Yes, I took that picture of the shark. No, I was not in the water with it (aquariums for the win), although I am proud to say I have snorkeled with sharks a couple of times. A shark picture seemed appropriate for a post about taxes and credit cards; they all are potentially scary, and they are frequently misunderstood.
I’m sharing this here due to popular request! I apologize to everyone who is not in my field; these posts are not going contain much that can hold your interest. I’ll get back to rambling about other topics later this week.
Back Office Skills
This is the “skills checklist” we give to new members of our back office team. They can bring it with them when they request raises if they want to.
Obviously, this is not going to be super useful if you are not in our particular field (orthodontics). Even if you are in this field, you will want to design a skills list that fits your unique practice, team, and office culture. …
Honestly, it’s mind blowing for me to write this post. I have major imposter syndrome anytime I even think about numbers this high.
And before we go any farther: please don’t send me messages telling me I’m limiting myself by “not thinking big” or some such nonsense. These are freaking huge numbers. And not only on a global scale (where the median household income is under 10k) but in the USA as well (where the median household income is about $61k) and even in the shiny bubble of doctor salaries that I live in, where the average individual income is anywhere from $100k to $300k depending on your specialty and time in practice and blah blah blah.
So, yes, it feels crazy to write this post. It’s also really fun for me to write this post, because I’ve been waiting impatiently for this day ever since I realized it was within my grasp this calendar year. …
A couple quick notes before we dive in to the numbers:
I decided back in January of 2018 to share our family’s spending publicly for a whole year. This was an attempt to prove that doctors do not have to spend a totally ridiculous amount of money to live well and love life and more importantly a strategy to make us take a cold hard look at where all our cash was going and decide whether we liked what we saw. …
Not too bad, especially considering Baby J couldn’t get a passport until late last year. Below you’ll find our total costs and savings from all those trips, listed by month of the year. …
If you’re wondering which airline has the best champagne selection or the highest thread count on their linens, this is not the post you’re looking for.
Our family travel style is very middle-of-the-road for international travelers. We fly in basic economy most of the time. Sure, we love a good airport lounge and we very occasionally spring for the lay-flat beds on nighttime flights. But we also are not “luxury” travelers. We don’t care about alcohol selection and don’t like to be checked on every 10 minutes. We do love getting from Point A to Point B without dreading our travel days, even if Point B is halfway across the world.
So here’s my review of British Air and our flights to and from Switzerland this year with our preteen C and our little toddler J. …
December included a wonderful few days of celebrating Christmas with loved ones in our hometown, followed by the excitement of jetting off to Interlaken, Switzerland to ring in the New Year with some good friends. (I included the whole trip in our “December spending” even though it overlapped January by 4 days.)
A quick reminder: these monthly spending reports are an effort to keep myself accountable to the idea that doctors do not have to spend a totally ridiculous amount of money to live well and love life. We’ve now successfully done these spending reports for every month in 2018.
As I have mentioned before, we do not do traditional budgeting. You absolutely should do traditional budgeting if that works for you as a way to control your spending. More on this topic here. …
Joining Maui, Las Vegas, and Camano Island on our “2018 vacations we travel-hacked” list is Switzerland! This was my sixth time to Switzerland but my first time bringing kids along.
The Trip
Once again, we traveled at a peak time to a destination famous for being expensive. We were in Switzerland for 7 nights over the holidays, and also traveled overnight getting there and getting home – so we were away from home for 9 nights, 10 if you include the airport hotel the night before the trip.
We were mostly in the Berner Oberland, exploring Interlaken, Thun, Murren, and Grindelwald, with a brief visit to Zurich on our way home.
We had the obvious advantage of staying with friends for the majority of the trip, although this did not mean they footed the bill for all our food. In fact, we ate out almost every day and consumed as much local chocolate and cheese as we could get our hands on… which you’ll see reflected in our dining/grocery spending.
We also willingly took on the extra expense of premium economy and business class air travel, as well as three nice hotel stays to make our flight schedule more convenient. You could easily do Switzerland for less than this, particularly if you don’t mind flying in basic economy in the off season (and if you have the advantage of flying from closer than the west coast of the USA). You could also do this trip for a heck of a lot more.
Below is the cost breakdown for our trip, and as such the last of our spending for 2018. This is for a family of 4 during the ever-popular travel time of Christmas break.
It’s official: our list of funtivities for 2019 will include building an investment property from the ground up!!
Well, okay… let’s say it’s as official as it can be without actually being done. I suppose there’s always a chance of things getting derailed anywhere in the process.
