Do young OD's have to live a thrifty lifestyle...even though they are "DOCTORS"

[gochi]

Hey,

I was just wondering how young doc's live on a very low income. Here are my calculations...

Say you make 80,000/yr (avg)
After taxes gross income drops down to 50,000/ yr (live in oregon)
Loan for 4yrs= 160,000 @ 6.5% is ~ 1800/month (10 yrs to pay loan)

Total: 50000- (12*1800)= 28, 400= $30,000/yr

So as an optometrist, and going to school for 8 years, one would be making as much as an individual who never thought about college ?

Someone please tell me there was a mistake in my calculations?

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[KHE]

Hey,

I was just wondering how young doc's live on a very low income. Here are my calculations...

Say you make 80,000/yr (avg)
After taxes gross income drops down to 50,000/ yr (live in oregon)
Loan for 4yrs= 160,000 @ 6.5% is ~ 1800/month (10 yrs to pay loan)

Total: 50000- (12*1800)= 28, 400= $30,000/yr

So as an optometrist, and going to school for 8 years, one would be making as much as an individual who never thought about college ?

Someone please tell me there was a mistake in my calculations?

A couple of things here....

Don't take the 10 year repayment on a loan that large. Spread it out over 30 years. Cash flow is king here. If as you get yourself established, and you have extra money coming in, you can put money towards the loans but in general, it makes little sense to try to pay off a loan like that that quickly because there are so many other better ways to spend that money.

Also, you are not going to pay anywhere CLOSE to $30000 in taxes. I live in CT, which is a very high taxed state and I make WAY more than $80000 and I pay way LESS than $30000 per year in taxes.

 

[gochi]

A couple of things here....

Don't take the 10 year repayment on a loan that large. Spread it out over 30 years. Cash flow is king here. If as you get yourself established, and you have extra money coming in, you can put money towards the loans but in general, it makes little sense to try to pay off a loan like that that quickly because there are so many other better ways to spend that money.

Also, you are not going to pay anywhere CLOSE to $30000 in taxes. I live in CT, which is a very high taxed state and I make WAY more than $80000 and I pay way LESS than $30000 per year in taxes.

I see you're point, but at the same time its kinda disturbing to see money go outta you're wallet every month for 30 years, even though its not very much, I hope

 

[blazenmadison]

Hey,

I was just wondering how young doc's live on a very low income. Here are my calculations...

Say you make 80,000/yr (avg)
After taxes gross income drops down to 50,000/ yr (live in oregon)
Loan for 4yrs= 160,000 @ 6.5% is ~ 1800/month (10 yrs to pay loan)

Total: 50000- (12*1800)= 28, 400= $30,000/yr

So as an optometrist, and going to school for 8 years, one would be making as much as an individual who never thought about college ?

Someone please tell me there was a mistake in my calculations?

living thrifty is smart.
just take a look at this http://abcnews.go.com/2020/story?id=3432477&page=1

family of 7 on $35,000 a year!

 

[KHE]

I see you're point, but at the same time its kinda disturbing to see money go outta you're wallet every month for 30 years, even though its not very much, I hope

I know that on your graduation day when you look at the bottom line and see that very large number, it can be very daunting and I understand why you might have a desire to pay it off quickly.

But again.....it's not the wise thing to do.

If you are paying 6.5% on your student loan and you take $1 and put it towards your student loan...you have essentially made a 6.5% return on your investment. (And because student loan interest is tax deductible below certain income thresholds, you are actually getting LESS of a return on your investment by paying off student loans.)

If however you take that $1, and you invest it in the stock market, or a practice, or put it towards any credit card debt you may have, the return on the investment of that $1 is going to be SO MUCH LARGER over time.

So let me say again that cashflow is key, here. You want to be putting as much of your money towards things that have good returns on investment, and student loans is NOT one of them. Don't fear the student loan debt, scary as it might be. It will get paid off eventually and remember, if you are paying $500 a month now it's one thing, but $500 a month 20 years from now is a drop in the bucket.

 

[JAZZEYE]

Listen to what KHE is saying here !
No matter what you do for a living..... this makes very good sense.

 

[cpw]

KHE speaks the truth !!!

