Paying off 340k in loans in 7 months after graduation

[sweetlenovo88]

Just wanted to share. I come from immigrant parents and came here at a young age. I just graduated from psychiatry residency, yeah! My loan burden is now at 190k down from 340k. I started paying them off approximately 14 months ago when I started moonlighting in residency. I am engaged to a non-medical student and have no kids, I receive no financial assistance from anyone else and live in an expensive city. With the contract jobs I am about to start, I expect to pay the remaining balance in 7-8 months and be completely debt free. I am working in psychiatry M-F 8-5 and two full weekends a month of call at another facility. This is 400k a year. All are contract jobs through my corporation I used for moonlighting that allow me to maximize my tax savings. I continue to rent and have no mortgage. I have a nice BMW I bought for 12k cash from a government auction when I first started moonlighting and before I started paying the loans off. I sold my old car for 7k. I worked on cars myself in residency.

But I digress. What got me motivated was listening to Dave Ramsey and being sick of debt. At 340k and growing, with majority 6.8% and and sizable portion at 8.5% graduate plus it would have been 25k in interest every year. My payment on the standard repayment plan would have been 4k a month for 10 years. That made me sick. I graduated from a US med school with about 225k in loans. I lost a year to not matching and residency was four years, so the loans grew in deferment from 225k to 340k. Before moonlighting I decided to not make loans while in residency. Salary was especially low here and expenses high in this metropolis. Any payment would have been a token payment but degraded whatever quality of life I had during the first 3 years to terrible.

After becoming debt free, I have to work for a couple months to catch up with taxes due in April. Anyway, I will not be interested in more debt, no, I don't want that "doctor's mortgage" with a crappy APR or some kind of "practice loan." No more debt. I will continue to live modestly, invest my money in various businesses/funds/real estate. I refuse to ever get a mortgage even though I continue to live in said expensive city. Save money over time, then buy a house cash at a great deal from a foreclosure or an auction at some point.

I am sharing today to keep myself on track with my plan to pay off debt and to possibly inspire others that it is possible to shake off the shackles of debt slavery. If you get angry about it, you can do it and make a plan.

end rant

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[Gpan]

This is very encouraging to hear. Could I ask how did you pay 190K down while just holding a moonlighting job in residency? Do you not EAT lol

 

[leonazul25]

This is very encouraging to hear. Could I ask how did you pay 190K down while just holding a moonlighting job in residency? Do you not EAT lol

I paid down 150k, have about 190k left. I worked 3/4 weekends a month and was able to find high paying jobs through locums. My residency had little call in the finals years and the daily schedule was quite easy. Towards the end I was making around 15k a month from moonlighting. Also tax planning, etc.

 

[dynx]

I paid down 150k, have about 190k left. I worked 3/4 weekends a month and was able to find high paying jobs through locums. My residency had little call in the finals years and the daily schedule was quite easy. Towards the end I was making around 15k a month from moonlighting. Also tax planning, etc.

You were making 15k a month after taxes? 300k a year moonlighting? That's unbelievable. Emphasis on unbelievable.

 

[dynx]

You were making 15k a month after taxes? 300k a year moonlighting? That's unbelievable. Emphasis on unbelievable.

Just to clarify. You worked 3 weekends a month making 5k a weekend after tax? Or you worked during the week as well? And the locations you worked at couldn't find someone to work 6 days a month for 300k a year? I'm just curious. I know jails get fill ins and I've heard up to 2500 for a weekend but I'm amazed at the oportunity you've found.

 

[sweetlenovo88]

You were making 15k a month after taxes? 300k a year moonlighting? That's unbelievable. Emphasis on unbelievable.

Just to clarify. You worked 3 weekends a month making 5k a weekend after tax? Or you worked during the week as well? And the locations you worked at couldn't find someone to work 6 days a month for 300k a year? I'm just curious. I know jails get fill ins and I've heard up to 2500 for a weekend but I'm amazed at the oportunity you've found.

