Help paying off student loans

[oldstock]

This thread should be stickied in the pre pharm forum so these kids can see how lavishly some of you pharmacists are living with all that debt. You only live once guys. Spending your 20s and 30's eating ramen and not getting car washes to save a nickel seems a little insane, but to each their own I guess.

well, we always have to pay sooner or later

---

Members don't see this ad.

 

[Momus]

Muse, I'm not going to lie, reading this thread made me sad for you. I thought it was terrible that someone could work so hard to get through pharmacy school only to live like they were making minimum wage. Then I saw that you managed to make an extra $2700 payment on your student loans this month and realized you are on to something. I wish I had the willpower to pull something like this off.

This thread should be stickied in the pre pharm forum so these kids can see how lavishly some of you pharmacists are living with all that debt. You only live once guys. Spending your 20s and 30's eating ramen and not getting car washes to save a nickel seems a little insane, but to each their own I guess.

Each dollar I save now will be worth $31 after 40 years at 9% compound interest. $31 mil is my retirement money when I am 70. I don't wanna be broke ass and depend on crappy social security. You reap what you sow.

 

[anewmanx]

Each dollar I save now will be worth $31 after 40 years at 9% compound interest. $31 mil is my retirement money when I am 70. I don't wanna be broke ass and depend on crappy social security. You reap what you sow.

I do see your point. I suppose after the adjustment for inflation, the interest rate on the student loans isn't that bad year to year.

As for your last sentiment, I could not agree more. I have to rely on Veterans Compensation and Social Security Disability Income for my livelyhood right now, and it's a horrible feeling. I have absolutely no faith in the United States government to keep paying these benefits the rest of my life. Every year they try to pass another law to lower compensation for one, or the other, of the compensations I receive for my service to our "great" country.

You're wise not to rely on the Social Security system or a company's retirement plan.

 

[Muse600]

This thread should be stickied in the pre pharm forum so these kids can see how lavishly some of you pharmacists are living with all that debt. You only live once guys. Spending your 20s and 30's eating ramen and not getting car washes to save a nickel seems a little insane, but to each their own I guess.

yes, to each their own...

but I'm with Momus - I can't rely on anyone to help me out when I'm 70

also - "fun" is relative. And I'm not saying don't enjoy your 20's and 30's - just set a reasonable budget for it. For me - it's ~$250/month riding motorcycles at the track or in the desert.

even by that measure, I've had "fun" by the conventional "20's and 30's" measure more than most of the pharmacists I know...check it out here: http://forums.studentdoctor.net/threads/help-paying-off-student-loans.1047214/#post-14740599

also **UPDATE** - sold the mini-supermoto bike for $500 - gave $60 to a kid doing a fundraiser at school and added $440 to last month's loan payment - $3,100+ less debt!

 

[BMBiology]

This thread should be stickied in the pre pharm forum so these kids can see how lavishly some of you pharmacists are living with all that debt. You only live once guys. Spending your 20s and 30's eating ramen and not getting car washes to save a nickel seems a little insane, but to each their own I guess.

You can work for the man, be the man or own the man. I chose the latter and it is probably the best decision I made. I am debt free and way ahead most of my friends.

I am not saying you need to be frugal. I am just saying you need to be smart and generate enough money early in your career so you can have money work for you and not the other way around.

 

[pezdispenser]

Muse, I'm not going to lie, reading this thread made me sad for you. I thought it was terrible that someone could work so hard to get through pharmacy school only to live like they were making minimum wage. Then I saw that you managed to make an extra $2700 payment on your student loans this month and realized you are on to something. I wish I had the willpower to pull something like this off.

A pharmacist working full time has a take home pay of around $6,000 per month.

You should be able to live quite comfortably on $4,000/mo, and that's hardly living like you're making minimum wage. My budget is about that and I even have a mortgage.

Which leaves a hefty $2,000/mo to knock out your loans.

 

[Pharmist1720]

I've never lived on a budget but I think this thread has inspired me to start. I'm getting married to a pharmacist next month, so together we'll have around 250k in student loans. I've been out of school for 3 years and have paid off about 70k, but I've never lived on a budget. Just lucky enough to have a full time job that is 7on 7off then 2 prn jobs that always need me to work during the off week. Fiance won't graduate for another year but she works as a tech now. Right now I take home around 7250-8k per month depending on how many extra shifts I pick up. Usually make sure I pay 2k to loans each month. But with a budget I'm thinking I should be able to pay closer to 3k each month. My problem with budgeting is definitely food. We eat out all the time. What is a good goal amount to spend on food for a couple per month? Maybe I can talk her into cooking more, and maybe getting rid of her HBO. Thanks and good luck with your budget.

