Estimating future income based on 700k of student loans

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lonee2

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Hi, I'm a predent looking into the schools and the prices are a bit shocking assuming the school cost spreadsheet I saw posted is accurate. Recently I became concerned about astronomical loans and the future of dentistry, so I made an excel spreadsheet to help project my future income.

If I had to do a TDLR: This is a 25 year projection based on exiting school with 700k of loans. First, I calculated gross income subtracted by CA&Fed tax. The income numbers I used are more typical of an associate than an owner. I then substracted minimum IBR loan payments based given by a calculator. The plan is to save(invest) 1k a month for the tax bomb so that is substracted as well. Obviously there were a ton of assumptions because I'm trying to predict the future and I had to trust several resources

Spreadsheet

Assumptions:
- 700k loans after school(factoring in interest during school) - this is a high ball estimate but realistic for several schools at this point
- CA/Fed taxes that stay the same
- Federal 25 year loan repayment + forgiveness
- Minimal payments
- 1st year gross income is 120k then jumps to 150k 2nd year - assuming the first year gets you "up to speed"
- After 2nd year, income raises by 3% yearly - About average compared to other jobs but idk about how dentistry grows exactly
- Invest 1k every month to save for tax bomb
- Investment growth will be 10% yearly - Based on historical stock trends
- Used a line to extrapolate the tax and annual loan payment values after putting in ~5 calculator generated points. My excel skills aren't the best but it looked like a straight line and I was too lazy to type 50 points into the calculator.


Resources:
- Tax calculator CA
- Saving for tax bomb compound interest calculator
- Student loan IBR calculator Note: I used the government calculator too but that gave a lower number(~1k) and I wanted to be conservative
- Dental school cost estimate

Final thoughts:
Obviously there were a ton of assumptions but I tried my best to simulate a "worst case scenario". If my calculations are even close, I'd be taking home about 55k after tax/loan income my first year and slowly up from there after. I'm would be completely fine with taking home 55k. To me, that's not a bad income at all. I was just concerned about living below poverty and or being forced to work extreme hours or do unethical treatment because that was the impression I got from some of you. I don't want to be an associate but I'm being conservative in case DSO's or other economic factors make owning difficult by the time I enter.

Assuming decent market conditions, yes you are paying way more than the actual loan but it's over 25 years and inflation is working with you. If you save 1k a month and the market conditions are steady, you end up with almost 1 million after the tax bomb. Couple things I haven't considered are 1. whether the REPAYE system will still be there in the future 2. Whether dentistry really grow 3% yearly. 3. Marriage affecting IBR payments(haven't done extensive research on this). If the IBR goes then idk what I would do but it that stays running the way it is I think things will turn out fine. If there's anything I missed please let me know so I can make the calculation more accurate. I can't help but think that I must have missed a few important things here.

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I think you did bit of a research. You can read my story somewhere, but personally, 55k after tax was not enough, specially to live in Cali. You are assuming you can live within the budgets, but there will be always unexpected expenses (life happens) if you have no cash, dip into CC which interest is a killer, and 3% growth is not always the case. In fact, if you become an owner, you might stay same income for few years assuming you work at other offices to have an income. That 1 k you are trying to save for tax bomb, I personally think it will be hard.
 
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Taking home 55k in CA? Good luck with that...
I think you did bit of a research. You can read my story somewhere, but personally, 55k after tax was not enough, specially to live in Cali. You are assuming you can live within the budgets, but there will be always unexpected expenses (life happens) if you have no cash, dip into CC which interest is a killer, and 3% growth is not always the case. In fact, if you become an owner, you might stay same income for few years assuming you work at other offices to have an income. That 1 k you are trying to save for tax bomb, I personally think it will be hard.
Money is always good but I don't need boatloads to be happy. Currently, I live with my mom in a more expensive part of California and we make it work for under 50k so if I need to be frugal I know I can be. But I don't think I'd want to live in Cali anyway unless I can find a more unsaturated area here because my money goes further in other places and there is more earning potential. The 3% is based on other professions and dentistry historically but times are changing for dentistry I guess so who knows. This projection for the worst case scenario so I imagine real life is going to be better. Dw I avoid CC debt like the plague it ain't my money 👌

Yes, saving the 1k each month may require diligence but remember that's taken into account and 55k is after. I'll probably automate the process so I'm not tempted. In my calculation you end up with almost 1 million after paying for the tax bomb so you can use that money for emergencies or retirement if need be. Compound interest is a beast. This is of course assuming you don't take money out in a recession and the economy is following historical trends. Even if there's a huge recession the amount you end up with is so much over the tax bomb I don't think it's something to worry about. I picked 1k as an arbitrary number but I imagine 500 works too.

The median per capita income is about 39k in California(before tax I believe) so I think it really just comes down to making good decisions with your money and try not to buy things like fancy cars you don't own and can't pay back. I'm going to shoot for the stars but I have comfort knowing that even if most things go wrong I'll be just fine.
 
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I commend you on at least making an effort to see the financial picture. My question is. Is dentistry really worth all this extreme budgeting, toiling, living below your means, hoping no other financial complications occur (recessions, health issues, covid, home, marriage, divorce, job issues, practice issues, etc. etc.).

It is REALLY difficult to save money over the long haul. People always say they will save, but LIFE HAPPENS. Marriage is expensive. Children are expensive. Life is expensive.

My advice. Consider 300K to 350K your maximum debt. Look into the military. Look into the other scholarship situations. Look into public health afterwards for loan repayment solutions. Get out of Cali. Locate rural/ semi rural to work in.

Dentistry is a job. Not a passion. It's a means to an end. The end is living LIFE to it's fullest. Living life is not working 25 yrs to pay off a ridiculous loan, living severely below your means, and HOPING to save 1 million dollars for the tax bomb.
 
