Aggressive Student Loan Repayment Strategies

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I understand that IBR will allow you to pay 10-15% of your AGI towards your loans, but for me, I find it unsettling that this will extend my loan repayment over close to two decades..
Does anyone know if you can apply for IBR and choose to make overpayments every month, and if things get tough, would I be able to fall back on the 10-15% of my AGI? I understand that the interest you pay back is tax deductible, but it is only up to set amount annually, and also, you are better off paying down your principle then taking the tax benefit.

I will graduate with ~160k in debt (I borrowed only what I needed - this amount is just tuition costs, and I covered everything else on my intern salary. Doing the PharmD and MS dual degree from a private school is very expensive..). I calculated my monthly payment on a 10 year repayment program to be approximately $2000. I plan on living very frugally and making large overpayments (paying $3000) to cut down the amount of time I will be paying back the loan and saving thousands on interest.

Anyone else plan on doing this? What's your situation and strategy? Is it even worth saving the recommended 10% on of every paycheck towards savings when you have huge student debt? I planned on saving less until my loans were paid off.

Btw, I used this calculator to calculate how these overpayments will shorten my loan duration (I typed in the 4 different loans I have and interest rates): http://unbury.me/


Some inspiration: this harvard MBA guy paid off 95k in debt in 10 months (he had been working previously so he drained his savings in addition to be ing frugal). Interesting read.
He talks about how he would bring a flask with alcohol when he was out with friends so that he only had to order a coke.
http://nomoreharvarddebt.com/about/

My husband and I are both recent professional school grads - me in Pharmacy and him in Physical Therapy. As a result, we have a HUGE student loan debt.
Our plan right now since his field is more stable than pharmacy is to use his income to live off of and mine to simply pour towards student loans. There's a little wiggle room though, once I get a job (Im a recent grad and not licensed yet), we do plan on saving a little of my income to pay cash for a nicer car (think a 10 y/o+ small AWD SUV) and get a decent emergency fund of about a few thousand.
My thoughts on the matter are that anything you save while you are paying your debt should return an interest higher than what your debt is. So at an average rate over 7% (averaging Grad Plus and Stafford rates) you would have to get an investment of over 7% to make it worthwhile, because everything you are using to save and not paying towards debt is accumulating more interest that you will eventually have to pay. Plus when you save, you lose a small percentage towards inflation (what you have now, will buy less in the future).
So in my view, it makes more sense to kill that ridiculous high percentage student loan debt before developing any big time savings.
Of course, I'd still advocating putting money towards your employer's 401k match during this time since that's free money, and I think it's good to have an emergency fund of easily accessible funds for what crap happens. But beyond those two things, I think it's smarter to just kill student loans off.
As for paying over your IBR, I think you can. Right now my loans aren't in repayment, but my husbands are and we applied for IBR for his, which is still in process (the company has screwed up like 3 times coming up with our monthly payments) so I'm not 100% sure about the overpayment, but I really don't see why they wouldn't let you overpay.

I have about 140k in debt from pharmacy school (borrowed the absolute minimum). I am pursuing grad school so will only be able to work part time (~10-15 hours a week). I plan to live off my stipend of 18k a year and use the rest of the money towards unsubsidized loans (subsidized loans do not occur interest in school) . I set a hard limit that I will absolutely not spend more than 18k a year. I calculated that in 4 years I would be able to pay off about 80k but still have 60k of debt left. I think I am screwed

Originally Posted by koercive

I will graduate with ~160k in debt (I borrowed only what I needed - this amount is just tuition costs, and I covered everything else on my intern salary. Doing the PharmD and MS dual degree from a private school is very expensive..). I calculated my monthly payment on a 10 year repayment program to be approximately $2000. I plan on living very frugally and making large overpayments (paying $3000) to cut down the amount of time I will be paying back the loan and saving thousands on interest.

IBR is only good if you owe a lot of money and do not make much. 160k is a lot of money but reasonable. Live at home and do not buy anything big for the first few years. You should be able to pay most of your student loans within 4 years. It is not difficult. I know this because I did it.

