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How Much Money Do Your Really Make

If someone asked me right now I wouldn’t have an accurate answer. I know how much I take home every 2 weeks but there is job related expenses which I am responsible for and depending on taxes I may owe some or get some back by the end of the year.

Most docs will answer with their gross income, highly inaccurate since taxes are usually every doc’s biggest expense. Sounds impressive but who are we impressing?

Let’s say I make $300k as my gross income. I would owe, at the very least, 1/3rd in taxes, assuming I was able to write off quite a bit.

So if I cleared $200k in one year I would be left with $16k/mo. That’s the meat of my income, $16,000 per month.

It’s a lot of money. In 2 months I would be taking home what some families make in a year.

If I have a mortgage and a car I would need to take around $5k off the top. This would account for car registration, gas and repairs and of course payments. The mortgage and home repairs, property taxes and insurances would take up the rest.

Now, left with $11k, I would need to focus on somewhere around $350k of student loans and perhaps a little bit of credit card debt. Paying the bare minimum I would have to take another $3k off the top, leaving me with $8k/mo.

This isn’t disposable income quite yet. Groceries, dining out, monthly dues, travel and entertainment expenses would eat into this for another $3k worth, bringing us down to $5k.

Then there is unexpected expenses, some licensing or last-minute expenses for various events in life. Let’s take another $1k off for that. Leaving us with $4k at the end of the month.

Ahh, disposable income, hello you sexy little thing. $4k a month of disposable income, that’s pretty fucking sweet.

Well, technically, we need to save for retirement so let’s take another $3k/mo off of that and we are left with $1k of truly disposable income.

My buddy makes $70k/yr as a computer programmer and he has right around $2k/mo of disposable income, after putting money into his retirement.

If course, the retirement advisers tell him that he needs less money for retirement than his doctor counterpart which makes no sense because they live in the same city … but that’s a whole other can of worms.

So if the doctor is living like a … doctor, making ‘$300k/yr’ but left with the same amount of disposable income as someone making $70k/yr then something is wrong.

The doctor is bleeding out cash, that’s what’s wrong. Sure, the doc family will be fine if they stash away $3k/mo for the next 30+ years. They may even vest in a pension program and have health insurance coverage from their medical group for life etc.

I guess the point which I’m making is that there is really isn’t much ‘take-home’ if you’re gonna live a doctor’s lifestyle before you’ve accumulated a doctor’s net worth.

Doing my research I found out that ‘doctors are rich’ didn’t really become part of the US lingo until the 70’s. Through the 80’s it remained true, doctors were making bank. Then HMO’s came in and curbed the greedy docs and the vocabulary describing docs stayed.

More docs started chasing the doctor lifestyle not realizing that few doctors, truly few in comparison to the total number of docs out there, are making that fat dough.

Accumulate your wealth and then start living a lavish lifestyle or spend your life chasing this illusive dream.

Alternatively, you could live a middle class lifestyle on an upper-middle-class income … that’s an easy way to build wealth.

 

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