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debt!!
- Thread starter jkq202
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Depending on where you go, and how much tuition goes up each year, it will last you 2-3 years. What I would do right now, if you haven't already, is put it in a mutual fund or high interest savings account.
My money that I saved over the years is in a mutual fund that has consistently earns around 10% per year. I withdraw a set amount each month for my living expenses. The only issue is, I can't withdraw out of it more than twice a month, so I have to get by on what I get each month.
My loan money is in a high interest savings account (5%) and comes down each month into my checking to pay my rent. This is another account you can only withdraw from a certain number of times a month (I think 5), so you have to be careful about getting the right amount put down into checking.
Right now, but not for long, a relative is paying my tuition, but she will probably pass on soon, so each semester I accept the full amount of my loans and cancel them at the last minute if she doesn't pass on. Loans, since I'm out of state and have some savings in my name, generally just cover tuition, so if she were to pass, I would need to withdraw more from my savings to cover rent as well.
This past year, I only took out my subsidized Staffords, so my loans are actually earning money right now, so that's why I didn't drain my savings and took loans out instead because my mutual fund is earning more than my loans. Anyway, it made sense to me, so hopefully it makes sense to you.
My money that I saved over the years is in a mutual fund that has consistently earns around 10% per year. I withdraw a set amount each month for my living expenses. The only issue is, I can't withdraw out of it more than twice a month, so I have to get by on what I get each month.
My loan money is in a high interest savings account (5%) and comes down each month into my checking to pay my rent. This is another account you can only withdraw from a certain number of times a month (I think 5), so you have to be careful about getting the right amount put down into checking.
Right now, but not for long, a relative is paying my tuition, but she will probably pass on soon, so each semester I accept the full amount of my loans and cancel them at the last minute if she doesn't pass on. Loans, since I'm out of state and have some savings in my name, generally just cover tuition, so if she were to pass, I would need to withdraw more from my savings to cover rent as well.
This past year, I only took out my subsidized Staffords, so my loans are actually earning money right now, so that's why I didn't drain my savings and took loans out instead because my mutual fund is earning more than my loans. Anyway, it made sense to me, so hopefully it makes sense to you.
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Debt is a necessary evil for most professional students, I'm looking at over 100k myself 🙁 My best advice to you is to not let the debt freak you out, at least you'll be earning decent money once you graduate and can pay it back in a reasonable amount of time.
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Pressmom, would you mind sharing which institutions/investment products you're using for your mutual fund and high interest savings account? I have a what I thought was a high interest savings account, but it's currently really only pulling in about 3% interest (it doesn't have many restrictions, but I don't mind some restrictions for a higher yield). And I'd love to learn more about the 10% interest mutual fund that you're using. If you're not comfortable posting it out here, could we discuss via PM? Thanks!!
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i would love to hear about the 10% option, too! but i know we are strangers and i don't usually talk about money with anyone. i guess i could stop being so conservative. old school new england mentality comin' at ya.
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Excellent advice, Pressmom! In addition, I'd say go ahead and start a Roth IRA while you're at it. For everyone who doesn't make a ton of money, you can often start them for as little as $25 a month (less than a dollar a day) and work your way up. Starting young is super helpful and it's all about that compound interest. I finally got around to starting mine last month and it's so neat to see it grow in just a month. Much faster than a little savings account, even though my investment options were pretty tame.
I'll also second the savings account thing for the loans. My loan check goes into my savings account, so that way, I can make a little bit off it and it's not quite as easy to spend it if it just went straight into checking. But you can move it into checking with a click or two of a mouse, so it's pretty easy to get to and more liquid than a mutual fund for short term stuff.
If anyone has access to USAA (you should if you or your parents were in the military), they have very, very good plans out there for investing and retirement and lots of FREE financial planning advice and tools, not to mention excellent insurance rates and banking options.
Oh yeah, thought this was cool. Say you want $750,000 for when you retire at age 65. This chart shows you how much a month you need to save each month with a decent IRA, 401K, mutual fund, etc retirement investment based on when you start. So if you chip in $200ish a month when you're 25, that's a lot easier than 10K a month when you're just about to retire in a few years! Pretty cool.
I'll also second the savings account thing for the loans. My loan check goes into my savings account, so that way, I can make a little bit off it and it's not quite as easy to spend it if it just went straight into checking. But you can move it into checking with a click or two of a mouse, so it's pretty easy to get to and more liquid than a mutual fund for short term stuff.
If anyone has access to USAA (you should if you or your parents were in the military), they have very, very good plans out there for investing and retirement and lots of FREE financial planning advice and tools, not to mention excellent insurance rates and banking options.
Oh yeah, thought this was cool. Say you want $750,000 for when you retire at age 65. This chart shows you how much a month you need to save each month with a decent IRA, 401K, mutual fund, etc retirement investment based on when you start. So if you chip in $200ish a month when you're 25, that's a lot easier than 10K a month when you're just about to retire in a few years! Pretty cool.
