Finances for 2-Doctor Households

We're going to talk about two doc households. I got an email recently said my wife and I in the past three years have gone from both being in training to an attending and a trainee to now two attendings. I know. Dr. Curtis, one of our columnists here at the White Coat Investor, has previously written a blog post on this which we read. And we have your current blog post probably old by the time you get around to this email, which I read as well in the past few days. I think it would be helpful for those of us who are in dual physician couples to have a podcast episode where you get questions asked from physician couples and have maybe an early career and a later career couple discuss. I think it's about 15% of docs now are married to another doc, let alone another high income professional. I know you always say 90% of personal finance is applicable regardless, but some of the idiosyncrasies may make for an entertaining podcast for me and I imagine others to listen to. No question that needs to be answered. Just the thought of something I thought might add value. Well, you know, often on this Milestones podcast we get both members of a couple and I think that's really helpful to really talk about what their challenges are, what their successes are, what they're working on. And so we try to include when you want to bring your spouse on or your partner on to the Milestones to Millionaire podcast, we try to bring you on and we think that's great. But I don't know that I can round up a whole bunch of you to come on and talk about two doc couple situations. So let's talk about some of the things that that come in when we're talking about this stuff. So I replied back to this doc and I said, well, what's different for you? What do you think we really need to cover on this topic? And this is what he wrote back. He said, I think the biggest things that were different for us were more the idea of going through the job selection process and looking into career options as two subspecialists. That being said, I think the blog post covered things quite well. Mostly different was our decision making on life insurance. We chose a smaller amount each in a shorter term loans. I paid mine off during residency and now timing on children, waiting until we're attending to consider it played into our financial lives. I also don't know what the crossover is from the podcast and the blogs. I would guess the blog tends to run older in the audience while the podcast is more of the current med students. So don't know how many of them would have heard about it. Anyway, it goes on. Yeah, I don't know that that's actually the case. Podcast listeners are not necessarily blog readers. We've definitely learned that over time. But I don't know that one audience skews older or younger. The only real skew we've noticed in white coat investor community is older docs tend to be on Facebook and younger docs tend to be on Reddit. That's definitely a trend we've noticed, but otherwise, I don't know. The podcast skews particularly old or young. I think you guys are a pretty good swath of white coat investors. Okay, dual income. What's different? Well, first of all, it's mostly good to have two incomes, right? You got this big, huge shovel, right? If the average doc these days is making something like, I think it's something like 363,000, something like that is the average. It's there in the upper three hundreds. Well, that means now you've got an income. If there's two of you and you're just average, you've now got a $700,000 or $750,000 income. That's well into the top tax bracket. That's a lot of money. Yeah, you're going to pay a huge tax bill each year. Newsflash, when you make a lot of money, you got to pay a lot of taxes. But you can do a lot with $750,000 a year, right? Imagine you're living like a resident, right? Residents are making 60, $75,000 a year. Even if you give yourself a big raise coming out of residency and you're living on $100,000, let's say you're paying $250,000 in taxes. That still leaves you $400,000 a year that you can use to build wealth, right? And you can do a lot with that. I mean, let's say you both owe $400,000 in student loans gone in two years, right? It's pretty awesome to have that sort of a shovel. Let's say you want to become millionaires as fast as you can. Well, shoot, how many years is that going to take? You wipe out your student loans in the first year or two, and three years after that, four years after that, you're millionaires. I mean, if you really keep your spending down, you could easily be financially independent within a decade of coming out of school on a two physician income. So that's a lot of power to have that big shovel. And almost any Problem you encounter because of your dual income status can be managed with that bigger shovel, right? I mean, what often happens? You get a family, you're running a household, whatever. There's a whole bunch of things that nobody has time for because you're both working 60 hours a week, right? And so you got to hire those out. You got to hire somebody to clear the driveway, you got to hire somebody to mow the lawn, you got to hire somebody to clean the house. You got to hire somebody to, you know, watch the kids. You know, all this stuff you gotta hire out. But guess what? All of that costs a lot less than a physician gets paid. So you're still coming out way, way