Marriage & Children

16 Weeks of Maternity Leave

Having a baby and becoming a mom is stressful. There's no denying that. Planning for a maternity leave can be stressful, too. If you're expecting your first baby (or even a second or a third!), you might be wondering what a longer maternity leave looks like. Here's how I spent (and funded!) 16 weeks of maternity leave.

A Word About Stress

Everyone handles stress differently. No two births are the same. There are so many variables when it comes to maternity leaves.

For me, well, my leave was pretty stressful.

There was moving and almost dying along the way. At some point (OK, multiple points), I was overwhelmed and probably met criteria for postpartum anxiety. I spoke to a psychiatrist friend who pointed out that I pretty much experienced all the top life stressors except death of a loved one (and let's keep it that way!) within a 4 month period:

  • New baby (especially the first one)
  • Moving
  • New Job
  • Serious illness

She also pointed out that what's especially hard for new mothers is that no one is taking care of us. We are always taking care of baby (and spouse).

A Look at 16 Weeks of Maternity Leave

I feel lucky that my mother lives nearby enough and has been with us most weeks.

Breakfast of Champions – home cooked Korean food

So, I decided to give myself a pass on pretty much everything. For me, that meant a lot of stopping.

I stopped worrying about…

  • Posting consistently on this blog.
  • My new postpartum figure (well, kind of).
  • Every single bit of what I was eating.
  • Spending too much especially if it made my life easier during this time.

I am still trying to worry less about the not fully unpacked apartment.

Oh, and I finally figured out the biggest fallacy of “maternity leave” — nothing gets done despite not “going to work.”

Funding a Longer Maternity Leave

Throughout my leave, I was often asked how are we able to afford taking 16 weeks of mostly unpaid leave.

Let's back up and actually look at my leave. I took 16 weeks of leave, and it was only very partially paid. 6 weeks paid at my old base salary was all I got.

So how did we swing the full 16 weeks of maternity leave?

The answer is simple: We lived below our means, and we saved for it. Remember, you have about 9 months to save for maternity leave!

Let's go back to the idea of living below our means. In other words, we do not need our whole paycheck to get by. While I was pregnant, I stopped making extra payments to loans in favor of saving for this time.

Then, I had a cushion to pay for my maternity leave.

It definitely didn't feel good to watch my checking account balance only decrease during my leave, but seeing his face daily more than made up for it.

What are you looking at?

Final Thoughts on 16 Weeks of Maternity Leave

Isn't this what it's all about, Moms? I hope everyone about to have a baby can have the freedom to spend more than the typical 4-6 weeks of doctor maternity leave.

Look hard at your budget while your expecting, and see what you can do to save a bit extra. Even if you can't fund 16 weeks of leave, anything extra counts. You won't regret it.

What do you think of funding a longer leave? Comment below!]]>

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"Follow the trail of blood"

We were at my parents' in NJ when the bleeding started. My first call to the on-call OB was met with reassurance. “One episode of bright red bleeding + clots is ok.” Except it quickly became 4-5 episodes in < 1 hour. The next call – “Go to the nearest ER.” Except that I wanted to be at my hospital with my doctors. I felt ok and the bleeding was intermittent so we took a chance and decided to head to Long Island. Google maps said it would take 1 hour. So off we went. We left Eggy home with grandma. We let my OB's office know we were on the way. I double diapered myself and brought chucks for the ride. I brought my donut pillow to sit on (3rd degree tear …). The last 20 minutes or so were scary. I started bleeding profusely and constantly. I bled through the two diapers, onto the chucks, onto the donut pillow, onto the seat and seat belt. I tell M he may get rich sooner than planned … But I feel fine. I check my pulse, seemed “normal”. We roll up to the ED entrance. The security guard immediately puts me in the wheelchair as blood is spilling out of the passenger seat. M goes to park. I get wheeled into triage and the nurse starts to do intake and looks at the blood pooling below me, “I'll register you later…” then wheels me into the ED directly into a trauma bay – “Crit B”. M parked and when he arrived at the ED entrance looking for me the guard says “Follow the trail of blood.” The usual happens. Vitals are taken. I'm slightly tachy. My BP is high as my body is compensating for the blood loss. 2 x 18 gauge IVs are placed quickly. Blood is sent. My on-call OB arrives. An ultrasound of my uterus is done. 1 unit blood was hung pretty quickly as I am whisked to the OR for emergent D&C for presumed retained parts. I wake up in recovery. I'm getting a second unit. Anesthesia did a great job as I remember nothing and have no pain. The NP examining me notices my engorged breasts and gets me a breast pump. I'm not sure how I managed to pump but I did (with assistance from M). I end up in recovery for several hours since a 3rd unit of blood is given. I finally get wheeled into a room at ~ 4am. Two weeks prior to this, Eggy was born. This sweet moment only lasted a few minutes as I started hemorrhaging after the placenta was delivered (yes I've had not one, but two hemorrhages). After a few minutes of skin to skin with Eggy, I suddenly feel very cold and shiver uncontrollably. Things are a bit of a blur but I remember the room being suddenly full of doctors and nurses – the “OB crash team” so to speak. Another IV is placed. I see M in the corner holding Eggy. I'm getting shots to stop the bleeding. M later tells me blood was pouring out and was all over the floor. I turned white including my lips. I received two blood transfusions. After 5 blood transfusion in two weeks, it seems like more blood is foreign than mine. A 10lb sand bag is placed over my uterus to contract it. These recent experiences taught me that life is precious. I'm grateful I didn't have a home birth (was never a “dream” of mine). I'm grateful for the doctors (shout out to my OB – good friend from medical school) and nurses that took care of me.]]>

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Interviews with real women physicians – Rebecca

Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired from their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially!  So let's introduce our next woman physician rockstar – Rebecca.

Tell us about yourself:

I’m an Internal Medicine physician turned Stay-At-Home/Homeschooling Mom. I met my husband the first day of intern orientation, and we are celebrating ten years of marriage (and four children) this year. Since we met while we were both in the military, we move where the military sends us, which included eight years in one of the most expensive cities in the country and now the past three years in a Southern coastal city with a moderate cost-of-living. I graduated from residency eight years ago, but I only practiced clinical medicine for five years after residency. I trained in the military and served my three-year military commitment practicing general Internal Medicine, during which period my first two children were born. At that point, I got out of the military and took a part-time civilian job for two years, until the military moved my husband (and the rest of us) cross-country when my third child was five weeks old. I planned to take an extended maternity leave to get settled and enjoy this time with my kids, but I enjoyed it so much that I never wanted to go back. We then added one last child to the mix and started homeschooling. This was not my original plan when I started my medical training, but being debt free has given us the freedom to make this choice. When I’m not making lunch, reading Charlotte’s Web, making salt dough maps, and exploring fractions, I read, knit, visit historical sites, and volunteer for far too many community organizations.