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As others have mentioned, I commend you for engaging in such a thorough financial analysis. More pre-dents should complete this financial exercise. Just a couple of points:
  • The income driven repayment plans seem to be your financial lifeline/saving grace. What happens if those programs change for the worse (though highly unlikely)?
  • You could be underestimating the total debt given the propensity of D-schools to annually increase tuition & fees AND the accruing interest.
  • Associate GP income tends to plateau. ADA & Bureau of Labor Statistics has mean GP income at $190k and has not kept pace with inflation.
  • I think your investment return is 11%. Highly aggressive - I would be more conservative at 7% to 8%
Most bankers (I'm not a banker) suggest a student debt to income ratio of 1:1. 2:1 can be manageable. At 3:1 or greater, it's probably financial suicided without the income driven repayment plans.
 
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Most bankers (I'm not a banker) suggest a student debt to income ratio of 1:1. 2:1 can be manageable. At 3:1 or greater, it's probably financial suicided without the income driven repayment plans.

I’ve never heard of this rule but it makes sense. I’m canadian so i was lucky to graduate with “just” 120k of debt after dental school but i keep reading stories in the NYT about american student finishing undergraduate with 65-100k of loans for programs without big salaries in the end (eg. Psychology, communication, etc)... i don’t know these people but i’m super scared for what their future holds. Same for predent who are planning to take 500k of loans. Dentistry is nice for me because i can afford a few weeks of vacation a year, and work in public health, and afford perio residency. But if i had 5x the amount of loans i have, i would hate my life and i would be so stressed. One thing goes wrong in a perfectly designed repayment plan and you’re in trouble. And things always go wrong.
 
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I commend you on at least making an effort to see the financial picture. My question is. Is dentistry really worth all this extreme budgeting, toiling, living below your means, hoping no other financial complications occur (recessions, health issues, covid, home, marriage, divorce, job issues, practice issues, etc. etc.).
Thanks! I'll admit, a lot of this is riding on the gov and it's ridiculous that loan forgiveness had to be used to make any kind of decent plan. On top of that the repayment is 25 years so yeah I would be working that much if I want the best outcome whether I like it or not. I'll project a regular payment plan next to see how it pans out but I doubt it will go so well. I will argue that some of the other complications you mention are equally likely to screw people will regular jobs too though(divorce, health, recessions, etc).

I've drawn the best line I could for the bare minimum and there is still in my opinion still a lot of value in the potential. To pull some numbers I used. First year I'm projecting 120k gross income which is on the extremely low end according to what I read on here and I would end up with 55k after tax/loans to spend. 2nd year is 150k and that ends up at 70k after tax, after loan payments. That's still significantly above average income and the rest of the projection assumes I'm working as an associate. Investing 1k a month for 25 years will lead to 1.3+ million at the end, and the tax bomb is ~400k, so that's a million in buffer. If I get hit with a recession in the worst time, that would suck for retirement as it would for everyone else but at least that tax bomb is accounted for. Wouldn't be the best life working as an associate, but it's completely doable imo

Looking at the numbers alone, this is still on the high end of income compared to most jobs even with the budgeting and planning. Sure it's significantly worse than dentistry in the past but I don't think it's at the point of impossibility just yet. Not many other jobs have almost guaranteed 70k after tax income and the extreme potential for growth.

It is REALLY difficult to save money over the long haul. People always say they will save, but LIFE HAPPENS. Marriage is expensive. Children are expensive. Life is expensive.
I suppose life hasn't exactly happened to me yet but I do know the importance of saving. I've been saving for retirement a couple years now because I ran the calculation and saw that every dollar I save now turns into about 20 after 40 years accounted for inflation. If I sign up for this or any loan I plan on paying it back before I sign up. Life does sound expensive but hey almost all of our dental assistants manage it with less right? Maybe I'll ask them for advice lol

My advice. Consider 300K to 350K your maximum debt. Look into the military. Look into the other scholarship situations. Look into public health afterwards for loan repayment solutions. Get out of Cali. Locate rural/ semi rural to work in.
I've seen you and others give that advice while I was browsing around early and I agree with all of those points. However, it's getting harder and harder because the prices are increasing so fast. At this point I think less than 3 schools will be below 350k for OOS and on visual inspection over half of them are over 500k(this is all factoring in interest according to the person who calculated this). I've looked into the military but I might be disqualified because of a medical condition and I don't think I would personally be too enthusiastic working for them. I will look into other scholarship options and try to settle in places with less competition for sure. The good news is that I've lived in a rural area for 5 years and suburbs for about 7. I know I don't really care where I live and can probably let the numbers dictate that for me.

Dentistry is a job. Not a passion. It's a means to an end. The end is living LIFE to it's fullest. Living life is not working 25 yrs to pay off a ridiculous loan, living severely below your means, and HOPING to save 1 million dollars for the tax bomb.
You're right that it's just a job in the end. It's strange but none of my pre dent friends were willing to really discuss this when I asked them to help me with the research. I remember one of them had this "all in" attitude where he thought it was just win or lose to him and you had to take your shot no matter the risks or odds. He kept asking me "do you really want to be a dentist?". It didn't matter what I said to him, his mind was set. There comes a point at which it's not worth it anymore but I think people(including me) are afraid of looking for it. Very frustrating but I think it's largely to do with the sunk-cost fallacy of getting this far and not wanting to turn back as well as not being able to comprehend the level of debt and what it means in the future. "Monopoly money" I've heard it called a couple times and I agree. It's hard for myself as well. That's why I'm doing all these calculations and opening it to any criticisms. Hard to wrap my head around a 700k debt when my net worth is almost 0 and I've only worked around min wage.
 
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Look, spending 4 years to go 700k in debt to make 50k/year is a dumb decision. It’s bad enough when you expect to make several hundred thousand (like $300k/year+).

You would be better off going to work at Walmart. It isn’t ”Monopoly Money”. It is real money that you cannot bankrupt. You can find work that matters and a passion without going $700k into debt. You can depend on the government. . . But I generally think that depending on the government is a recipe to be pissed off and poor.
 