That is 15k before taxes. 5k a weekend. With call calling me every 20 min and seeing 50 patients a day working 12 hour days and not sleeping nights because of the call. I also had to fly 1000 miles out of state and then drive 3 hours to get to this small city. I did not work during the week. I have been at this job for the last 5 months but have recently moved on. I got paid the full amount tax free and then make estimated tax payments of 3k per quarter to the IRS and will have another tax bill in April of 2016. Since this is through my S-corp I will get to deduct expenses and distribute some of my earnings to K-1 distributions saving on FICA taxes. I continue to work a combination of jobs as a contractor (non employee-no benefits and less stability) through my S-corp. My weekend job I am about to start now, at two weekends a month, will be 4k a weekend, expenses paid and 6 hours a day with no call and no new admits. I have been lucky finding these oppurtunities.

 

[calvnandhobbs68]

That is 15k before taxes. 5k a weekend. With call calling me every 20 min and seeing 50 patients a day working 12 hour days and not sleeping nights because of the call. I also had to fly 1000 miles out of state and then drive 3 hours to get to this small city. I did not work during the week. I have been at this job for the last 5 months but have recently moved on. I got paid the full amount tax free and then make estimated tax payments of 3k per quarter to the IRS and will have another tax bill in April of 2016. Since this is through my S-corp I will get to deduct expenses and distribute some of my earnings to K-1 distributions saving on FICA taxes. I continue to work a combination of jobs as a contractor (non employee-no benefits and less stability) through my S-corp. My weekend job I am about to start now, at two weekends a month, will be 4k a weekend, expenses paid and 6 hours a day with no call and no new admits. I have been lucky finding these oppurtunities.

That's some serious dedication.

 

[Gpan]

That is 15k before taxes. 5k a weekend. With call calling me every 20 min and seeing 50 patients a day working 12 hour days and not sleeping nights because of the call. I also had to fly 1000 miles out of state and then drive 3 hours to get to this small city. I did not work during the week. I have been at this job for the last 5 months but have recently moved on. I got paid the full amount tax free and then make estimated tax payments of 3k per quarter to the IRS and will have another tax bill in April of 2016. Since this is through my S-corp I will get to deduct expenses and distribute some of my earnings to K-1 distributions saving on FICA taxes. I continue to work a combination of jobs as a contractor (non employee-no benefits and less stability) through my S-corp. My weekend job I am about to start now, at two weekends a month, will be 4k a weekend, expenses paid and 6 hours a day with no call and no new admits. I have been lucky finding these oppurtunities.

Damn that is pretty good. What specialty are you if you don't mind me asking? And Did you have any time to socialize or hang out with friends the past year or you just worked night and day?

 

[sweetlenovo88]

Damn that is pretty good. What specialty are you if you don't mind me asking? And Did you have any time to socialize or hang out with friends the past year or you just worked night and day?

psychiatry. social life definitely took a dive, spent most of time with fiance

 

[The White Coat Investor]

Nice work. I've got readers requesting you send me a guest post for the blog. If you're interested, email me at editor (at) whitecoatinvestor.com. I think you have my last amazing debt story beat:

http://whitecoatinvestor.com/how-we...-a-quarter-million-dollar-debt-in-six-months/

Sounds like you did something fairly similar.

 

[ENTologist]

Bravo

 

[thesauce]

Exemplary.

The only thing that I would caution you on is that Dave Ramsey is really meant for the masses - that is, those that have trouble restraining their spending. This isn't your problem. Your problem was educational debt.

Once you tackle it, I recommend that you not be afraid of a mortgage. I realize that you're very sensitive about debt at this point, and I agree with you about the doctor loans which have absolutely terrible rates, but you could certainly consider a 15yr fixed at under 3% once you have 20% to put down. That's pretty close to the inflation rate and you'd probably be losing money socking everything away in savings and paying rent while you wait to pay 100% in cash. Just my $0.02 to think about.

Again, great job!

 

[The White Coat Investor]

Exemplary.

The only thing that I would caution you on is that Dave Ramsey is really meant for the masses - that is, those that have trouble restraining their spending. This isn't your problem. Your problem was educational debt.

Once you tackle it, I recommend that you not be afraid of a mortgage. I realize that you're very sensitive about debt at this point, and I agree with you about the doctor loans which have absolutely terrible rates, but you could certainly consider a 15yr fixed at under 3% once you have 20% to put down. That's pretty close to the inflation rate and you'd probably be losing money socking everything away in savings and paying rent while you wait to pay 100% in cash. Just my $0.02 to think about.

Again, great job!

I'm not sure I'd call the rates at which you can get a doctor loan "terrible." They're generally within 0.25-0.5% of what you can get with a 20% down conventional. Fees and rates are generally only slightly higher. If you have high rate student loans or are not maxing out your retirement accounts, those are probably better uses of your money than a 20% down payment.