Did you graduate with student loans? How much & what are the interest rates?

I had about $50k worth of loans from my first year of medical school (before I joined the military) that were consolidated at around 2%. My husband had no loans. I paid them off as quickly as I could, and finished paying them sometime before I graduated from residency. That may have been a financial mistake, given the low interest rate, but I wanted to be free of them.

Financial aspects of kids 

When did you have them?  

We have four kids, ages 4 mos to 7 years. My first child was born about seven months into my first attending job, and the second child less than two years after that. I was active duty military and only entitled to six weeks of maternity leave, but it was fully paid at my usual salary. I had my third child at the end of my part-time work, with no benefits, and my fourth child while I was already a SAHM.

Are you planning to fund their college expenses?

We feel strongly that we want to pay for four years of undergrad education for our four children because our respective parents did that for us. The finances on 16 years of college are daunting. We have 529 funds for each kid in each of the two states where we have a state income tax obligation and get a tax break. My husband transferred his post-9/11 GI Bill, which would cover the full cost of state school for one kid or about half the cost of private school for one kid, although that benefit is subject to political maneuvering and we are not counting on it. Knowing that we hoped for multiple children, we started funding the 529 account for my oldest as much as we could when he was born, and have been able to slightly increase the total amount saved with each kid, but our current contributions are only about double what we started, not quadruple. We currently save a little more than 10% of our take-home income for college and that puts us on track to be able to fully pay for all four kids for state schools. All the money in the 529s belongs to me, not to the child, and we treat it as a single pot of money to move among children as needed. We will reassess as they get closer to college and see if we will be able to pay for private schools as well, maybe via our taxable account, cash flowing from income, if grandparents offer any money – we’ll see, but even if we can just offer a state school, that would be fine.

What are your child care expenses?

Childcare for the first two was initially on the order of $1800/mo for center-based infant care, until we were able to get them off the waitlist into the subsidized center on base. That was about $1000/mo for two kids, so a significant savings. Childcare once we had kids #3 and #4 is either really cheap (free!) or really expensive (the entire amount of my potential wages). We decided on center-based care because we were more comfortable with a group of caregivers instead of a single caregiver, cost, and the availability of on-base care with hours that worked well for our usual schedules.

Financial aspects of marriage

How and why I became a SAHM – I had no flexibility with the length of my maternity leave or my work hours while I was active duty. When we learned that we would be moving cross-country with a 4.5yo, a 2.5yo, and a newborn, I decided to take advantage of the last year before my oldest would start kindergarten and keep everyone home with me and enjoy exploring our new city. It was significantly more satisfying (and more fun) than seeing patients and filling out pre-auths for generic drugs. While I liked practicing medicine before I had kids, I loved staying home with them. Part time work was not the best of both worlds for me; it just made me feel like a bad doctor and a bad mother. Once I paid for taxes and childcare and funded my retirement account, I was only bringing home about $500/month, which we haven’t particularly missed. I’ve managed to replace some of the solo 401(k) contributions by picking up some consulting work. Financially, staying home was a wash when we had three kids; now that we have four, I’m saving money by not working. Since I was already staying home, we decided to homeschool kindergarten to maintain flexibility in our family schedule when my husband was deployed. Homeschooling proved to be a wonderful fit for our whole family, meeting the academic and social needs for our children better than we feel any of our local schools would. At this point, with lots of soul searching, I decided that – barring a major change – I don’t want to return to clinical practice while my kids are young, so for a good decade or so. I maintain my licensure and board certification, but if I return to clinical practice, I plan to do a formal re-entry program. If we don’t need the money, I might become a park ranger instead.

Are you married?

Being married and having finances is the key to our financial lives, especially as a one-income family. This is the only marriage for each of us, and the only children we have are ours together. We met at intern orientation, and married just over a year later. We were both military physicians of the same rank, without significant assets and with only a relatively small amount of debt from medical school and a car loan.

Did you get a pre-nuptial or post-nuptial agreement?

We lived in a community property state and did not get a pre-nup or a post-nup, for both religious and practical reasons.

Do you and your husband agree on finances?

We combined all our (non-retirement accounts) since we married and consider all of our money “ours.” Originally we shared responsibility for paying bills and managing money, but I took over all the financial management during my husband’s first deployment, and I have continued to manage all the finances since then. In general, we have similar (but not identical) attitudes towards spending and saving. We used to budget by the method of “pay ourselves first” and then save whatever was left-over at the end of the month, but started formal budgeting prior to my getting out of the military. We use YNAB (You Need a Budget), and now that we account for every penny, we allocate each spouse a personal/hobby budget that rolls over from month-to-month. I do about 80-90% of the spending since I do all the spending for the household and 5/6 of the people in it. My husband likes to complain about his “allowance,” but admits that he is in agreement with the plan and just likes giving me a hard time about it. My husband does not participate in the day-to-day budget reconciling or financial management, but we sit down for budget meetings every 1-2 months.

General Finances

What’s your FI (financial independence) number? 

We haven’t fully determined our number. There are several big unknowns that won’t be determined for the next 4-10 years, such as where we’re going to live when we get to pick instead of the military, and whether or not my husband stays in long enough to qualify for a pension. Our expenses will likely not decrease significantly with retirement, and may even increase. We currently have no health care expenses, we are not yet building equity in our forever home, and a good portion of my husband’s compensation is a tax-free housing allowance. Our annual expenses, after taxes and retirement contributions (but continuing college savings) are right around 100k, so at 25x expenses, our number would be 2.5mil, which does not sound like enough money to me at all. At 40x expenses, the number is 4mil, which sounds more reasonable. I will not consider us FI if we aren’t able to pay for college for the kids, and probably wouldn’t feel FI, regardless of account balances, until all the kids are through college and financially independent themselves. The kids should all be through college a few years before we hit age 60, but we are on track to have the money a good 5-10 years before that. We’ll have to see.

Who handles the finances in your relationship? Are you DIY or do you have a financial advisor? 

We have always done it ourselves. We both started with a solid grounding in the basics of saving and investing from our parents, but I’m more interested in the topic than my husband. Generally, I keep an eye on things and do the research and then we discuss before making any commitments. Because we started young when things were simple, as we’ve added complexity with more marriage, more investments, children, 1099/Schedule C, homeownership, etc., I’ve only had to learn one or two more things per year to manage the finances and do our taxes.

What is your net worth?  

Our net worth, including an estimated $50k of home equity is about $950,000. If I could include the 529 accounts, it’d be a nicer, rounder number with an extra zero.

How are you saving for FI/retirement?