Live with family for a year or buy a trailer and pay it off. Or refinance for 30 years, find a job that uses public service loan forgiveness act and make minimum payments, then after 10 years the rest is erased.

I'll end up with 80K Once I graduate including undergrad loans.

huntermare: I forgot to mention, but I plan on contributing to my 401k up to my employer's match. I agree with you on the comment about getting higher than 7% returns otherwise I am losing big time. I have played with stocks since starting undergrad, but I don't think it's worth a risk unless I am consistently picking 2x, 3x baggers (not gonna happen).

I likely can get a job in the public sector (my last employer has a few openings) to qualify for the loan forgiveness program, but I find that I am very happy in the corporate world, where I am currently working. Financially speaking, taking the public sector job is advised; however, I am willing to give that up to work in pharma (if I get in). I have decided that I will live frugally (either live with parents if I'm close to them) or rent in a not-so-nice area until my loans are paid off. I am more cognizant of my finances now and have enrolled in Mint.com's services. Also, not gonna buy a car - my 8 year old car is running smoothly (~30mpg) and is still fun to drive

Assuming a take home salary of $6000 (arbitrary and after 401k max match), how would you guys break it down spending wise?
$3000-3500 towards loans
$2500 towards cost of living including rent (I will likely be in a large metropolitan), food, ALL expenses
$0-500 towards personal emergency fund/liquid savings and investments

Originally Posted by koercive

Assuming a take home salary of $6000 (arbitrary and after 401k max match), how would you guys break it down spending wise?
$3000-3500 towards loans
$2500 towards cost of living including rent (I will likely be in a large metropolitan), food, ALL expenses
$0-500 towards personal emergency fund/liquid savings and investments

If you are not living with the family and renting an apartment, then $2,500 for living cost may be too low for L.A. An apartment can easily cost you $1500 a month then plus gas, car insurance, health insurance, food, clothes, etc. The only real saving is living with the family.

Live at home if possible, max out your 401k at $17,000 a year and after you have saved 3 months of emergency fund, use the rest of your money to pay back your loans. Set a goal of paying everything back in 5 years.

Not to be too insulting, but isn't it sad to be in your mid 20s-30s, have a doctorate, make ~$100,000+, and revert to living with Mommy & Daddy?

Originally Posted by RX86

Not to be too insulting, but isn't it sad to be in your mid 20s-30s, have a doctorate, make ~$100,000+, and revert to living with Mommy & Daddy?

Yes, you shouldn't hold your head up (until you have paid back your student loan).

Originally Posted by RX86

Not to be too insulting, but isn't it sad to be in your mid 20s-30s, have a doctorate, make ~$100,000+, and revert to living with Mommy & Daddy?

In many other countries, it's the norm to live with your parents until marriage, no matter how old you are.

Originally Posted by RX86

Not to be too insulting, but isn't it sad to be in your mid 20s-30s, have a doctorate, make ~$100,000+, and revert to living with Mommy & Daddy?

Making a prudent financial decision while young that will have a major impact on your ability to provide a strong future for your family is never "sad".

Originally Posted by RX86

Not to be too insulting, but isn't it sad to be in your mid 20s-30s, have a doctorate, make ~$100,000+, and revert to living with Mommy & Daddy?

I have to agree with this. Especially for men. Living with your parents after finishing a doctorate? Really? Work a few extra shifts or sign up for PRN jobs. The pride of adulthood is worth at least that. Your parents have fed your for all these years, do you really have the right (or face) to ask them for more?

Originally Posted by xiphoid2010

I have to agree with this. Especially for men. Living with your parents after finishing a doctorate? Really? Work a few extra shifts or sign up for PRN jobs. The pride of adulthood is worth at least that. Your parents have fed your for all these years, do you really have the right (or face) to ask them for more?

I agree with you. I couldn't think of living with my parents rent free without picking up the tab on something to help out (bills, groceries, entertainment expenses). I guess it only makes sense if you still make less than your parents' combined incomes, otherwise it sounds like a person is stingy if they're making more than their parents and not contributing to the household in some way.