 

[thesauce]

I'm not sure I'd call the rates at which you can get a doctor loan "terrible." They're generally within 0.25-0.5% of what you can get with a 20% down conventional. Fees and rates are generally only slightly higher. If you have high rate student loans or are not maxing out your retirement accounts, those are probably better uses of your money than a 20% down payment.

I just went through the process and the rates that I saw (and I checked all institutions in my state that offered doctor loans) were 1-1.5% higher.

 

[The White Coat Investor]

I just went through the process and the rates that I saw (and I checked all institutions in my state that offered doctor loans) were 1-1.5% higher.

That's too bad. Sorry to hear that. I agree 1-1.5% higher IS terrible and probably worth saving up a formal down payment to avoid. As I recall, PMI is about the equivalent of paying 1% more. Doctor loans avoid that, but if you're paying it in rate, then it's really all the same.

 

[dpmd]

That's too bad. Sorry to hear that. I agree 1-1.5% higher IS terrible and probably worth saving up a formal down payment to avoid. As I recall, PMI is about the equivalent of paying 1% more. Doctor loans avoid that, but if you're paying it in rate, then it's really all the same.

Well PMI or higher rate for the doctor loan is a bummer, but depending on how the market is in your area it might be worth it to avoid waiting and then you can look into whether refinancing later (due to appreciation or saving up money dropping your loan to value). Plus the intangible benefit of having your own place is something to factor in. Back in the days you could do a no documentation loan at a higher rate if there were certain barriers to getting a loan, my husband (fiance at the time) and I did that in order to get our condo during med school then refinanced it later when rates were better and our situation was more acceptable to the lenders. The fact that the condo was cut at least an hour off my commute was an added bonus. Although, later when rates came way down it wasn't worth the higher interest rate they offered for refinancing since it was a rental property, so I made it a priority to pay off.

 

[Plastikos]

I just recently took a doctor loan over the conventional since it just made more (tax/money) sense. The conventional was 3.6% fixed 10% down with pmi. Doctor loan was 4.125% with pmi rolled into the rate, paid a little bit of points to get back to 3.6%, but this way all those things are tax deductible. You have to look at things through the lens of whats the best use of the dollar, not randomly assigned values based on perception, etc...As dpmd said, you can always change things later when most advantageous to you.

Yes, I could have paid 20% but it just doesnt make a whole lot of sense overall. I ran the numbers and its the same amount just paid differently and with a doctor loan you can turn one into a write off. Down payments are just gone after you pay it, yes you have some equity, but i'd rather put the money to use elsewhere, who knows what could happen. The only reason I paid 10 instead of 5% was because the principal mortgage was so reasonable that it was just very easy to do. If it were otherwise I can think of much better places to put that money.

 

[The White Coat Investor]

While I don't disagree that there may be better uses of that money, it's not correct to say that the "down payment is just gone after you pay it." It's not gone. It directly reduces the size of the loan, thus reducing the amount of interest paid each month and can be reaccessed upon taking a cashout refinance or selling the house.

 

[Plastikos]

True. I more precisely meant that its 100% after tax money for the most part and there are more efficient ways to do the same thing. Principal is not an issue on this place as it is absurdly within our means thankfully, finally making some great finance moves (thanks wci). No guarantees with selling either, another reason we didnt go too much. We know what we need to be happy. Enough safe space, each other, and fancy bicycles and their associated paraphernalia.

 

[jakeislove]

Awesome job!!!

 

[Smart Money MD]

That is a serious income for psychiatry. Bravo. Many surgeons would struggle to make that amount.

 

[sweetlenovo88]

Progress continues, down to total of 165k, had a late start getting my contract jobs in order and decided I will be starting my own practice one day a week. Here is my screenshot from navient, so excited I'm below a $100 with them now.

 

[Plastikos]

Thank goodness you're paying those off, those rates are terrible.

 

[FinancialPlanner]

Awesome job! There is something to be said for being totally debt free. Have you considered refinancing the student loans? I know you only have several months left but most the refinance companies have no closing costs... and less interest is less interest. If it was me, I would be going for the variable rate refinance (only if my timeline was 7 months - otherwise always go for fixed). This might save a few thousand in interest... better than a poke in the eye!!

