In debt far above my eye balls!!

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AceH

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Alright, I know this has been discussed to death, but I have some specific questions. I would really appreciate any input on this. I will be graduating with ~ 300K student loans, yes it is a lot. Majority is federal loans, some are graduate plus loans (also federal loans?), then there is the private loan (about 20,000). What the hell should I do during residency against this beast of a debt? Assuming I get paid 50K, should I defer everything except the private loan? or just pay based on income? I'm not sure how the private loan plays into defer vs IBR etc. thanks in advance!

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Bingo. That's a great post by WCI. If you can avoid it, don't do what I did and defer/forebear. I started residency with close to the same amount that had mushroomed close to 400K by the time I finished residency. I lost about 10 months post residency due to my own stupidity in not paying attention to how IBR works. I now pay about 10-12K every month like clock work and have about 170K left, 90K of which is high interest (7%). Luckily, the rest is 2.75% so I will likely pay those down more slowly once I'm done with the high interest debt. Good luck.
 
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how much will your payments be per month? if your take home as an attending is 10k and payments are 6K, thats reasonable.
 
The WCI just did a great post on this:

http://whitecoatinvestor.com/what-should-i-do-with-my-student-loans/

I don't have any specific advice beyond this but good luck handling the debt.

The only thing I don't like about that flowsheet is not refinancing if you can afford PAYE. That's about a 20-40K extra interest for you. Certain lenders (like DRB), will default your payment to $100/mo while in residency.

I have 200K in loans. I refinanced to 4%. Saved a boat load of money.
 
You need to do a few things:

Get a copy of Dave Ramsey's total money makeover. Seriously.

Understand doing residency in a high cost of living place is just off limits.

Eating out, going to the movies, getting a new iPhone, driving nice cars, etc is off limits.

Understand that you have a financial disaster on your hands; act accordingly.

You cannot be a homeowner until your mess is handled.

A lot of people will disagree with me and say "oh, it's not that bad" and they're wrong. You have a suffocating amount of debt that needs to be addressed aggresively, that will be tough in residency, but doable. Im nearly out of debt as a pgy3. Ive paid off 80k thus far. It is possible to make significant gains, you just have to be motivated.
 
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I also recommend DRB, they will refinance you as a resident as soon as you sign your contract after match day and have great customer service.
 
Awesome input!! thank you guys, I thought I had to sell my soul to escape this massive titanic sized debt. I'll just be selling several years of my life instead.
 
Do a 3 year residency in a low cost of living city where you can moonlight (at least during 3rd, if not 2nd year).

Live cheaply during residency and start paying ASAP.

Take a private job in low cost of living city after residency. Continue to live cheaply like a resident until your debt is wiped out.

Have fun along the way.

I'm < 5 years out and have paid off >$170K. I will be debt free in < 12 months.
 
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Your situation is not much different than many (most?) graduating med students. Of course its a lot of debt, but its not a "financial disaster," assuming you matched into EM. Start reading some personal finance stuff, especially WCI. I agree that you need to take it seriously, but its not an untenable situation.

My main motivation for responding was to address the Dave Ramsey advice. His advice is often times emotionally based and not mathematically based. A lot of people who are better writers than me have already offered valid criticisms elsewhere that you can find. His advice is worth a read, but not the end all. Supplement with less extreme advice, like this http://whitecoatinvestor.com/live-like-a-resident/.
 
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I also recommend DRB, they will refinance you as a resident as soon as you sign your contract after match day and have great customer service.
Upon further reading this seems like a great option. One quick question, upon graduation do you still into the repaye process after consolidating with drb?
 
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Upon further reading this seems like a great option. One quick question, upon graduation do you still into the repaye process after consolidating with drb?

No, Once you refi you have a private loan and cannot go into RePAYE. I think that's what you're asking.
 
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You may be eligible for a PSLF which could save you a lot of money too. If you want to keep that option open, try consolidating all your public loans into one DIRECT public loan eligible for REPAYE and then refinance all your private debt separately. Once residency is ending and you have a clearer picture of the next few years you can decide to continue down route of loan forgiveness or refinance everything into one loan that you pay off aggressively in 3-4 years. This is the option I will be pursuing with 300K total debt (but 70k private). Correct me please if this is bad advice!!
 