My cousins' lived with their parents for years after they graduated from college. I don't know the situation of that but now the two brothers bought a house and their parents live with them now. Another one of my relatives have a massive house because they used the salaries on the three brothers, the parents, and one of the brothers' is married. I guess it depends on the situation. Like, why would I buy myself a house to live in all by my lonesome self when I can live with my family?

Originally Posted by xiphoid2010

I have to agree with this. Especially for men. Living with your parents after finishing a doctorate? Really? Work a few extra shifts or sign up for PRN jobs. The pride of adulthood is worth at least that. Your parents have fed your for all these years, do you really have the right (or face) to ask them for more?

Coming from your Asian background, I have to say that I am quite surprised by this view. It was my understanding that most Asian cultures prioritized familial strength and prosperity, thus would not making the decision to live with parents for a length of time after schooling, if financially prudent, be permissible in this regard? Please don't misunderstand, I am a strong proponent of independence, however, I would say that keeping money in the family (by avoiding paying interest/building investments) is not a sign of weakness and instead one of strength.

Think about the most powerful and influential families in the world and you will probably discover humble beginnings, but long-term resolve to increase familial affluence and resources. In my personal situation, I did indeed live with my parents for a year after school, during which time I worked 55-60 hours per week at my regular job and 20+ hours managing my rental property and increasing my financial literacy. My parents became millionaires at the age of 45, I will be a millionaire by 32 and I hope I can assist my offspring in achieving even greater accomplishments.

I asked my father once how I could repay him for all of the assistance he has given me, including paying for my professional education and staying in his home for a year after graduation. He responded by telling me to do the same for my children, if I had no children to find some (deserving yet unable) and do it for them, and to help my brother and sisters if it became necessary. In these ways I will make sure to repay my parents for their gifts, and will do so in amounts many times greater than what was received.

Originally Posted by Dr Wario

Coming from your Asian background, I have to say that I am quite surprised by this view. It was my understanding that most Asian cultures prioritized familial strength and prosperity, thus would not making the decision to live with parents for a length of time after schooling, if financially prudent, be permissible in this regard? Please don't misunderstand, I am a strong proponent of independence, however, I would say that keeping money in the family (by avoiding paying interest/building investments) is not a sign of weakness and instead one of strength.

Asian does prioritize family ties. It is a two way street, the parents are suppose to provide every means to succeed for the young until they are adults, then it becomes the children's duty to provide for the needs of their parents. This can be quite extreme in asian, the kind of sacrifices performed by parents to children and vice versa. "Xiao shun", or filial piety, may be a foreign concept to people here, but it requires us children to be dutiful, loyal and obedient to our parents.

I consider parental duty to their children to be complete by the end of undergrad (or grad school at the latest), and children's duty to provide for parents started then. This is why I never accepted any financial help from my parents after undergrad. This is also why my wife has been sends some of what little money she made at the time to her parents regularly for years. My family, as you are aware, clawed our way out of ghetto here to become quite well off today. These days, they still offer me financial help. My response is always: you have done enough, taught me well, now I can stand on my own. Their response is: it'll be yours anyway after we are gone. That's the bond within an asian family, and how wealth is passed on.

I completely agree that there is savings to be had by living off the parents. No arguing with numbers there. However, somethings are worth more than that. I know, it's not the most efficient means to save money, but it's hard to explain. Feel me?

I agree. My wife and I are planning on living with my in laws while I do rotations, and we'll probably be there for about a year or so afterward...of course there is a chance my father in law might have a house for us to live in ourselves assuming none of the cousins grab it before we have the chance.

I figure the time will come when they are going to need my help down the road, so I want to get myself in a position where I'll be able to help them the best I can. I big part of that is to pay down this debt early. I don't see any shame in families sticking together as long as the decision is mutual and there is no laziness involved. Its all about the motivations behind the decision, like so many other things.