My dad gave kitchen-table lessons about the merits of passive low-cost indexing from the time I was about 10 or 12, and we have continued that trajectory. We essentially have a Bogleheads 3-fund portfolio replicated across 2 TSP accounts (government 401k), 2 Roth IRAs, 2 SEP-IRAs, and 1 solo 401(k). We max out my husband’s TSP at 18k/yr, both Roth IRAs (we are comfortably under the limit for being able to make direct, instead of backdoor, Roth IRA contributions), and have SEP-IRAs from prior 1099 work. I contribute all my consulting money, minus required FICA taxes, as my employee contribution to my solo 401(k), and may max it out this year although I haven’t made enough to do in prior years. We have a decent taxable account, but have only been able to contribute to this irregularly as our family and expenses have grown. All told, depending on how much 1099 income we have in a year, we are saving 38-45k/yr in retirement accounts, which is 25-30% of our pre-tax income and puts us on track to retire between 50 and 60, depending on what we decide our FI number is. Our asset allocation is 60% domestic stock, 30% international stock, 10% bonds, and 0.5% REITs. The REITs are new in my new solo 401(k), and I’m still contemplating whether I think the added diversification is worth the loss of simplicity, which is why I’m not including it in any rebalancing, just adding my solo 401(k) money there. I rebalance annually in March, and generally rebalance by changing the allocations for incoming new money rather than selling and buying, unless there’s a variance of more than 5% from my target asset allocation.

One thing you wish you knew/regret:

We are not interested in real estate investing and have no interest in being absentee landlords, but bought a house when we moved to this duty station. Knowing what I know now . . . houses are expensive. And while it hasn’t been catastrophic, it’s mentally stressful to worry about moving given that we will be on the military’s time frame and not our own. We may end up “diversifying” into real estate whether we like it or not.

Do you have insurance?

We have life insurance on both my husband and myself, although less than many doctors. Our only debt is a mortgage that would be more than covered by the sale of the house. We figure we are self-insured for the first $1 million, and have 30-year policies for another $1 million on my husband and $750k on myself. We made these calculations based on three kids so should probably revisit them now that there is a fourth. Our calculations assume that I would return to work after 1-2 years if we did not have my husband’s income. We do not have disability insurance as my husband is still active duty and it wasn’t on my radar before I stopped working all together. We will have to reexamine that when he’s getting out of the military, but it would be less of a concern if he has a pension. We carry the rest of the usual insurances – auto, home, umbrella.

What does FI/retirement mean to you? What does it look like?

We are not FI, but we are on track. I call my stay-at-home/homeschooling life a “sabbatical” from medicine, but financially I think of it as taking some of my retirement years now, while I am young and while my children are young and at home. Our days are full – but joyful – and I feel very lucky to have this time to raise my children, explore our area, support my husband’s difficult schedule, bake muffins, and read good books. I left clinical practice at age 33, and I anticipate returning to paid employment in some capacity in my mid-to-late 40s and work 10-15 years. Whether or not I’ll return to medicine depends on a number of financial and non-financial factors, but I’m really considering the park ranger idea.

Do you give to charity? If so, where and why?

We give regularly to charities including our church, our almae matres, and various charities that meet basic human needs like food, shelter, and clean drinking water. This is a line item in our budget, about half of which goes to regular contributions to our church and the local food pantry, and the other half we donate in larger sums as we see fit. In December, we take whatever is left and divide it up for the children to decide which charities they would like to support and we help them find and research charities working in areas that interest them. We also observe a Lenten fast where we eat more simple meals and give up treats (like ice cream and Amazon Prime), and donate the extra money that frees up in our budget.

Any parting words of wisdom?

Although we are a dual-doctor couple, our finances more closely resemble those of non-doctor professionals than those of most doctors. We didn’t have significant loans, we started earning a decent salary at age 26 right out of medical school, and has increased more-or-less linearly to a low six-figure salary. We paid off our debt and started saving and investing within a few years. We did not max out all out of retirement accounts every year (hindsight!), but we were at that point by about age 30. Like many non-doctor professionals, we have benefitted significantly from income smoothing, earning the same amount of money across a longer time period. There was one year we were (barely) in the 28% tax bracket, but every other year of our married lives we’ve been in the 25% tax bracket. Our annual income is a fraction of many of our peers, but this does two things: 1) it prevents lifestyle inflation so it keeps our FI number lower (as a multiple of lower expenses) and 2) we got an 8-10-year head start. We live (and enjoy) a decidedly middle-class lifestyle rather than a “doctor” lifestyle – We have a nice house with a nice yard, but it’s 30 years old. I drive a new Honda Odyssey, my husband drives the 11yo Volvo sedan that I bought when I graduated from medical school and only has air-conditioning sometimes. We get our movies from the library and occasionally Redbox. I’m still wearing several pairs of shoes I bought over ten years ago. I sew patches over the torn knees of my boys’ pants and hand them down to the next kid. I even wash and reuse Ziploc bags. We are frugal and aim to keep expenses down so that we can spend our money on things that matter to us – date night, all the books we want, swim and piano lessons, at least one nice family vacation a year, a few long weekends, and several other trips to visit family. The power of compounding: Here’s my Vanguard balances graph (numbers removed) over the past 10 years. This is our taxable account, but our Roth IRAs show a similar graph. We married in 2007, finished paying off our loans, and started investing in 2008. The green is contributions, the blue is investment returns. We have now hit the tipping point where our compounding is really compounding on itself – you can see that we’ve continued to make contributions at a much slower rate than before (4 kids!), but that the investment returns keep going up.

And … that's a wrap! If you're interested in doing this please send me an email – I'd love to hear from you!

I loved reading Rebecca's story and I hope you did too. Definitely a different life than most women physicians.]]>

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Moving & Mega Backdoor Roth IRAs

Before any big change in your life (hello, moving!), it's important to get your finances in order. We consider the cost of a move, and we compare our current salary with our future position. But what about saving for your future? It's probably not on your mind when you're thinking about moving. But for my recent move, a Mega Backdoor Roth IRA was something important to consider.

our move to a MCOL. I had less than 2 months before my planned maternity leave to figure out how to make sure I was maximizing benefits, particularly my work-sponsored retirement accounts.

My Work-Sponsored Retirement Accounts

To recap, here are the retirement accounts I have through work:

  • 403(b) – I max out my contribution at $18,000 and receive a generous employer contribution + match. I am currently 40% vested in employer contributions.
  • Private 457(b) – I max out my contribution at $18,000. There is no employer contribution.
  • Cash Balance Plan (aka small pension) – Unfortunately, I am 0% vested, so I will lose it all.

In addition to these work retirement accounts, my Roth IRA for 2017 was funded in January.

Planning Ahead for a Move

Since the leave was planned well before our move to a MCOL, I had already increased contributions to my work's 403(b) and 457(b) so that my contributions would be maxed out by the end of September.