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The only thing I don't like about that flowsheet is not refinancing if you can afford PAYE. That's about a 20-40K extra interest for you. Certain lenders (like DRB), will default your payment to $100/mo while in residency.

I have 200K in loans. I refinanced to 4%. Saved a boat load of money.

I don't think you understand. The flowsheet says RePAYE, not PAYE. RePAYE's effective interest rate is probably lower than what you can get as a resident from DRB (run the numbers yourself to be sure.)
 
Forgive my ignorance, if I consolidate federal loans into one, then refinance private loan into a separate pile, then I will be paying 2 separate bills? say, for example, $300 for federal loans, and $300 for private loans. Seem to be big hit with resident salary to be paying 2 separate loans. Again, forgive my ignorance if this is a dumb question. I'm having hard time understanding this.
 
I had about 270k of loans after residency. Paid it back in about 2 years as an attending, living on a resident's budget. As an ER attending, living on 50k a year working 12 days is still pretty sweet.

Also, If you get a job that pays as an independent contractor (as many jobs are) your paychecks are paid pre-tax. This means you can just front load your student loan payments every year to decrease interest.
 
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Forgive my ignorance, if I consolidate federal loans into one, then refinance private loan into a separate pile, then I will be paying 2 separate bills? say, for example, $300 for federal loans, and $300 for private loans. Seem to be big hit with resident salary to be paying 2 separate loans. Again, forgive my ignorance if this is a dumb question. I'm having hard time understanding this.

I have to chuckle when people talk about the big hit of $600. YOU BORROWED $200-400K TO GO TO SCHOOL, SOMEONE'S GOING TO PAY IT OFF. Wait until you need to be making $10K a month payments. It won't be any easier.

But at any rate, the private loan payments once refinanced with be $0-100, so that should help your cash flow issues.
 
I had about 270k of loans after residency. Paid it back in about 2 years as an attending, living on a resident's budget. As an ER attending, living on 50k a year working 12 days is still pretty sweet.

Also, If you get a job that pays as an independent contractor (as many jobs are) your paychecks are paid pre-tax. This means you can just front load your student loan payments every year to decrease interest.

Remember after that first year you'd better be making quarterly estimated payments. The safe harbor will help you avoid penalties the first year. But I know one doc couple who took advantage of this to pay off their students loans by like December of the first year as an attending.
 
You need to do a few things:

Get a copy of Dave Ramsey's total money makeover. Seriously.

Understand doing residency in a high cost of living place is just off limits.

Eating out, going to the movies, getting a new iPhone, driving nice cars, etc is off limits.

Understand that you have a financial disaster on your hands; act accordingly.

You cannot be a homeowner until your mess is handled.

A lot of people will disagree with me and say "oh, it's not that bad" and they're wrong. You have a suffocating amount of debt that needs to be addressed aggresively, that will be tough in residency, but doable. Im nearly out of debt as a pgy3. Ive paid off 80k thus far. It is possible to make significant gains, you just have to be motivated.

You paid off 80k in 2.5 years of residency while making a salary of 50k/year before taxes? Either you have a spouse who is supporting your household or you have someone else helping you get ahead of this debt. My AGI is barely over 80k for the first two years of residency.
 
You paid off 80k in 2.5 years of residency while making a salary of 50k/year before taxes? Either you have a spouse who is supporting your household or you have someone else helping you get ahead of this debt. My AGI is barely over 80k for the first two years of residency.

Wife works (makes about 40). We both had crappy, paid off cars when we started residency. I moonlight a ton and I am in an area of the country where EPs are in great need and command an impressive hourly rate moonlighting. We paid off about 20/y for the first two years and the rest this year (again, moonlighting really has its perks).
 
I have to chuckle when people talk about the big hit of $600. YOU BORROWED $200-400K TO GO TO SCHOOL, SOMEONE'S GOING TO PAY IT OFF. Wait until you need to be making $10K a month payments. It won't be any easier.

But at any rate, the private loan payments once refinanced with be $0-100, so that should help your cash flow issues.

