Has Anybody Successfully Paid Off their Loans Early?

[Groove]

Can somebody tell me how divorcing in residency when you're presumably making $50-60k/year and anywhere from $50-300k ends up costing you a nice chunk? Was it lawyer fees? How much could alimony reasonably be in this scenario where you're financially in the hole and likely don't have too many assets? In divorce wouldn't your debt be split as well if you were liable for alimony at that point? Or was there child support involved?

I'm married and I'm so deeply fearful of my spouse divorcing me. While we have an awesome relationship, residency hasn't started yet, and who knows how we'll handle it when I'm away for such long and odd hours. With all the stories I hear of divorce in real life and on these boards, I can't help but think it's an inevitability...

If you have an awesome relationship then why are you so worried about divorce?

---

Members don't see this ad.

 

[deleted480308]

Can somebody tell me how divorcing in residency when you're presumably making $50-60k/year and anywhere from $50-300k ends up costing you a nice chunk? Was it lawyer fees? How much could alimony reasonably be in this scenario where you're financially in the hole and likely don't have too many assets? In divorce wouldn't your debt be split as well if you were liable for alimony at that point? Or was there child support involved?

I'm married and I'm so deeply fearful of my spouse divorcing me. While we have an awesome relationship, residency hasn't started yet, and who knows how we'll handle it when I'm away for such long and odd hours. With all the stories I hear of divorce in real life and on these boards, I can't help but think it's an inevitability...

because in many states your medical license (which you have all but earned by residency) counts as a marital asset and with it your future increased income

 

[Beargryllz]

Does the debt not transfer to the spouse if something were to happen to you??

They can sure ask your spouse to pay, but you would have had to marry a genuine idiot if they fall for this. I can walk up to any person on the street and ask for a million dollars but I doubt any of them would give it to me.

That is essentially what they're doing: asking for free money from a random person.

 

[Groove]

Can somebody tell me how divorcing in residency when you're presumably making $50-60k/year and anywhere from $50-300k ends up costing you a nice chunk? Was it lawyer fees? How much could alimony reasonably be in this scenario where you're financially in the hole and likely don't have too many assets? In divorce wouldn't your debt be split as well if you were liable for alimony at that point? Or was there child support involved?

I'm married and I'm so deeply fearful of my spouse divorcing me. While we have an awesome relationship, residency hasn't started yet, and who knows how we'll handle it when I'm away for such long and odd hours. With all the stories I hear of divorce in real life and on these boards, I can't help but think it's an inevitability...

It's complicated by a myriad of different variables including the state, length of marriage, children, assets, standard of living, degree of litigation, legal tactics, etc.. As someone else said, if you were married during medical school and they supported you to any degree, then many judges will award a portion of your earning power as an MD as alimony.

For me, it was fairly straightforward. 2 years, no kids, did not support me in medical school and she had 2 degrees with a job that paid roughly my residency salary (moonlighting added a sig discrepancy). I paid close to 85K in alimony including her legal fees. Divorce is never cheap when you have an MD attached to your name. You should have seen what they originally asked for... No, judges do not take into account your degree of personal educational debt. That being said, it was completely worth it and I would have lost so much more as an attending. No, it wasn't fair but that's life and I came out much better than I would have after residency. The primary complicating factor during my divorce was that I did not live in a no fault state and hence, required her cooperation. She and her lawyer used this for leveraging power. Or... as my lawyer put it.. "legal extortion". Essentially, the longer you wait... the more you stand to gain. So, I probably gave up more than I would have in a pure no fault state. After all, they only agreed to mediate after I threatened to move to a no fault state for my first job and file for divorce after establishing residency.

In the end, it's always about the money.

 

[EctopicFetus]

Does the debt not transfer to the spouse if something were to happen to you??

Correct.. though it depends on which type of loan you have.

 

[EctopicFetus]

I think 45% tax rate is too high. Run some numbers on www.paycheckcity.com and it seems that 35-38% is closer to what you'll pay between Federal, SS, and Medicare taxes (Florida has no state tax.) I don't know why people mention 25% or 30% tax rates. Money not in one's pocket -- charitable donations or pre-tax contributions with withdrawal penalties -- isn't useful to someone trying to pay down loans ASAP.

you tax rate depends on your deductions. there is what you pay on your MAGI but often through a variety of write offs your MAGI is much lower than your real income. We often talk about this without being clear. My real income tax rate last yr was 16%. That is of all the money I earned. Thats only federal tax not state, social security, medicare etc.

 

[The White Coat Investor]

I think 45% tax rate is too high. Run some numbers on www.paycheckcity.com and it seems that 35-38% is closer to what you'll pay between Federal, SS, and Medicare taxes (Florida has no state tax.) I don't know why people mention 25% or 30% tax rates. Money not in one's pocket -- charitable donations or pre-tax contributions with withdrawal penalties -- isn't useful to someone trying to pay down loans ASAP.

I guess if your number one financial priority is paying off loans that might be true, but if you also want to live your life-owning a home, saving for retirement, giving to charity, saving for college etc, then it might not be true.

