lonee2
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- Sep 27, 2020
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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.
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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