I was unable to get a straight answer from HR if I can continue to make contributions when short term disability pay kicked in for my maternity pay, so I played it safe. I also could not get a straight answer if I would continue to get employer contributions plus the match match if I front loaded the 403(b) and 457(b).

Thankfully, the employer contributions + match have continued!

Now, I will be separating from my job (I am employed until the end of December), some things will change. I am starting a new job in 2018 that only offers a 401(k). That means I'm losing my 457(b) and cash pension plan.

Because of that, I decided to take advantage of the Mega Backdoor Roth IRA (linked to excellent article by Mad Fientist).

What is a Mega Backdoor Roth IRA?

You might be wondering what exactly is a Mega Backdoor Roth IRA?

It is the ability to contribute an additional $36,000 a year into a Roth IRA. This is in addition to the regular or backdoor Roth IRA of $5,500 annually.

I knew this was an option through my work's 403(b) since they allow non-Roth after-tax contributions (aka NRATs). This is not the same as being able to contribute to a Roth 403(b) or 401(k). These contributions are in addition to my $18,000 employee contribution. You can contribute NRATs up to the total limit of $54,000 (for 2017).

Obviously, I want the free employer contribution + match, so I am limited to contributing an extra ~ $15,000 in after-tax contributions. But if you have no employer contribution then you can contribute the difference of $54,000 less $18,000, or up to $36,000.

Understanding Mega Backdoor Roths and Taxes

One caveat is that you want your plan to allow in-service distributions, meaning that you can move the NRAT portion of your 403(b) or 401(k) out of the account and into your Roth IRA. Some plans let you do this quarterly or annually. Mine only allows this upon job separation.

This is not a deal breaker, but this means that I will owe taxes on the gains only. One will still owe taxes on the gains with a quarterly or annual in-service distribution, but it will have less time to make gains, so they should be minimal.

Why This Money Move Was Right Before Our Move

I did not contribute to this in the past since I'm still paying down student loans. But now that I am leaving and losing a good amount of tax-advantaged space with the new job. It made sense to “fill up” this bucket before my move.

Final Thoughts on Mega Backdoor Roth IRAs

To summarize, here is how to tell if you are eligible for a Mega Backdoor Roth IRA. Ask yourself these questions:

  • Does your plan allow non-Roth after-tax contributions?
  • Does your plan allow in-service distributions? How often?
  • If yes to both – you are lucky! And have an additional potential $36,000 to contribute to your Roth IRA

If you're eligible to contribute or you want more information about a Mega Backdoor Roth, make sure you swing by the Mad Fientist's article. Whether a Mega Backdoor Roth is the right financial move for you or not, before you move to a new city or simply change jobs, make sure that you think about your future money situation, too.

Have you heard of the Mega Backdoor Roth IRA? Comment below!]]>

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Making the Move to a Lower COL

Sometimes, the right money move means an actual move. Here's everything you need to know about making the move to a lower COL based on my very own move.

Considering the Possibilities

I put in my 90-day notice at my job (my first job out of residency) the end of September. This nicely coincided with my maternity leave, so I won't be returning. M also gave notice around the same time. Why? M was offered an opportunity he (we) couldn't refuse.

Except the job was not in NYC or within commuting distance. Let's just say my initial response was “Hell No” as a New Yorker. Our first trip to Philadelphia together–aka the “I need to convince Bonnie trip”–didn't end well.

At first, I was excited. Philly is a lot like Brooklyn (Shhh, I've been told they don't like to hear that!). But then, as the day wore on, I was sad about leaving my friends and my life here.

I was a wreck.

Exploring New Opportunities

However, it became clear to me this was a job he could not turn down for his career. So, I figured, at the very least, I should check out the job market for me and see what turned up. There was no shortage of opportunities for me. I looked into both private and academic positions.

For a number of reasons (new addition to family being a top one), I decided to leave academics and join a private practice. The deal was clinched when M said “we can retire 5 years faster.”

I found a job that I am excited about. It doesn't hurt that both M & I will also be increasing our incomes significantly and living in a lower COL area. I took advantage of the job and location transition to take an additional month of maternity leave bring the total leave to 16 weeks.

Not quite LCOL, but for us New Yorkers, Philadelphia is a significant drop in COL. So we are practicing a bit of geographic arbitrage.

So here is what I learned from by making a move to a lower COL:

#1. Don't be afraid to see what else is out there.

Explore options job wise. Obviously, I knew I was making less being in academics AND being in NYC (doctors get paid less here…). But until I saw the numbers in front of me, it didn't feel real.

#2. Don't be afraid to move.

Moving is one of the top stressful events for adults (and children). I could see us living in NYC for the foreseeable future. Once I ran the numbers living in Philly vs. NYC (incorporating our new higher salaries, less taxes, less expensive childcare), it really was a no brainer. At the very least, it can't hurt to try!

Both WCI and Physician on Fire espouse living in a lower COL to get you to FI faster. I finally listened to them.

Thankfully, my parents live in New Jersey, so Philly isn't that much further away. Also, they can still be quite involved with helping out with our newborn.

#3. Sometimes you just gotta do what's best for the family.

We would've been “fine” staying here for a while or forever. I'd be lying if I said the cost of childcare (and private school if we went that route) in NYC didn't cause some heart palpitations, though.

Both of us have lived in NYC for several years and were open to trying something new.

NYC won't be going away if we want to come back.

Final Thoughts on Making a Move to a Lower COL

It's hard to give up what you know, what feels familiar, and what you call home. However, if you're feeling a pinch financially or want to accelerate your FIRE journey, a move to a lower COL area might be the right decision for you.

Have you moved to a lower COL? Comment below!]]>

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Blended Family Finances: What You Need To Know

The blended family is defined as a family consisting of a couple and their children from current and previous relationships. Blended families are on the rise and you need to know how to prepare yourself financially.

I've already written about a Premarital Financial Checklist that all couples should consider before walking down the aisle. In this post, I'll discuss some of them in more detail. Plus, I'll share some possible legal & financial ramifications for blended families.

Please note – I am NOT a lawyer. I strongly recommend you consult with a family lawyer in your state (and the state bonus kids live in).

To kickstart your blended family finances, here's what you need to know:

1. Know your partner's full financial obligations to his/her children and ex-spouse

You'll want to know if your partner owes alimony or spousal support. Specifically, you need to know how much and for how long. You'll want to know what his/her child support obligations are and for how long.

Each state has different age limits – 18 through 21+. Generally, if the child goes away for college, support payments stop. If the child lives at home, payments continue.

You'll also want to find out what their financial obligation for college is. In general, this is split between the biological parents in proportion to their income.

I strongly recommend reading your partner's divorce decree and parenting agreement to know what the obligations are. Often, parents are required to have a certain amount of life insurance for their kid(s). This area is one big reason I recommend delaying marriage for blended families.

