Financing, under somewhat unique circumstance.

[David_Cary]

Ok - an example from Tesla leasing - presumably similar to their lending.

10 years in practice. Partner in group. Have relatively small salary - 150k. But other income - last year was pretty bad though. Over $500k in IRAs
$600k rental house with $320k mortgage. $800k house with $390k mortgage. Zero other debt - 2 cars fully owned.

Tesla gave me a hard time despite a high down payment (which I am doing for very unique situation) on a S85 with minimal options. Comes Friday - yeah for me...

Makes sense for MD loans on houses. Cars not so much. I personally view a Tesla as something for people with $1M in assets and $200k in income. Anything else is of questionable value. There are several $20k and $30k cars that are just fine. Environmental statement? - much better - ie more cost effective ways of doing that.

Have you considered what the ACA will do to physician incomes going forward? The Civic is very nice nowadays.
Kids? Private school? College? Want your offspring to be limited because you needed a X right out of training? Saving for college yet?
No kids? Positive you are going to stay that way?
Med school debt? Average is $200k nowadays. I'm done with mine.

Now mind you, I leased a BMW 545 right out of training but I was single. Swapped it after 2 years and got myself a Honda Civic.

 

[iKhalid]

You can also go to a car leasing company, have them buy the car and lease it. If you can afford a good down payment, they won't say no. When everything goes well, buy it (given it's an open lease contract), if things go wrong, return it.
I'm not sure if Tesla's lease program is open, but normally car dealers offer closed leases only.

 

[JohnSnowNW]

My advise to the OP, if you want to leverage/borrow to buy your Tesla go ahead. But have a solid plan for investment. Otherwise buy your lower cost car then in the next yr or 2 when you realize your financial success get an EVEN BETTER Tesla!!! You know there's going to be one, and the model X will have many kinks like the first few Model S'

We have considered this, and it's still on the table. We have two perfectly good vehicles, one being a '13 Mazda 6, which works just fine (as opposed to the aforementioned Civic) Our other vehicle is an '11 AWD Suzuki SX4, which is a bit too small for our two young kids. We could potentially make them work for a couple more years...but it's getting more and more difficult to do so.

We would be taking posession of the X several months before it would be easily doable with our finances, but it's still relatively easy. My wife is committed to working a few extra moonlighting shifts a year to make it work.

Ok - an example from Tesla leasing - presumably similar to their lending.

10 years in practice. Partner in group. Have relatively small salary - 150k. But other income - last year was pretty bad though. Over $500k in IRAs
$600k rental house with $320k mortgage. $800k house with $390k mortgage. Zero other debt - 2 cars fully owned.

Tesla gave me a hard time despite a high down payment (which I am doing for very unique situation) on a S85 with minimal options. Comes Friday - yeah for me...

Makes sense for MD loans on houses. Cars not so much. I personally view a Tesla as something for people with $1M in assets and $200k in income. Anything else is of questionable value. There are several $20k and $30k cars that are just fine. Environmental statement? - much better - ie more cost effective ways of doing that.

Have you considered what the ACA will do to physician incomes going forward? The Civic is very nice nowadays.
Kids? Private school? College? Want your offspring to be limited because you needed a X right out of training? Saving for college yet?
No kids? Positive you are going to stay that way?
Med school debt? Average is $200k nowadays. I'm done with mine.

Now mind you, I leased a BMW 545 right out of training but I was single. Swapped it after 2 years and got myself a Honda Civic.

Thanks, for taking the time to respond. My wife does have some medical school debt, but our other debt is extremely low. She is projected to make 300k+ (low end of average)...and it would seem unlikely that the effects of the ACA would be so extreme as to make it an issue. Our kids are not old enough to attend school, but will be attending public school. We will be saving money for college, but not until my wife begins working post-fellowship, and purchasing the X will not interfere with our savings strategy.

We are purchasing the X as it fits our needs and driving habits, with the plan to keep the vehicle for at least 8 years. We do not wish to purchase another ICE vehicle, regardless of how many affordable ones exist. We would be taking a short-term hit to our finances purchasing the X, but we both feel that it would be worth it...for us.

As I've mentioned previously in this thread, we have a relatively frugal life-style, and aside from the X, have no plans to change.

You can also go to a car leasing company, have them buy the car and lease it. If you can afford a good down payment, they won't say no. When everything goes well, buy it (given it's an open lease contract), if things go wrong, return it.
I'm not sure if Tesla's lease program is open, but normally car dealers offer closed leases only.

Yes, we've considered just leasing it. A "good" down payment would be relative, I think. We could easily do 25%, but more than that would require a little extra planning.