 

[anewmanx]

Hmm... I'm not in the shoes of you guys, and I won't pretend to be. Buuuut... let me throw my two cents in here.

My best friend died at 26, doing the job he loved as a helicopter pilot, and left three kids behind. A lot of you are making your decisions predicated on the belief that you will live to old age. That is not guaranteed for any of us.

Make a balance, and try to enjoy your lives.

 

[BMBiology]

"Analyzing government data, Pew looked at households headed by Americans under 40 and found that those who graduated college without student loan debt have seven times the net worth, nearly $65,000, as those who have student loan debt, at $8,700."

http://www.usatoday.com/story/money...tudent-loan-debt-affect-on-net-worth/9078281/

 

[pezdispenser]

Hmm... I'm not in the shoes of you guys, and I won't pretend to be. Buuuut... let me throw my two cents in here.

My best friend died at 26, doing the job he loved as a helicopter pilot, and left three kids behind. A lot of you are making your decisions predicated on the belief that you will live to old age. That is not guaranteed for any of us.

Make a balance, and try to enjoy your lives.

I don't personally know anyone who died before ~60 y/o. So I'd say there is quite a high chance that most people do live to an old age, and it is prudent to make decisions based on that.

But I also know a lot of people who do not save for retirement and spend all the money they make, and then some. What will happen to these people if they do indeed live to an old age? Keep working until they drop dead? Just live off Social Security?

 

[xiphoid2010]

65k net worth?? That's nothing.

US savings rate lately is only 4% of after tax income, it was even negative a while back. The average household income after tax is about $40k/yr, if so then the average american household saves about $1600 a year. So $65k netwoth is not surprising.

Overspending is the prevailing american culture, contrast that with Chinese houseglhold savings rate of 50% (yes that's 50 with a zero). People not spending money on expensive imports leads to trade surplus, which the government then have to buy US bonds to offset. So the Chinese government is trying to increase peronsal spending and decease savings rate.

 

[PumpkinSmasher]

We currently have 240k in student loan debt between my wife and I. We are paying it down on 10yr plan, while savings for retirement and savings for buying a house next year. We save about 20% of our gross income for retirement. We do not factor in my future pension or social security when projecting our future retirement fund. We also have a 529 account for future children and some additional investments on the side.

I have us on a budget of sorts, I do not go to the extreme of itemizing all my receipts. We cover all of are expenses and save and the rest is fun money. We still take lots of vacations, eat out a lot, drive decent cars, etc. Like an above poster mentioned, you need to cover all your expenses, emergency fund, retirement and then the rest is whatever you want it to be.

Essentially every penny of my salary that I take home is going toward our retirement savings. Her salary goes toward our housing savings, student loans, fun money, emergency fund savings, etc. We will probably start paying down my student loans quicker in a couple years. My interest rate is 6.8% and my wife is 3%.

 

[Lauralexco]

The only real long lasting solution to the increasing level of student loans is to learn how to pay them offer faster. lauralexco

 

[Momus]

Listen up, college graduates: 7 keys to a happy life

 

[pezdispenser]

My problem with budgeting is definitely food. We eat out all the time. What is a good goal amount to spend on food for a couple per month? Maybe I can talk her into cooking more, and maybe getting rid of her HBO. Thanks and good luck with your budget.

Eating out all the time can be very costly. Do you know how much you are spending now? I would guess maybe $1,200/mo for 2 people but it could blow out to $1,800+. If you make deep cuts, you could probably hit $400-$600/mo for 2 people at the low end, but probably aim for a more gradual and moderate reduction.

 

[anewmanx]

Eating out all the time can be very costly. Do you know how much you are spending now? I would guess maybe $1,200/mo for 2 people but it could blow out to $1,800+. If you make deep cuts, you could probably hit $400-$600/mo for 2 people at the low end, but probably aim for a more gradual and moderate reduction.

One could argue in favor of hiring a part time cook/maid in comparison to the cost of eating out. Probably would break even, eat better, and have a clean house.