I have read M's divorce decree and understand his child support obligations as well as his required life insurance requirements for his son.

2. Consult a family lawyer

Just like you'd have a lawyer review your job contract, make sure you consult with a family lawyer in the state where the bonus children live (where the custodial parent lives, if not with you and your partner).

Ask them if your income could ever count and/or if there is precedent for this. They will generally say no.

This does not stop an ex-spouse from going after your money, especially if your partner is making less than usual or went back to school. Child support laws vary by state.

I consulted with 2 family lawyers and both told me to not get married!

3. Consider Delaying Legal Marriage

You may have heard that your income and assets won’t matter since they are not your biological children, but that may not be the case. This will not deter an ex-spouse from trying to get at your assets. Even if the suit is frivolous, you will still need to hire a lawyer (read: more fees) and spend time on the matter.

This is a top reason to delay marriage until the children no longer require child support and college support. The FAFSA does not ask for your income, but the college can.

If you are going to take this route I highly recommend you get paperwork in place –  Wills, Health Care Proxies, and Power of Attorneys, especially if you have children with your partner.

We are delaying marriage until his bonus son graduates college.

4. Prenuptial Agreement

Prenups are essential for blended families to protect the interests of the partners (and children). This is a whole other topic and are state specific.

My advice in short would be:

  • Keep premarital assets separate.
  • Agree to keep retirement accounts.
  • Discuss spousal support.
  • Child support and custody cannot be stipulated in a prenup.

We are not married now but plan to have a prenup when we do tie the knot.

5. Estate Planning

Estate planning is definitely more complicated with blended families. I often see contention when there are bonus children and new children from the blended couple. Figuring out how to make sure the partner and children are taken care of requires gentle treading.

It is also difficult to really know what the assets and means of their ex-spouse truly is. If you are reading this post, chances are, you and your partner will have the means to be generous with everyone.

As mentioned in #1, your partner may have life insurance obligations to his/her children from the previous marriage. Take this into account when deciding on additional life insurance policies if needed.

My advice: Do not be stingy with your bonus children. Reverse the situation and see how it feels if your partner decided to cut them out if they were your children.

We have wills, POAs, HCPs and living wills. We have named each other as beneficiaries. Both children are well taken care of.

6. Financial Planning & Logistics

Blended families are often older when they marry and may continue to operate as separate financial houses. I recommend seeing everything as “one pot.” This does not necessarily mean having one joint checking account, however.

I favor the one joint checking account for joint expenses and two separate accounts. Additionally, I strongly encourage blended families, like all families, to plan financially together. This will take some additional planning to ensure everyone is taken care of.

At this time, our banking accounts are totally separate, but we operate as “one pot.” I ensure both of us max out our tax advantaged retirement accounts as it is all going towards our retirement.

Final Thoughts on Blended Family Finances

When you blend families together, things can get complicated and they also also usually wonderful. One of the ways to mitigate some of the tension and conflict that might come from mixing families is to have the hard conversations upfront. The sooner you do it, the better. Using these talking points, you and your partner can get your blended family finances in order so everyone is taken care of.

Any other tips for blended family finances? Comment below!  ]]>

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Interviews with real women physicians – Stella

Welcome to another installment of Interviews with Real Female Physicians. The goal of this series is to share their story so that you, the reader, may learn and be inspired from their experiences – good and bad. We all come from different backgrounds and have different situations. Some of you are married, some are not, some with kids, some with blended families. Let’s show other women that any of these can work financially!  So let's introduce our next woman physician rockstar – Stella.

Tell us about yourself:

I am a gastroenterologist working for Kaiser Permanente in the Bay Area but originally from Dallas, TX. My husband is a facial plastic surgeon in private practice. We’ve been out of training for ~7 years and both turning 40 this year. We live in San Francisco and have a 4 year old daughter and a son on the way this November. We are both avid travelers and foodies. I often hear the advice to move out of a HCOL area but to us, we love the city and all it has to offer and feel it’s worth it.

Did you graduate with student loans? 

I had ~$120k in student loans following med school. I went to The University of Texas at Austin for undergrad and a public in-state med school. I’m the youngest of 6 kids and my family was not wealthy so I received grants and loans to get through my education, including Pell grants. I paid off the highest interest private loan (~$20k) when I worked as a hospitalist in between residency and fellowship but otherwise deferred my loans during training. I consolidated the loans with ACS. Luckily the interest on the remainder of my loans were relatively low at ~3%, and I paid them off in one fell swoop 5 years out of training. I would have done it sooner, but my then FA discouraged me from doing so stating it was “good debt” that helps my credit score and I’d be better off investing in the market w/ better returns. Glad I didn’t listen to that advice as it feels good to be almost debt free.

Financial aspects of kids 

When did you have them?

We had our daughter 3 years after becoming an attending.

Are you planning to fund their college expenses?

My husband and I had completely different experiences in this regard growing up. As I mentioned earlier, my parents didn’t have much so I got through school with loans and work study programs in college. Even though this made me independent and resilient, I did feel limited in the options of where to attend school. I didn’t bother applying out of state or to expensive private universities. I think in retrospect I did fine for myself, but it must be refreshing to not have finances hinder the “the sky’s the limit” mentality. My husband’s family in contrast paid for 4 years at Stanford undergrad and out of state medical school including living expenses. Not only that but they also set up a modest trust fund for him that matured in his late 20’s to get a jump start on life. Despite this, he is incredibly grounded and rational with money. In fact, between the 2 of us, I tend to be the spendthrift. I often have to convince him to loosen up the pursestrings. We plan on fully funding for 4 year private school and grad school if need be. Partly this is cultural and partly this stems from both of our experiences. I think the most important factor is that we try to instill in our children a sense of hard work and empathy for others. We are front loading $140k for each kid early on in the Utah 529 and leaving it alone to let compound interest work its magic. We’ll bankroll the rest if that isn’t enough to cover the costs by the time they’re in school. If we’ve overfunded then I’ll transfer the beneficiary to nieces/nephews or perhaps grandkids. After 5 years out from front loading the 529, I’m considering funding an irrevocable trust for our kids that matures around age 30 similar to what my husband had as a starter fund. I know this is controversial and may engender “economic outpatient care” per the millionaire next door, but it was such a huge benefit for us starting out. We can fund the annual gift limit of $28k per couple without running into estate tax issues.

What are your child care expenses?

Our nanny’s take home pay was $40k a year for the first 3 years, then our daughter went to preschool. We still have a part time nanny/housekeeper who picks her up after preschool, and does all the grocery shopping/cooking/cleaning around the house. Her take home pay is ~$30k. With both of our schedules it wasn’t feasible to do daycare since we are often running late and needed the flexibility of a nanny.