I just want to say thank you and the rest of the group here. My dumb brain finally understood your chart after learning a ton about loans. I have also been looking into SoFi and DRB, who seem to have a very appealing advertised interest rate. DRB specifically states that you only need to pay $100 dollars a month during residency, which is also very appealing. Now, I feel that this is too good to be true. Are there any downsides to refinancing your entire loan (both private and federal) under these lenders? My thought was that I won't get the benefits that federal loans offer i.e forbearance, public loan forgiveness etc. Plus there might be something in the fine print that will eventually screw me over.
 
Wife works (makes about 40). We both had crappy, paid off cars when we started residency. I moonlight a ton and I am in an area of the country where EPs are in great need and command an impressive hourly rate moonlighting. We paid off about 20/y for the first two years and the rest this year (again, moonlighting really has its perks).

Can you moonlight as a pgy1? I did internally as a pgy2 at $60/hour and as a pgy3 at 170/hour. Still didn't make the money you're talking about, with some months working 48 hours extra. Our AGI was over 100k/yr and we had no car debt.

Impressive that you two shifted as much monly as you claim to your loans in residency. Did you really net an additional 60k moonlighting over the past 8 months? That's 350+ hours while in residency at 200/hr...

For a family of 2...
Rent 1500
Utilities 400
Cell 150
Gas 200
Food 1k
Loans 1500/mo

Above is the equivalent of 80k/year gross. Doesn't inside a lot of other expenses. Making headway on loans while in residency is nearly impossible.
 
Can you moonlight as a pgy1? I did internally as a pgy2 at $60/hour and as a pgy3 at 170/hour. Still didn't make the money you're talking about, with some months working 48 hours extra. Our AGI was over 100k/yr and we had no car debt.

Impressive that you two shifted as much monly as you claim to your loans in residency. Did you really net an additional 60k moonlighting over the past 8 months? That's 350+ hours while in residency at 200/hr...

For a family of 2...
Rent 1500
Utilities 400
Cell 150
Gas 200
Food 1k
Loans 1500/mo

Above is the equivalent of 80k/year gross. Doesn't inside a lot of other expenses. Making headway on loans while in residency is nearly impossible.

Yep, stressing out about paying down loans in residency is a high-stress, low yield proposition. Just get on IRB plan, pay your minimum, and worry about other things during residency. The way I see it, I'm not going to work even more hours moonlighting and live on less than a resident budget just so I can see a few extra grand come off the loans. I'll save the debt worry for when I'm working half as much and making 6 times more than I do now.
 
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Can you moonlight as a pgy1? I did internally as a pgy2 at $60/hour and as a pgy3 at 170/hour. Still didn't make the money you're talking about, with some months working 48 hours extra. Our AGI was over 100k/yr and we had no car debt.

Impressive that you two shifted as much monly as you claim to your loans in residency. Did you really net an additional 60k moonlighting over the past 8 months? That's 350+ hours while in residency at 200/hr...

For a family of 2...
Rent 1500
Utilities 400
Cell 150
Gas 200
Food 1k
Loans 1500/mo

Above is the equivalent of 80k/year gross. Doesn't inside a lot of other expenses. Making headway on loans while in residency is nearly impossible.

We pay about half that for housing and about 2/3 that for food. And I'll end up clearing 350h of moonlighting this year in stride. I also work at a program closer to 180h/m, not 20. Worked a ton of shifts on my elective month. I work 3-4 extra 12 hour shifts most months. I have a higher base rate for moonlighting. It also helps to be credentialed everywhere and flexible. When someone calls and says we need someone to work 2 days from now, the hourly rate can get pretty high.

I realize my situation doesn't apply to everyone, but I was cognizant of the fact that I wanted a 3y, low cost of living program with a good work/life balance that also strongly supported moonlighting.

It takes a lot of work, but it's doable.
 
Don't stress about it.

Moonlight if you want but use the extra money to enjoy yourself

You will have years to pay it off making alot of money

You have 300K in loan, making an extra 50K/yr killing yourself is not worth it.

You could make 50k in 2 months after residency, why kill yourself?

Relax, live a decent life as a resident, you can pay it off when you get out of residency in 2-3 yrs.

I paid off my 110k loan in less than a year without much sweat.
 
