Income and Lifestyle

[booradley83]

Considering that most docs want to life in an area such as Toronto or Vancouver..............................or at least most of the people that I know; how is it really possible to afford a decent lifestyle on an ABOVE-AVERAGE family doctor income?

Say I bill $350k, that's ABOVE- AVERAGE...............take home after a 25% overhead, and minus fees/licensiing/malpractice is ~250k PRETAX-.  Post-tax I'm looking at $153k or $12.5k per month:

 

Expenses:

1. Considering that even a 1/2 livable POS house is $1 million - that's $4500 in mortgage payments

2. Fixed costs - Utilities/insurance/property taxes/car insurance/payment - $3k  - This assumes 2 reasonably nice cars for a husband/wife couple.

3. Spending money - $2000 (THIS IS EXTREMELY FRUGAL FOR MOST DOC FAMILIES)

4. Savings  - $2000

 

And this isn't even including things like childcare/vacation/RRSP etc................

 

Is it just me, or does it seem like 12.5k ISN'T MUCH AT ALL NOWADAYS...............

 

[#YOLO]

you're right. medicine is a terrible return on investment. especially with stagnant salaries. 

[booradley83]

I'm not comparing docs to other 'average workers' who pull in 50-60k a year and rent a room or buy a $240k condo.  I'm just saying; with the tax system the way it is, and the runaway cost of living in these cities...................doesn't seem like much...........

[Lactic Folly]

Are you using a corporate tax rate? A spouse who doesn't work outside the home?

[maplesyrup]

10 minutes ago, booradley83 said:

I'm not comparing docs to other 'average workers' who pull in 50-60k a year and rent a room or buy a $240k condo.  I'm just saying; with the tax system the way it is, and the runaway cost of living in these cities...................doesn't seem like much...........

Just here to comment on your awesome username. Nice!

[1D7]

Live frugally and invest well. You can buy houses in the GTA at sub-1 million dollar prices if you're willing to live in the periphery of the GTA.

[10pcnuggets]

I was born and raised in central Toronto. All of my friends living in the city within similar professions (ie not in medicine, making ~65-80k salaries 3 years post grad) live in apartments or rented condos in downtown Toronto. You can't have everything - if you are a young professional living in Toronto on a single-person income, you are most likely not going to be able to afford to put a downpayment on a house until you have put away some savings (and even then it may be hard). If you want an affordable larger home, you need to move to the suburbs. 

Also, what is wrong with a $240k condo?! 

[booradley83]

1 hour ago, Lactic Folly said:

Are you using a corporate tax rate? A spouse who doesn't work outside the home?

Why would you use a corporate tax rate?  The corporate tax rate is FOR MONEY LEFT INSIDE THE CORPORATION.  Any money you want to use is taxed at regular income............

[Aconitase]

Most people that are docs live mostly outside Toronto in the GTA (ie - Vaughan, Mississauga, Oakville) to get a bigger house for less money. Buying in Rosedale isn’t really an option for most GPs. 

 

In in terms of paying for it I think you have missed a few points:

 

-does your partner work? Most stay at home partners married to docs are usually closer to 500k+ ones. 

 

-2000k per month spending is fairly high for a young couple without kids  no reason to spend that much if you saving for a house 

 

-do you have help from parents?

 

assuming you have a partner pulling in 80k a year, cut spending a bit and ask parents for a little help it isn’t that hard if you choose to live a little outside the core  

 

-

 

[shematoma]

At the end of the day, being a physician, especially in primary care, doesn't make you wealthy. If you expect to have your choice of living wherever you want (urban Toronto or Vancouver) owning a house with kids and a spouse who doesn't work then family medicine probably won't cut it. Maybe you can consider urology or cosmetic dermatology.

Many people are content living in 2nd or 3rd tier cities, or even smaller towns where living costs are low. They might even be better places to raise kids.

Or maybe you could be one of those "doc families" that doesn't need to spend lavishly. Maybe one car is enough when you live in a big city, and maybe it can be a Toyota.

[Birdy]

Easy: don’t live in a big city. 

I’m looking at having a really, really nice lifestyle on a reasonably average family doctor income down East, and I have a big family. We’ll be looking at very nice homes around $350k-$400k in the areas we’re considering settling once I’m done residency. 

[rmorelan]

11 minutes ago, shematoma said:

At the end of the day, being a physician, especially in primary care, doesn't make you wealthy. If you expect to have your choice of living wherever you want (urban Toronto or Vancouver) owning a house with kids and a spouse who doesn't work then family medicine probably won't cut it. Maybe you can consider urology or cosmetic dermatology.