 

[bonaire]

You mentioned two young kids late in the thread. I think they would be up front, almost #1 in your life in terms of securing your and their future. I would bank the MX payment in their name in case something goes wrong with the medical world. Are you sending them to public school? My kids' private school payments over the years would have been higher on a monthly basis than any MS or MX payment. But you can definitely afford the MX if the kids go to public schools versus today's typical private education.

I was a financial idiot when I was young and growing in my career. With two young kids. Now in my 50s - I look back and could have done so much better in terms of flushing all that cash down the drain.

 

[JohnSnowNW]

You mentioned two young kids late in the thread. I think they would be up front, almost #1 in your life in terms of securing your and their future. I would bank the MX payment in their name in case something goes wrong with the medical world. Are you sending them to public school? My kids' private school payments over the years would have been higher on a monthly basis than any MS or MX payment. But you can definitely afford the MX if the kids go to public schools versus today's typical private education.

I was a financial idiot when I was young and growing in my career. With two young kids. Now in my 50s - I look back and could have done so much better in terms of flushing all that cash down the drain.

They are absolutely #1, as one of our main interests in the X is that it's built on the S platform...which is the safest vehicle ever tested. If we keep the X over the 8 year period, the cost wouldn't be dissimilar to the costs of two 35k ICE vehicles in the same time-frame.

The public schools in the TC are top-notch, and we have no plans to send them to private.

We are actually both very good with money, and as I said, this is the only large purchase we plan on making any time soon. We are actually choosing to remain in our current house for a few years longer than planned, to make the purchase of the X easier on our finances, for instance.

I really do appreciate your suggestion for caution.

 

[Drucifer]

Public School can make a huge difference.

Public school makes a huge difference. My wife originally wanted to send our 6 year old daughter to private school, and there are a lot of great ones here, but we took a little more time to explore the public school options and we are glad we did. Our daughter is in a language immersion magnet K-8 school, learning Japanese in kindergarten now. The parents and teachers are really focused on education and are from a broader social and economic strata than you might get in a private school. the school is 90th Percentile on ratings (there is a lot of information about academic performance for schools online these days, and comparing public schools is easier now than comparing colleges was when I was in high school).

At the end of the day, I did public school and a private University. With the money saved on private school (approx 20k * 13 years, or $260k), we will be able to send our daughter to any 4 year undergrad school she chooses.

Without public school, this fall I would be getting another Chevy Volt for certain.

 

[JohnSnowNW]

Public school makes a huge difference. My wife originally wanted to send our 6 year old daughter to private school, and there are a lot of great ones here, but we took a little more time to explore the public school options and we are glad we did. Our daughter is in a language immersion magnet K-8 school, learning Japanese in kindergarten now. The parents and teachers are really focused on education and are from a broader social and economic strata than you might get in a private school. the school is 90th Percentile on ratings (there is a lot of information about academic performance for schools online these days, and comparing public schools is easier now than comparing colleges was when I was in high school).

At the end of the day, I did public school and a private University. With the money saved on private school (approx 20k * 13 years, or $260k), we will be able to send our daughter to any 4 year undergrad school she chooses.

Without public school, this fall I would be getting another Chevy Volt for certain.

I was actually pro-private school, though I didn't attend any, before my wife and I did more research into the public schools here. We are currently looking at pre-schools for our oldest that also have language immersion...though we haven't made any commitments.

I agree that we would not be purchasing an X if we were considering private school.

 

[MikeC]

The thing about medicine is that one makes very little for a long time, then suddenly there is a large income jump which compensates for the years of being underpaid. At the inflection point, there is very little savings (more likely a lot of debt), yet the person has been working hard for a significant number of years and has likely already forgone a lot of things that people in other fields were able to indulge in. Sure, it's ideal to live like a resident for a few more years to optimize one's bank accounts - but at the same time, humans only live so long and the more of those years you can spend driving a Tesla, the better IMO. Clearly, the OP can afford an X given they will be bringing in $300k+/year and at current interest rates there is not a big penalty for financing 90%.

OP: I think once your wife has a signed contract, it won't be an issue. Without a contract, they will probably ask for two years of 1099 income (plus fellowship salary) to base it on. Depending on how much she moonlights between now and then, you may qualify based on that income. I purchased my car 7 months out of residency while working as an independent contractor full-time, but they definitely wanted to see that I had the contracts to show that I would be able to continue to work as an independent contractor.