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I just want to say thank you and the rest of the group here. My dumb brain finally understood your chart after learning a ton about loans. I have also been looking into SoFi and DRB, who seem to have a very appealing advertised interest rate. DRB specifically states that you only need to pay $100 dollars a month during residency, which is also very appealing. Now, I feel that this is too good to be true. Are there any downsides to refinancing your entire loan (both private and federal) under these lenders? My thought was that I won't get the benefits that federal loans offer i.e forbearance, public loan forgiveness etc. Plus there might be something in the fine print that will eventually screw me over.

The fine print is that the resident rates are 4.5-5% a year, not the 2-4% you can get as an attending. But yes, the resident payments are $100.
 
The fine print is that the resident rates are 4.5-5% a year, not the 2-4% you can get as an attending. But yes, the resident payments are $100.
Do you know if you can refinance again once you become an attending to take advantage of the lower rates within the same company? If not, I suspect an easy option is to re-fi with DRB and then switch to SoFi once you become an attending.
 
You all can do whatever you want with your debts but what I did was to setup a payoff over the longest period of time possible (30 yrs) so that my payment would be as low as possible, so as not to be too overburdened as I start out early in life & career, then try to pay it off early as I got more established in my life, financially.

Granted, I only started with $100,000 very low interest over 10 yrs ago (then added $70,000 during fellowship), so about $170,000 total. 13 yrs later I've paid off about half, not horrible, could be better, but...whatever. Since the interest is kind of low, there's other things I'd rather do with my money that give it to the bankers.

Don't be freaked out by debt. Debt isn't bad. Debt serves a purpose. It allows you to leverage things you'd never be able to do, have, create, if you had to pay cash. As long as you're working (and are covered with good insurance for any disabling incident) you'll be able to make the payments. At some point, you've gotta just say "---k it," and live your life. The bankers can wait. There's so much money coming out of my account every month for debates and payments, what's another few hundred, or thousand? Lol.

That's being said, if you've got the money, pay off some high interest debt. Do what you're comfortable with. But remember, it's just money. ---- it.
 
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Im gonna disagree. Debt is bad. I too have a ton of debt like birdstrike but my rates are low. My current loans are about 220k at 1 7/8%. I am in no rush. I have paid off 200k+ in my time since I finished residency. In that time I have had 2 kids and put a huge amount away in retirement.

Debt at 5+% on 300K plus is financial suicide. The currnt rates approach 7-8%. If you owe 300k (which is low) thats ~24k in interest or 2k per month post tax or more than 1 shift per month.

If you owe this much, live cheap, work like a dog and free yourself. One of the causes of burnout is working more than you want. When you have that debt hanging over your head you have to work.
 
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Granted, I only started with $100,000 very low interest over 10 yrs ago (then added $70,000 during fellowship), so about $170,000 total. 13 yrs later I've paid off about half, not horrible, could be better, but...whatever. Since the interest is kind of low, there's other things I'd rather do with my money that give it to the bankers.

Don't be freaked out by debt. Debt isn't bad. Debt serves a purpose. It allows you to leverage things you'd never be able to do, have, create, if you had to pay cash. As long as you're working (and are covered with good insurance for any disabling incident) you'll be able to make the payments. At some point, you've gotta just say "---k it," and live your life. The bankers can wait. There's so much money coming out of my account every month for debates and payments, what's another few hundred, or thousand? Lol.

Surely you realize your scenario is totally different from the average med student ($200K at 6.8%) much less many students who paid for expensive med schools all on debt ($450K at 7.5%). My class, the class of 2003, all refinanced their debt at 0.9%. Not happening today.

Ask yourself these three questions before taking Birdstrike's advice:

1) Is your interest rate 1%?
2) Do you still want to owe half of your student loans in 13 years or would you prefer to be in a position to walk away from medicine if you don't like it?
3) Could part of Birdstrike's famously well-known exit from emergency medicine have been related to his financial situation? I mean, paying off $170K in 13 years means something like $1100 a month, or less than 5% of the typical emergency physician salary. EM is a lot more fun when you can do it on your own terms and being in a financial position to walk away always helps you be on your own terms.

Unless you're going for PSLF, try to be free of your student loans within 2-5 years of graduation. I don't know a single doc who has done that and regretted it. It's like people who regret paying off a mortgage early despite it being at a relatively low rate and tax deductible. Maybe they're out there, but I just can't seem to find them. Mathematically it can make sense to carry low interest rate debt. Behaviorally, precious few of those who decide to carry debt so they can invest the difference actually invest the difference. They usually just spend the difference.
 