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I agree with Electrophile about investing in an IRA. Here is an article I found on the basic difference between a Roth and traditional IRA.
http://beginnersinvest.about.com/cs/iras/f/tradvsrothira.htm
I actually have a traditional, so I would have to pay a penalty to take money out, but since I have more liquid assets, it works for me. If you think you may need to take money out to, say, buy a house, it would be better for you to get a Roth. If you don't think you'll need the flexibility or you make more money than Roth allows, then go with the traditional.
Correction:
Here is something about exemptions for penalties for taking out of a traditional IRA.
http://beginnersinvest.about.com/cs/iras/a/aairafees.htm
http://beginnersinvest.about.com/cs/iras/f/tradvsrothira.htm
I actually have a traditional, so I would have to pay a penalty to take money out, but since I have more liquid assets, it works for me. If you think you may need to take money out to, say, buy a house, it would be better for you to get a Roth. If you don't think you'll need the flexibility or you make more money than Roth allows, then go with the traditional.
Correction:
Here is something about exemptions for penalties for taking out of a traditional IRA.
The article:
http://beginnersinvest.about.com/cs/iras/a/aairafees.htm
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Good advice generally. One thing to be sure of is if you put money into FDIC-insured accounts, only the first $100,000 per institution is insured. So, if you're in the $100,000 range, it's a good idea to split it up, or else you may lose money if the bank fails, which is looking quite possible as the real-estate crisis trucks along.
If you put your money in mutual funds, it is not insured and you could lose the whole principal. Unlikely, but possible. Investing a large sum like $100,000 in equities (stock funds) at this moment is probably a bad idea because the market is volatile (and volatile downwards, in my opinion.) If you lose 10% the first year and make 10% in the second and third years, your total gain is about 3%/year, which is not very attractive. Many mutual funds have been virtually flat over the last 7-8 years. On the other hand, my savings rate is 3%/year, compounded monthly and FDIC insured, although that rate could change downwards as time goes on.
If your dad has good money sense, you could work something out with him so that you could loan him the inheritance money at a 6% return. He could then invest it accordingly so that he comes out ahead. Of course, you'd have to assess the risks there too.
If you put your money in mutual funds, it is not insured and you could lose the whole principal. Unlikely, but possible. Investing a large sum like $100,000 in equities (stock funds) at this moment is probably a bad idea because the market is volatile (and volatile downwards, in my opinion.) If you lose 10% the first year and make 10% in the second and third years, your total gain is about 3%/year, which is not very attractive. Many mutual funds have been virtually flat over the last 7-8 years. On the other hand, my savings rate is 3%/year, compounded monthly and FDIC insured, although that rate could change downwards as time goes on.
If your dad has good money sense, you could work something out with him so that you could loan him the inheritance money at a 6% return. He could then invest it accordingly so that he comes out ahead. Of course, you'd have to assess the risks there too.
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Excellent advice, Pressmom! In addition, I'd say go ahead and start a Roth IRA while you're at it. For everyone who doesn't make a ton of money, you can often start them for as little as $25 a month (less than a dollar a day) and work your way up. Starting young is super helpful and it's all about that compound interest. I finally got around to starting mine last month and it's so neat to see it grow in just a month. Much faster than a little savings account, even though my investment options were pretty tame.
I'll also second the savings account thing for the loans. My loan check goes into my savings account, so that way, I can make a little bit off it and it's not quite as easy to spend it if it just went straight into checking. But you can move it into checking with a click or two of a mouse, so it's pretty easy to get to and more liquid than a mutual fund for short term stuff.
If anyone has access to USAA (you should if you or your parents were in the military), they have very, very good plans out there for investing and retirement and lots of FREE financial planning advice and tools, not to mention excellent insurance rates and banking options.
Oh yeah, thought this was cool. Say you want $750,000 for when you retire at age 65. This chart shows you how much a month you need to save each month with a decent IRA, 401K, mutual fund, etc retirement investment based on when you start. So if you chip in $200ish a month when you're 25, that's a lot easier than 10K a month when you're just about to retire in a few years! Pretty cool.
Why would a vet ever even want to retire?
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Actually, the rollover from a trad IRA to a Roth at this time might be a great ideas as:
(a) the stock market is crap and your stocks are depressed in price (hence less taxes due as taxes are calculated from the value on the day of the rollover)
(b) if you are a student, your tax bracket is super low and the taxes you pay will be lower than when you graduate and are making a real salary.
I rolled mine over years ago when the stock market was in a low period and have just been watching it grow in value over the years. If you are older and need the tax break go for a regular IRA though. I can't imagine most of us on the board are in this position though 🙂
I am surprised though that you kept your money in MFs, Pressmom, since FAFSA will find them. I rolled all my cash into a house. I'll let ya'll know how the subsidized/unsubsidized breakdown changes next year now that my money is "hidden" legally, of course. The sub/unsub breakdown this year was not good, the "penalty" I was forced to pay for having a full-time job and saving my money over the years, grrrrr!
(a) the stock market is crap and your stocks are depressed in price (hence less taxes due as taxes are calculated from the value on the day of the rollover)
(b) if you are a student, your tax bracket is super low and the taxes you pay will be lower than when you graduate and are making a real salary.