Many people are content living in 2nd or 3rd tier cities, or even smaller towns where living costs are low. They might even be better places to raise kids.

Or maybe you could be one of those "doc families" that doesn't need to spend lavishly. Maybe one car is enough when you live in a big city, and maybe it can be a Toyota.

even then it won't be as quick as people seem to think - income is not the same as wealth after all. Plus it isn't like you can automatically chose urology or dermatology either - very smart hard working people have about a 50% chance for that.  Plus you have to work a long time as a specialist to make up for the extra training time for the different types of training. Say 350Kish (for most other fields) vs 250K in income  with the cost of an extra 4-5 years of training + interest incurred etc. Plus the lifestyle cost some would consider of doing 4-5 more years  as a resident/fellow, and they don't usually start their careers as cleanly (as a personal example rads often only get 70% of max partnership money to start often and have to work their way up). That can take a decade or more to catch up (and that assumes no saving by the family med doc, which is unlikely). If the family doc lives on the save income as the specialist does during those 4-5 years - basically making them both have the same income over the same period living like residents/fellows then often  they never really catch up at all by the math.  

Of course it is more than hard to say you would be poor either - compared to most that people leaving in that city 250K a year is a lot of money. 

You always have to chose between spending or saving - or in other words wealth vs income. Income effectively is what you spend, wealth effectively is what you don't. 

[shematoma]

8 minutes ago, rmorelan said:

even then it won't be as quick as people seem to think - income is not the same as wealth after all. Plus it isn't like you can automatically chose urology or dermatology either - very smart hard working people have about a 50% chance for that.  Plus you have to work a long time as a specialist to make up for the extra training time for the different types of training. Say 350Kish (for most other fields) vs 250K in income  with the cost of an extra 4-5 years of training + interest incurred etc. Plus the lifestyle cost some would consider of doing 4-5 more years  as a resident/fellow, and they don't usually start their careers as cleanly (as a personal example rads often only get 70% of max partnership money to start often and have to work their way up). That can take a decade or more to catch up (and that assumes no saving by the family med doc, which is unlikely). If the family doc lives on the save income as the specialist does during those 4-5 years - basically making them both have the same income over the same period living like residents/fellows then often  they never really catch up at all by the math.  

Of course it is more than hard to say you would be poor either - compared to most that people leaving in that city 250K a year is a lot of money. 

You always have to chose between spending or saving - or in other words wealth vs income. Income effectively is what you spend, wealth effectively is what you don't. 

I hear you. I think OP is lamenting the fact that his/her income in FM isn't going to afford a fabulous lifestyle in an urban top tier city - and they don't seem particularly frugal, wanting "2 decent cars," $3k a month on "fixed" costs and $2k+ in discretionary spending. People who burn through that kind of monthly cash flow should go for derm/uro or bust.

[member_225]

I don't really understand why it seems like 12.5k/month isn't much at all. You yourself told us where the money is going! If those docs want to live in Toronto or Vancouver, then they have to compromise somewhere, most probably their spending outside of housing. 1 million can buy a mansion or it can buy a small house. Move further out, spend less money on a house, and you won't have to live as frugal. Problem solved. 

[Aconitase]

1 hour ago, shematoma said:

I hear you. I think OP is lamenting the fact that his/her income in FM isn't going to afford a fabulous lifestyle in an urban top tier city - and they don't seem particularly frugal, wanting "2 decent cars," $3k a month on "fixed" costs and $2k+ in discretionary spending. People who burn through that kind of monthly cash flow should go for derm/uro or bust.

Agreed. OP clearly not wants to live large but not willing to compromise anywhere 

[rmorelan]

17 hours ago, booradley83 said:

Considering that most docs want to life in an area such as Toronto or Vancouver..............................or at least most of the people that I know; how is it really possible to afford a decent lifestyle on an ABOVE-AVERAGE family doctor income?

Say I bill $350k, that's ABOVE- AVERAGE...............take home after a 25% overhead, and minus fees/licensiing/malpractice is ~250k PRETAX-.  Post-tax I'm looking at $153k or $12.5k per month:

 

Expenses:

1. Considering that even a 1/2 livable POS house is $1 million - that's $4500 in mortgage payments

2. Fixed costs - Utilities/insurance/property taxes/car insurance/payment - $3k  - This assumes 2 reasonably nice cars for a husband/wife couple.

3. Spending money - $2000 (THIS IS EXTREMELY FRUGAL FOR MOST DOC FAMILIES)

4. Savings  - $2000

 

And this isn't even including things like childcare/vacation/RRSP etc................