Consolidate your student loan at a low interest over 30 years and make small payments. Unfortunately, though, most of us make too much for the student loan interest to be tax deductible. (you have to make less than 65k to deduct it)

 

[BKK]

I disagree with KHE. Do whatever you can do to pay down your debt as soon as you can. The sooner that you do not have payments in your life of any kind, the better you are set up for the future.

If you take 30 years to pay off your loan debt and invest the difference, you can make on average 12% in a good mutual fund, right. But since you are paying 6.5% in student loan interest, your 12% return is really just 5.5% net. Now, let's talk about taxes on your mutual funds (not including Roth IRA of course). Subtract 1-2% more for taxes and you are now at the inflation rate of around 4%.

Give yourself a modest raise for graduation, attact your student loan with a vengence with the extra and get it done with. In a few years you can really start to amass wealth without all of the payments.

I just paid off my loans in April after almost 11 year from graduation. Next month we will have no other debt payments but the house. We plan to really stack up some cash now....

Just a differing opinion.

BK

 

[KHE]

I disagree with KHE. Do whatever you can do to pay down your debt as soon as you can. The sooner that you do not have payments in your life of any kind, the better you are set up for the future.

If you take 30 years to pay off your loan debt and invest the difference, you can make on average 12% in a good mutual fund, right. But since you are paying 6.5% in student loan interest, your 12% return is really just 5.5% net. Now, let's talk about taxes on your mutual funds (not including Roth IRA of course). Subtract 1-2% more for taxes and you are now at the inflation rate of around 4%.

Give yourself a modest raise for graduation, attact your student loan with a vengence with the extra and get it done with. In a few years you can really start to amass wealth without all of the payments.

I just paid off my loans in April after almost 11 year from graduation. Next month we will have no other debt payments but the house. We plan to really stack up some cash now....

Just a differing opinion.

BK

I simply can not agree with this philosophy. I understand that there are some people who just HATE having debt of any kind, and for them they would rather NOT be in debt than to make the extra money. But the mathematics of the situation simply don't support the position of paying off student loans quickly. Let's consider everything as AFTER tax dollars because student loans are paid with after tax dollars:

If you have $165,000 in student loan debt at 6.5% and you elect to pay it off in 30 years, your monthly payment will be $1042.91. The TOTAL AMOUNT PAID after 30 years will be $375,447.60.

If however, you take the same loan and pay it off in 10 years, your monthly payment will be $1873.54 for a total amount paid of $224,824.80.

The difference here is $150.662.80 Seems like a lot of money right? Sure. BUT.......

If you take the difference in monthly payments between the 10 and the 30 year plan, which is 830.63 and invest it in a non-tax deffered account for 30 years, you will end up with $1,877,629.80 if you get a 10% return on investment and $2,903,022.06 if you get 12%.

Therefore, the NET amount that you have made is $1,502,181.48 for the 10% return and a whopping $2,527,573.06 for the 12% return. (Both figures after subtracting the total payment of $375,447.60 for the student loans.)


But if you throw everything towards the student loan for the first 10 years and THEN put the WHOLE amount towards investment/savings for 20 years, you will end up with $1,422,707.89 for a 10% return and $1,853,409.50 for a 12% return.

Therefore the NET amount you have made in this situation is $1,197,883.09 for the 10% return and $1,628,584.70 for the 12% return. (after subtracting the $224,824.80 for the total student loan payments.)

So the bottom line becomes....which would you rather have after 30 years?

A) $2,527,574.06 and no student loan debt?
B) $1,628,584.80 and no student loan debt?


I can't speak for any of you guys but I'm going to go with option A.

 

[still_confused]

the number one rule in stocks is that past returns do not guranatee future results, so i dont think its wise to take all the money you would put into student loans into the stock market. while 10% has been the historic return, it could be -10% easily.

however, KHE is right about cash flow, take the money and put it in a house or condo, at the very least at the end of the day you will have a place to live in, or put in towards a business. having some in the stock market is a good idea, but dont expect whopping returns.

while math favors the 30 year payment plan, some people like being debt free, and that is totally alright. there is no price for peace of mind. look at your money and give yourself an honest assessment on how you feel about your future and how you want to spend it.