Originally Posted by xiphoid2010

Asian does prioritize family ties. It is a two way street, the parents are suppose to provide every means to succeed for the young until they are adults, then it becomes the children's duty to provide for the needs of their parents. This can be quite extreme in asian, the kind of sacrifices performed by parents to children and vice versa. "Xiao shun", or filial piety, may be a foreign concept to people here, but it requires us children to be dutiful, loyal and obedient to our parents.

I consider parental duty to their children to be complete by the end of undergrad (or grad school at the latest), and children's duty to provide for parents started then. This is why I never accepted any financial help from my parents after undergrad. This is also why my wife has been sends some of what little money she made at the time to her parents regularly for years. My family, as you are aware, clawed our way out of ghetto here to become quite well off today. These days, they still offer me financial help. My response is always: you have done enough, taught me well, now I can stand on my own. Their response is: it'll be yours anyway after we are gone. That's the bond within an asian family, and how wealth is passed on.

I completely agree that there is savings to be had by living off the parents. No arguing with numbers there. However, somethings are worth more than that. I know, it's not the most efficient means to save money, but it's hard to explain. Feel me?

I do understand your points, and please correct me if I am wrong, but when you said that accepting assistance from parents after schooling as being "sad", you were referring to those who use the aid to subsidize their own laziness? Yes, accepting help so that you can party all day and drive an awesome car is somewhat detestable, but I do not feel acceptance for the purpose of increasing familial fortitude is so.

Now indeed, how much assistance one accepts for their betterment is a matter of personal course, simply weighing the increase in financial strength vs sharpening the skills of independent living. After one year of residing with my family, I decided it was time to diversify the portfolio and mitigate localized risk by moving to a different area (plus it really sucks to bring a lady over to your parents house).

Originally Posted by Dr Wario

I do understand your points, and please correct me if I am wrong, but when you said that accepting assistance from parents after schooling as being "sad", you were referring to those who use the aid to subsidize their own laziness? Yes, accepting help so that you can party all day and drive an awesome car is somewhat detestable, but I do not feel acceptance for the purpose of increasing familial fortitude is so.

I didn't say it was "sad". I do however think it's somewhat unmanly to have a fully grown man to be still living with his mom.

I am also not a fan of living with parents during adulthood. I haven't lived at home or received support from my parents since I was 19.

Originally Posted by xiphoid2010

I didn't say it was "sad". I do however think it's somewhat unmanly to have a fully grown man to be still living with his mom.

It is also unmanly not being able to fully provide for your family because it takes you 20 years to pay back your student loans

Originally Posted by BMBiology

It is also unmanly not being able to fully provide for your family because it takes you 20 years to pay back your student loans

Provide for your family??? No pharmacist's family is going to go hungry because of loan payments. I've raised children on much (MUCH) less than what a pharmacist makes. Perspective please.

Originally Posted by All4MyDaughter

Provide for your family??? No pharmacist's family is going to go hungry because of loan payments. I've raised children on much (MUCH) less than what a pharmacist makes. Perspective please.

If you live in the middle of country then you are okay. But if you live in a city and you want your kids to go to good schools, $250,000 in student loan is goin to make that difficult.

Originally Posted by BMBiology

If you live in the middle of country then you are okay. But if you live in a city and you want your kids to go to good schools, $250,000 in student loan is goin to make that difficult.

It's possible that you might have to give up some of life's luxuries, but that in no way equates to "not being able to provide for your family." The vast majority of Americans make do with much less than what a pharmacist brings home.

Being able to provide for your family is subjective. Some people think just raising their children until they are 18 is sufficient. I don't. I don't want my kids to be buried in student loans. I want them to live in a safe neighborhood. I want them to go to good schools. All of these things require a lot of money and frankly, $130,000 a year salary with $250,000 in student loans is going to make those things difficult if you do not aggressively tackle your student loans.

Originally Posted by Dr Wario

(plus it really sucks to bring a lady over to your parents house).

Originally Posted by xiphoid2010

I do however think it's somewhat unmanly to have a fully grown man to be still living with his mom.

Yeah, if you're still looking for a mate, that seems like it would greatly extend the "live here until marriage" timeframe.

