Is it hard to live "below your means" coming out of dental school with debt?

[adamrose]

Prospective dental student here,
I think the best advice I have came across in terms of dealing with the school debt is to pay it off as soon as you can and live below your means. How many years is the goal of paying off debt quick achievable in ?

I was wondering what exactly this meant. Is living below your means when you take ~$50,000 to live on and throw your additional salary right into your loans? does it mean living on less than $50k?

How easy is this to do as someone who is single? or someone who is starting a family?

I come from a family with financial troubles and I see myself as someone who could live modestly. I am just wondering to what extent "live below your means" could imply when as a general dentist out of GPR, you could bring in $100-200k

sorry for the bombardment of questions.

Answers would be appreciated!

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[bjpenn]

Prospective huh?have you applied to dental school?

Have you ever shadowed a dentist in a corporate office? You should try and see what you think.

I think your concerns can be alleviated if you went to a cheap school.

 

[Faux]

It really depends on where you go to school. Your payments can be in the 2k range or they can be in the +4k range. A lower debt can be payed off much more quicker and you won't be suffocating every month. Just too many variables at play.

 

[adamrose]

Prospective huh?have you applied to dental school?

Have you ever shadowed a dentist in a corporate office? You should try and see what you think.

I think your concerns can be alleviated if you went to a cheap school.

prospective does mean applying!

 

[Bereno]

Its hard for some, not for others. Its a funny thing because the trick is to resist the temptation to splurge. If you are OK living on 50k, then you are fine. If you are OK living off 40k, even better. Simple as that.

As an aside, it might not always be best to pay off your loans as soon as you can, but that is a different story.

 

[DrJeff]

It's actually pretty easy if you don't start living ABOVE your means in the 1st place!

Let's say that you do a residency that pays you 50k a year. Then you go out in private practice and are making 100k a year - keep living like you're making 50k a year, and talk with a financial adviser and get a plan and stick to it! In the scenario that I mentioned above, you won't have an extra 50k of money a year to use (taxes, unfortunately will take some of YOUR money that you earned), but most financial advisers, after assessing your current status and talking with you about your goals, will likely come up with a plan for that money that you're earning, but not spending that has a mix of student loan debt repayment, retirement savings, and saving for future investments (buying a home, buying a practice, etc)

If you have the discipline required to make it through dental school, then realistically you have the discipline required to stick to a financial plan

 

[womboona]

As an aside, it might not always be best to pay off your loans as soon as you can, but that is a different story.

Can you describe this?

 

[Bereno]

Sure. I will try and keep it simple as to not distract from this thread.

Associates have limited cash inflow. Student loans are a large, but consistent cash outflow. Owning a practice is a slightly less consistent, but much higher cash inflow. The thought is that using your associate inflows to pay for student loans early will delay the possibility of the higher, but slightly less consistent cash inflow from owning a practice. It is possibly better to minimize the student loan payment first, while using the remaining associate cash inflow to fund an acquisition of a practice. This provides the dentist with the opportunity to substantially increase their cash inflows, beyond the increase they incur in cash outflows (increased debt). Once the higher cash flows have been established, the dentist can then increase their payment on student loans. The driving reason for this is that even with an increase in cash outflows for accelerated student loan payments, the increased cash inflows from practice ownership more than compensates. Another side effect is that this will shift the dentist's peak income years to an earlier age. There are some threads about this in a few places on this forum that might shed a little more light on the topic.

 

[Smart Money MD]

Prospective dental student here,
I think the best advice I have came across in terms of dealing with the school debt is to pay it off as soon as you can and live below your means. How many years is the goal of paying off debt quick achievable in ?

I come from a family with financial troubles and I see myself as someone who could live modestly. I am just wondering to what extent "live below your means" could imply when as a general dentist out of GPR, you could bring in $100-200k

Ideally if you have debt coming out of school, you'd want to structure your living expenses to allow for paying back your debt in a timely manner. At the minimum you'd want to be able to pay the minimum amount required, but most educational loans are structured in a 10-year repayment period. To rid of your debt quickly, you'd have to set aside enough to accelerate your repayments. I would imagine that can be accomplished in a few years after you start working especially if you pay close attention to your cash flow. (ie might not want to get that new BMW just yet the first year you get a 6-figure salary).

 

[StumpMT]

As it is right now as a Medical Laboratory Scientist I net just under $40k. My fiance is also a Medical Laboratory Scientist but works in microbiology making only slightly more because she is the lead of the department. The way I see it even if I'm netting $45k after loans payments etc as a dentist I'm still making more that I am right now, and my fiance and I do perfectly fine. Depending on where you live it is not hard living on $40k after taxes.