 

[jc812]

KHE, what specific type of non-tax deffered account are you referring to? Which ones do YOU use?

 

[BKK]

I simply can not agree with this philosophy. I understand that there are some people who just HATE having debt of any kind, and for them they would rather NOT be in debt than to make the extra money. But the mathematics of the situation simply don't support the position of paying off student loans quickly. Let's consider everything as AFTER tax dollars because student loans are paid with after tax dollars:

If you have $165,000 in student loan debt at 6.5% and you elect to pay it off in 30 years, your monthly payment will be $1042.91. The TOTAL AMOUNT PAID after 30 years will be $375,447.60.

If however, you take the same loan and pay it off in 10 years, your monthly payment will be $1873.54 for a total amount paid of $224,824.80.

The difference here is $150.662.80 Seems like a lot of money right? Sure. BUT.......

If you take the difference in monthly payments between the 10 and the 30 year plan, which is 830.63 and invest it in a non-tax deffered account for 30 years, you will end up with $1,877,629.80 if you get a 10% return on investment and $2,903,022.06 if you get 12%.

Therefore, the NET amount that you have made is $1,502,181.48 for the 10% return and a whopping $2,527,573.06 for the 12% return. (Both figures after subtracting the total payment of $375,447.60 for the student loans.)


But if you throw everything towards the student loan for the first 10 years and THEN put the WHOLE amount towards investment/savings for 20 years, you will end up with $1,422,707.89 for a 10% return and $1,853,409.50 for a 12% return.

Therefore the NET amount you have made in this situation is $1,197,883.09 for the 10% return and $1,628,584.70 for the 12% return. (after subtracting the $224,824.80 for the total student loan payments.)

So the bottom line becomes....which would you rather have after 30 years?

A) $2,527,574.06 and no student loan debt?
B) $1,628,584.80 and no student loan debt?


I can't speak for any of you guys but I'm going to go with option A.

Why do you have to pay this off in 10 years? Could it be paid off in 5 years, or possibly less? If your salary is $90 to 100K, could you not live off of $50K for a few years? A graduating optometry student is not used to living off of $50K, so it should be a decent status of living while really get crazy with paying off a $165K debt load. Of course, that assumes that you are a "normal" American with an addition $5-20K in other consumer debt (CC, car payments, etc). Living with debt is something that I personally do not want to have ever again. I like the fact that once I am done with my consumer debt in 2 months, I get to keep those payments. We will not be living in this area for an extended period of time, so I will not begin to pay down the house. But, when we do get to a place a set down roots (after military retirement), not having a huge student loan payment, car payment or other useless consumer debt payments we will be well on our way to 0% financing on our house.

If your game plan works for you, fine keep on paying the loans like a mortgage. I don't want to pay interest to other. I would rather keep it myself. If that is not "sophisticated" enough, so be it. At the end of the day, if some thing happens to screw up life, not having payments is much better than worrying about how to still pay of the still $100K student loan balance.

BK

 

[Sight5]

I disagree with KHE. Do whatever you can do to pay down your debt as soon as you can. The sooner that you do not have payments in your life of any kind, the better you are set up for the future.

If you take 30 years to pay off your loan debt and invest the difference, you can make on average 12% in a good mutual fund, right. But since you are paying 6.5% in student loan interest, your 12% return is really just 5.5% net. Now, let's talk about taxes on your mutual funds (not including Roth IRA of course). Subtract 1-2% more for taxes and you are now at the inflation rate of around 4%.

Give yourself a modest raise for graduation, attact your student loan with a vengence with the extra and get it done with. In a few years you can really start to amass wealth without all of the payments.

I just paid off my loans in April after almost 11 year from graduation. Next month we will have no other debt payments but the house. We plan to really stack up some cash now....

Just a differing opinion.

BK

Another thing you are missing BKK is how inflation works. "Subtract 1-2% more for taxes and you are now at the inflation rate of around 4%."

Sure inflation will affect the true value of whatever say a stock market investment will profit you but the same applies to the value of debt. Say you borrow 165K and stretch it over 30 years. Inflation will make the amount you owe worth less and less. For instance, borrowing $100,000 in 1977 was significantly worth more then than now. The longer you pay off your loan, the less it is really worth if inflation continues as it historically has.

