Checkup – April 2020

Welcome to another Dr. PayItBack monthly checkup! I use this space to remain accountable to our expenses and goals, track net worth and debt, and muse on what was done well and what can be improved.

I confess that I thought April would feel every bit as slow as March, but instead it seems to have gone by in the blink of an eye. No complaints there; every month is hopefully getting us a little bit closer to ‘normal’, whatever that will eventually look like.

As I predicted in my last checkup, my hospital has been unable to weather the current environment of no elective procedures, and they have instituted 5% salary cuts to all physicians across the board, starting in May. Considering that my hospital administrators have given themselves cuts on the order of 10-20%, and the fact that many of my colleagues are dealing with loss of income ranging from 10-100%, I feel like I have gotten off easy so far. Here’s hoping that it’s not the first of many.

Budget/Cash Flow

April 2020 Budget

If I had any questions of what a bare bones budget would look like for the PIB household, this is about as close as I’ll get while I still have an income. Food budget is pretty stable, with the rare expensive meal out replaced by large amount of takeout. Entertainments consists entirely of streaming services and video games. Spending on everything else (cars, daycare, random Target excursions) is way down or absent.

Reflected here is also a decision to hoard cash while making minimum payments on student loans and deferring investment over and above 403b contributions. I still consider my work situation fairly tenuous, and while I hope the worst news is behind me, I’ll feel a lot better with a 3-5 month emergency fund in place. Furthermore, the variable interest rates on our student loans have reached such ridiculously low levels that even the math argues for just sticking the money in our savings account.

PayItBack Progress

April 2020 Debt

The aforementioned ridiculous rates. If rates stay here (unlikely?) and I payed only the minimum for the rest of my loan term, I would pay about $1,600 total in interest over 4 years. When cash is king, that’s not a figure that motivates a lot of overpaying. I’m still very grateful to have the car payments out of our hair though.

Net Worth

April 2020 Net Worth

Nice to see progress here yet again, in fact the largest monthly net worth gain I’ve ever posted ($27,260). No illusions that this will continue; while I’m staying the course and not acting on my suspicions, I am definitely in the camp expecting a ‘W-shaped’ recovery at best. It wouldn’t surprise me at all if May ends up down or even. I think I’ll consider it a victory if I can reach net worth zero by the end of July.

The question is where to start putting money when I reach a satisfactory cash cushion (~$30,000). Do I build it up more and consider it an extra-large emergency fund/start of a house down payment? Do take my own Boglehead advice and lump it into our backdoor Roths? Sometime soon I will have to tackle the 0% APR credit card, lest I get whacked with massive interest come August. Decisions, decisions.

Financial Goals for 2020

1) Devote 2/3 (66.7%) of net income to wealth-building: 55.7% running average
2) Max out 403b: $7,056 of $19,500 (36.2% done)
3) Max out backdoor Roth IRAs: $0 of $12,000 (0% done)
4) Max out 529s for state tax benefit: $0 of $16,000 (0% done)
5) Save an additional amount to achieve 20% of gross salary: $6,950 of $28,500 (24.4% done)
6) Pay 2019 tax underpayment: $0 remaining
7) Pay off all carried 0% APR credit card balances: $18,910 remaining
8) Pay off my car loan: $0 remaining
9) Pay off Mrs. PIB’s car loan: $0 remaining
10) Pay off Mrs. PIB’s student loans: $24,790 remaining

How Far I’ve Come

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