 

[SoylentGreen]

I'll give two scenarios, and in each, both Pharmacists graduate with $250k in student loans, make $100k out of school. 6 years later...

Who would you rather be...

Pharmacist A - Worked solely on paying down student loan debt. $0 debt, but only $10k savings.

Pharmacist B - Financially balanced. $80k student loan debt, $80k in savings.

Somewhere in between. $10K isn't enough to handle emergencies, but the more you save the more interest you pay to your debt, so you should save as little as necessary to secure yourself against emergencies.. I think $30-40K is a reasonable amount of savings for an indebted grad

 

[pezdispenser]

Pharmacist A - Worked solely on paying down student loan debt. $0 debt, but only $10k savings.

Pharmacist B - Financially balanced. $80k student loan debt, $80k in savings.

If something happens (good or bad-bad day on the road, child, opportunity to open a new Pharmacy, down payment on a house, sick and out of work for 2 years, or forever) to A, it better cost less than $10k otherwise here we come credit cards, savings is wiped out.

If something happens (again good or bad) to [correction: B], they can absorb the cost right? Also, they have the flexibility to pay student loans off at any point in time with the stroke of a pen, and we have instilled the good habit of saving (sometimes not a problem for some).

I agree with what you said in principle, but I'm thinking that in practice, person B probably put most of that $80k in a 401(k) or something, such that you can't easily just withdraw it for emergencies. Otherwise, if you do leave it in a savings account that pays maybe 0.8% interest, it is basically costing you (6.8% - 0.8%) x $80k = $4,800/yr in additional interest that you are paying on the student loans instead.

Somewhere in between. $10K isn't enough to handle emergencies, but the more you save the more interest you pay to your debt, so you should save as little as necessary to secure yourself against emergencies.. I think $30-40K is a reasonable amount of savings for an indebted grad

I agree with this too. There has to be a balance.

So where do you guys actually put the emergency fund? I have the Ally MMA but it still only pays 0.85% so I don't want to put a whole lot in there (~$10k). The rest, I put in Vanguard mutual funds, which I know would probably scare most people. My justification is to 'ladder' the investments and trade liquidity for a greater expected return. I figure that since most merchants and providers accept credit cards, I won't need more than $10k cash on the spot. But if I do have a major emergency, there should also be some time available to liquidate the mutual funds. Also I believe the original amount that you put into a Roth IRA can be withdrawn without paying any tax or penalty, so I have that available to me as well.

 

[Muse600]

huh...so I shouldn't just leave it in my checking account??

and how are the Vanguard mutual funds doing for you?

@ soylentGreen/pezdispenser: I only leave ~$15-$20k in the SHTF fund...the rest goes towards loans...do you guys have more before putting towards loans?

but Pez - I like that: $10k available immediately, another $10-20k in vanguard mutual, rest towards loans (or if loans done, rest into the vanguard account)

 

[pezdispenser]

I have $20k in the Vanguard Total Stock Market Index Fund which has done remarkably well +22% per annum over the past 5 years. Of course, this performance cannot be expected to continue forever. But the point is, if you take a long-term expected return of ~8%, you aren't wasting the interest rate spread with your student loans by parking your money in mutual funds, as opposed to a 0% checking account. So this takes pressure off your decision over how much money to keep, and how much to pay off loans.

I already paid off my student loans, but I do have a mortgage, so I still try to dynamically balance my investments with the mortgage. If I see investment opportunities, such as when the stock market or my company stock are cheap, I can allocate money to go into them. Then, if I sell something and take profits and don't see anything else good to invest the money in, sometimes I just use it to pay down my mortgage. But because my mortgage interest at 4.25% (+ tax deductible) is lower than the standard 6.8% student loans, my situation is skewed more towards investing. With 6.8% student loans, IMHO you should skew the balance more towards paying off debt.

 

[oldstock]

I have $20k in the Vanguard Total Stock Market Index Fund which has done remarkably well +22% per annum over the past 5 years. Of course, this performance cannot be expected to continue forever. But the point is, if you take a long-term expected return of ~8%, you aren't wasting the interest rate spread with your student loans by parking your money in mutual funds, as opposed to a 0% checking account. So this takes pressure off your decision over how much money to keep, and how much to pay off loans.