I understand that there are many people who are debt averse. They want avoid it as much as possible and have no more payments.

But this type of philosophy is very financially naive. I guarantee you any financial planner worth his salt will advise you to extend your student loan to the 30 year threshold. Paying off your loan in 5 years is even more absurd as it handcuffs your cash flow and makes it so that you can't invest it in a practice which in the long run pays off much more. What you suggest is paying $4000 every month into your student loan!

You will never make as much money working for someone else as you will for yourself in the longrun. Better to start building your assets sooner than later.

I am just a lowly preopt with limited real world experience, so please don't blast me too hard if I am wrong anywhere .

 

[IcanSEEanOD]

.

 

[Ryan_eyeball]

I too am just a lowly pre-opt student, but I am really confused. I don't see how you can NOT pay off your loans within 5 years. I basically have been living off of 9,000 a year working part time, paying 450 a month for rent and about 300 a month for food and insurances for the past 3 years, and using loans and scholarships for school and extras.

I will graduate from undergrad with about 20,000 in debt (no credit card debt), and then (I'm guessing) about 200,000 from OD school. So if I work full time making about 80,000, I could put about 50,000 a year into paying off my debt (which leaves me 30,000 for expenses), which would mean it would only take 5 years to pay off my debt including interest.

What am I missing here? I know that my expenses will go up because I'm sure its going to be more expensive living anywhere than in a college town, but more than 30,000 a year? I know that I did go to a state school, so my undergrad debt is pretty low. And I know that I might not make 80,000 to start off with, but probably pretty close to that. And I will not be on my mom's health insurance anymore, not to mention the taxes on my income. But still, I'm probably not going to have any dependents, own a house, or start a private office for a couple years so I don't know where I could be spending more money. Please fill me in on what I am forgetting!

(I am working for an Optometrist, and he spread his loans out over 30 years, and has been living pretty nicely, as he has a house, two kids and takes lots of vacations. But I think I could live pretty cheaply for the first couple years and enjoy life after everything is paid off, and start investing.)

$200,000 for an OD degree today? Geez and I thought $110k (3k from undergrad) was bad that I racked up just two years ago. I agree with KHE to invest the money than pay off the student loan debt. Its cash flow you need to be concerned about. If you work for someone your benefits can be a good chunk of money to consider: Health Insurance, Dental Insurance, Disability, Mal-practice, worker's compensation, 401k, medical spending accounts. $80,000 might seem like a lot, but it can go pretty quickly, especially at the tax bracket you'll be joining.

I'm not saying you can't pay it off on the schedule you set forth. It would take meticulous calculations and living modestly. It has become a tougher decision now that student loan debt has risen closer to 7%.

 

[Sight5]

I too am just a lowly pre-opt student, but I am really confused. I don't see how you can NOT pay off your loans within 5 years. I basically have been living off of 9,000 a year working part time, paying 450 a month for rent and about 300 a month for food and insurances for the past 3 years, and using loans and scholarships for school and extras.

I will graduate from undergrad with about 20,000 in debt (no credit card debt), and then (I'm guessing) about 200,000 from OD school. So if I work full time making about 80,000, I could put about 50,000 a year into paying off my debt (which leaves me 30,000 for expenses), which would mean it would only take 5 years to pay off my debt including interest.

What am I missing here? I know that my expenses will go up because I'm sure its going to be more expensive living anywhere than in a college town, but more than 30,000 a year? I know that I did go to a state school, so my undergrad debt is pretty low. And I know that I might not make 80,000 to start off with, but probably pretty close to that. And I will not be on my mom's health insurance anymore, not to mention the taxes on my income. But still, I'm probably not going to have any dependents, own a house, or start a private office for a couple years so I don't know where I could be spending more money. Please fill me in on what I am forgetting!

(I am working for an Optometrist, and he spread his loans out over 30 years, and has been living pretty nicely, as he has a house, two kids and takes lots of vacations. But I think I could live pretty cheaply for the first couple years and enjoy life after everything is paid off, and start investing.)