 

[JohnSnowNW]

The thing about medicine is that one makes very little for a long time, then suddenly there is a large income jump which compensates for the years of being underpaid. At the inflection point, there is very little savings (more likely a lot of debt), yet the person has been working hard for a significant number of years and has likely already forgone a lot of things that people in other fields were able to indulge in. Sure, it's ideal to live like a resident for a few more years to optimize one's bank accounts - but at the same time, humans only live so long and the more of those years you can spend driving a Tesla, the better IMO. Clearly, the OP can afford an X given they will be bringing in $300k+/year and at current interest rates there is not a big penalty for financing 90%.

OP: I think once your wife has a signed contract, it won't be an issue. Without a contract, they will probably ask for two years of 1099 income (plus fellowship salary) to base it on. Depending on how much she moonlights between now and then, you may qualify based on that income. I purchased my car 7 months out of residency while working as an independent contractor full-time, but they definitely wanted to see that I had the contracts to show that I would be able to continue to work as an independent contractor.

Thanks, this is definitely useful information for us. I was hoping this would be a consideration, as it would mean we should have no issue being approved. Our total expenses are only half of her income, which is 100k+(including salary and moonlighting).

 

[tri335]

This is a great thread. Thank you to the OP. Being in training is really difficult and for a long duration you are putting off a lot of things such as saving, traveling that your friends may not have had to do because they were not in medicine. Along the way treating yourself (or your wife in this case) is really important to continue rewarding yourself for your hard work. I don't like to use YOLO but I do think that if you did the math with finances and debt repayment then I would say just go for it. Seem like you have been living within your means. My experience has been even with a influx of cash you will probably live for a while like you always have...even with a big quality of life improvement, the jump in financial cost to do that is relatively small in the setting of the larger salary increase. That's how I see it now that i've been out for a few years. I say go for it! However, the conservative side of me just says to wait until you sign a contract first. it'll make the loan part easier and i think its a nice compromise for balancing reward and waiting to ensure proper positioning financially. let us know what you do! gluck!

 

[bonaire]

Another thing overall for the Medicine lifestyle. The ACA has made a play to try to cut into the monies paid through the medical system. This may tighten the earnings potential of medical staff and the industry in general. Be careful to watch how ACA plays out and if being a doctor or working in the field of choice is not as rosy a lifestyle as it once was. Now, investing in health care in the last 3 years, I have found that it also pays off about the best in terms of financial investments from the side of stockholding (beats the S&P and almost all other sectors for multi-year returns). That is a possible indication of a bubble forming.

 

[JohnSnowNW]

This is a great thread. Thank you to the OP. Being in training is really difficult and for a long duration you are putting off a lot of things such as saving, traveling that your friends may not have had to do because they were not in medicine. Along the way treating yourself (or your wife in this case) is really important to continue rewarding yourself for your hard work. I don't like to use YOLO but I do think that if you did the math with finances and debt repayment then I would say just go for it. Seem like you have been living within your means. My experience has been even with a influx of cash you will probably live for a while like you always have...even with a big quality of life improvement, the jump in financial cost to do that is relatively small in the setting of the larger salary increase. That's how I see it now that i've been out for a few years. I say go for it! However, the conservative side of me just says to wait until you sign a contract first. it'll make the loan part easier and i think its a nice compromise for balancing reward and waiting to ensure proper positioning financially. let us know what you do! gluck!

Yeah, if we didn't live the way we do, we wouldn't even be thinking about it. A signed contract aside, if she were to moonlight exclusively, and for only 3 days a week, her salary would be greater than she'd be making in her specific specialty. Of course, she's not guaranteed 3 days/wk, when only contracted to work at 3 hospitals, currently. So, we're not too concerned about financing the car, but perhaps waiting would allow us to get a bit better deal/financing option.

Of course, the wife doesn't want to wait...and it's difficult to ask her to when she's willing to work for it, and we have forgone fun expenditures for quite some time.

- - - Updated - - -

Another thing overall for the Medicine lifestyle. The ACA has made a play to try to cut into the monies paid through the medical system. This may tighten the earnings potential of medical staff and the industry in general. Be careful to watch how ACA plays out and if being a doctor or working in the field of choice is not as rosy a lifestyle as it once was. Now, investing in health care in the last 3 years, I have found that it also pays off about the best in terms of financial investments from the side of stockholding (beats the S&P and almost all other sectors for multi-year returns). That is a possible indication of a bubble forming.

Even with a cut, of say 50% to her base salary, we'd still be fine. Like I said, we have no desire to live extravagantly...and our reasons for purchasing an X are more utilitarian than anything else. Granted there are plenty of cheaper options out there.

I do understand what you're saying though.