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As others have mentioned, I commend you for engaging in such a thorough financial analysis. More pre-dents should complete this financial exercise. Just a couple of points:
  • The income driven repayment plans seem to be your financial lifeline/saving grace. What happens if those programs change for the worse (though highly unlikely)?
  • You could be underestimating the total debt given the propensity of D-schools to annually increase tuition & fees AND the accruing interest.
  • Associate GP income tends to plateau. ADA & Bureau of Labor Statistics has mean GP income at $190k and has not kept pace with inflation.
  • I think your investment return is 11%. Highly aggressive - I would be more conservative at 7% to 8%
Most bankers (I'm not a banker) suggest a student debt to income ratio of 1:1. 2:1 can be manageable. At 3:1 or greater, it's probably financial suicided without the income driven repayment plans.
Thank you! Going over each of the points:

That's a valid point. I should look into how the gov handles policy changes like that. I would think it's reasonable to keep the policy the same for people already signed up but I don't know how the gov works in that regard and the policies could change before I enter dental school. It's insane that I can't pay down the loan without outside help and have to rely on the forgiveness

The calculations taken do account for 5% increase in tuition a year I believe. The interest slapped on while you're in school should be included as well so that part seems to be covered. I haven't checked the exact numbers for myself but the people who made that sheet seemed to know what they were doing and none of the numbers seem off

It would be nice to have a graph for the median income in the last 10 years. That has been surprisingly hard to find. I used this gov site for the 3% annual growth estimate though I'm not sure that I trust them. Do you have any ideas for a more accurate growth number?

The return I used was about 10%, which is right around average if I dump it into the S&P500 index. The growth over the last 10 years was about 11.49% not accounting inflation. Over the last 30 years it was 7.0% adjusted for inflation. The average rate of inflation over the past 20 years is 3.1%. The inflation works in my favor because it devalues the loan so that's why I estimated rate of return to be around ~10%. I think that over 20 years it's probable that I get something close to the average in return
 
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Look, spending 4 years to go 700k in debt to make 50k/year is a dumb decision. It’s bad enough when you expect to make several hundred thousand (like $300k/year+).

You would be better off going to work at Walmart. It isn’t ”Monopoly Money”. It is real money that you cannot bankrupt. You can find work that matters and a passion without going $700k into debt. You can depend on the government. . . But I generally think that depending on the government is a recipe to be pissed off and poor.

50k is for the first year assuming you make 120k. I would love to make 300k and I'll try to do so but it's not something I expect or plan for. I guess if you go in expecting to make bank and hope that the loan disappears that could be disappointing? I'm not considering going in this for just for the money. If I really wanted that then that's what I'd be doing that right now. I think dentistry could be a fulfilling career that would allow me to live comfortably at the minimum(for my standards) yet have the potential to grow. Going to Walmart would give a salary of 25-30k so that's more of an emotional argument. Have nothing to say about the gov no idea what they're like yet I'll have to read up.
 
Money is always good but I don't need boatloads to be happy. Currently, I live with my mom in a more expensive part of California and we make it work for under 50k so if I need to be frugal I know I can be. But I don't think I'd want to live in Cali anyway unless I can find a more unsaturated area here because my money goes further in other places and there is more earning potential. The 3% is based on other professions and dentistry historically but times are changing for dentistry I guess so who knows. This projection for the worst case scenario so I imagine real life is going to be better. Dw I avoid CC debt like the plague it ain't my money 👌

Yes, saving the 1k each month may require diligence but remember that's taken into account and 55k is after. I'll probably automate the process so I'm not tempted. In my calculation you end up with almost 1 million after paying for the tax bomb so you can use that money for emergencies or retirement if need be. Compound interest is a beast. This is of course assuming you don't take money out in a recession and the economy is following historical trends. Even if there's a huge recession the amount you end up with is so much over the tax bomb I don't think it's something to worry about. I picked 1k as an arbitrary number but I imagine 500 works too.

The median per capita income is about 39k in California(before tax I believe) so I think it really just comes down to making good decisions with your money and try not to buy things like fancy cars you don't own and can't pay back. I'm going to shoot for the stars but I have comfort knowing that even if most things go wrong I'll be just fine.
Why would you want to spend that many years in school to make less than a nurse for most of your career is the question
 
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you can retire a millionaire saving 15% of your income making 50k. If you are a dentist without substantial student loan debt and you’re not saving/investing the majority of your income (>50%) you’re doing it wrong.

OP, if you go dental just do something like the military or public health and knock that debt out in 4-5 yrs. Then you should be making 200-300k and saving >50% of it. You will become wealthy and enjoy your job (assuming you want to be a dentist).

In this scenario you should be debt free, including your home, and have substantial savings by 10 yrs out or approximately 35 years old. IMO this is an attainable and good position to be in.
 
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you can retire a millionaire saving 15% of your income making 50k. If you are a dentist without substantial student loan debt and you’re not saving/investing the majority of your income (>50%) you’re doing it wrong.

OP, if you go dental just do something like the military or public health and knock that debt out in 4-5 yrs. Then you should be making 200-300k and saving >50% of it. You will become wealthy and enjoy your job (assuming you want to be a dentist).

In this scenario you should be debt free, including your home, and have substantial savings by 10 yrs out or approximately 35 years old. IMO this is an attainable and good position to be in.
This is one of the best things I have ever seen written on this site. If people would understand that if they saved >50% of their income from a young age and invested it properly they could do whatever the hell they want to do with the rest of their life. The problem is, understanding this is only 20% of the battle. Changing their behavior is the other 80%. It's one thing to know it, it's another to DO it. Everyone is too busy posting their Cabo vacation on Instagram while their student loans are accruing interest faster than they can pay it down.

OP, it is incredible that you are looking into this now. You can avoid going $700k in debt if you make smart decisions. Go to an inexpensive school. Live at home and commute. Work on top of school, or even between undergrad and dental school. Change residency so you can get into a cheaper school. Dont throw all of your money away at the bar. Stop trying to impress your peers. Apply for scholarships. Have the military pay. Live in an inexpensive apartment (This is a big one. Everyone feels so entitled to the standards of living that Mommy and Daddy brought them up in. We are students! Live like one!). You can make it work.