First off (I am no tax accountant, and i live in california so it might be different for you), to TAKE HOME $80,000 you'll have to have a salary of at least $105,000 (post income, social security etc taxes)

How many corporate jobs pay $105k this much the first year out of optometry school. I would wager NONE.

Now realistically say your FIRST YEAR out of optometry school you land a corporate job that starts you out at $80,000 a year, I would say that's reasonable and probably optimistic for being the 1st year out also.

Lets be nice with the tax/social security gods and say you take home $60,000.

You put $50,000 into your student loan.

The 10K you live thrifty, share an apartment, never eat out, get cheap as hell car insurance, ummm... then health, dental insurance get a cheap plan also... umm... don't get a girlfriend because they cost a lot of money ... um... never buy water bottles and just reuse the same ones... umm...

You get my point? Why would you put yourself through this when you can take the 30 year plan and live well, build assets, make much more then the 80K corporate doc makes in the long run by investing money into a private practice (I mean, the corp doc will gets raises but they'll probably cap him below 100k because there is really no incentive to pay more for that when he can be easily replaced with a new grad) + your gf won't dump you.

(I am assuming you are a male which is bad of me especially since the majority of incoming optometry students are female, but just remember it is all in jest)

Be smart with your money, don't lock yourself in! If you make your payments on time and are diligent, your student loans interest rate can even go down over the years!!!!

 

[KHE]

If your game plan works for you, fine keep on paying the loans like a mortgage. I don't want to pay interest to other. I would rather keep it myself. If that is not "sophisticated" enough, so be it. At the end of the day, if some thing happens to screw up life, not having payments is much better than worrying about how to still pay of the still $100K student loan balance.

BK

Again....you do whatever is comfortable for you. Like I said, some people hate the idea of debt so much that they would rather pay the debt off sooner and ultimately end up with less money in the long run than carry the debt. And there's nothing wrong with that.

The point I'm trying to make is that there is good debt, and there is bad debt. And if you have $1.00, what is the best long term use of that $1.00?

 

[KHE]

What am I missing here? I know that my expenses will go up because I'm sure its going to be more expensive living anywhere than in a college town, but more than 30,000 a year?

What are you missing? You're missing.....

Federal, State and (maybe) local income taxes
FICA Taxes
Your license
Your malpractice insurnace
Your continuing education
Your membership due in any professional orgaizations you wish to join
Your health/disability insurance (Even for one healthy person, this can easily be over $5000 per year)
Car payment/gas/commuting expenses

That's just the tip of the iceberg.

Was there something about the analysis I posted about why it's better in the long run to NOT pay off the student loan that you had issue with, or didn't understand or are you just philosophically opposed to "debt" of any kind.

If you're opposed to debt, that is something you need to get over in this business because you're always going to have it. Practice acquisition debt, house debt, loans within the practice to purchase equipment/expand the office.....

Debt is always going to be around.....the key is how you MANAGE that debt. Again...there is good debt and bad debt. Do you think that Donald Trump, and Bill Gates don't have any debt?

 

[still_confused]

Do you think that Donald Trump, and Bill Gates don't have any debt?

they also have billion dollar companies

 

[KHE]

they also have billion dollar companies

Of course they do, but when they look to acquire more companies, they don't pay cash for them. As ODs, you want to operate like them but on a much smaller scale.

 

[cpw]

I'm not saying you can't pay it off on the schedule you set forth. It would take meticulous calculations and living modestly. It has become a tougher decision now that student loan debt has risen closer to 7%.

I know.. I'm lucky I graduated when I did. I've got my loan locked at 2.7% so anything I invest that makes better than a 3% rate of return (like my SEP-IRA) I'm better off putting extra money into that than paying more towards my student loan.

Plus, since I'm in the higher tax bracket my student loan is NOT tax deductible anymore. (as it will be for most of y'all as well)

My SEP-IRA is tax deductible as is my mortgage/home equity loan. I'm paying more on the home equity loan at the moment since it's at 9% and the student loan is at 2.7.

Trust me, I didn't understand ANY of this while I was in school. I read a lot of books.

 

[EyeBaller]

KHE is absolutely right. It's all about debt management not debt freedom. You really have no advantage to paying off student loans as fast as you can, apart from "piece of mind."