I already paid off my student loans, but I do have a mortgage, so I still try to dynamically balance my investments with the mortgage. If I see investment opportunities, such as when the stock market or my company stock are cheap, I can allocate money to go into them. Then, if I sell something and take profits and don't see anything else good to invest the money in, sometimes I just use it to pay down my mortgage. But because my mortgage interest at 4.25% (+ tax deductible) is lower than the standard 6.8% student loans, my situation is skewed more towards investing. With 6.8% student loans, IMHO you should skew the balance more towards paying off debt.

I would assume that the +22% annual win is pre-tax ??

 

[Muse600]

Nice...I think I'm going to re-arrange my SHTF funds...I'll keep some in checking, but move the rest into a Vanguard mutual fund...and frankly, I need a bigger fund!

Listen up, college graduates: 7 keys to a happy life

just read this, lol...and I actually agree with the takehome:

My advice: Spend your first few decades in the workforce getting yourself in great financial shape so you have the freedom to pursue whatever career you want.

That means saving like crazy. And, no, you won’t be missing out on much. All those possessions you want will give you so little pleasure. Instead, what will give you pleasure is striving after the things you’re passionate about. I would encourage you to manage your financial life so you can do just that.

I just differ in that spending money on "things" does bring me happiness. Big house/nice cars? Nope...but I really, REALLY like riding dirt bikes. Flying into a turn way too hot, braking late, pushing the bars down & left while twisting the gas to hammer out of a turn out past the limits of traction...ahhhh....that's therapy for me. It evens me out...my stress goes away, I'm relaxed, and on my drive home, my thoughts become clear. But it does cost me $150-$200/month to play....

 

[pezdispenser]

I would assume that the +22% annual win is pre-tax ??

Yes, it is pre-tax, but with these things, you only pay capital gains tax when you sell. If you held it for more than one year, you get the discounted long-term capital gains tax rate of 15%. The dividend for VTSMX is only about 1.7%, and you do pay taxes on this each year, but for that fund, 94% of the dividend is a Qualified Dividend, which is also eligible for the 15% tax rate.

 

[BMBiology]

^^ just want to add that some states have taxes on capital gain. In California it is counted as income tax so expect to pay 9.3% for people in our income range.

 

[pezdispenser]

^^ just want to add that some states have taxes on capital gain. In California it is counted as income tax so expect to pay 9.3% for people in our income range.

Yuck. So how much does an average RPh in CA pay in state taxes? $10k? Do you feel that it is worth it?

 

[BMBiology]

I am still debating if it is really worth it. In addition to high sale taxes, here are the CA income tax brackets:

For earnings between $0.00 and $7,582, you'll pay 1.00%
For earnings between $7,582.00 and $17,976, you'll pay 2.00% plus $75.82
For earnings between $17,976.00 and $28,371, you'll pay 4.00% plus $283.70
For earnings between $28,371.00 and $39,384, you'll pay 6.00% plus $699.50
For earnings between $39,384.00 and $49,774, you'll pay 8.00% plus $1,360.28
For earnings between $49,774.00 and $254,250, you'll pay 9.30% plus $2,191.48
For earnings between $254,250.00 and $305,100, you'll pay 10.30% plus $21,207.75
For earnings between $305,100.00 and $508,500, you'll pay 11.30% plus $26,445.30
For earnings over $508,500.00, you'll pay 12.30% plus $49,429.50

Starting at just 50 k, you are being taxed at 9.30%! So when you add up federal income tax, social security, medicare, health and dental insurances, 401 k, you really need to make 200 k to live comfortably in California.

 

[Muse600]

it's definitely worth it for me...I get to ride motorcycles year round!

I grew up in MA...friggen freezing weather for months...then summers were so hot and humid that being outside for 15 mins made you sweaty. I visited Vegas around 4th of July once...you could feel the heat coming off the pavement! CA is awesome...you pay a lot for income tax, properties, sales tax, gas, water, and electricity, but you get the nice weather. And honestly, most of what I buy that I pay sales tax for, I buy at work (employee discount cancels out taxes), I ride a motorcycle and natural gas truck (so don't overpay on gasoline), I barely use much water/gas at home/electricity (1br apt), and I don't need to buy a $500k single family home. Find me a $350k condo in long beach that I can rent out one of the rooms, and I'm good until I can finance another one...

 

[SoylentGreen]

huh...so I shouldn't just leave it in my checking account??

and how are the Vanguard mutual funds doing for you?