Once you graduate in as little debt as possible you avoid income-based repayment and loan forgiveness like the plague. Instead, you live frugally and aggressively pay down your debt. Don't count on anyone else paying off the loans except for yourself. After a few years, you are debt free, making an income that puts you in the top 5% of earners in America. You are a free elf. You won the game while everyone else digs themselves further and further into debt.

My biggest piece of advice to you is to be able to say "NO." And care very little what everyone else thinks of you while you do what you need to do to set yourself up for the future. The steps are easy, you just have to DO IT!
 
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You also need to account for dental related expenses such as licensing, DEA, CEs, association fees, disability insurances, etc. 50k that was enough before becoming a dentist is not nearly enough once you are a dentist. You are high income earner which means there are more things you have to spend money on whether you like it or not. Please highly consider HPSP if you pursue 700k debt.
 
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I commend you for at least thinking about this. Like the other posters, I really question if it is something I would try to pursue at that cost.

You are a talented student, I'm sure you would be successful in other fields. My personal opinion is that if the amount of effort and time dental students put into dental school was put into a person's own business, or in some corporate job they would definitely advance very quickly up the ranks. Then saving and investing your income earlier will put you in a wonderful position to retire early.
 
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I'm confused. I was recently in a dental thread on sdn where dentists told me I was blowing the dental loans out of proportion and it could be paid off in 4 years.
 
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I'm confused. I was recently in a dental thread on sdn where dentists told me I was blowing the dental loans out of proportion and it could be paid off in 4 years.
There are a few member dentists here that with their business acumen .... they could blow away any amount of DS loan. The majority of the members here have been pretty united in advocating for reasonable DS debt. I mean ... come on. It's common sense to invest in your education with the least amount of borrowed funds.

Interesting story. Recently I played golf with 3 old duffers who teach at MWU-Arizona. Nice individuals. They were complaining that they ONLY received a 2-5% raise THIS year. Where I work (DSO) .... the general dentists were all asked to take a 10% cut in pay due to covid. Interestingly .... us specialists were allowed to keep our same salary. Most likely reason. Specialists bring in more production vs. the gps. Back to MWU. I think we can all agree where the money for their raises will be coming from.
 
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There are a few member dentists here that with their business acumen .... they could blow away any amount of DS loan. The majority of the members here have been pretty united in advocating for reasonable DS debt. I mean ... come on. It's common sense to invest in your education with the least amount of borrowed funds.

Interesting story. Recently I played golf with 3 old duffers who teach at MWU-Arizona. Nice individuals. They were complaining that they ONLY received a 2-5% raise THIS year. Where I work (DSO) .... the general dentists were all asked to take a 10% cut in pay due to covid. Interestingly .... us specialists were allowed to keep our same salary. Most likely reason. Specialists bring in more production vs. the gps. Back to MWU. I think we can all agree where the money for their raises will be coming from.
People being united to decrease loans is like thoughts and prayers. Means diddly
 
Hi, I'm a predent looking into the schools and the prices are a bit shocking assuming the school cost spreadsheet I saw posted is accurate. Recently I became concerned about astronomical loans and the future of dentistry, so I made an excel spreadsheet to help project my future income.

If I had to do a TDLR: This is a 25 year projection based on exiting school with 700k of loans. First, I calculated gross income subtracted by CA&Fed tax. The income numbers I used are more typical of an associate than an owner. I then substracted minimum IBR loan payments based given by a calculator. The plan is to save(invest) 1k a month for the tax bomb so that is substracted as well. Obviously there were a ton of assumptions because I'm trying to predict the future and I had to trust several resources

Spreadsheet

Assumptions:
- 700k loans after school(factoring in interest during school) - this is a high ball estimate but realistic for several schools at this point
- CA/Fed taxes that stay the same
- Federal 25 year loan repayment + forgiveness
- Minimal payments
- 1st year gross income is 120k then jumps to 150k 2nd year - assuming the first year gets you "up to speed"
- After 2nd year, income raises by 3% yearly - About average compared to other jobs but idk about how dentistry grows exactly
- Invest 1k every month to save for tax bomb
- Investment growth will be 10% yearly - Based on historical stock trends
- Used a line to extrapolate the tax and annual loan payment values after putting in ~5 calculator generated points. My excel skills aren't the best but it looked like a straight line and I was too lazy to type 50 points into the calculator.


Resources:
- Tax calculator CA
- Saving for tax bomb compound interest calculator
- Student loan IBR calculator Note: I used the government calculator too but that gave a lower number(~1k) and I wanted to be conservative
- Dental school cost estimate

Final thoughts:
Obviously there were a ton of assumptions but I tried my best to simulate a "worst case scenario". If my calculations are even close, I'd be taking home about 55k after tax/loan income my first year and slowly up from there after. I'm would be completely fine with taking home 55k. To me, that's not a bad income at all. I was just concerned about living below poverty and or being forced to work extreme hours or do unethical treatment because that was the impression I got from some of you. I don't want to be an associate but I'm being conservative in case DSO's or other economic factors make owning difficult by the time I enter.

Assuming decent market conditions, yes you are paying way more than the actual loan but it's over 25 years and inflation is working with you. If you save 1k a month and the market conditions are steady, you end up with almost 1 million after the tax bomb. Couple things I haven't considered are 1. whether the REPAYE system will still be there in the future 2. Whether dentistry really grow 3% yearly. 3. Marriage affecting IBR payments(haven't done extensive research on this). If the IBR goes then idk what I would do but it that stays running the way it is I think things will turn out fine. If there's anything I missed please let me know so I can make the calculation more accurate. I can't help but think that I must have missed a few important things here.
Impressive mental gymnastics! Trying to justify what you already know is a terrible decision?