 

[sweetlenovo88]

Update: Down to 50k with Navient, total is at 120k by the end of this week. Shooting for 80k by the end of the year. Working overtime starting in November to make up for two week vacation to Europe. On the cheap of course (reasonably so) because of these loans. Got two free round trip tickets because of airline miles

 

[thesauce]

Fabulous. Keep up the good work! Are you remembering to make your quarterly tax payments?

 

[sweetlenovo88]

Fabulous. Keep up the good work! Are you remembering to make your quarterly tax payments?

Yes estimated tax payments for personal returns and the IRS wants me to file a 944 yearly return instead of 941 for my s-Corp for 2015

 

[enien]

Thats intense, nice job!

 

[sweetlenovo88]

down to 24k with navient, 105k total remaining for student loans. I am then completely debt free. My eyes can't believe the navient/sallie mae number is so low! After this, the bulk is at 5.8% and the rest at 5% and 2.3%. I will probably have to slow down soon to put money into retirement for 2015 (53k max into solo 401k) and start putting more aside for a sizable tax bill in April after my K-1 distribution. I am debating with myself if I should go full force and have this paid off in 4 months and not do retirement for the emotional satisfaction of achieving long due goal. However, I think the logical side will win given the large tax savings and I will do the retirement.

 

[DD214_DOC]

Where are you guys finding these independent contract positions? I can only work weekends, and have been looking for about 6 months and can't find a damn thing. Locum tenens has been pretty useless, offering me only daytime weekday positions or positions in other states. Local hospitals surprisingly have no available positions for psychiatry. I'm guessing I should just contact a physician staffing person directly?

 

[Gpan]

You should do some private consultant for some of us who are clueless on what to do lol. Great job!!!!

 

[DrDreams]

Just wanted to share. I come from immigrant parents and came here at a young age. I just graduated from psychiatry residency, yeah! My loan burden is now at 190k down from 340k. I started paying them off approximately 14 months ago when I started moonlighting in residency. I am engaged to a non-medical student and have no kids, I receive no financial assistance from anyone else and live in an expensive city. With the contract jobs I am about to start, I expect to pay the remaining balance in 7-8 months and be completely debt free. I am working in psychiatry M-F 8-5 and two full weekends a month of call at another facility. This is 400k a year. All are contract jobs through my corporation I used for moonlighting that allow me to maximize my tax savings. I continue to rent and have no mortgage. I have a nice BMW I bought for 12k cash from a government auction when I first started moonlighting and before I started paying the loans off. I sold my old car for 7k. I worked on cars myself in residency.

But I digress. What got me motivated was listening to Dave Ramsey and being sick of debt. At 340k and growing, with majority 6.8% and and sizable portion at 8.5% graduate plus it would have been 25k in interest every year. My payment on the standard repayment plan would have been 4k a month for 10 years. That made me sick. I graduated from a US med school with about 225k in loans. I lost a year to not matching and residency was four years, so the loans grew in deferment from 225k to 340k. Before moonlighting I decided to not make loans while in residency. Salary was especially low here and expenses high in this metropolis. Any payment would have been a token payment but degraded whatever quality of life I had during the first 3 years to terrible.

After becoming debt free, I have to work for a couple months to catch up with taxes due in April. Anyway, I will not be interested in more debt, no, I don't want that "doctor's mortgage" with a crappy APR or some kind of "practice loan." No more debt. I will continue to live modestly, invest my money in various businesses/funds/real estate. I refuse to ever get a mortgage even though I continue to live in said expensive city. Save money over time, then buy a house cash at a great deal from a foreclosure or an auction at some point.

I am sharing today to keep myself on track with my plan to pay off debt and to possibly inspire others that it is possible to shake off the shackles of debt slavery. If you get angry about it, you can do it and make a plan.

end rant

Thank you so much. I cannot tell you how encouraging this is. I do not want to be in debt a single second longer than I have to after graduating and I was wondering if it was even possible. My goal is within 4 years of becoming an attending. Thank you for letting us know it is possible and we wont all die from a burden of debt upon graduating.

 

[Med0000]

Your debt payoff is inspirational and motivating! I am doing the same thing currently although less aggressively (paid $200k in 29 months). Keep it up and know that your hard work and discipline will pay dividends for the rest of your life. Freedom from debt is priceless in my opinion.