 

Is it just me, or does it seem like 12.5k ISN'T MUCH AT ALL NOWADAYS...............

 

A few more points I guess - because a lot the numbers above are not far off - I mean if you had the 200K downpaymetn for that 1 million house, which would take time of course, then yeah at the rates today for a 25 year mortgage it would be around 4K a month. 

Reasonably nice cars is subjective of course - the overall total is not that far off - estimated at 9K a year per car (cars are very expensive ha) according to some standard sources (CAA for instance). that is taking 50% of the total for fixed costs right there. 

Your 2000 of spending money - hard to place where that is in terms of frugal as by your very own numbers you cannot really have much more than that being spent etc. Out of that total I would suggest is your vacation etc. In this model I would suppose there is no child care as you mention a 2 person head of household but no income from the other side. Something would probably have to give there ha - and those are time limited expenses there as well. 

Your RRSP you mention above would be done in the savings for 4. most likely. Since you would get the tax deduction you would spend 12K a year effectively there to get 24K invested (53% tax bracket after all). You would also max out your TFSA and have roughly 6K a year in non registered accounts (assuming you don't leave some of this all in the corp which is often down for more overall tax efficient savings/total return etc. 

By the way that roughly after 25 years - let's say that is an average work life - would be about 2.5 million dollars. A lot of bad assumptions there as well as inflation is not covered, but also you probably would investment more over time and your salary would also rise due to inflation, and you pay off the house in 25 years at that rate as well. Put the mortgage payments then into the investment pool for the final rush to the finishing line, and you retire at age 60 with roughly 6 million (or 3ish million with inflation) after 35 years. That would give you a permanent income of 120K in today's money (double that in actual 35 years from now money) a year indexed for inflation forever basically give or take (which is what you are earning all a long as you would no longer need to save at that point). This doesn't take into consideration your house as another investment either (which would be worth millions as well). 

So....that isn't really all that bad. It isn't life of the rich and famous level but under that most people would retire relatively early, have no drop in income in retirement, live in one of most expensive places in the country, and have a probably good lifestyle all a long (as you outlined above). This is all without doing anything particularly special (saving in the corp, trying to run up higher income as often outlined on the form, in fact you are working normal family doc hours, 2 reasonable cars, spending 2K a month frugally on whatever etc). 

It does assume you know what to do with the 2K a month investments and avoiding all those basic traps (like high MER mutual funds). 

I guess I did all that math to say - some would say you aren't saving enough, or you are overspending. To many people that might actually be true - I personally couldn't do that level of spending and not be twitchy ha. But that is just me. Point is you came up with a pretty basic not super crazy overall spending map - I wanted to see where it end up. I am not particularly scared by the outcome, because time is a powerful multiplier of wealth.

[LittleDaisy]

17 hours ago, booradley83 said:

Considering that most docs want to life in an area such as Toronto or Vancouver..............................or at least most of the people that I know; how is it really possible to afford a decent lifestyle on an ABOVE-AVERAGE family doctor income?

Say I bill $350k, that's ABOVE- AVERAGE...............take home after a 25% overhead, and minus fees/licensiing/malpractice is ~250k PRETAX-.  Post-tax I'm looking at $153k or $12.5k per month:

 

Expenses:

1. Considering that even a 1/2 livable POS house is $1 million - that's $4500 in mortgage payments

2. Fixed costs - Utilities/insurance/property taxes/car insurance/payment - $3k  - This assumes 2 reasonably nice cars for a husband/wife couple.

3. Spending money - $2000 (THIS IS EXTREMELY FRUGAL FOR MOST DOC FAMILIES)

4. Savings  - $2000

 

And this isn't even including things like childcare/vacation/RRSP etc................

 

Is it just me, or does it seem like 12.5k ISN'T MUCH AT ALL NOWADAYS...............

 

I think that you will have to compromise somewhere: 

1) Live in suburbia with a cozy house

2) Live in downtown Toronto with an affordable house, but cut down spending elsewhere 

3) Consider going to specialties that pay well----> dermatology, plastic surgery, surgical specialties...Once again, the job market for these specialties are quite saturated except for dermatology, but it is super competitive to get in.

One of the reason that a lot of new grads in FM choose to work elsewhere than DT GTA or Vancouver, is that the cost of living is very high, and perhaps more money savvy to practice in area with high needs or peripheral GTA to have a more comfortable lifestyle than being locked down to a high down payment 

[goleafsgochris]

If you want to live downtown: You need a starter home.  That can be a 500k condo.  Once you pay a decent chunk of that, and it goes up in value, get a townhouse or a nicer condo.  Once you pay a chunk of that off, go for a bigger home, etc.  Rosedale/forest hill/bridal path is out of reach for GPs but almost all other areas aren't unless you want the nicest house on the block.  

