how much do you owe? stragegies to paying off loans

[Optodoc]

Hey so i'm a new optometry grad but since there are alot more pharmacy students I wanna get your input on this issue thanks : )

original post:

Hi all, I have 6 months till I have to start paying off a massive loan amount of $180,000. I'd like to see what others owe and how they plan on paying it off. (that's 33k tuition + living + interest)

I got a job that pays 95 k year + bonus; I will probably work a 6th day to get more income.
My living expenses all inclusive is about 2,400 a month.
Taking home I would expect about 5,000 every 4 weeks, leaving me with 2,600 to pay towards loans for the next 10 years at a 6.8 interest rate. that sounds pretty bleak and depressing...

I actually know some friends who are buying a house and stretching both student loans and mortgage to 30 years i think that's a bit risky but according to them housing market will improve and with inflation that might be a worthwhile investment.

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[BMBiology]

it's tough to get 6.8% guaranteed return. I would save 6 months for emergency money and then pay as much as you can every month. If possible, live at home for the first 2 or 3 years or get a roommate to reduce living cost. Don't buy anything fancy like a new car.

The reality is that you have to really work hard for 10 years in order to pay off $180,000 on a $95,000 annual salary. The sooner you pay it, the less interest you will pay and the better off you will be.

 

[Optodoc]

http://forums.studentdoctor.net/showthread.php?t=1008103

i just found this on your forum, i guess that answers it

 

[PharmDstudent]

http://forums.studentdoctor.net/showthread.php?t=1008103

i just found this on your forum, i guess that answers it

Welcome to the pharmacy forum...

 

[Optodoc]

it's tough to get 6.8% guaranteed return. I would save 6 months for emergency money and then pay as much as you can every month. If possible, live at home for the first 2 or 3 years or get a roommate to reduce living cost. Don't buy anything fancy like a new car.

The reality is that you have to really work hard for 10 years in order to pay off $180,000 on a $95,000 annual salary. The sooner you pay it, the less interest you will pay and the better off you will be.

yeah it's crazy. it's hard to change the mentality that you've finally graduated after 8 years of hard work and then, bam you realize you're going to be somewhat of a slave to corporate for another 10 years...kinda like reaching the finish line and then you're told u have to run 2x longer than what you just did when you're already very tired. kind of depressing, and yes i was naive to not really take that into consideration before signing up for it.

so 95k is my base salary with bonus from what i know it should be around 105k and i'm taking a 6th day as an independent contractor at 450a day so i'm looknig at minimum 120k a year which gives me a take home of 8k a month; i use 2,500 a month inclusive (which is about a 40,000 salary pre-tax) for living insurance car and food so i'll be pumping 5,500 into my loans. my goal is to get it down to $100,000 in 2 years and then stay on the 10 year course thereafter making payments of $850 a month is pretty doable. again this is assuming everything goes smoothly and i don't get fired God forbid. sucks being out the first year.

 

[xiphoid2010]

yeah it's crazy. it's hard to change the mentality that you've finally graduated after 8 years of hard work and then, bam you realize you're going to be somewhat of a slave to corporate for another 10 years...kinda like reaching the finish line and then you're told u have to run 2x longer than what you just did when you're already very tired. kind of depressing, and yes i was naive to not really take that into consideration before signing up for it.

so 95k is my base salary with bonus from what i know it should be around 105k and i'm taking a 6th day as an independent contractor at 450a day so i'm looknig at minimum 120k a year which gives me a take home of 8k a month; i use 2,500 a month inclusive (which is about a 40,000 salary pre-tax) for living insurance car and food so i'll be pumping 5,500 into my loans. my goal is to get it down to $100,000 in 2 years and then stay on the 10 year course thereafter making payments of $850 a month is pretty doable. again this is assuming everything goes smoothly and i don't get fired God forbid. sucks being out the first year.

couple of things you may want to consider:

(1) during the first 6 month post graduation, subsidized stafford loans are still interest free, you will want to direct your extra payment towards the un-subsidzed portion for the biggest bang on your extra payment.

(2) Student loan interest is phased out for adjusted gross income >$75k/yr. You won't have that problem for 2013. But for 2014, you can maxout your 401K, which will take your $95k down to 78k, then if you have pretax portion of benefits such as health, flex spending, you can keep AGI at or just below $75k. For that you will qualify for full $2500 tax deduction, at 25% tax bracket, it saves you $625 in taxes.

(3) someone mentioned 6 months emergency fund earlier. This is sound advice. Take advantage of the 6 months grace period post grad.