Another thing to think about is if you are paying as much as you can into your student loans every month to pay it off ASAP then I'm assuming you're saving very little, and have little flexible income. What are you going to do if/when something unexpected happens and you can't work for some period of time. You still have to make that loan payment.. if you're paying multiple thousands of dollars each month, then being out of work for even a few days can make it tough to meet that payment. Why not pay less each month, invest some money into long-term ventures (e.g. stocks) for long-term returns and some into short term liquid assets (which can now be almost at the same interest rate as your student loans so you don't really lose out), that way you have your "piece of mind" when you hit an unfortunate situation.

 

[still_confused]

F
How many corporate jobs pay $105k this much the first year out of optometry school. I would wager NONE.

[/B]

dont wager much, put the money you would lose into your student loans instead

 

[Sight5]

dont wager much, put the money you would lose into your student loans instead

I am from California so of course my view is skewed.

But do you have any evidence to back up your statement? I think there would be very many optometry students there first year out interested in making that kind of money at a corporate job.

 

[still_confused]

I am from California so of course my view is skewed.

But do you have any evidence to back up your statement? I think there would be very many optometry students there first year out interested in making that kind of money at a corporate job.

im just another person on the internet so believe as you may, i have some friends that graduated either last year or two years ago with offers above 100K (range is 85-110), some of the states they were in include new york, some midwestern states, alabama, yes california. while some didnt have a "we will pay you 100k for x hours this year" on the contract, they did in fact make 100k last year as er "indepedent contracters. now i dont know the details and the hours are probably long. what should make many posters on this forum happy is that some of them turned down these jobs to go to smaller, private practices for a lot less.

i am not able to scan up an offer sheet nor am i going to ask to scan up their checks neither.

if i remember correctly, one of the more credible posters is a recent grad (one of the moderators?) works corporate so maybe they can offer some evidence.

 

[IcanSEEanOD]

.

 

[drbizzaro]

First off (I am no tax accountant, and i live in california so it might be different for you), to TAKE HOME $80,000 you'll have to have a salary of at least $105,000 (post income, social security etc taxes)

How many corporate jobs pay $105k this much the first year out of optometry school. I would wager NONE.[/B]

Out of the 20 I know from my class who graduated this year, only 4 make less than 100K in corporate (only because they were foolish and accepted their offers blindly). The rest all make over 105K

 

[eyestrain]

I'm very hesitant to believe what people claim they make. Its very easy to throw out numbers since there is basically no way you can prove them wrong. That being said, I think making 100k out of school working corporate is entirely possible. You'd probably be working 6 days a week and be the bitch of some district manager, but you'd make a decent living....at least until they canned you for a cheaper, new grad in a year or two.

 

[still_confused]

be the bitch of some district manager.

not all walmart district managers are out to get you.

does thinking that corporate optometrists live miserable lives make you feel better?

 

[Ryan_eyeball]

I'm very hesitant to believe what people claim they make. Its very easy to throw out numbers since there is basically no way you can prove them wrong. That being said, I think making 100k out of school working corporate is entirely possible. You'd probably be working 6 days a week and be the bitch of some district manager, but you'd make a decent living....at least until they canned you for a cheaper, new grad in a year or two.

In my opinion Luxottica is the worst to work for, especially Sears or Target Optical. My opinion of Walmart Optical is a hell of a lot higher than those others mentioned. If you work as an Independent Contractor for any Luxottica brand be prepared to be screwed by either Cole Managed Vision, or Eyemed.

Again this is probably only the region I've been in, and not reflect the majority of OD's out there.

 

[eyestrain]

does thinking that corporate optometrists live miserable lives make you feel better?

Yes.

 

[hello07]

Ryan eyeball, In my opinion, there is another company out there that I believe is worst than Luxottica -Target or Sear. I live and work in the NY area and there is a BIG corporate company with franchises and corporate stores that literally abuse some if not all of their doctors. I do not want to mention the company name but those doctors that have worked for this company will tell you so. It is not Pearl or LensCrafters either. I'll give you a hint. First word begins with a "C" and second word begins with a "F".
In my honest opinion, some in that company can pay you very well and some take advantage of you like you wouldn't believe. And yes.......after 2 years or so they let you go -or shall I say push you out w/o knowing the reason. Always come up with some alibi. My 2 cents.