Source: am a neurologist 2 years out, who makes more than a family dr but not a TON more (325-350k this year likely).  Bought a condo for 600k, increased in value to 900k, my partner and I just sold it and bought another condo a few months ago for 1.1M.  Once you have that a 1.5M townhouse isn't out of reach.  If you want to live downtown you need to be willing to sacrifice some size/space, even if youre wealthy.  Of course as others suggested the option is there to move to the burbs, but I don't want to do that--I frankly don't need the space, and although you may disagree if I wanted a big suburban house I would have been a teacher and made 70k and not gone through 13 years of school.  You will have options if youre a GP, but yeah it wont be a house in downtown Toronto the size of a big house in the suburbs unless you're netting CEO wages.

 

Edit: LittleDaisy pretty much summarized this above with points #1 and #2 haha

[indefatigable]

2 hours ago, LittleDaisy said:

3) Consider going to specialties that pay well----> dermatology, plastic surgery, surgical specialties...Once again, the job market for these specialties are quite saturated except for dermatology, but it is super competitive to get in.

 

In terms of raw earnings - ophthalmology and radiology are the two big ones.  Both of them have a lot of variance within the specialties and dominate the infamous top 100  billers (granted predominantly private practitioners aren't included - like some plastic surgeons and cosmetic dermatologists).  For comparison example, the salaried radiologists  at SickKids earn 450K year (after expenses/overhead with pension included).  In terms of raw billings before overhead & pension deduction, that would be a very high number - but SickKids is probably paying their radiologists the market rate.  Ophthalmology also has some very high earners with some very high volume surgery clinics.  I know some radiologists work privately as well.  I've yet to meet a dermatologist earning $$$ - don't doubt they exist, though!
 

[maplesyrup]

1 hour ago, tere said:

In terms of raw earnings - ophthalmology and radiology are the two big ones.  Both of them have a lot of variance within the specialties and dominate the infamous top 100  billers (granted predominantly private practitioners aren't included - like some plastic surgeons and cosmetic dermatologists).  For comparison example, the salaried radiologists  at SickKids earn 450K year (after expenses/overhead with pension included).  In terms of raw billings before overhead & pension deduction, that would be a very high number - but SickKids is probably paying their radiologists the market rate.  Ophthalmology also has some very high earners with some very high volume surgery clinics.  I know some radiologists work privately as well.  I've yet to meet a dermatologist earning $$$ - don't doubt they exist, though!
 

my dermatologist is making mad $$$. She sees one patient every five minutes, doesn't do procedures, and therefore bills like crazy. She also requires a two week followup, whether you need it or not, and I had to sign a form saying I'd be back within two weeks before I'd even seen her.

[indefatigable]

11 minutes ago, maplesyrup said:

my dermatologist is making mad $$$. She sees one patient every five minutes, doesn't do procedures, and therefore bills like crazy. She also requires a two week followup, whether you need it or not, and I had to sign a form saying I'd be back within two weeks before I'd even seen her.

Very high volume!  Procedures and surgeries pay more, though, so if you really want max $$$ - it's probably better to go for something like ophtho.. or maybe read a lot of scans.  Even with dermatologists like yours, not too many crack the top 100 biller list.  

[maplesyrup]

11 minutes ago, tere said:

Very high volume!  Procedures and surgeries pay more, though, so if you really want max $$$ - it's probably better to go for something like ophtho.. or maybe read a lot of scans.  Even with dermatologists like yours, not too many crack the top 100 biller list.  

I bet, my dad had glaucoma surgery, and his optho was insanely busy. Has been each time I've been in there. No less than 30 patients at a time, and all procedural. If I liked eyeballs, optho would be the way to be.

[booradley83]

This isn't an opulent lifestyle...........my point is that I expected life to be a lot easier after becoming an attending...............

Let's break it down a little further:

Expenses:

1. Considering that even a 1/2 livable POS house is $1 million - that's $4500 in mortgage payments

2. Fixed costs - Utilities/insurance/property taxes/car insurance/payment - $3k  - This assumes 2 reasonably nice cars for a husband/wife couple. (Toyota Sienna - $700 monthly; Toyota Camry $480 monthly; Car insurance - $600 monthly; Internet/tv-$160 Cell phone - $160 - Water - $40 Electric/gas - $300  Sewer/maintainence/miscellaeous - $600, car gas/maintaince-$400-500)  - WE ARE RIGHT OVER $3500

3. Spending money - $2000 (THIS IS EXTREMELY FRUGAL FOR MOST DOC FAMILIES) - Groceries/Food - 500-$1500, clothes/household essentials $200, 

4. Savings  - $2000 - FINE LET'S DO THE RRSP; THIS IS ESSENTIALLY NOTHING HERE............

 

HOW MUCH DO YOU HAVE LEFT OVER?  WHAT ABOUT CHILD CARE? WHAT ABOUT VACATIONS? WHAT ABOUT REAL SAVINGS?  WHAT ABOUT A FEW SPLURGES HERE AND THERE?