Are your kids in private or public school? 

My daughter is currently in a private pre K-8th grade school. It is ~$36k per year including aftercare and summer school which is pretty standard in SF. I would be lying if I said I didn’t have an existential crisis about this ALL the time. I grew up without means, a child of immigrant parents, went to public schools my whole life, and I think that really taught me resilience and how to relate to others. I’m concerned about my kids being around wealth and excess their whole lives, and I worry about how they will learn empathy for others. I’m fascinated by education policy and have read up on it quite a bit. I know all the studies and evidence that cites how diversity (socioeconomic and ethnic) is better for everyone, but when it came down to it I just couldn’t “experiment” with my child. Part of me feels like what is the point of working so hard to get where we are if we aren’t able to provide a better life than we had for our kids? I’m still working on getting clarity on this matter…we’ll see.

Financial aspects of marriage

We are legally married. I had no assets but my husband had a modest trust fund that really helped us get a jump start on life. Unfortunately it matured right after the crash in 2009, but it was still enough to pay for our wedding, start his practice without having to moonlight or take out loans, put a down payment on our home in a very HCOL area, and pay off my student loans. I recognize that I’ve lucked out in marrying someone without debt, and credit this “starter fund” with allowing us to get a headstart on our finances. We did not get a pre-nup. We are both very much of the mindset that what’s mine is yours and vice versa and trust each other inherently. This may sound naive or foolish but it’s worked for us thus far. Some couples have budgets for each other or have to ask permission to spend over a certain amount, but this is unheard of in our relationship. My husband and I agree on finances and speak openly about it–he trusts me to take care of the financial aspects for our family. I have more of an interest in personal finance and find it empowering to be knowledgeable about this stuff. Neither of us stay at home. I work 4 days a week instead of 5 which allows me some breathing room to run errands or self-care. I think the perception however is that I have much more free time so I’ve taken over the financial responsibilities for our household, which I’ve enjoyed anyways. We both are highly compensated, but he does earn more than me by a sizeable margin. However, I have the generous pension and provide our family’s health insurance through my employer. Together we earn >$1M a year. I think we both have mutual respect for each other that we both contribute equally to this relationship and not just in monetary terms.

General Finances

What’s your FI (financial independence) number? 

~$9 million. We will probably need ~$350k/year to cover expenses in retirement, and I multiplied this by 25. I do get a generous pension if I stick w/ my employer at least part time until I’m 60 which I’m not including in this calculation, but it would provide ~$250k/year at retirement until death–it’s hard to pass up that deal. We may get to our FI number in 10 years, but instead of retiring, will probably cut down to 3 days a week at some point until I officially retire at 60. In the meantime, I really need to cultivate some hobbies/interests so that I can look forward to retiring to something.

Who handles the finances in your relationship? Are you DIY or do you have a financial advisor? 

I’m in a transitional period after recently getting rid of our financial advisor and in between a DIY stage and robo-advising. Currently our taxables accounts are in 2 places: I’m investing on my own at Vanguard using a lazy 4 fund portfolio AND using a robo-advisor at Betterment which charges .25% of AUM. It’s my own little experiment and so far the Betterment account has outperformed my DIY account at Vanguard by a few percentage points even including their fee. Plus they tax loss harvest which I don’t have much interest in doing. I’ve easily spoken to an advisor when I’ve needed to and they gave great, unbiased advice. I haven’t quite decided which way I’ll go just yet when I do consolidate my accounts.

What is your net worth?  

$3.8 million including equity in our home. Without equity it’s ~$2.5M.

How are you saving for FI/retirement?

I contribute the max $18k to my 401k at work plus I get a >$20k match. In addition, I put in ~$15k in post tax money so I can do the mega backdoor Roth IRA conversion. We each do $5,500 in backdoor Roth IRAs every year. He maxes out his 401k + 3% match. I wish he had more tax advantaged space but is limited by his S-Corp safe harbor 401k plan. I have a defined benefit pension plan that will essentially provide half of my max income yearly at retirement until death if I stay with my employer until 60. I’m not including this in my FI number but it would provide the majority of my expenses in retirement. Beyond that we put the rest of our savings in taxable accounts. Our asset allocation is 90/10 stocks/bonds and rebalance by reinvesting dividends or contributing from our savings to the asset class that’s lagging behind about every quarter (as opposed to selling any funds). I place tax-inefficient funds in my Roth IRAs (REITs, emerging market, small cap value funds), and also use low ER target date funds (with the date beyond my expected retirement date to be more aggressive) in my 401k to avoid wash sale issues with my taxable accounts. We save 25-30% of our gross income a year. We basically live off my income and his income goes straight to our savings account so we don’t miss it, which I then transfer to our taxable accounts or other investments once it reaches a certain threshold.

Biggest financial regrets:

  1. Using a commissioned broker unknowingly as our first “financial planner” who charged a 6% front loading fee! I realized this when I looked at the paperwork from when he opened our 529 account. Opening a 529 account is super easy to do yourself and here he was skimming 6% off the top. It still makes my blood boil thinking about it, but you live and you learn. This was one of the main motivators I had to educating myself so I consider it a silver lining.
  2. Using the financial advisor at my banking institution to open up individual bond funds for me and charging me 0.8% AUM when he wasn’t managing anything–bonds manage themselves.

One thing you wish you knew:

It takes time and a lot of reading to feel really comfortable managing your own finances. I think it took me up to 2 years of extensive reading, and I’m still learning something new things all the time. So in the meantime, it’s okay to use a financial planner if you need one–just pick a fiduciary, fee-only, NOT fee-based FA. Also, target date funds with low expense ratios are okay to use while you’re learning the ropes.

Do you give to charity? If so, where and why?

I’ve always felt strongly about contributing to charities or organizations that empower other women or invest in women owned businesses. We give ~$20k a year (with goals to contribute more in the future) to a variety of charities including Women for Women International, Planned Parenthood, ACLU, and Amnesty International. A major goal for me this year is to set up a donor advised fund (DAF) for tax efficient charitable giving. Another one of my goals this year is to set up a small need based scholarship fund at my high school alma mater in honor of my father who passed away a few years ago that will be awarded to promising females who want to major in STEM fields. And while this isn’t charity, we are investors and hold equity in my sister’s startup tea company which has a social impact component helping female Kenyan tea workers establish financial independence and care for their families.

Any parting words of wisdom?