@ soylentGreen/pezdispenser: I only leave ~$15-$20k in the SHTF fund...the rest goes towards loans...do you guys have more before putting towards loans?

but Pez - I like that: $10k available immediately, another $10-20k in vanguard mutual, rest towards loans (or if loans done, rest into the vanguard account)

I keep about $33K but I am the only breadwinner in a family of four.

 

[xiphoid2010]

I keep about $33K but I am the only breadwinner in a family of four.

Double pharmacist household, 2 kids. Kept about $50k in emergency fund, but recently used the bulk of it to pay off most of my wife's remaining student loans.

Reasoning:
Double income means both not being able to work is very unlikely.
Paying off her loan =$1300/month less bills, able to live on 1 income indefintely
Short/long term disability, life, medical insurance are in place, Roth 401k principle can act as a safety net.

In 2 months we will totally be done with our student loans, we will have the wonderful dilemma of where to invest all that excess cash. It's gonna be sweet!

 

[pharmerjohn]

Oh, and if you're paying 6+% in student loan interest, message me. I've been helping my Pharmacist look at refinancing options with interest payments lower than that.

Any recommendations on avoiding 7+% while in school?

 

[oldstock]

Any recommendations on avoiding 7+% while in school?

go rob a bank or better yet, rob your family bro JK

 

[Momus]

My Ally savings account has only 10k. That's enough for me to live at least 4 months. I have ibonds, and muni bonds to sell if I need some money in emergency <- Why I love to keep some bonds. I also have $100k total credit card limit to tie me over temporarily as a last resort. The rest of my money is in real estate, stocks, bonds, REITS ROTH IRA and 401k. There is no need to pick which one to invest in. There is no guessing game here. The only thing I really know is I don't know anything so I invest in everything. That's how you always win through asset and tax diversification.

 

[pharmerjohn]

go rob a bank or better yet, rob your family bro JK

Rob a bank... Geeze, why haven't I done that! Oh, that's right, I'm averted to bullets puncturing lungs, heart, and other vital organs. Plus, I have moral obligations to consider.

No... No families.

 

[n64bomb]

My Ally savings account has only 10k. That's enough for me to live at least 4 months. I have ibonds, and muni bonds to sell if I need some money in emergency <- Why I love to keep some bonds. I also have $100k total credit card limit to tie me over temporarily as a last resort. The rest of my money is in real estate, stocks, bonds, REITS ROTH IRA and 401k. There is no need to pick which one to invest in. There is no guessing game here. The only thing I really know is I don't know anything so I invest in everything. That's how you always win through asset and tax diversification.

Invest in whatever gives the highest return.
"Use equity and capital to create more equity and capital to an extent larger than any other investment available" That should be your goal as an investor. I suggest you do some learning!

 

[oldstock]

Careful on over-diversification. Yes, that's a thing and being over diversified and earning 2 or 3% a year barely beats inflation. You also have to factor in other REAL life cost of living adjustments (taxes, new technology aka Iphones ($200-300 a few years ago, now $500+), replacement of old and used up items, etc). And please do everything you can to avoid that CC debt. That's a downward spiral to nowhere you want to be. If you can pay it off great, but as expenses grow and lifestyle changes, you will spend more and more money and having that 'credit card buffer' every month, can lead people to trouble quicker than they can blink an eye (hence the -2% avg US savings rate a few years ago). Just make sure you manage that efficiently.

Defer payments until you graduate and that gives you a 6 month window to pass boards and start your job. At that point I know you can refi to around 5 or 6% (fixed) 2-4% (variable), given you meet the underwriting requirements.

great advice !!

 

[pharmerjohn]

Defer payments until you graduate and that gives you a 6 month window to pass boards and start your job. At that point I know you can refi to around 5 or 6% (fixed) 2-4% (variable), given you meet the underwriting requirements.

In terms of costs and overall process, is refinancing student loans the same as a mortgage refinancing? Also, would you recommend paying interests while in school or would it make more financial sense to roll interests into the principal and refinance the loan after graduation? I will be working while in school and will have income, so I'm trying to see which of those options make the most financial sense. Paying interests while in school seems to be the more intuitive cost saving option, but maybe there's a better alternative that I'm not seeing. Thanks again for your response!