I just did a post on my taxes for the year. I paid a lot more than last year (because I made a lot more, quite a bit more than EM average) and still only paid 21%, including both halves of the payroll taxes and state income taxes. I'd have to be grossing something like $600K+ to get anywhere near 38%.

http://whitecoatinvestor.com/2013-tax-report-and-the-new-obamacare-taxes/

Let's take a typical EM salary that first year out of residency, perhaps $225K, and assume the guy is an employee in California, single without kids, saves nothing for retirement, and inappropriately takes the standard deduction. What will he owe?
I have no idea if paycheck city is accurate, but here's what it spits out:

• Monthly Gross Pay $18,750.00
• Federal Withholding $4,671.85
• Social Security $1,162.50
• Medicare $271.88
• California $1,661.39
• SDI $187.50

Ha ha, idiots living in California. They're so dumb. At any rate, if you multiply all this by 12, you end up with:
Federal tax: $56,052 25% of gross
State tax: $19,937 9% of gross
Payroll tax: $19,463 9% of gross.

All in, this sucker is paying a 43% effective tax rate. That really sucks. But I don't actually believe it, so I suspect paycheck city isn't accurate. Let's run a little check

SS tax is 6.2% of the first $117K, or $7254 for the year, or $605 per month. Wait a minute, that's different from $1,163 a month. Makes you kind of wonder about the other numbers....

 

[circulus vitios]

I guess if your number one financial priority is paying off loans that might be true, but if you also want to live your life-owning a home, saving for retirement, giving to charity, saving for college etc, then it might not be true.

I just did a post on my taxes for the year. I paid a lot more than last year (because I made a lot more, quite a bit more than EM average) and still only paid 21%, including both halves of the payroll taxes and state income taxes. I'd have to be grossing something like $600K+ to get anywhere near 38%.

http://whitecoatinvestor.com/2013-tax-report-and-the-new-obamacare-taxes/

Let's take a typical EM salary that first year out of residency, perhaps $225K, and assume the guy is an employee in California, single without kids, saves nothing for retirement, and inappropriately takes the standard deduction. What will he owe?
I have no idea if paycheck city is accurate, but here's what it spits out:

• Monthly Gross Pay $18,750.00
• Federal Withholding $4,671.85
• Social Security $1,162.50
• Medicare $271.88
• California $1,661.39
• SDI $187.50

Ha ha, idiots living in California. They're so dumb. At any rate, if you multiply all this by 12, you end up with:
Federal tax: $56,052 25% of gross
State tax: $19,937 9% of gross
Payroll tax: $19,463 9% of gross.

All in, this sucker is paying a 43% effective tax rate. That really sucks. But I don't actually believe it, so I suspect paycheck city isn't accurate. Let's run a little check

SS tax is 6.2% of the first $117K, or $7254 for the year, or $605 per month. Wait a minute, that's different from $1,163 a month. Makes you kind of wonder about the other numbers....

Wow, I always figured Paycheckcity would be accurate. Most of the income tax calculators that I find online are also wrong, which is also surprising.

I looked up the rates and did these calculations by hand: $225k filing single with the standard deduction for federal ($6200 for 2014) and state ($3906 for 2014) tax in California is $58,108 Federal; $7254 SS; $3341 Medicare; and $18,123 State. Total tax liability of $86,826 or 38.6% of gross pay.

 

[red10]

Do any of you guys use financial planners to help with these decisions about where to put money when or have you all just read White Coat's website?

 

[deleted547339]

Do any of you guys use financial planners to help with these decisions about where to put money when or have you all just read White Coat's website?

I listen to a lot of Dave Ramsey. I'm an intern.

Also, my wife and I have knocked our loans down about 15K so far this year.

 

[dchristismi]

I'd be just about finished paying off my student loans if I hadn't divorced. Instead, I only owe 12K more of alimony and 90K in student loans now. Divorce is expensive, and I live in a no-fault state.

But it was oh so worth it.

 

[exsanguination]

If you have an awesome relationship then why are you so worried about divorce?

Because nobody except doctors understands the physical and emotional requirements of being an EM doc. Hell, most docs don't understand what that entails.

Add to that our erratic shift schedule and lack of time in residency for keeping the relationship strong and boom, you have the perfect storm.

Just look at all the posters here who likely thought they had great relationships. Doctors should never marry unless its to other doctors or high earners - the financial risk is too great!

 

[scummie]

This thread and the one from awhile back from a poster that described their budget have been the two best financial-related threads I've seen in awhile.

 

[drguy22]

So i have about 140K in loans. I just refinanced 130K of them with DR bank at 2.74% variable, the cap is at 18%, but really? how realistic is that? this economy isn't going to get better anytime soon. My payments come out to $900/month and i throw in another $800 towards principal. I live very comfortably, bought a new care (audi A6), bought to investments condos whose rent pays the respective mortgages. I am single, 29, no kids. so far I've paid 20K into retirement, i filed an extension for 2013 so that i can max it out. Ill keep filing extensions every tax year to max out the retirement fund ( my max is 51K) this is my first year out as an attending. If anyone wants to get referred to DRbank PM me.

 

[Old_Mil]

So i have about 140K in loans. I just refinanced 130K of them with DR bank at 2.74% variable, the cap is at 18%, but really? how realistic is that?

You don't remember the 70s, do you...

Sent from my Z10 using Tapatalk