Big Hoss
 
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People being united to decrease loans is like thoughts and prayers. Means diddly
There was a collapse in the number and quality of dental school applicants in the 1970s and 1980s. Ultimately several dental schools closed their doors permanently. It will happen again, it’s just a matter of when.

Big Hoss
 
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Impressive mental gymnastics! Trying to justify what you already know is a terrible decision?

Big Hoss
How would it be mental gymnastics if I'm determining whether I'd be ok with making a minimum of X and working for Y years? Everyone has different standards. Maybe making anything less than 150k without debt is a terrible decision to you. Distilling it down numbers is the most objective way I see to make an informed decision.

Also people don't seem to understand this is probably the worse case scenario and I'm curious to see alternatives so I'll be making a couple more projections soon
 
Also people don't seem to understand this is probably the worse case scenario
Is it really though? How do you plan for something like a pandemic that might come along and destroy that “nest egg” you’ve been saving for your impending tax bomb?

You can plan all you want. But here’s the thing, the best laid battle plans never survive the first shot. I can assure you that if you borrow $700,000 to become a dentist you will absolutely live to regret it.

Big Hoss
 
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Is it really though? How do you plan for something like a pandemic that might come along and destroy that “nest egg” you’ve been saving for your impending tax bomb?

You can plan all you want. But here’s the thing, the best laid battle plans never survive the first shot. I can assure you that if you borrow $700,000 to become a dentist you will absolutely live to regret it.

Big Hoss
Does this include specialties as well?
 
Imagine explaining to someone from 20 years ago that we would be debating whether a dental education is worth nearly one million dollars. This is so beyond the pale of absurdity it's a crime these schools are allowed to exist.
 
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Dentistry has been good to me. I grew up getting free and reduced lunch at school and living in a trailer home half of my childhood. We didn’t celebrate birthdays with parties and presents growing up because my parents couldn’t afford to buy a bunch of presents and throw big parties.

I’ve finally reached that point in my career where I can afford to “live like a doctor” if I feel like it and still save a ton for retirement. It worked out for me.

I don’t think it would have worked if I started out with 700k in debt. I bought in to a rockstar practice that was very expensive and the bank would not have loaned me the money if I was 700k plus in personal debt. Without buying this practice my income would have stayed on the lower end and I would have stayed broke while watching that debt total go up and up. I would be miserable.

I would not recommend dentistry if the only way to do it is with 700k in loans. Look into other careers. My brother’s wife has an associated degree in nursing and makes 125k as an RN. She got into less than 15k of debt to earn that degree.
 
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Dentistry has been good to me. I grew up getting free and reduced lunch at school and living in a trailer home half of my childhood. We didn’t celebrate birthdays with parties and presents growing up because my parents couldn’t afford to buy a bunch of presents and throw big parties.

I’ve finally reached that point in my career where I can afford to “live like a doctor” if I feel like it and still save a ton for retirement. It worked out for me.

I don’t think it would have worked if I started out with 700k in debt. I bought in to a rockstar practice that was very expensive and the bank would not have loaned me the money if I was 700k plus in personal debt. Without buying this practice my income would have stayed on the lower end and I would have stayed broke while watching that debt total go up and up. I would be miserable.

I would not recommend dentistry if the only way to do it is with 700k in loans. Look into other careers. My brother’s wife has an associated degree in nursing and makes 125k as an RN. She got into less than 15k of debt to earn that degree.
Curious - if you don't mind sharing, how much are you spending per month for what living like a doctor means to you?
 
Curious - if you don't mind sharing, how much are you spending per month for what living like a doctor means to you?
The day you can lease a new 911 Turbo every three yrs. ;) You've ARRIVED. Actually a 911 GT3 RS is better or any Italian car.
But seriously .... there is no exact number to your question. I've seen dentists who act like they make doctor money (but have no money) and I've seen those dentists who have plenty of money, but never spend it.

Personally. I indulged as soon as I was able to do it. Of course .... if I had invested all the money I spent on all those depreciating toys I bought .... well .... I would have more money. But I would have missed out on all those fun experiences with my family. Those fun experiences are priceless.
 
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The day you can lease a new 911 Turbo every three yrs. ;) You've ARRIVED. Actually a 911 GT3 RS is better or any Italian car.
But seriously .... there is no exact number to your question. I've seen dentists who act like they make doctor money (but have no money) and I've seen those dentists who have plenty of money, but never spend it.

Personally. I indulged as soon as I was able to do it. Of course .... if I had invested all the money I spent on all those depreciating toys I bought .... well .... I would have more money. But I would have missed out on all those fun experiences with my family. Those fun experiences are priceless.
I was one of those dentists. I leased nice cars despite owing close to $1 million in loans (student, home, practice loans, and credit card debt). I drove S-classes and 7 series (I never like Porsche….bumpy ride, too small for the kids, and too noisy etc) when I was in my early 30s. My first house was a much nicer house than those of my dentist and physician friends. One thing I love about my wife is she fully supports every decision that I’ve made. Happy marriage is key. She and I worked 6-7 days/wk to pay for these expensive toys. With so much existing debts, we were forced to spend less to set up our own practices….only $95k for wife’s practice and $120k for mine. In order for us to see the profit after a few months of starting our business, we had to keep the overhead low, hire fewer staff and did many things ourselves etc. We traveled to work at other offices while running our own offices.

My younger sister, who is a general dentist, and I graduated around the same time (in the early 2000s). She made no where near what I made. My income alone was probably more than 2x as much as her and husband’s incomes combined. After graduation, my sister and her husband lived with our parents to save money. She worked 7 days/wk (3 days/wk at her own office, 4 days/wk at the corp). She invested her money in real estate very early…..when everything were so cheap. She had driven the same Toyota Sienna van for almost 15 years. The Tesla that she bought 2 years ago was her very first luxury car. I, on the other hand, didn’t purchase my first investment property until 2008. Currently, my sister has more investment properties, which were full paid off, than me. Now she only works 3 days/wk and treats 1 patient at a time....no more jumping from chair to chair. Her husband still works 5 days/wk.

