For an audio version of this post, please click on the speaker icon (top left).

 

 

Welcome to this episode of The Doctor’s Bill (Can You Afford It?).

Wonder if you should buy that big ticket item or not?

Well here’s your chance to have a wealth management expert, Johanna Fox Turner, of Fox & Company Wealth Management analyze your overall finances and make a final verdict on whether or not you can indeed swing for the fences and splurge on yourself or whether you should just walk away.

[Johanna and I have no current financial relationship]

Disclaimer:  This is not meant to be a substitute for paid professional advice but only meant to serve as a suggestion/guideline.

 

The following are the details from our submission form:

 

Item/Experience Desired:

Paying children’s complete college/grad school bill (they both plan on college and medical school).

Approximate Cost:

$800,000

How do you plan on paying for this item/experience?

Savings and income over the upcoming decade

On A Happiness Scale of 1-10 (10 Being Happiest), rate what this item/experience will do for you A) Short Term and B) Long Term:

10

Age:

46

Gender:

Male

Occupation:

Physician Business Owner (Family physician)

Wife is a pharmacist

Marital Status:

Married

Any Children (If so please provide ages)?

2: ages 14 and 16

How Many Years Till Planned Retirement?

21

What is your total household income?

$1.2M (all sources: business profits, real estate profits, interest income)

State Income Tax (if Any)

$0

What is your % Annual Savings Rate? (savings/gross income)

50% of gross pre-tax income

Estimated Annual Living Expenses (Current):

$170,000

Estimated/Desired Annual Living Expenses (In Retirement):

$120,000

Market Value of Primary Home [For Renter =$ 0]

$2M

Additional Real Estate Holdings Equity (Market Value-Debt):

$3M  ($4.5M-$1.5M loan @ 3.5% 10 year fixed)  with rental income about $360k before debt service.

Current Liquid Asset Value (Savings, Checking, Etc.):

$1.8M (savings accounts and 12-24 month CDs (2.4-3% APY)

Retirement Assets (401k/IRA/HSA):

$1.8M

Brokerage Account (Taxable):

$250k

Miscellaneous Asset Value (Please elaborate):

$4M (business)

Mortgage Balance:

$360k (2.75% 5 year arm, resets in November to over 5% so plan to pay off in full from savings at that point)

Student Loan Balance:

$0

Additional Liabilities:

$49k credit cards (0%); 75k auto loans (2%)

Unfunded Future College Costs & Years Left Till Needed:

$800k.   1/2 needed after 2.5 years, 1/2 needed after 4.5 years.

Other Unfunded Goals and Years Remaining (Today’s Dollars):

$0

Any other pertinent information not addressed?

I am a family physician with essentially no financial training other than that which is self-taught or instinctual.

I am a bit paranoid about emergency funds and therefore currently enjoy having more than 1 year reserves to cover a major downturn.

I don’t like the currently lofty market valuations and, although market timing is generally not recommended, I would consider investing some of this money after a significant downturn so I catch the equivalent of a 2009 market bottom, otherwise I see a Japan like stagflation coming to the US over the next decade.

Business and commercial real estate generating roughly $2.5M with expenses roughly at $1.2M

Have $22k/mo loan debt which will be paid off within 8 years.

We tithe 10% of our post tax income ($80k).

The youngest child should be done with educational expenses after 13 years.

If we are still doing well would like to pay for their wedding and help with their first homes.

Also not sure if I should let them take out some debt so they have some “skin in the game” even if we ultimately decide to pay it off for them.

 

 

 

 

So does this family doc have what it takes to give his children a full ride to both undergraduate and graduate school?

Or does gifting his kids higher education ends up lowering his retirement outlook?

Click on the Doctor’s Bill Image and find out the verdict:

 

 

After you see the verdict please come back to this page and comment whether you agree or not with the decision (and no cheating by looking at comments first!)

 

 

 

If you would like to submit your own Doctor’s Bill request please fill out the submission form.

 

Note:

If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”

Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.