the idea of 4k in rent.
Living in a place you love really changes your mental health. But I would cut down the monthly fun and food expense to offset the extra cost of the apartment.
I would rather pay off my student loan first and then reward myself with something nice after. Even if you are just attacking the goal for 6 months.