Originally Posted by All4MyDaughter

I am also not a fan of living with parents during adulthood. I haven't lived at home or received support from my parents since I was 19.

My parents would love me to move back home. As an only child, they have bigtime empty nest syndrome. I'm only about an hour away, so we still see each other regularly, but they are very excited about me moving back home for 6 weeks for an APPE. After graduation, I don't think I would move back in unless I couldn't find a job and was broke, although my girlfriend probably wouldn't be crazy about that idea.

I know 2 asian girls paid $70k in a year in student loan at 6.8% living at her parent's home. Her loan is $150k, it will be be paid off by the end of this year. I don't get why people who are able to pay off loan, but defer it to 10-30 years because "high cost of living expenses". And, IMO $2500 for monthly expenses is crazy to me... I'd prolly spend $1500/month, ghetto it up (1000 rent + 500 misc) if that lol... Right now, I am spending around $900/month (this is extreme frugality, I don't recommend for most people lol) and saving at least $5k/month.

You can make $1M/year and still be broke if you don't play good defense, at the end of the year you will have $0. It does not matter what you make, what matter the most is what you get to keep. If you can't save, you will NEVER be wealthy.

Originally Posted by Momus

Right now, I am spending around $900/month (this is extreme frugality, I don't recommend for most people lol) and saving at least $5k/month.

I suspect you may wear this shirt from time to time

Awesome shirt lol...

My motto is if I don't need it, it's not a bargain

I've lived in LA for ~$600 for my own room and shared bath
I am currently living in SF also paying <$600 for my own room and shared bath

I plan on renting in a similar fashion after graduating (maybe get my own bath after I graduate, but shoot for under $1000 inc. utilities) rather than living with my parents (I may consider it if I get a job close to them, but it's unlikely that I will live with them). I can cut down the $2500 all expenses budget by cooking more of my meals and not going out as much

Originally Posted by koercive

I am currently living in SF also paying <$600 for my own room and shared bath

You must be in the tenderloin or something

Originally Posted by BMBiology

Being able to provide for your family is subjective. Some people think just raising their children until they are 18 is sufficient. I don't. I don't want my kids to be buried in student loans. I want them to live in a safe neighborhood. I want them to go to good schools. All of these things require a lot of money and frankly, $130,000 a year salary with $250,000 in student loans is going to make those things difficult if you do not aggressively tackle your student loans.

My husband and I have never lived in a dangerous neighborhood or sent our kids to a bad school, and we've never made "a lot" of money (until now). It's not a choice between The Ghetto and 90210. There's a lot of "in between" in America.

Originally Posted by All4MyDaughter

My husband and I have never lived in a dangerous neighborhood or sent our kids to a bad school, and we've never made "a lot" of money (until now). It's not a choice between The Ghetto and 90210. There's a lot of "in between" in America.

especially on medicaid!

Originally Posted by All4MyDaughter

My husband and I have never lived in a dangerous neighborhood or sent our kids to a bad school, and we've never made "a lot" of money (until now). It's not a choice between The Ghetto and 90210. There's a lot of "in between" in America.

Originally Posted by confettiflyer

You must be in the tenderloin or something

nope!

I make more than my parents do; I'd feel like a first class a-hole living with them, especially if I wasn't contributing to expenses. Different strokes and all that, but I think living off of your parents after pharmacy school is nuts. I took the loans, I knew what I was getting into, now I pay them back. We live very comfortably and I'm repaying double the minimum on my loans. It's not hard!

My advice is to set up a plan to pay off your student loans in about 5 years. It is absolutely foolish to pour every last dime you make into your student loan debt. Yes, a 6.8% interest rate is somewhat high (nowhere close to credit card interest however), but it is not worth to sink every last dollar into paying off that loan while passing up other opportunities.

The key to successful investing is DIVERSIFYING, remember that. Paying off your student loans is indeed an investment in yourself at 6.8 %, that is true. That is why you should have an aggressive plan. However, you don't want to put all your eggs in one basket.