[booradley83]

3 hours ago, goleafsgochris said:

If you want to live downtown: You need a starter home.  That can be a 500k condo.  Once you pay a decent chunk of that, and it goes up in value, get a townhouse or a nicer condo.  Once you pay a chunk of that off, go for a bigger home, etc.  Rosedale/forest hill/bridal path is out of reach for GPs but almost all other areas aren't unless you want the nicest house on the block.  

Source: am a neurologist 2 years out, who makes more than a family dr but not a TON more (325-350k this year likely).  Bought a condo for 600k, increased in value to 900k, my partner and I just sold it and bought another condo a few months ago for 1.1M.  Once you have that a 1.5M townhouse isn't out of reach.  If you want to live downtown you need to be willing to sacrifice some size/space, even if youre wealthy.  Of course as others suggested the option is there to move to the burbs, but I don't want to do that--I frankly don't need the space, and although you may disagree if I wanted a big suburban house I would have been a teacher and made 70k and not gone through 13 years of school.  You will have options if youre a GP, but yeah it wont be a house in downtown Toronto the size of a big house in the suburbs unless you're netting CEO wages.

 

Edit: LittleDaisy pretty much summarized this above with points #1 and #2 haha

The only problem with this theory is that...............even if you keep 'trading up', your mortgage will still increase even marginally every time............also, don't expect that Toronto housing boom to continue............it's been BUST since last year................

[rmorelan]

40 minutes ago, booradley83 said:

This isn't an opulent lifestyle...........my point is that I expected life to be a lot easier after becoming an attending...............

Let's break it down a little further:

Expenses:

1. Considering that even a 1/2 livable POS house is $1 million - that's $4500 in mortgage payments

2. Fixed costs - Utilities/insurance/property taxes/car insurance/payment - $3k  - This assumes 2 reasonably nice cars for a husband/wife couple. (Toyota Sienna - $700 monthly; Toyota Camry $480 monthly; Car insurance - $600 monthly; Internet/tv-$160 Cell phone - $160 - Water - $40 Electric/gas - $300  Sewer/maintainence/miscellaeous - $600, car gas/maintaince-$400-500)  - WE ARE RIGHT OVER $3500

3. Spending money - $2000 (THIS IS EXTREMELY FRUGAL FOR MOST DOC FAMILIES) - Groceries/Food - 500-$1500, clothes/household essentials $200, 

4. Savings  - $2000 - FINE LET'S DO THE RRSP; THIS IS ESSENTIALLY NOTHING HERE............

 

HOW MUCH DO YOU HAVE LEFT OVER?  WHAT ABOUT CHILD CARE? WHAT ABOUT VACATIONS? WHAT ABOUT REAL SAVINGS?  WHAT ABOUT A FEW SPLURGES HERE AND THERE?

At current mortgage rates that is 4K (because to own that house you need a down payment - ideally 20%. More of course if you are just jumping into at crazy low amount down. 

1500 a month on food? Guess there is a lot of eating out there?

Leasing two cars - I mean convenient but leasing is always going to be more expensive. Particularly short term leasing (2-3 years). 

effectively 36K saved a year not nothing I would say. 

Where is your spouse in all of this? Obviously a second income, even a modest one would solve most of the problems you mention above. If not working, why is child care needed? 

(one thing not talked about is loan repayment if required - as much as I am saying things are reasonable here, that is an expense that cannot be ignored of course if present)

You are absolutely right that it is a very expensive city, and probably in a housing bubble on top of that or close to it. I would agree that if wealth is your primary goal then living there isn't the most logical thing to do. Still In TO the vast majority of people are not earning anything even remotely close to 250K a year. There lives are not terrible deprived wastelands. 

Some of this is philosophy and those no right or wrong answer. I still say with your model above you will need up retiring earlier than most, and having no loss of income in retirement. That isn't horrible to say the least. Also the mortgage payment will likely fall relative to your income over time (it will always be 4K a month, your income will not stay at 12.5).  Over time things will get easier.