Now even with all the debts paid off, I don't plan to cut down my work days (currently, 22 days/month….3 Saturdays and 3 Sundays/month) because I would go crazy if I had stay home doing nothing for so many days. Another reason is I don’t want to see my practice and my reputation declining. The kids look up to me. My patients love me. “Work gives you meaning and purpose and life is empty without it.” Stephen Hawking. Tesla’s CEO, Elon Musk, works more than 40 hours a week.
 
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The day you can lease a new 911 Turbo every three yrs. ;) You've ARRIVED. Actually a 911 GT3 RS is better or any Italian car.
But seriously .... there is no exact number to your question. I've seen dentists who act like they make doctor money (but have no money) and I've seen those dentists who have plenty of money, but never spend it.

Personally. I indulged as soon as I was able to do it. Of course .... if I had invested all the money I spent on all those depreciating toys I bought .... well .... I would have more money. But I would have missed out on all those fun experiences with my family. Those fun experiences are priceless.
I went to fountain hills yesterday...crazy amount of exotic cars. Must all be dentists :cool:

I can hardly believe that I am pretty close to getting to the point where I can afford my own car (D4, matched perio). I will never forget not having the dollar fifty needed to ride the bus as a kid. growing up, we could not afford to go to the dentist but were too rich for medicaid. heck, I still can't quite afford ortho tx for myself, our ortho program charges 4k. But the end is near :)
 
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If any predent out there is contemplating going to dental school for anything over 400k (which is already highway robbery), spend that money at a therapist instead, because you will need one from day 1 on the job with loans that large
 
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I was one of those dentists. I leased nice cars despite owing close to $1 million in loans (student, home, practice loans, and credit card debt). I drove S-classes and 7 series (I never like Porsche….bumpy ride, too small for the kids, and too noisy etc) when I was in my early 30s. My first house was a much nicer house than those of my dentist and physician friends.
I'm scared I'm following a similar path. My cost of living will be dirt cheap at my GPR next year and I know that spending the extra 10k on an 2020 M340i will put a bigger smile on my face than the 2018. I justify it because I know no matter my financial situations having a car like that will make me the happiest person alive
 
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you can definitely live on 40k a year as a marriage couple with no kid in a city with reasonable cost of living. but the question is can you do it? can your future girlfriend/ future wife tolerate it?

the biggest question is if you will regret it in the future? when Covid hits, I actually regret picking dentistry and self-doubt myself, things turn out okay but this event opens my eyes regarding planning future expectation on present knowledge. it can be a hit or a miss.

the market returns on average, according to what I know, is not 10%. it is like 5-6% but if you average out 20-30 years it is 7-8%. however, imagine, you put all your saving in a semi aggressive growth fund that has history at growing 14% but on year 19 into 20, you need to withdraw to pay that tax bomb on REPAYE, the stock market tanks 30-40% (just like it did in march). and in the past 20 years, stocks have tanked and went up multiple times.

I am working up my own investment plan to hopefully replace my income in 10 years so we (my wife and I) live on like 10% of our combined income (1.5k a month) and save the rest. granted thou, we are given a paid off house by in law. we both drive beater cars (8 year old and 6 year old) with no intention on upgrading the cars.

However, to be honest, there are days I feel why I bother living like this and not splurge. the temptation out there is too real and combined with the stress of doing dentistry, it just makes too much sense (don't forget to add in insta pic of other people, etc"
 
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I justify it because I know no matter my financial situations having a car like that will make me the happiest person alive
Meh, I’ll prolly just stance my Camry.

31FABECE-AF02-49BD-BEDF-25FCE454EE5E.jpeg


Big Hoss
 
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I'm scared I'm following a similar path. My cost of living will be dirt cheap at my GPR next year and I know that spending the extra 10k on an 2020 M340i will put a bigger smile on my face than the 2018. I justify it because I know no matter my financial situations having a car like that will make me the happiest person alive
Don't buy a used BMW. You should lease a brand new one and return it 3 years later when the car starts to give you problems and when it's warranty expires. Right after graduation, I purchased a used 3-yr old 7 series BMW and about 6 months later the car started to give me a lot of problems. I ended up trading it in and leased a newly re-designed 7 series. And during the first year of driving this brand new car, I had to bring it to the shop for repair at least 4 times...but I didn't care because I didn't own it. I didn't have to pay for any of these repairs because it was still in the warranty period. Despite the unreliability of the BMW cars, I continued to lease them because they are fun cars to drive. It's also much cheaper to lease than to buy....you only need to put $3-4k down... and you can drive home in a brand new M340i. With leasing option, you get to drive a different car every 3 years. You are young. The car technology is changing very rapidly. You wouldn't want to get stuck to driving the same boring car for a long time.

I work more days than most of my colleagues and I want to reward myself for my hard work. Having a nice car makes the daily commute much less stressful. What I make in a day is enough to cover a monthly lease payment for a $100k car. And since I work 4-5 days more per month than my colleagues, I could lease a car that is 3-4 times more expensive than the car I that currently drive (or lease 3-4 different cars at the same time) if I wanted to. But I want to use the extra money I earn for working extra days to save and to invest for my future retirement.
 
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The day you can lease a new 911 Turbo every three yrs. ;) You've ARRIVED. Actually a 911 GT3 RS is better or any Italian car.
But seriously .... there is no exact number to your question. I've seen dentists who act like they make doctor money (but have no money) and I've seen those dentists who have plenty of money, but never spend it.

Personally. I indulged as soon as I was able to do it. Of course .... if I had invested all the money I spent on all those depreciating toys I bought .... well .... I would have more money. But I would have missed out on all those fun experiences with my family. Those fun experiences are priceless.
You wouldn't want to get stuck to driving the same boring car for a long time.