(4) File for income based repayment or PAYE, but stick to a self-imposed accelerated payment schedule. This will grant you the flexibility of decrease your payment if something bad happens, but still pay it off early if everything goes well.

 

[BMBiology]

(4) File for income based repayment or PAYE, but stick to a self-imposed accelerated payment schedule. This will grant you the flexibility of decrease your payment if something bad happens, but still pay it off early if everything goes well.

I was in the 10 year repayment and I think I received 1.5% deduction on my interest rate (so like 5% to 3.5%) by just paying my payment electronically for 6 months straight without any missed payment.

I don't know if the same rule would apply when you enroll in IBR or PAYE. Something for you to confirm before you make any decision.

Yes, tackle the principle as soon as you can. The longer you want, the more interest you will have to pay.

 

[Aznfarmerboi]

Pay off the higher interest loans first. No brainer but so many people break this rule.

 

[Bier9999]

Here's some pointers:

- Work 6 days a week, or maybe even 7 days a week at one job.
- Or get 2 jobs.
- Don't blow your first paycheck on that Mercedes SL 550.
- Don't go on fancy European vacations or even out of state trips.
- Bag your own lunch everyday.
- Don't go out to eat every weekend.
- Limit yourself to two credit cards (and put one of them in the freezer).
- Don't buy brand name clothes, limit your wardrobe options to 10 day selection.
- Stop making friends with people who ask you for money.
- Don't upgrade to the latest piece of tech every 3 months.
- Drink water from the company's water fountain during break.

BONUS: Don't get a girlfriend/ don't be the loser who goes head over heals over some chick and spend ~$1000 on her shopping spree.

It's your life. It depends on how badly you want to get rid of your debt. You can say there are better ways to save $ but if you were really smart, you wouldn't be in the healthcare industry to begin with. The real money are the real estate developers building and selling multistory condo's to the average suckers while making $1 million a day.

 

[joetrisman]

Here's some pointers:

- Work 6 days a week, or maybe even 7 days a week at one job.
- Or get 2 jobs.
- Don't blow your first paycheck on that Mercedes SL 550.
- Don't go on fancy European vacations or even out of state trips.
- Bag your own lunch everyday.
- Don't go out to eat every weekend.
- Limit yourself to two credit cards (and put one of them in the freezer).
- Don't buy brand name clothes, limit your wardrobe options to 10 day selection.
- Stop making friends with people who ask you for money.
- Don't upgrade to the latest piece of tech every 3 months.
- Drink water from the company's water fountain during break.

BONUS: Don't get a girlfriend/ don't be the loser who goes head over heals over some chick and spend ~$1000 on her shopping spree.

It's your life. It depends on how badly you want to get rid of your debt. You can say there are better ways to save $ but if you were really smart, you wouldn't be in the healthcare industry to begin with. The real money are the real estate developers building and selling multistory condo's to the average suckers while making $1 million a day.

 

[sakigt]

couple of things you may want to consider:

(1) during the first 6 month post graduation, subsidized stafford loans are still interest free, you will want to direct your extra payment towards the un-subsidzed portion for the biggest bang on your extra payment.

(2) Student loan interest is phased out for adjusted gross income >$75k/yr. You won't have that problem for 2013. But for 2014, you can maxout your 401K, which will take your $95k down to 78k, then if you have pretax portion of benefits such as health, flex spending, you can keep AGI at or just below $75k. For that you will qualify for full $2500 tax deduction, at 25% tax bracket, it saves you $625 in taxes.

(3) someone mentioned 6 months emergency fund earlier. This is sound advice. Take advantage of the 6 months grace period post grad.

(4) File for income based repayment or PAYE, but stick to a self-imposed accelerated payment schedule. This will grant you the flexibility of decrease your payment if something bad happens, but still pay it off early if everything goes well.

I am such an idiot. I completely misunderstood #2 and didnt realize the tax deduction was based off AGI. not income.

 

[SkiPharmer]

I graduated in 2008 and my wife graduated in 2009, we each had around $150,000. She works retail full time, I work retail full time and two PRN hospital jobs. I am at $33,000 and she is at $54,000. If you work your butt off, spend wisely and pay a LOT down you will see them disappear. And yes we do have fun, we have a 25 foot speed boat, going skiing in Colorado 4 times a year and have been to Europe 3 times in the last 18 months. Yes, I could have had my loans already paid off if we hadn't done these things, but you only live once. Just be smart with your money.