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Can any new attendings or senior residents wanting to have their loans forgiven speak to how difficult it is to find an a job that qualifies for PSLF in emergency medicine? With many non for profit hospitals using large CMGs to staff their EDs it seems like there would be few jobs outside of academia or the VA that would qualify.
 
Can any new attendings or senior residents wanting to have their loans forgiven speak to how difficult it is to find an a job that qualifies for PSLF in emergency medicine? With many non for profit hospitals using large CMGs to staff their EDs it seems like there would be few jobs outside of academia or the VA that would qualify.

I've always considered PSLF a big gamble. Personally, I never considered risking it. If you get aggressive with the loans there's no reason you can't pay them off pretty quick. I enjoy what I consider a pretty nice lifestyle and live by myself in a 4100 sqft house but that didn't stop me from paying ~150k last year alone. I've always been too paranoid that the laws will change but that's me. You don't have to live in a shack and drive a beat up pinto to get the monkey off your back, you just have to balance. I had extremely large loans and I'll have all my high interest gone in 7 months and 100% in 14. I can't wait. Damn is that going to feel good.
 
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Can any new attendings or senior residents wanting to have their loans forgiven speak to how difficult it is to find an a job that qualifies for PSLF in emergency medicine? With many non for profit hospitals using large CMGs to staff their EDs it seems like there would be few jobs outside of academia or the VA that would qualify.
in my neck of the woods the majority of jobs are hospital based. so super easy to find a 501c3. i am risking pslf. i have 220k in loans after residency. 6 yrs left to qualify for pslf.

total loans paid if pslf pays out
230k
total loans paid out if i refinance to 5 yrs pay off in 3
290k
if i somehow screw up pslf or it dissolves
350k...
risky business. well see if i was smart or not in a few years

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in my neck of the woods the majority of jobs are hospital based. so super easy to find a 501c3. i am risking pslf. i have 220k in loans after residency. 6 yrs left to qualify for pslf.

total loans paid if pslf pays out
230k
total loans paid out if i refinance to 5 yrs pay off in 3
290k
if i somehow screw up pslf or it dissolves
350k...
risky business. well see if i was smart or not in a few years

Sent from my VS986 using Tapatalk

How much does these PSLF jobs pay? If they are paying standard rate, then its not that big of a gamble. If they are paying below market by 50K+, then I would never do it. 6 yrsx50k is your loan for the most part sans interests.
 
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my job pays market rate in this part of the country. i get paid less then wci and most docs in tx, but get good benefits, pension, 403b, and cme at 7k/yr. so i think it comes out in the wash

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my job pays market rate in this part of the country. i get paid less then wci and most docs in tx, but get good benefits, pension, 403b, and cme at 7k/yr. so i think it comes out in the wash

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If you are paid market, and like the place, why not.

If you are paid market, but would rather live somewhere else, then I would get another job. I could do Locums, work 40hrs a week, and Pay off 400k in a year easily.
 
How much is the "market rate?"
 
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How much does these PSLF jobs pay? If they are paying standard rate, then its not that big of a gamble. If they are paying below market by 50K+, then I would never do it. 6 yrsx50k is your loan for the most part sans interests.

Don't forget to adjust for taxes. Your student loan payments are made with after-tax money but PSLF forgiveness is tax free.
 
How much /hour are you guys making that allows you to drop 5-10k/month, after taxes, on your loans fresh out of residency? Must either not be married with kids or must be making a lot more than I will be...
 
How much /hour are you guys making that allows you to drop 5-10k/month, after taxes, on your loans fresh out of residency? Must either not be married with kids or must be making a lot more than I will be...

I don't think dropping 10k a month is that difficult with EM. I don't have any more student loans but saved over 100k last year.
 
You all can do whatever you want with your debts but what I did was to setup a payoff over the longest period of time possible (30 yrs) so that my payment would be as low as possible, so as not to be too overburdened as I start out early in life & career, then try to pay it off early as I got more established in my life, financially.

Granted, I only started with $100,000 very low interest over 10 yrs ago (then added $70,000 during fellowship), so about $170,000 total. 13 yrs later I've paid off about half, not horrible, could be better, but...whatever. Since the interest is kind of low, there's other things I'd rather do with my money that give it to the bankers.