I work more days than most of my colleagues
Fortunately I don't have to indulge to feel good. I drive a 10 y/o "Granola" Subaru that I still baby. I don't look rich compared with other dentists. However, my neighbors think I'm big time because my family and I live in a 4.5 car garage house with a nice view of the Pacific NW valley and Cascade Mtns. I saw how my physician father and brother's health declined and I'm hoping to cruise thru my next 8 yrs to pay off my house with my health intact. My 11 y/o twin boys are already showing signs of being business savants at their public school district's Science and Engineering Academy (they want to drive better cars). I could care less if other dentists think I'm a loser. I'm blessed in many ways that matter most.
 
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The take home message is that dentistry is extremely rewarding both financially and everything else. I know everyone complains about dentistry being stressful or hard on the body, but come on ........ I can just imagine those hard working, blue collar, manual laborers laughing at us dentists complaining. Dentists as a whole have it good. Most dentists were high achievers and alot of those same hard working skills will help in your future employment (PP or otherwise).
Once you graduate ..... most of you will have the option on how many days you want to work. DSOs are pretty good about that. I can work as much or as little as I want. In PP ... you will decide how many days you want to work. I think a disadvantage to academia is that the full time teachers are FULL time. I.e. they have to work 5 days per week.
In time most of the new dentists will have the opportunity to finally enjoy the fruits of all their hard work. Whether that is a new car, nice home, etc. It's part of life to work hard and then enjoy the rewards.

But this happy story ends with any predent that is actually looking on taking on 500K or more plus interest of future debt. The financial world is ruthless. Financial institutions ONLY CARE about themselves. That's their mission statement. Make money off of mis-informed borrowers. An unfortunate truth is that the less qualified borrowers (i.e YOU predents) will always get the worst interest rates. This will continue through out your business career. Those with a great job, good employment history, good credit score and LOW debt get the best loans/interest rates. Everyone else gets worse loans. Do the banks really want to lend a new grad with 500K plus DS loans a future private practice loan? How about a home mortgage?

btw. I was talking to my evil bank Wells Fargo the other day. They are selling off their student loan contracts/business to another company. Look it up on google. That should be telling. You think they have lost money on student loan defaults? How many of those in default are new dentists who thought like the OP?

So. Original poster (OP). You are trying to reverse engineer a possible solution to 700K DS debt. Don't do it. Spend your energy on trying to get into dental school via another less costly route.
 
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What world do we live in where pre-dents need to rely on income-based repayments and huge tax bombs to get their education? It should be a warning to all pre-dents that dentists can't even pay for school using traditional loans anymore.

To OP, some of your assumptions are very generous. For example: "Investment growth will be 10% yearly - Based on historical stock trends" Most people in personal finance will say 6%, and with future inflation, even that might be too generous. "taking home about 55k after tax/loan income my first year and slowly up from there after." is another generous assumption, especially for CA. I don't know much about politics, but I don't see how lobbyists and debt hawks continue to ignore the income-based repayment plans for 30 more years.

Like the other commenters have written, find a cheaper way or don't do it.
 
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To the OP - yes it is doable with those numbers. Doable is not a guarantee though. This is a risky plan especially when looking at the other potential options out there. If you have your heart set on it, go for it, just as long as you understand the potentially devastating consequences of it.
 
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Don't buy a used BMW. You should lease a brand new one and return it 3 years later when the car starts to give you problems and when it's warranty expires. Right after graduation, I purchased a used 3-yr old 7 series BMW and about 6 months later the car started to give me a lot of problems. I ended up trading it in and leased a newly re-designed 7 series. And during the first year of driving this brand new car, I had to bring it to the shop for repair at least 4 times...but I didn't care because I didn't own it. I didn't have to pay for any of these repairs because it was still in the warranty period. Despite the unreliability of the BMW cars, I continued to lease them because they are fun cars to drive. It's also much cheaper to lease than to buy....you only need to put $3-4k down... and you can drive home in a brand new M340i. With leasing option, you get to drive a different car every 3 years. You are young. The car technology is changing very rapidly. You wouldn't want to get stuck to driving the same boring car for a long time.

I work more days than most of my colleagues and I want to reward myself for my hard work. Having a nice car makes the daily commute much less stressful. What I make in a day is enough to cover a monthly lease payment for a $100k car. And since I work 4-5 days more per month than my colleagues, I could lease a car that is 3-4 times more expensive than the car I that currently drive (or lease 3-4 different cars at the same time) if I wanted to. But I want to use the extra money I earn for working extra days to save and to invest for my future retirement.
Appreciate the in depth reply doc. I know everything and anything about BMW, have been working on them since junior year of high school.

My reasoning for buying vs leasing is that if I buy a car for 35k vs lease a 50k car, my payments will be similar and after 3 years for the lease, I have to trade the car back to the dealership and find something else. At least with financing I will have some form of asset that I can have to show for all the payments I made. With a lease I also won't be able to play around and swap out too many parts without getting tricky. Most of all with the lease is that their lease offers as advertised are very low mileage.

For what it is worth, I wouldn't touch a used 7 series with a 10 foot pole no matter what point of my career I am in
 
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Appreciate the in depth reply doc. I know everything and anything about BMW, have been working on them since junior year of high school.

My reasoning for buying vs leasing is that if I buy a car for 35k vs lease a 50k car, my payments will be similar and after 3 years for the lease, I have to trade the car back to the dealership and find something else. At least with financing I will have some form of asset that I can have to show for all the payments I made. With a lease I also won't be able to play around and swap out too many parts without getting tricky. Most of all with the lease is that their lease offers as advertised are very low mileage.

For what it is worth, I wouldn't touch a used 7 series with a 10 foot pole no matter what point of my career I am in
are 2020 m3s 35k? I thought they start at like 55k
 
are 2020 m3s 35k? I thought they start at like 55k
I'm looking at a 2018 340i. I'd get the newer motor at the expense of an older chassis however with extended warranty I'd be covered until 2022 / 2023. Even then, the motor in them is incredibly reliable / durable

I can probably pay that off in 2 years with income outside of dentistry. What I should be doing is getting a civic but just like why I picked an ivy league instead of the school I got a scholarship to, yolo
 
Appreciate the in depth reply doc. I know everything and anything about BMW, have been working on them since junior year of high school.