 

[paremyd]

Cohen's Fashion Optical. That is the name of the last poster's cryptic message.

There are states with high demand in which you can make over 100K fresh out of school. Alaska is one of them.

One should be very careful when looking at how much one makes. Gross is different than net when talking about a lease. I was guaranteed 108K fresh out of school in AZ to take up a lease. I didn't know that I had to pay for staff and my own taxes. I also didn't realize that I had to work 6 days/week. So I made a paltry salary in the 80's to 90's after all is said and done.

It was better than making 250/day doing independent work in CA without any benefits/vacation pay.

 

[docwatson]

I simply can not agree with this philosophy. I understand that there are some people who just HATE having debt of any kind, and for them they would rather NOT be in debt than to make the extra money. But the mathematics of the situation simply don't support the position of paying off student loans quickly.

So the bottom line becomes....which would you rather have after 30 years?

A) $2,527,574.06 and no student loan debt?
B) $1,628,584.80 and no student loan debt?


I can't speak for any of you guys but I'm going to go with option A.

KHE...

This is assuming that you are going to want to practice for 30 years, and if you have the stomach to operate with debt hanging on you. While I agree that the stock market is a good option, there are no guarantees about the future. Some people like the idea of having no debt so if anything happens, they can always go home knowing that they only need a few dollars a day to live. Yeah, I know you can always operate with large debt knowing the government will bail you out if you can't make your payments (because you decided to hang on to your whopping debt and invest the rest of your money), but this is not a good way to operate. I try to depend on no one.

There is a lot of stress knowing you have a large payment lurking around. Combine your incredibly huge student loan with a house payment, possibly a large car payment, and even a large practice loan, it adds up. Every day you think, "I have to make a lot of money and I have to keep doing this for the next 30 years!"

Americans have this penchant for getting in over their heads. Few people can operate for very long on a low net income. With you suggesting that a person invest a significant portion of their income towards the stock market instead of paying off a large loan early may set up a person for failure. Going to school for 20 years (12 years secondary, 8 years college) is not easy. It's downright painful in my mind. So at some point you want to live the "good life". I postponed my "good life" until just a couple of years ago when I was nearing 40. That's torture. I WANT TO SPEND MONEY NOW. Basically, I'm sick of living like a poor person and I want to start living my life!

I think I'm like most doctors who feel that the sacrifice needs to pay off at some point. So it makes it downright impossible to invest large sums of money. So I suggest that people try to pay off large debts earlier to make them more manageable--instead of investing. Still invest a lot of money but make it realistic. So I think a $160,000 loan at 6.5% should be paid off in 10 years. Sure, think about spreading out the payments over 30 years but plan on paying it off earlier--like I did.

Docs also need to think about saving money for a practice and/or a building. I have a private practice and am currently renting. I've paid off my student loans and now I'm saving up to build our own building and possibly buy another practice or start one up in another town.

 

[docwatson]

One other thing...

Maybe with the thought of students coming out of school with huge debt loads, I think many people should think about a different profession before they even think about going to school. Let's be realistic here. On average optometrists just don't make that much money to justify the ridiculous cost of education nowadays in my humble opinion. Maybe once the cost exceeds the ability for doctors to make a living wage (i.e. starve), there will be fewer applicants to OD schools and we can make a dent in the oversupply.

I think there is an aversion to any talk about oversupply or even any negative talk about the profession with students since they sacrificed a lot to get into school to hear things like this. But the reality is there. I think debt load vs income is too high for most students coming out of school and there are too many ODs...

 

[hello07]

I agree with Doc Watson that "on average optometrists do not make that much money to justify the cost of their education nowadays." This is a very true statement and I stand behind it. When I was in optometry school, my tuition first year was 15,000 and by my forth year it went up close to 17 and some change. I got out in 1993. The tuition OD's schools charge today private ones- 25,000 plus does not justify the income we make per day/ per week/ per month/ per year especially those students with high debt. My salary in the past 14 years has gone up 100 maybe 125 dollars per day. My 2 cents.