Don't be freaked out by debt. Debt isn't bad. Debt serves a purpose. It allows you to leverage things you'd never be able to do, have, create, if you had to pay cash. As long as you're working (and are covered with good insurance for any disabling incident) you'll be able to make the payments. At some point, you've gotta just say "---k it," and live your life. The bankers can wait. There's so much money coming out of my account every month for debates and payments, what's another few hundred, or thousand? Lol.

That's being said, if you've got the money, pay off some high interest debt. Do what you're comfortable with. But remember, it's just money. ---- it.

If you are wealthy and miserable, you are miserable.

If you are happy and in debt, you are happy.

That being said, I'll take happy and debt free, if I may.
 
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I don't think dropping 10k a month is that difficult with EM. I don't have any more student loans but saved over 100k last year.

The math isn't hard and this isn't rocket science. If an emergency doc is making $360K, that's a gross of $30K a month. Even if he pays a full third of that in taxes (I paid 25% of my much higher income last year) that leaves $20K a month. My family lives very well on $10K a month. That leaves $10K a month with which to build wealth. If you have loans, put it toward that. In fact, if you have loans live on $5K and put $15K a month toward them. They'll go away very fast, especially if you refinance them to a variable 2%. If you want to put $50K toward retirement and only $130K a year toward the loans, that's probably okay too. The loans still go away quickly and you'll hit a net worth of zero just as fast. The point is you need to live a lifestyle somewhat similar to a resident lifestyle for 2-5 years after residency. Then live it up. If you want to retire very early, live like a resident for 10 years afterward. $360K - $120K for taxes - $50K for living expenses = $190K/year. $190K/year x 10 years at 5% real = $2.5M. That's enough that you can spend $100K every year for the rest of your life and never work after 40.
 
The math isn't hard and this isn't rocket science. If an emergency doc is making $360K, that's a gross of $30K a month. Even if he pays a full third of that in taxes (I paid 25% of my much higher income last year) that leaves $20K a month. My family lives very well on $10K a month. That leaves $10K a month with which to build wealth. If you have loans, put it toward that. In fact, if you have loans live on $5K and put $15K a month toward them. They'll go away very fast, especially if you refinance them to a variable 2%. If you want to put $50K toward retirement and only $130K a year toward the loans, that's probably okay too. The loans still go away quickly and you'll hit a net worth of zero just as fast. The point is you need to live a lifestyle somewhat similar to a resident lifestyle for 2-5 years after residency. Then live it up. If you want to retire very early, live like a resident for 10 years afterward. $360K - $120K for taxes - $50K for living expenses = $190K/year. $190K/year x 10 years at 5% real = $2.5M. That's enough that you can spend $100K every year for the rest of your life and never work after 40.

What do you recommend for someone graduating med school owing 450k+ debt (500k+ after residency)? Continue living like a resident while putting the excess income towards loans, or take advantage of REPAYE?
 
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If you are wealthy and miserable, you are miserable.

If you are happy and in debt, you are happy.

That being said, I'll take happy and debt free, if I may.
You don't have any debt? Literally, none?
 
Are you all aware that the wealthiest of the wealthy, those with enough cash not to need to borrow, often use debt (if the interest rate is right for the purpose) to serve a purpose?

Corporate example: Even Apple Corp, the wealthiest company on the planet with biggest cash reserve in the world, uses debt for certain purposes. They park much cash overseas and borrow back in the USA against their cash, because the rate they can get is lower than the penalties they'd have to pay, repatriating the cash back onto US shores.

Personal example: I could cash out my 401k to pay off my students and be much closer to debt free. But it would be stupid, since my interest on my student loans costs me less than would the penalties paid and lost tax advantages of the retirement program, with matches, etc.

Who's better off, 1-someone with $1.5 million in assets and $0.5 million in debt, or 2-the guy with $1.0 million in assets and $0 in debt? They both have the identical net worth of $1 million.

Answer: It depends. Maybe guy #1, maybe guy #2, or maybe they're equally as good off. It depends on many, many factors; interest rate, liquidity and stability of the assets, tax rates, etc.

It just something to think about. That being said, and as I said above, everyone should do what they're most comfortable with.
 
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