  • Money affords you the opportunity to invest in meaningful projects. Now that we have some expendable income, I’ve felt this burning desire to give back and do something bigger than just practicing medicine. I’m still working on exactly how best to do that, but I’m thankful for the opportunity to explore these options.
  • Outsource what you can afford if it gives you more time to spend with family or doing things that bring you joy (or maintain your sanity), and don’t feel guilty about it.
  • Focus on gratitude–I struggle with this every day. I know that I have many advantages and am so fortunate in so many ways, but it’s easy to lose sight of this.
  • Don’t marry a crazy person–I know that you can’t always control who you fall in love with but if there’s early warning signs that you aren’t going to be financially compatible or they seemed destined to live paycheck to paycheck, run the other way.
  • Mo’ money mo’ problems–making more money brings a whole host of other issues to consider like asset protection, estate tax planning, trust funds, buying more insurance, etc. Work as much as you need and consider cutting back when you have enough.

And … that's a wrap! If you're interested in doing an interview please send me an email – I'd love to hear from you!

I hope you enjoyed reading about Stella and her family.]]>

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Why Wait? 5 Reasons to Delay Legal Marriage

legally married and not be aware of it. Ahem…we aren't.

Marriage has some legal benefits, but it also comes with several disadvantages as well. I've discussed before that marriage is a legal contract.

Most people do not think of it this way and do the typical “I love you” marriage. Historically, marriage was not meant for “love.” It was, in many ways, a business transaction between families.

Moreover, current marriage and divorce laws were put in place to mainly protect the woman as women often were homemakers and would be financially devastated in the event of a divorce. Hence why there are alimony or spousal support laws.

As more women join the workforce and become the breadwinning partner (this is often the case for women physicians!), these laws can seem antiquated and often work against us.

My goal is to make you aware of all the pros and cons of legal marriage. I am not suggesting that you never get married. But, it may make a lot of sense to delay marriage for some time.

So, here are the reasons to consider delaying legal marriage:

Marriage Penalty Tax

Most people think you get a tax break by getting married. It depends. Most people don’t realize that the married filing jointly tax brackets are not just a matter of doubling the single brackets.

Depending on how much you and your spouse make, you may actually pay a marriage penalty tax. This mainly occurs when both partners make a similar income. The marriage bonus mainly applies to couples where one spouse makes a lot less or is a stay at home parent. Here is a calculator to see if you'll get a marriage bonus or penalty.

Since this post went live there has been a major overhaul in the tax code in 2018, so the marriage penalty is lessened.

Blended Families

Blended families are commonly defined as one partner brings in children from a previous marriage or relationship. This factor can add complexity to the relationship. If this is your situation, that doesn't mean marriage is off the table. It's just worth considering the complexities of the situation.

You should be aware of all the financial obligations your partner has and consult a family lawyer in the state of custodial residence of the children. Child support laws are state specific. You may have heard that your income and assets won't matter since they are not your biological children but that may not be the case. This will not deter an ex-spouse from trying to get at your assets. Even if the suit is frivolous, you will still need to hire a lawyer (read: fees) and spend time on the matter.

In my opinion, this is a top reason to delay legal marriage until the children no longer require child support and college support. The FAFSA does not ask for your income, but the college can. If you are going to take this route, I highly recommend you get paperwork — Wills, Health Care Proxies, and Power of Attorneys — in place, especially if you have children with your partner.

Student Loans

Delaying legal marriage can make a lot of sense financially if you are with another high income earner and you're pursuing some some of income-based repayment for student loans. Otherwise, most attendings have their loan repayment as an attending capped out at the standard 10 year plan. That means that there is no benefit unless the debt to income ratio is above 2 for the attending.

If you are getting married, timing matters! Do not get married in November or December due to the timing of recertifying payments. January weddings are great because of when you need to certify repayment, which looks back at prior year tax returns. Before delaying marriage for this reason, I definitely recommend seeking professional student loan advice.

Financial Issues

One of the biggest challenges in a relationship comes when you and your partner are not on the same financial page. I recommend premarital financial counseling for all couples.  Through this process you may find there are some major discrepancies.

Getting married will not magically fix them (or other pre-existing issues!). If both of you are committed to each other despite these differences, take the time to iron out them out before walking down the aisle.

The Divorce Rate

And finally, you might want to delay legal marriage because the divorce rate is > 0%. This may seem obvious, but no one really thinks about the divorce rate nor do they think they will get divorced. The divorce rate overall is not 50% as often quoted and even lower among physicians and highly educated folks. You're looking at 25-30ish%. But it still is not 0%.

I think it is foolish to think divorce cannot happen to you. This is not a reason in itself to not get married. Premarital counseling, discussing common life goals, and a well thought out prenuptial agreement will go a long way.

Why We Plan to Delay Legal Marriage

We will face a marriage penalty tax. I'd rather throw the 5-10K in penalty taxes towards my student loans. Also, my income would bump M up to my tax bracket, so that means less take home income for him.

We are a blended family. He has a son from a previous marriage. Unfortunately, us getting married puts us at financial risk. After consulting a few family lawyers, they all told me I should delay marriage until my bonus son has completed college as my income will likely be imputed for his financial aid eligibility.

Final Thoughts on Delaying Marriage

This isn't about not being in love or not being committed. In fact, deciding to wait to get married could be another way to show just how dedicated you are to your relationship. Whether you decide to wait or not, make sure you consider each of these reasons before tying the knot.

What do you think? Would you consider delaying marriage?

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Ultimate Financial Planning Guide for the Physician Mom To Be: Part 2

In Part 1, I discussed things you should consider prior to becoming pregnant. Here is the rest.

You're Pregnant!

Congratulations! Don't panic. The good news is you have about 9 months to plan!

1. Get insurances NOW if you haven’t already for the above reasons. You may get a pregnancy exclusion but just get it and you can re-apply and get more later. Find out your OOP expenses for your health insurance if you have not already as well.

2. You'll need a basic will in place to name the guardian of your child should you pass and notify the guardians you choose. This often becomes a non-urgent to-do item after the baby is born unfortunately.

3. Retirement plans at work: If you’re taking unpaid leave or any leave, you’ll want to frontload your 403(b)/401(k)/457(b) so they are maxed out before you deliver. I recommend you frontload these accounts at least 2 months prior to your expected delivery date in case of a preterm delivery. Although this won't be a deal breaker, you'll also want to find out if and how frontloading affects employer matching if you get any.

4. If you haven't already, find out what steps need to be taken to take your maternity leave:

  • First, you'll need to decide how many weeks you want to take off. This is a highly personal decision. I've yet to meet a woman who said they took too much time off.
  • Depending on your employer, you may get completely unpaid leave or a combination of paid and unpaid leave. You may be responsible for paying your benefits during unpaid leave.
  • If you can use your vacation days towards paid leave, hoard them!
  • Finally, tell your boss or administrator so everyone at work can start planning for your leave and coverage gaps.

5. Think about childcare options. It comes down to daycare vs. nanny vs. stay at home partner.

  • Daycare and nanny costs vary significantly based on location.
  • In some cities (ahem, NYC), there can be up to a 1 year waiting list for young infants. I'm not sure how this works since no one can actually predict when they can become pregnant.
  • I recommend you pay a nanny on the books. Not only is it illegal not to, but you open yourself up to a ton of liability by not doing so.