 

[pharmerjohn]

There is no additional cost to have your student loans refinanced (at least with the companies we have worked with). Some want you to set up accounts with their banks so I would caution you before you committed to anything. If you have the ability to pay some down while in school, I think it would be wise to do so. However you don't have to over extend yourself during school. I would just say do your best to graduate with as little as possible (Yeah, easy for you to say). Most of my clients have between $100-$250k in student loan debt, and often times that is doubled when they marry another medical professional. So the difference between $250k at 7.5% and $250k at 5.5% is very significant on a monthly basis.

I know this is very general information, however I don't want to give advice without knowing more about you and your situation because everyone is different. For example, just met with a Pharmacist who, for the first time I have ever seen, graduated with $0 student loan debt courtesy of her parents. But her 'protection portfolio' only consists of auto & renters insurance. No disability, no life (which isn't really applicable because she's not married and doesn't need the collateral), and only receives group benefits. Point being, she thought she was in prefect shape (investing in all these different areas) but if something happens, she's vulnerable in a lot of other areas. That investment account can be wiped away if she hurts someone in a car accident. So everyone is different and there's never a cookie cutter answer that solves the problem.

No costs student loan refinancing sounds a heck of a lot better than paying down points on a mortgage. Sounds like keeping the loan amount low and paying as much interests as possible while in school is the plan. Thanks again for all the helpful info.

 

[n64bomb]

Invest in yourself. Your ability to earn an income will produce more than any equitable investment you can find. Oh, and it won't keep you up at night hoping (and praying) that your investment account stays in the green. Use compounding interest to your advantage while young, but don't rely on that to be your golden ticket to financial independence.

My quote is investing in yourself. You just have to understand how to make proper decisions to grow equity and capital and use your equity and capital (and others' too) to make more.

3 Biggest ways to grow equity: 1. Own your own business and have an idea that generates sales 2. Own equities/arbitrage/exploitation of equities 3. Commercial real estate ..... Notice how all of these 3 involve direct ownership of a company/companies........ hint hint.

Find out how to manage those and you win. I dont know why amateurs think people who buy equities or commercial real estate are sitting at home at night with their fingers crossed hoping it works. If you understand how to invest in the right companies/start your own company/invest in commercial property to exploit previously unperceived differences in equity, you will win. Otherwise, you are one the people who use the phrase "play the stock market" Winners win and losers lose. It's that simple.

Its kinda sad hearing someone say a pharmacist income is enough that will supersede investments for a persons lifetime. So naive. Any true investor should be insulted by that statement. Most people aren't true investors, so I guess I understand where the statement is coming from. Most people are essentially just investing expecting a return for retirement.

 

[owlegrad]

Winners win and losers lose. It's that simple.

Brilliant! And here I thought it was complicated. My eyes are open now!

 

[oldstock]

Brilliant! And here I thought it was complicated. My eyes are open now!

lol

 

[BMBiology]

^^ let's be fair here. Nobody knows if the tax rates will be higher in the future. As a matter of fact, the republican chair had proposed decreasing the tax rates by getting rid of tax deductions.

That is one thing I am cautious about financial people. They always try to tell you to avoid 401 k so you have more money to give them to "manage".

 

[Momus]

Careful on over-diversification. Yes, that's a thing and being over diversified and earning 2 or 3% a year barely beats inflation. You also have to factor in other REAL life cost of living adjustments (taxes, new technology aka Iphones ($200-300 a few years ago, now $500+), replacement of old and used up items, etc). And please do everything you can to avoid that CC debt. That's a downward spiral to nowhere you want to be. If you can pay it off great, but as expenses grow and lifestyle changes, you will spend more and more money and having that 'credit card buffer' every month, can lead people to trouble quicker than they can blink an eye (hence the -2% avg US savings rate a few years ago). Just make sure you manage that efficiently.

Diversification is the only way to preserve your wealth. You can bet on one or two things, hope to be Bill Gates or go bankrupt. But, that's not how I do things, I don't like to gamble on one or two things. I use diversification as an advantage to preserve the wealth and brute savings as the primary method to get to where I am today.

You don't know how frugal I am. The only people who I know are more frugal than me are those that are featured in extreme cheapstakes and extreme couponers show. I simply don't have to time to follow their tactics.

Invest in whatever gives the highest return.
"Use equity and capital to create more equity and capital to an extent larger than any other investment available" That should be your goal as an investor. I suggest you do some learning!

I save AT LEAST $3500-4500/month to taxable Vanguard stocks (single income). I can bet you don't even do that. I don't get close to $1M in 6 years doing all the wrong stuff.