Not at least contributing enough into your 401k (that is at or greater then 90% equities vs. bonds if you're in your 20s) to get the company match is foolish. As a matter of fact, you need to contribute at least 1 or 2 % more then your company match to force you to save and invest. I note that you're doing this, so good job.

Not contributing to a Roth IRA during your first year of licensure (assuming you won't hit the income limits) is foolish because it provides a great tax shelter to withdraw from when you are ready to retire.

During your first FULL annual year of licensure, you need to consider the traditional-to-Roth IRA conversion.

You should also be building up equity in the form of savings. If your in your 20s, these savings should be in slow growth mutual funds, bonds, etc. Not in a checking or savings account. Set up your checking account for your direct deposit and bills, and keep the minimum amount to avoid a penalty. All the rest of your money should be wired over to your financial accounts. These slow growth investments are safe, will build up equity over time in the form of capital gains and dividends, and allow you to add on additional wealth. If you don't start investing now while you're in your 20s, you will lose out on the opportunity to build substantial wealth (you will need probably 5 million dollars at least to live at your current standards in 40 years) by the time you are ready to retire. Beyond that, it's extremely important in today's volatile market (and the current economic straits of the pharmacy profession) to build up a safety net in case you lose your job, etc. Paying off your student loans rapidly doesn't provide you with food and housing in case of job loss, etc.

While the market is down, this is a great time to consider purchasing an inexpensive house/condo, etc. Why rent for $1500/month when you can pay a mortgage for the same price? You're building up equity and just paying yourself off. I'm not saying you do it now (maybe get a roommate after you graduate?), but after a year or two of building equity and getting ahead on your loans, you are better off paying off something you own as opposed to dumping your money down the rabbit hole known as rent.

Again, I reiterate, an aggressive plan to pay off student loan is a GOOD THING. But do not put all your eggs in one basket. If you want to be very financially comfortable throughout your life, you need to invest and DIVERSIFY.

Good luck.

Originally Posted by koercive

I've lived in LA for ~$600 for my own room and shared bath
I am currently living in SF also paying <$600 for my own room and shared bath

Living at home (assuming your family welcome you back) >> Living in a ghetto apartment with a roommate (assuming $600 in SF would only get you a not-so-nice apartment and assuming your roommate is also poor)

I have paid back virtually all of my student loans, have a good 401k nest egg, own a chuck of company's stocks, drive a nice car and have enough saved up to buy a nice house (yes, I am showing off now). And you know what? I probably live better than most of my friends. Once your money is free from student loan debt and their high interest rate, you can have your hard-earned money work for you.

Paying back my loans early is probably the best decision I made after I graduated from pharmacy school. It is not hard. I just takes some planning. Good luck to you.

I would be making the same as each of my parents but if I asked to move in with either one of them they would laugh at me. Even if I asked to move in with them now or when I was 20 and accepted they'd still laugh at me

I'm stretching my student loan and minimizing my payments under IBR. It's funny because I just consolidated and downloaded an application for IBR. They ask for a most recent paystub if your income drastically changed last year (instead of a normal tax return).

My most recent pay stub will consist of a 4 day work week because of the july 4th holiday, so they get to extrapolate my income from this and my IBR payment is that much lower.

That is...until next year at least.

Originally Posted by Notecard

I would be making the same as each of my parents but if I asked to move in with either one of them they would laugh at me. Even if I asked to move in with them now or when I was 20 and accepted they'd still laugh at me

Clearly, you are not asian. My mom wants me to move in with them all the time... I was like "no..."

Hold the phone. Without knowing your loan situation, in what world is using IBR consistent at all with agressive student loan repayment strategies?

I guess if you work in nonprofit/federal, have 100k in federal loans and another 100k in private, sure, enter IBR and pay off the private loans ASAP, and then use student loan forgiveness after 10 years. But other than that I'm not sure how IBR is relevant to paying off debt.

My current strat is paying off highest interest loans first (obviously). So I'm paying much more on fixed rate staffords, and minimums on my variable rate staffords and private loans (currently chillin with an interest rate of 1.5% to 3%). My emergency fund is all set now, so I started contributing a little more for 401k/IRA (mainly to reduce my tax liability).