6. Think about whose medical insurance the newborn will go under – you or your partner. It may just end being the one where the pediatrician is in-network and convenient for you.

7. Start drawing up a list of things you'll need to buy for the baby:

  • Distinguish between needs vs. wants. I recommend making 3 lists: need, really want, want. Keep in mind the need list is shorter than you think! There are fortunately or unfortunately tons of items to fit any budget. I recommend using the book Baby Bargains and the website Lucie's List to hone in on the items.
  • Whether you end up having a baby shower or not, I would still create a registry. Close friends and family will ask and they will want to buy you a gift. You might as well receive items that you want! I used Baby List for my registry.
  • Remember, you don't need a ton of stuff when the baby actually arrives. I recommend a wait and see approach to avoid a shopping craze.
  • Don't forget that you'll need some stuff too! Maternity clothing, postpartum supplies, nursing clothing and nursing equipment. At this time, breast pumps are required to be covered by your insurance.

8. Start saving for stuff (above) and for unpaid leave if applicable. This is a good time to curb your regular spending to get ready for the baby and all the expenses that come with it. Remember, you'll need to save for monthly expenses, not total income replacement. I hope you are living below if not well below your means so it should not be as much as it sounds.

9. This is not a financial tip (well sort of), but I highly recommend that you and your partner take a babymoon. A great time to do this is in the beginning of your second trimester. The nausea and unrelenting fatigue of the first trimester are over and you are not inhibited by your growing belly yet. Your lives will never be the same (for the better!). Do not forget the primary relationship (your partner). I also recommend you plan and budget for weekly date nights sans baby.

10. Outsourcing. While you're probably a type A, can do-it-all mom-to-be, the reality is it gets harder to do this as your pregnancy progresses. Don't be afraid to start outsourcing things like cleaning, laundry, and even cooking so you can get much needed rest prior to baby. You may also need to hire help with the baby if you don't have good support or family nearby. Remember, outsourcing will make you happier.

11. Find local mommy groups. Not only are they a source for used, unused and sometimes free baby items, but they are a source of support during this exciting and sometimes anxiety-provoking time. Consider joining Physician Moms Group (PMG) on Facebook. There are also local PMG groups as well. Remember, at the end of day, you will figure out how make it work!

Thousands of physician moms already have! What I have done/am doing:

  • My second life insurance policy went into effect just weeks before I became pregnant. I may have gestational diabetes (as of writing this blog post I failed the 1 hour glucose challenge). Boy am I glad I had my policies in place!
  • My insurance paid for 6 pairs of compression stockings – highly recommend you get some! 20-30 mmHG is recommended. I got Sigvaris Eversheer calf-high socks.
  • M and I took a babymoon to Paris when I was 20 weeks pregnant. We used credit card points for flights and hotel so we only had to pay for meals, local transport and shopping.
  • I am the breadwinning partner. I am taking 12 16 weeks of leave. I am fortunate that at least 8 weeks will be paid. I‘ll have up to 4 unpaid weeks of leave. We live below our means so the unpaid portion is totally manageable. I am also thinking about taking an additional 4 weeks to work part-time before going back full time. Again, living below our means gives us this option.
  • I am on a waiting list for daycare (yes they told me 1 year…). The daycare is $2600 a month. We are still considering a nanny while the baby is very young as well.
  • I have started outsourcing a few things and do not regret it!

Recommended books:

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Ultimate Financial Planning Guide for the Physician Mom To Be: Part 1

Earlier this year I announced my pregnancy and listed a few financial considerations along with it. Now that I am in the final stretch I thought I'd put together a financial checklist for those who are planning to have kids and for those who are currently pregnant! A few things that are unique to us physician women:

  • Most of us won't become stay at home moms so will need to pay for high quality childcare or have a stay at home spouse/partner.
  • Many of us do not get paid leave. This will definitely affect inflow and one must plan accordingly.
  • Many of us are the breadwinning partner.

Ideally, certain things should be in place prior to becoming pregnant. So even if you're single and young I recommend you get some term life insurance now and disability insurance. You'll never be as young and healthy as now. Unfortunately, certain normal aspects of pregnancy such as a c-section, miscarriages and IVF are counted against you. Gestational diabetes, preeclampsia and postpartum hemorrhage can also ding you a few health classes as well.

As you know, there is never a right time to have kids but financially, the best time to have kids is as a medical student or resident. Why? You don't make much if at all so the income loss, if any, is minimal. Childcare can obviously be an issue financially in these lower income years. As an attending, every week you're not getting paid hurts that much more.

As an attending, you'll need to accept the fact that you will likely make less during pregnancy, during your leave, and even after your leave. This is due to how practices usually pay you and adjust your pay for time not seeing patients. Brace for impact.

As an attending, you'll need to accept the fact that you will likely make less during pregnancy, during your leave, and even after your leave. Click To Tweet

Things to think about before your first attempted pregnancy:

1. Before you sign that first attending job contract find out what happens when you take leave:

  • Find out if you get any paid leave. Large hospital employers tend to have paid maternity leave by using a short term disability plan. Find out the terms of this. If you are pregnant prior to starting the job, you may not be eligible. You may also need to work there a certain amount of time prior to being eligible.
  • Find out how taking leave affects your salary (if you need to make up a deficit for example) and find out how it will affect your bonus structure. Some employers will adjust target RVUs/collections and some don't – meaning you'll have to make up a sizeable deficit before you bonus again. There is a huge difference! I always recommend having a lawyer review your contract and definitely ask about this.

2. If you live in California, Rhode Island, and New Jersey, or New York (as of Jan 1, 2018), you may be eligible for state sponsored paid maternity leave. It won't replace your physician salary but it is definitely helpful!

3. Family Medical Leave Act (FMLA) – this federal law provides guaranteed job protection for 12 weeks (unpaid) to take care of your newborn. The 12 weeks can be taking at any time within 12 months of having your baby. To be eligible – you need to work for an employer with at least 50 employees and have worked there for at least 1 year. So this does not apply to small private practices.

4. As I mentioned above – get your term life insurance and disability insurances in order before your first attempted pregnancy. Otherwise, you may get a pregnancy exclusion, or worse, you develop gestational diabetes and your premiums double or more. Your partner should also get these insurances in order as well.

5. Health insurance – find out what your total OOP costs will be. This can range from $0 to several thousand. Definitely keep this in mind when looking at your medical insurance options. This is also another reason having children during residency is often cheaper – you work for a large hospital that often has great medical benefits for trainees. 6. Start hoarding vacation days to use towards paid leave if applicable.

Here is Part 2.

Recommended books:

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