 

[BMBiology]

You must have balls of steel to invest that much in the stock market every month. You will probably end up doing really well but I can't seem to do it.

For me:

Long term- 17.5 k + company match 401 k and 5.5 k for Roth IRA

Short term- 20 k in my company stocks

I can't seem to put money in my taxable account. Just can't do it..

 

[n64bomb]

Pharmacist income - $100k with 2% raises over 30 year period = $4,056,808 flows through your pockets (granted you don't get to keep all that money (taxes, expenses, debts, etc) (HENCE: importance to save income)). With after tax rate of return of 4% = $7,446,587 (again, unfortunately you don't get to keep all that).

Let's do a little comparison. Let's save 10% vs 20%...

On the same $100k at 2% raise over 30 years, with a 10% savings rate...=$405,681
Ditto, with a 20% savings rate...=$811,362

Makes sense, just double the money because you doubled rate of return (genius). But, I'll be earning an after tax return on my money. (You're right, so let's do that).

I'm going to save 10% because I think I will get 8% return (after-tax) (good luck) on my money. What's that look like?...=$1,485,233 (ah, hah! That's what I'm talking about!) Ok, awesome, but you paid $13,367,098 to taxes, debts, and other expenses. (Prove it.) Ok, 30% tax=$4,455,699. 25% income to pay debt (student loans, mortgage, business ventures, etc)=$3,713,083. And you want to live a nice life right? So 35% of money to living the dream (Not PB&J's for dinner, nice car, children, etc)=$5,198,316. (Go ahead, add them up and check my math).

Now let's try the 20% savings rate with a 4% (half return but half the risk) ROI...=$1,489,317 (compare with the number above...). AND $5,957,269 goes out the door to taxes, debts, and other expenses (HALF! and NO, I did not reduce the lifestyle by 10% to do that.) Rethinking about taxes (maybe paying taxes today instead of deferring to higher taxes in the future (AKA 401k)), paying 27% to taxes = $2,010,578. Servicing debt properly (consolidating, refinancing, reviewing other options) = $1,489,317. And then 33% to lifestyle (a difference most will not even notice, just becoming more efficient and not wasting money) = $2,547,373 ($85k/year or $7k/month to buying things that make you happy).

So to your 'supersede investments point,' no, Pharmacists income will not replace investments and it shouldn't. There should be a balance, but the return on your ability to earn an income will always be greater than you risking your ASSets with variable rates of return in the marketplace, in hopes they don't crap the bed when you need them most (examples: baby boomers who retired 1999-2001, or people who thought real estate was the bees knees 2007-2009). Investments should COMPLIMENT your Pharmacist income, never replace it.

There is a hierarchy to how successful people manage their cash flow, which is the reason why there is such a big gap in income earners in this country. As a Pharmacist, you will be in the top 15% right out of school, but it's easy to fall right back into the bottom 80%. Don't let that happen. Protect what you have today, and what you will earn in the future, save the right amount (hopefully more than 10% and consistently working towards 25+% as income goes up), pay your debts, bills, other liabilities, and what ever is left over is guilt free spending (blow it all if you choose) because you have already done the right things beforehand. Most people in this country think about it in the reverse order and that's why they end up in trouble.

Your post is sad. You are essentially saying 150,000 dollars per year just because someone has a pharmacist degree is the most that person is essentially capable of. I guess me creating 900k and 400k of equity in 2 commercial apartment complexes over the last 18 months when I'm 27 years old and graduated with no debt and no equity is just not the norm. I guess that 1.3 million I gained in sweat equity, as well as the income from those investments (net operating income-expenses/debt service) and the original equity i put into the investments, wasn't worth it because I have a pharmacist degree and can earn 150-170k per year in compensation. I had limited capital when I made these investments; now I'm in a much stronger position. I gained >1.5 million in equity in real estate less than 2 years starting out of school via flips/leverage/commercial real estate; I also gained significantly from equities. How does that compare to where I would end up on your plan? People who have the ability to use their money correctly and invest wisely know how to make the right decisions to grow their equity. Most people spend every dime they have, though. But for most people, the ability to derive income from their career is their primary source of income, so I see what you are getting at.

 

[n64bomb]

Diversification is the only way to preserve your wealth. You can bet on one or two things, hope to be Bill Gates or go bankrupt. But, that's not how I do things, I don't like to gamble on one or two things. I use diversification as an advantage to preserve the wealth and brute savings as the primary method to get to where I am today.