Originally Posted by GreyFox2002

TL;DR: pay student loans over 5 years, diversify, contribute more than 401k match, contribute to a Roth IRA or do traditional->Roth conversion, invest savings, possibly buy a house.

Completely agree with most of your sentiments.

re: student loans, i hate perpetuating the suze orman BS but getting rid of debt is a great thing that almost everyone should do. how was the S&P 500 performance during 2011? definitely didn't beat 6.8%. now if you were invested in treasuries that would be a whole different story, but I don't know many fresh graduates who put their money in fixed income (or even knew what 401k is for that matter). but i guess that's where diversification comes into play.

I would add that in your first year out of school, you need to contribute to a Roth, AND pay off as much student loan interest as possible up to $2500, as it is very unlikely that working as a full time RPh you will be able to deduct student loan interest anymore.

With 401k contributions, I assume most if not all of us reach the 28% tax bracket. Why pay even more tax on everything you make over 85k, when you can not only save for retirement but also lower your tax liability.

You mention investing savings, but I would definitely recommend a decent liquid emergency fund. I guess you could have a regular investment account, nowadays money transfer is pretty easy. In any case though I wouldn't recommend investment unless people are willing to do their homework and actually learn about investing.

WRT real estate, colleagues around my age who bought post-2008 for the most part were tremendously undercapitalized and IMO should not have bought a house. I mean maybe I'm cheap but I wouldn't buy a house if I had less than 20% and thus have to pay PMI. And a lot didn't factor in taxes, condo fees, or repairs. But I also live in a high cost-of-living area, if I was somewhere like Florida or Texas where everything is supercheap, bring on the McMansions.

I've already written a ton, might as well throw in a shout out for low-cost mutual funds. 1% annually adds up when you're talking about a timespan towards retirement.

Just some food for thought.

I don't think there's a trick or strategy...

just
1.) work a lot
2.) live as cheap as humanly possible
3.) and pay it down with your post-tax money as much as you can.

other than that:
-fully fund your 401k
-do the traditional->roth conversion,
-and if you can, trade stocks, or put your remaining earnings (if you have any after student loans) into those bonds, CD's, or mutual funds. I haven't found any other good ways to make your money grow. Savings accounts suck...

Originally Posted by GreyFox2002

You should also be building up equity in the form of savings. If your in your 20s, these savings should be in slow growth mutual funds, bonds, etc. Not in a checking or savings account. Set up your checking account for your direct deposit and bills, and keep the minimum amount to avoid a penalty. All the rest of your money should be wired over to your financial accounts. These slow growth investments are safe, will build up equity over time in the form of capital gains and dividends, and allow you to add on additional wealth.

Thanks for the advice! As a question for both you and the general forum, may I ask, what are your favorite financial accounts to use? Are there specific companies you prefer to work with?

Originally Posted by Justherewhynot

Thanks for the advice! As a question for both you and the general forum, may I ask, what are your favorite financial accounts to use? Are there specific companies you prefer to work with?

Vanguard. Really really low fees.

Originally Posted by confettiflyer

Vanguard. Really really low fees.

I second that. Go Vanguard.

Even lower fees ~0.16% on Admiral class shares when you have >10k in most index funds.

No account fee on a Vanguard brokerage account when you have >50k, which you can use to trade their ETFs commission free. Vanguard ETFs also have a super low expense ratio, average 0.17%.

With Vanguard, once you have $50k with them, you are a member of their Voyager Services. They will give you some special services.

What about Schwab? They seem to have an S&P 500 index fund with expense ration of 0.09% versus 0.18% for a similar Vanguard one. Any caveats?

Originally Posted by gnuel

What about Schwab? They seem to have an S&P 500 index fund with expense ration of 0.09% versus 0.18% for a similar Vanguard one. Any caveats?

That's fine. Fidelity also has their "Spartan" funds with low expense ratios. But neither offer as many as Vanguard.

wrong post