My reasoning for buying vs leasing is that if I buy a car for 35k vs lease a 50k car, my payments will be similar and after 3 years for the lease, I have to trade the car back to the dealership and find something else. At least with financing I will have some form of asset that I can have to show for all the payments I made. With a lease I also won't be able to play around and swap out too many parts without getting tricky. Most of all with the lease is that their lease offers as advertised are very low mileage.
Oh, I didn't know you have a hobby in fixing cars. I can only do minor modifications like running wires to add a constant 12v power outlet in the trunk, installing a Qi wireless charger inside a center console, swapping wheels etc. But I have zero knowlegde about fixing the engine. In your case, buying a used car is not a bad idea and it should be a fun project for you to work on every weekend. Just keep in mind that making modifications to the car may void the warranty.

I like to lease cars because I don't want to drive the same old body style for a long time. As you know, BMW and Mercedes change the body styles every 7 years. Another reason for leasing is German cars depreciate very rapidly. The lease payments that I had made over 3 year period pretty much covered the depreciated amount. For example, I only pay around $55k ($5k down + 35 payments of $1400 a month) for a car that has a MSRP of $110k. After 3 years, I don't have to list that used car for sale. I just return it to dealer and get a new one.
 
For what it is worth, I wouldn't touch a used 7 series with a 10 foot pole no matter what point of my career I am in
Yeah, I feel bad for the new owners who inherited those 7 series (and the S classes as well) that I returned after the leases. I once was a victim and I learned my lesson. There are a lot of electrical problems with these cars. But I like big sedans. They are like a 2nd house. I eat and take a nap in the car since I have close to 2 hours for lunch every time I work at the corp offices. I can lie down on the back seats and watch sport games while the wife goes shopping or while the kids take their music lessons.
 
Hi, I'm a predent looking into the schools and the prices are a bit shocking assuming the school cost spreadsheet I saw posted is accurate. Recently I became concerned about astronomical loans and the future of dentistry, so I made an excel spreadsheet to help project my future income.

If I had to do a TDLR: This is a 25 year projection based on exiting school with 700k of loans. First, I calculated gross income subtracted by CA&Fed tax. The income numbers I used are more typical of an associate than an owner. I then substracted minimum IBR loan payments based given by a calculator. The plan is to save(invest) 1k a month for the tax bomb so that is substracted as well. Obviously there were a ton of assumptions because I'm trying to predict the future and I had to trust several resources

Spreadsheet

Assumptions:
- 700k loans after school(factoring in interest during school) - this is a high ball estimate but realistic for several schools at this point
- CA/Fed taxes that stay the same
- Federal 25 year loan repayment + forgiveness
- Minimal payments
- 1st year gross income is 120k then jumps to 150k 2nd year - assuming the first year gets you "up to speed"
- After 2nd year, income raises by 3% yearly - About average compared to other jobs but idk about how dentistry grows exactly
- Invest 1k every month to save for tax bomb
- Investment growth will be 10% yearly - Based on historical stock trends
- Used a line to extrapolate the tax and annual loan payment values after putting in ~5 calculator generated points. My excel skills aren't the best but it looked like a straight line and I was too lazy to type 50 points into the calculator.


Resources:
- Tax calculator CA
- Saving for tax bomb compound interest calculator
- Student loan IBR calculator Note: I used the government calculator too but that gave a lower number(~1k) and I wanted to be conservative
- Dental school cost estimate

Final thoughts:
Obviously there were a ton of assumptions but I tried my best to simulate a "worst case scenario". If my calculations are even close, I'd be taking home about 55k after tax/loan income my first year and slowly up from there after. I'm would be completely fine with taking home 55k. To me, that's not a bad income at all. I was just concerned about living below poverty and or being forced to work extreme hours or do unethical treatment because that was the impression I got from some of you. I don't want to be an associate but I'm being conservative in case DSO's or other economic factors make owning difficult by the time I enter.

Assuming decent market conditions, yes you are paying way more than the actual loan but it's over 25 years and inflation is working with you. If you save 1k a month and the market conditions are steady, you end up with almost 1 million after the tax bomb. Couple things I haven't considered are 1. whether the REPAYE system will still be there in the future 2. Whether dentistry really grow 3% yearly. 3. Marriage affecting IBR payments(haven't done extensive research on this). If the IBR goes then idk what I would do but it that stays running the way it is I think things will turn out fine. If there's anything I missed please let me know so I can make the calculation more accurate. I can't help but think that I must have missed a few important things here.

This seems like a good example of having knowledge but no wisdom.

People have given you enough reasons why you shouldn’t do this, so I’ll just chime in another NO. I would laugh this whole thing off as being a big joke, but unfortunately 700k debt is a reality. Now it’s just a real dark comedy where you see nice people with bright futures ruin their financial lives. But hey, at least you get to do so while doing posterior class 2s!
 
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This seems like a good example of having knowledge but no wisdom.

People have given you enough reasons why you shouldn’t do this, so I’ll just chime in another NO. I would laugh this whole thing off as being a big joke, but unfortunately 700k debt is a reality. Now it’s just a real dark comedy where you see nice people with bright futures ruin their financial lives. But hey, at least you get to do so while doing posterior class 2s!
I love oscillating between here and dental town. Pre-dents on here talk about doing anything they can to become dentists, and dentists on there talk about doing anything they can to get out of dentistry o_O
 
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I love oscillating between here and dental town. Pre-dents on here talk about doing anything they can to become dentists, and dentists on there talk about doing anything they can to get out of dentistry o_O
why I stay out of dental town. I think I will become more pessimistic and hate my job more if I keep reading DT lol.
 
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I love oscillating between here and dental town. Pre-dents on here talk about doing anything they can to become dentists, and dentists on there talk about doing anything they can to get out of dentistry o_O
At least OP asked the question on here and not dental town. He'd have been destroyed on there lol
 
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