You don't know how frugal I am. The only people who I know are more frugal than me are those that are featured in extreme cheapstakes and extreme couponers show. I simply don't have to time to follow their tactics.



I save AT LEAST $3500-4500/month to taxable Vanguard stocks (single income). I can bet you don't even do that. I don't get close to $1M in 6 years doing all the wrong stuff.

I'm worth ~2 million right now (net equity) including everything. I graduated 20 months ago as a pharmD with 0 debt and 1500 equity (a usbank checking account) and a degree (my parents paid for college)......I'm not trying to belittle your 1 million in 6 years; just saying there is always room for improvement for all of us!

Im assuming you dont know what net operating income is? I'll help you out a little
My real estate has a net operating income (income after expenses but before mortgage) of 360,000 per year (adjusting for expenses that will be over 30 years and in the future with depreciation) and mortgages of 105,000 per year. This is for ~100 apartment units. That results in cash flow of 255,000 per year in income from the real estate. THIS IS ONLY 2 COMPLEXES AND MAKES $255,000 PER YEAR, IN ADDITION TO PAYING DOWN PRINCIPLE ON THE MORTGAGES, AND THE 1.3 MILLION I MADE IN EQUITY UPFRONT BY CONVERTING A 350K COMPLEX TO 800+K COMPLEX AND A 800K COMPLEX TO 1.9MIL COMPLEX(construction loans were necessary for both complexes 75K for the smaller complex and 205K for the larger complex).. $255,000/year equals >$21,000 per month of positive cash flow. That 1.3million is sweat equity too, so I've never paid any tax on it(and i'll never sell those assets, just keep using depreciation and never sell to avoid irs depreciation recapture)

How does your 3500-4500 per month to invest compare to my >20,000 per month? (By the way, I also have a pharmacist salary in addition!)

Are you starting to see how someone who owns a 150 million dollar skyscraper can make a lot of money? My portfolio is worth a couple of million; how about a professional investor who owns 2 skyscrapers in a large city?

 

[owlegrad]

Holy ****, if you are doing that well why become a pharmacist at all? A hobby? Resources flow to their highest ordered use, right? So focus on that!

 

[pharmerjohn]

I'm worth ~2 million right now (net equity) including everything. I graduated 20 months as a pharmD with 0 debt and 0 equity and a degree (my parents paid for college)......

Curiously, did they also help you start your commercial real estate investments as well? Getting started in commercial real estate is not easy, as one require a boat load of capital just to get started. A pharmacist I work with invested in commercial real estate, but ended up losing money. What made it different for you?

 

[Momus]

I'm worth ~2 million right now (net equity) including everything. I graduated 20 months ago as a pharmD with 0 debt and 1500 equity (a usbank checking account) and a degree (my parents paid for college)......I'm not trying to belittle your 1 million in 6 years; just saying there is always room for improvement for all of us!

Im assuming you dont know what net operating income is? I'll help you out a little
My real estate has a net operating income (income after expenses but before mortgage) of 360,000 per year (adjusting for expenses that will be over 30 years and in the future with depreciation) and mortgages of 105,000 per year. This is for ~100 apartment units. That results in cash flow of 255,000 per year in income from the real estate. THIS IS ONLY 2 COMPLEXES AND MAKES $255,000 PER YEAR, IN ADDITION TO PAYING DOWN PRINCIPLE ON THE MORTGAGES, AND THE 1.3 MILLION I MADE IN EQUITY UPFRONT BY CONVERTING A 350K COMPLEX TO 800+K COMPLEX AND A 800K COMPLEX TO 1.9MIL COMPLEX(construction loans were necessary for both complexes 75K for the smaller complex and 205K for the larger complex).. $255,000/year equals >$21,000 per month of positive cash flow.

How does your 3500-4500 per month to invest compare to my >20,000 per month? (By the way, I also have a pharmacist salary in addition!)

I ain't running a business. Mine is all invested salary. I have no interest of running a business like you.

Where do you find 100+ units for so little 350k + 800k? $11k/unit, is that a shack LOL? Give me the address I wanna see what the unit look like.

 

[CuriousPharmD]

i call bs on all this...

 

[HouTX]

some people work harder than others, some people want more outta life than others. just because he's a pharmacist does not mean he is just a pharmacist. I hope in 10 yrs I can be where he is at today, real estate wise.