We’ve never done anything like this before.
It’s kind of like that time we decided to make a gingerbread castle from scratch.
Why I’m Sharing This
First, so I actually keep track of the whole thing – including the little numbers like the ones you’ll see below. Keeping close track of it will help us decide if it was worth it and if we want to do something similar again.
Second, because I’m always wondering how my peers are investing their money and what that looks like. I get that it’s probably really intimidating for a lot of people to share this kind of stuff, but it doesn’t bug me. So I’m putting this information out there in case other people are wondering the same thing.
Why Now?
We are getting our student debt and business debt well under control, so we decided it was time to hunt around for another way to invest and grow our net worth. Traditional investment/retirement accounts bore us, and we have no interest in owning more offices (which seems to be a frequent next step of ortho docs in my position).
We like real estate, but aren’t super experienced with it. We own (or, more accurately, have mortgages on) our primary home and one long-term rental in another state which mostly takes care of itself. So we decided we wanted to try something new. We settled on building a vacation rental property.
The Location
We bought a little chunk of land in the gorgeous town of Sedona, AZ (where the banner photo was taken) in early 2017. The lot is a little over 10,000 square feet and is just a short walk from Uptown Sedona (the main tourist-trap part of this very touristy area). It’s a perfect location for a vacation rental and not a half-bad place to retire, should we want to do that there someday.
We paid $89k for the lot, had the seller finance it for a few months, and then paid it off (so we paid minimal interest and never involved a bank).
The Project
We recruited the help of a well-reputed contractor as well as a designer and architect. After changing our minds a dozen times about what we wanted, got an awesome plan back for a little under $5k.
This thing took 6 adults and the better part of a day to assemble, and it only stayed together after being left overnight wrapped in that green tape that they use on flower bouquets.
The structure will have a 3-bed, 2-bath “main house”, and an attached “mother-in-law suite” with 2 bedrooms and 1 bathroom. The total square footage is a little under 3k. The build is estimated to cost $506k.
For the sake of comparison:
“The median home value in Sedona is $505,400. Sedona home values have gone up 11.4% over the past year and Zillow predicts they will rise 4.9% within the next year. The median list price per square foot in Sedona is $281…The median price of homes currently listed in Sedona is $599,450.” (Zillow, December 2018).
Our yet-to-be-built house just appraised for $706k.
We’ll let you know how much we hate or love the experience of trying to build something like this. We’ll also, of course, be sharing the cash flow of this property once it’s up and running as a vacation rental. Then we’ll know if this thing is a huge win or a huge failure investment-wise.
The Costs So Far
For now, here’s where we’re at (approximately):
Lot: $89k
Design: $5k
Property taxes paid to date: $2k
Other (weed clearing/”sewer standby” fees): <$1k
Builder’s risk insurance: <$500
The Upcoming Costs and (if We’re Lucky) Profits
As mentioned above, the build itself is going to cost $506k. We are planning to borrow $450k as a construction loan and pay for everything else in cash. The construction loan will convert to a traditional mortgage when the house is finished.
If we were building this as a spec home and could sell it for its appraised value when it was finished, we’d pocket about $158k before taxes. That’s over $52 per square foot or 22% profit, however you want to look at it. I feel pretty good about these numbers but they also don’t matter too much because we don’t plan to sell.
The best-case scenario is that we will be raking in scads of vacation rental income – beyond our mortgage and maintenance expenses – starting in summer of 2019. Similar properties in that area are currently renting for $300-500 per night.
The worst-case scenario is that this thing generates zero money and/or the economy tanks real hard (like the media seems to want us to believe it will at any minute). That would be a huge bummer, but even in that case we should still be able to stay above water with this thing for the long haul.
We’ll keep you posted.
Ta-da! No doubt Good King Wenceslas lived in a structure exactly like this. Merry Christmas to all!
Second-Hand Holidays: Why Our Kids Aren’t Getting New Stuff for Christmas
There’s something about the prospect of getting new stuff that causes kids to go a little nuts around the holiday season. I’ve heard “You know what I want for Christmas…?!” approximately a thousand times since Halloween. And the answer to that question is not a single, simple item. Heavens, no. Long gone are the days when kids sent a hand-written letter to Santa asking for a jump rope. Kids are now making online “Christmas wish lists” on par with wedding registries, and plenty of parents are boldly crowdsourcing holiday shopping money “for the kids!”
We’re kind of over it.
Here are five reasons why my husband and I – despite loving the holiday season and having plenty of money available to spend on our little angles – have all but nixed Christmas presents in our household: …