 

[sweetlenovo88]

If anyone wants an update, I stopped paying loans in November to save for 58.5k to into an individual 401k and backdoor roth with Vanguard. I have paid self-employment taxes and have just finished saving to pay my federal taxes. Taxes were roughly 50k not counting estimated taxes from last year. Also took a low budget 5k vacation for two to Europe over 2.5 weeks during the holidays. Free flights with my miles.

So now, back to the plan starting in one week. $110k left of government student loans and I am completely debt free. My goal is to be done by Jul 1 or Aug 1 depending on the jobs I take. I graduated residency in July of '15 so it would nice to finish by July 1 of this year to rid myself of the incredible burned I carried.

NSLDS Screenshot as of today

 

[Plastikos]

Im glad you filled your retirement up, that was a good move.

 

[sweetlenovo88]

Im glad you filled your retirement up, that was a good move.

thanks, the tax savings were much more than the lost months of interest.

 

[Gpan]

One thing everyone should know is that your student loan interest deduction gets phrased out if you make >$80K a year as single and >$160K as married filer. I just thought everyone should be aware of this.

 

[37Base]

If you don't mind sharing, what part of the country are you located in? @sweetlenovo88


Sent from my iPhone using SDN mobile app

 

[sweetlenovo88]

If you don't mind sharing, what part of the country are you located in? @sweetlenovo88


Sent from my iPhone using SDN mobile app

Florida

 

[sweetlenovo88]

Update, I am almost done with the Mac Daddy, Navient/Salliemae. This number was in the high 200s when I started this journey; so nice to see this! I will post again when it is all zeroes. I am almost tempted to make my final payment over the phone and tell them something nasty as my parting gift. I will not though as we are all professionals.

 

[NBLogical]

+1 for terrible rates. I thought 6.8% was bad, but 8.5%?
This is crazy and I know n=1 but paying off 340k in loans within a year is impressive.
With your stated salary of ~400k/year, how much are you living off of with and without your spouses income? I'm expecting to live off of ~40-50k once I reach attending status.
Is this why everyone says to live like a resident for the first couple of years as an attending?

 

[deleted547631]

Easily one of the best and most inspiring threads on SDN!

Good job on killing those loans!

 

[sweetlenovo88]

Thanks man. Publicly posting on this thread helps me keep my eye on the prize. I haven't had a weekend off in two months and am pulling double duty for the last two weeks. I can see the light at the end of the tunnel

 

[sweetlenovo88]

good news, I made my payment to Navient and it is done. Also paid off my 9k perkins loan in full today. Perkins person said "Are you sure?" Yes, I'm sure, bastards. I am now starting on my last lender, nelnet with a total of 78k. I will post screenshots from navient once the payment posts.

 

[sweetlenovo88]

 

[sweetlenovo88]

Here we go, last creditor, Nelnet! Here is a screenshot before I submitted a 17k payment to them. I was on their extended repayment over 20 years while I paid off Navient. I bet someone there is thinking WTF! With this payment, I officially have a positive net worth for the first time considering my retirement savings. Big milestone for me!

 

[Igor4sugry]

I paid down 150k, have about 190k left. I worked 3/4 weekends a month and was able to find high paying jobs through locums. My residency had little call in the finals years and the daily schedule was quite easy. Towards the end I was making around 15k a month from moonlighting. Also tax planning, etc.

Sounds like you had a good PD who allowed you to moonlight pretty much anywhere starting in PGY-III?
Working 3 of 4 weekends a month how did you manage not to break that 80hour/week rule (80 hours per week averaged over 4 week period to be exact) (especially if you were at these places overnight taking call as well)? Or did your program not track this or look the other way?

 

[sweetlenovo88]

Sounds like you had a good PD who allowed you to moonlight pretty much anywhere starting in PGY-III?
Working 3 of 4 weekends a month how did you manage not to break that 80hour/week rule (80 hours per week averaged over 4 week period to be exact) (especially if you were at these places overnight taking call as well)? Or did your program not track this or look the other way?

Started working towards the end of 3rd year and started making money at the beginning of 4th year. PD allowed moonlighting because there was none in house. Last year of psych is chill and 80 hours was never approached nor did the residency care about that rule.

 

[sweetlenovo88]

 

[deleted547631]

Dropping $20K student loan payments like a boss! Sweet debt-free freedom cometh soon!