ahead. So take advantage of your bigger shovel. That's the huge advantage you have as a dual income couple, is that dual income. Okay, so what else is unique? Well, you might have two sets of medical school loans. That's a problem, right? Instead of owing $200,000, now you owe $400,000 or $600,000 or $800,000. We have certainly run into couples. Andrew@studentloanadvice.com tells me all the time that he's seeing couples that owe a million dollars between the two of them. It's not that unusual, particularly if you don't manage your medical school costs or your dental school costs or the loans afterward very well. And especially if you're like a dental subspecialists or if you're both dental subspecialists, it's not that hard to get over a million dollars between the two of you. Now with the dual income. Can you knock that out? Yes, you can. But it's a bigger challenge for sure to owe $1 million than to owe $200,000 in student loans. So you need to be very intentional about your student loan management plans. Meeting with Andrew and paying 500 or 600 bucks for student loan advice seems like a very good investment, especially if it results in hundreds of thousands of dollars in public service loan forgiveness that you wouldn't have. So that's another issue. Okay? Insurance is different, right? Lots of people wonder, well, do I need disability insurance at all? Should I buy less insurance? Should we both buy full insurance? Right? Because here's the deal. When I came out of med school, and especially after my intern year, when Katie started staying home with our oldest, we had one income. Our family was very dependent on my physician income. And so we insured it. We got disability insurance on me enough that we could live some sort of a comfortable life on it. If something happened to My ability to earn. But for lots of dual income couples, they're like, well, if one of us got disabled, we'd just live on the other one's income. And they decided not to buy disability insurance at all. They just viewed each other as their own disability insurance policy. Obviously some things can go wrong with that one. Maybe you're spending enough that you actually need both incomes, right? And so obviously things are going to be nicer if one of you gets disabled, there's still some income coming in from that person. And of course, if you are spending more than one income, that can be an issue that you don't have enough to meet your actual spending needs. So some people put a little bit of insurance on each person so they'd have something in the event that one of them got disabled. You can get divorced too, right? All of a sudden that income goes away when you get divorced. And now What? Now you're 45 and you got a medical problem and you can't get disability insurance? Well, that's a problem too. So maybe it's better to have something in place that you can take with you in the event something happens to the marriage. The other thing that often happens is one of you stops earning, right? Dual income does not mean dual income forever. It might only be dual income for a year or two. And maybe one of you wants to be a stay at home parent or something. Well, all of a sudden your dual income family just went to a single income family. Maybe just for a few years, maybe for the rest of your lives. And so you've got to look at your situation. What happens if one of you gets disabled? What happens if both of you get disabled? What happens if one of you gets disabled in five or 10 years, right? Think about all those things. And if the plan doesn't work without disability insurance, buy disability insurance until the plan works. So same issue with life insurance, right? If you don't have any kids, well, if your partner's a doctor, they're probably going to be fine without any life insurance. If you do have kids and you both get wiped out in a traffic accident or something, well, you're probably going to want to leave something for the kids. But is your need for life insurance as big as it was when Katie and I were a single income family with hardly anything in assets back in the 2000s? No, your need's not as big as ours. Could you get away without life insurance? You could. You probably could. Particularly if there are no children. If you got enough assets to bury yourself and your spouse is Going to be fine without your income. You don't need life insurance. You don't have to own this stuff. Just because other families need it doesn't mean you need it. Okay, what else have we not talked about? Okay, there's career planning. This is a big issue for dual income people, right? They want to live in one town and one of them can get a good job there, but the other one can't. Well, now what? Well, do you go to a different town? Does one of you stop working? Does one of you commute? Does one of you start doing Locums? There's all these options out there, but I think what generally happens is you end up having to go someplace else, someplace where both of your careers work. But that usually means some sort of a sacrifice. Somebody's making less than they otherwise could. Somebody has a job they don't like as much as a job, they could get somewhere else. That's just part of being married, right? That's just part of making a relationship work is you have to make some sacrifices and you have to make some compromises. And that includes with your careers, when you're a dual doc couple. And