I rolled mine over years ago when the stock market was in a low period and have just been watching it grow in value over the years. If you are older and need the tax break go for a regular IRA though. I can't imagine most of us on the board are in this position though 🙂
I am surprised though that you kept your money in MFs, Pressmom, since FAFSA will find them. I rolled all my cash into a house. I'll let ya'll know how the subsidized/unsubsidized breakdown changes next year now that my money is "hidden" legally, of course. The sub/unsub breakdown this year was not good, the "penalty" I was forced to pay for having a full-time job and saving my money over the years, grrrrr!
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Back from the dead -
Maybe some of of the current students or the newly minted DVM grads can comment on this, but how are you handling the debt? Do you simply consolidate the loans together and then get a 30 year repayment plan?
I'm still discovering if this is the right path for me, but what is an utter turn off for me are the costs involved. I guess its the nature of the beast for vet school to be that expensive, but to me debt is a sin, so I figure I may as well find out how others are handling it.
Edit - for those of you guys who engage in public service, is it possible to have some of the loans reduced?
Any feedback would be appreciated. Thanks.
Maybe some of of the current students or the newly minted DVM grads can comment on this, but how are you handling the debt? Do you simply consolidate the loans together and then get a 30 year repayment plan?
I'm still discovering if this is the right path for me, but what is an utter turn off for me are the costs involved. I guess its the nature of the beast for vet school to be that expensive, but to me debt is a sin, so I figure I may as well find out how others are handling it.
Edit - for those of you guys who engage in public service, is it possible to have some of the loans reduced?
Any feedback would be appreciated. Thanks.
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The costs aren't prohibitive if you go to your state school. I am going to accumulate about $15,000/year in debt, based on tuition ($12,500) and living expenses ($8500), offset by summer work. So, the total is around $60,000. (Luckily, about 50,000 of that will be an interest-free loan from my parents.) I could pay that off in 2 years, the way I live. Some schools, like Cornell, are much more expensive in-state.
If you have a more extravagant lifestyle and are planning on doing non-revenue-producing things in the summer, then perhaps you'll need the full amount in available loan money each year, which was like $26,000 or something here at UGA. Then, you'll have about $120,000 in debt, because a lot of your loans aren't subsidized. With your (hypothetical) lifestyle, you might be able to pay only $10,000 each year, even on a vet's salary. You might need a 15-year repayment plan.
Where it gets really crazy is in the out-of-state situation. OOS tuition is around $35,000/year, and then living expenses. It is clearly possible to rack up a lot of debt, some at high interest rates. On a vet's salary, assume $70,000, how much can you really pay each year? You'll be in it for a long time.
If you have a more extravagant lifestyle and are planning on doing non-revenue-producing things in the summer, then perhaps you'll need the full amount in available loan money each year, which was like $26,000 or something here at UGA. Then, you'll have about $120,000 in debt, because a lot of your loans aren't subsidized. With your (hypothetical) lifestyle, you might be able to pay only $10,000 each year, even on a vet's salary. You might need a 15-year repayment plan.
Where it gets really crazy is in the out-of-state situation. OOS tuition is around $35,000/year, and then living expenses. It is clearly possible to rack up a lot of debt, some at high interest rates. On a vet's salary, assume $70,000, how much can you really pay each year? You'll be in it for a long time.
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I'm looking at a minimum of 100k at MN (DVM/MPH) if I don't need cost of living expenses. Unfortunately, we will need the extra money, maybe not all of it, but some of it.
Now the good news is that we have a modest home for my area, and we plan to stay here as long as I can find work in my area. We don't have a high-end lifestyle, so I'm hoping to come in under 200k when it's all said and done. If we stay in our house, we'll hopefully be able to contribute a lot to my loans right off the bat.
We've got a few years to worry about it yet, and a lot can happen between now and then.
Now the good news is that we have a modest home for my area, and we plan to stay here as long as I can find work in my area. We don't have a high-end lifestyle, so I'm hoping to come in under 200k when it's all said and done. If we stay in our house, we'll hopefully be able to contribute a lot to my loans right off the bat.
We've got a few years to worry about it yet, and a lot can happen between now and then.
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Sure, if you assume everyone lives in Georigia or some other cheap state.
Tufts is 30k a year for in state. Cost of living up in this area is going to run you $12,000 a year easy if you you want your own bedroom, prefer eating on a regular basis and would actually like to have heat in your appartment during the winter. And lets not forget massachusetts state mandated health insurance at >$2000 a year....
My best case scenario is more like $180,000 in loans if I go to my in state school.
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Yeah I'm with david here. UCDavis is in the $24K-$26K per year range in-state, plus there is no way on Earth you are going to live in Davis on $8k per year.
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I'll throw UPenn into the expensive-in-state-school pot. 🙂
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A scary little factoid that was thrown out by a professor in our of our classes...he said that based on interest rates, fees, and whatnot, a $10 pizza today will have cost you $30 by the time you pay it off. So I decided never to buy pizza again...
RTP. I explicitly stated that some schools, like Cornell, are much more expensive.
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