 

[UofK]

I graduated in 2008 and my wife graduated in 2009, we each had around $150,000. She works retail full time, I work retail full time and two PRN hospital jobs. I am at $33,000 and she is at $54,000. If you work your butt off, spend wisely and pay a LOT down you will see them disappear. And yes we do have fun, we have a 25 foot speed boat, going skiing in Colorado 4 times a year and have been to Europe 3 times in the last 18 months. Yes, I could have had my loans already paid off if we hadn't done these things, but you only live once. Just be smart with your money.

I like this perspective. Ideally you want to throw as much cash at your loans as humanly possible, but your only young once. I would imagine you need a balance. I'm an incoming PY2 and I anticipate a debt amount of $180k plus.

 

[Bier9999]

I graduated in 2008 and my wife graduated in 2009, we each had around $150,000. She works retail full time, I work retail full time and two PRN hospital jobs.

This is the best answer to your question Optodoc. If you want a debt-free life, marry a woman who is loaded such as a pharmacist or the heir to some multi-billion dollar company. Good luck courting them though since they rather a 'President Obama + Tom Cruise + Jean Claude Van Damme' type of guys.

 

[SkiPharmer]

This is the best answer to your question Optodoc. If you want a debt-free life, marry a woman who is loaded such as a pharmacist or the heir to some multi-billion dollar company. Good luck courting them though since they rather a 'President Obama + Tom Cruise + Jean Claude Van Damme' type of guys.

HAHA Yes it does help that our combined income is close to $300k but other than travel and boating we don't spend our money much else. I have a buddy who is a RPh whose wife is a stay at home mom and he has $160k loans, $400k house and his wife drives an Escalade ESV.....yes he is paying the minimum on his loans but different strokes for different folks. I'd rather ski Vail and vacation in the Greek Isles than have brand name crap.

 

[kvl1027]

I graduated in 2008 and my wife graduated in 2009, we each had around $150,000. She works retail full time, I work retail full time and two PRN hospital jobs. I am at $33,000 and she is at $54,000. If you work your butt off, spend wisely and pay a LOT down you will see them disappear. And yes we do have fun, we have a 25 foot speed boat, going skiing in Colorado 4 times a year and have been to Europe 3 times in the last 18 months. Yes, I could have had my loans already paid off if we hadn't done these things, but you only live once. Just be smart with your money.

So the moral of this story is marry someone who makes as much as you.

 

[Bier9999]

Well, the moral of the thread is once your making upper class wealth, it's important to stay in that class by connecting with other upper class people. Why do you think Prince Harry is dating a socialite and not some broad on Main St? Why do you think Wendi Deng married Rupert Murdoch? Have you guys not heard of OLD MONEY? If not, please educate yourself. Especially in NYC, there are alot of old monies walking around but not all of them are wearing a platinum Luis Vuitton bag or driving a gold Mercedes.

 

[radio frequency]

Well, the moral of the thread is once your making upper class wealth, it's important to stay in that class by connecting with other upper class people. Why do you think Prince Harry is dating a socialite and not some broad on Main St? Why do you think Wendi Deng married Rupert Murdoch? Have you guys not heard of OLD MONEY? If not, please educate yourself. Especially in NYC, there are alot of old monies walking around but not all of them are wearing a platinum Luis Vuitton bag or driving a gold Mercedes.

I wouldn't call pharmacists "upper class wealth". It's great pay, for sure, and solidly upper middle income, but I think of upper class as having higher income levels than pharmacists...

 

[owlegrad]

I wouldn't call pharmacists "upper class wealth". It's great pay, for sure, and solidly upper middle income, but I think of upper class as having higher income levels than pharmacists...

Agree completely. Upper, upper middle class income IMO but to me upper class wealth is like, using money to make money, or not having to work at all, neither of which would be true of a pharmacist that makes money by working.

 

[joetrisman]

Agree completely. Upper, upper middle class income IMO but to me upper class wealth is like, using money to make money, or not having to work at all, neither of which would be true of a pharmacist that makes money by working.

Yup yup.

 

[knight on horse]

it's tough to get 6.8% guaranteed return. I would save 6 months for emergency money and then pay as much as you can every month. If possible, live at home for the first 2 or 3 years or get a roommate to reduce living cost. Don't buy anything fancy like a new car.

The reality is that you have to really work hard for 10 years in order to pay off $180,000 on a $95,000 annual salary. The sooner you pay it, the less interest you will pay and the better off you will be.

And if you're not married you should start thinking long and hard about it now. As we see, there's a life time to pay off a loan, but youth is fleeting

 

[knight on horse]

but if you were really smart, you wouldn't be in the healthcare industry to begin with

I was about to post the same.

If you aspire to be upper class, you need brains, or some other exceeding talent