so I don't think that's a news flash to anybody out there, but it's not an easy situation to deal with. And certainly if somebody wants to come on the podcast and talk about their successes as a dual income couple, we'd welcome you. We'll celebrate any milestone with you, and so we'll share some of the strategies maybe that you've learned doing that. Katie and I are now a dual income couple, I suppose, but we're not the classic dual income couple that most people think about when they think about dual doc couples. One thing that will be cool to know if you're in a dual physician couple is that your divorce rate is actually way lower than you might think it is. The typical divorce rate in the United States is 45 or 50%. If one of you is a doctor, that drops to about 25%. If you're both doctors, it drops to about 10%. You're actually much less likely to get divorced in a dual physician income household. I suspect that applies to other dual high income earners. And this is actually a lot more common. I understand from the statistics for women physicians to be married to another high earner than it is for men physicians to be married to another high earner. So there's some benefits there. Okay. Some other things that are unique about you if you are a dual physician couple. Well, you don't need two doctor Houses. Right. One doctor House is enough. So you save a lot on your incomes. You're probably driving two Dr. Cars. Sure. And you're going on a Dr. Vacation, but you're not going to go on twice as many of them as you otherwise would. So your expenses actually may not be as bad as you might think. You know, a one doctor couple and a two doctor couple may live pretty similar lives and you can save a lot of money. And so a lot of that second income can go toward wealth building activities. Okay, taxes. You've heard of the married tax penalty? That's not really a married tax penalty. You actually get a benefit for being married. You get to use the higher married tax brackets. It's a benefit. There is a penalty for dual incomes. That's where the penalty is. If you're both working, then all of a sudden you may find that you're paying higher taxes and there's not a lot that you can do about that. The tax code is what it is. There are some benefits to being married, there's some benefits to being single. And I wouldn't necessarily let the tax tail wag your license. Okay. Some people are like, oh, we're not getting married because it would cost us more in taxes. Really? Come on, you're a dual income couple. You're going to have an awesome financial life either way. Don't let the financial issues behind marriage really make your decisions of how you're going to live your life. That's like deciding not to have kids because kids are really expensive and we're going to have to save for college for them and all. Well, you don't get kids for financial reasons. Right. You want them for other reasons. Same thing when you get married to somebody. Another great thing that's really cool about being a dual income couple is you get more retirement accounts. Right. Instead of just having your backdoor Roth and maybe your 401k at work. Well, now your spouse is over at the university and they got a 403 and a 457 and a 401A. Yes, it's going to be more complicated loan management or more complicated retirement account management. But you got all these great benefits and maybe some matches and a lot more options when it comes to saving for retirement and withdrawing from those accounts in retirement. So that's a good thing. Especially if one of your accounts isn't that good. Well, maybe you can prioritize the other person's accounts. Student loan management gets a lot more complicated. It is almost always worth paying for some specific student Loan advice From somebody like studentloanadvice.com when you have two physicians, maybe one of them is going for PSLF and the other one isn't. And you're trying to figure out, well, how should we file taxes? What kind of retirement accounts should we use? Which IDR should we be in? This is a no brainer. Go spend 600 bucks. Both of you sit down. Right. You don't both pay. It's not $600 each, it's only $600 total to go in and talk with student loan advice about your student loan situation. So great benefit there. Another thing you can do when you both have separate jobs is you can really work the benefits. You don't need two health insurance policies for your family. One of them's fine. So figure out which one's best. Go on that one. And you don't have to pay the premiums on the other one. In fact, you might be able to negotiate, depending on the employer, partnership or whatever, you might be able to negotiate a higher salary for the person that's not using the insurance. And so work those benefits. If there's one that offers really great disability coverage, we'll take advantage of that. If there's one that offers better retirement accounts, take advantage of that. Health insurance, whatever, childcare, who knows what the benefits are from your employers, but you got two sets to pick from when there's two of you. Okay, I think that's about all I can think of that's applicable to dual income couples. But if there's a bunch of stuff I missed, well, shoot, Volunteer, come on the podcast. Tell us about how you've been successful as a dual income couple and we'll get into more of it. The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.