Jul 9, 2009
52
0
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Pre-Dental
After looking at some rough estimates, I will have to take out loans totalling about $200,000 over the next 4 years. However, my wife will be working during this time and we should have a good amount of income left over after expenses are taken out. Would it be a better idea to use any extra money to minimize the debt (taking it down to approximately $150,000) or would it be a better idea to save the money and keep the debt at $200,000? I was curious because it might be nice to have that $50,000 for a down payment on a house or to help start a practice after I graduate. Does anyone else have a similiar situation and/or some advice?

Summary- $50,000 in savings and $200,000 in debt VS. $0 in savings and $150,000 in debt
 

DrDDSman

10+ Year Member
Jul 19, 2007
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Some people would disagree with me, but i would go with keeping the 50k in savings and taking out the loans for school. That 50k would be useful in an emergency or if unexpected situation comes up.
 

Palmetto914

StrangerDanger
10+ Year Member
Jan 13, 2008
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I'm in the same boat as you...wife will be working full-time. I plan on taking out the full amount of loans until she is in a stable job, and I know what amount of $ we can comfortably (or a little short of comfortably) live on. There's no sense on taking out an extra $50k if you can support yourselves and save a little. That $50K you borrow becomes a lot more than 50k as interest does its job...
 
Jul 9, 2009
52
0
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Pre-Dental
I'm in the same boat as you...wife will be working full-time. I plan on taking out the full amount of loans until she is in a stable job, and I know what amount of $ we can comfortably (or a little short of comfortably) live on. There's no sense on taking out an extra $50k if you can support yourselves and save a little. That $50K you borrow becomes a lot more than 50k as interest does its job...
I understand that, but do you think that having $50k liquid would be more important?
 
Feb 3, 2010
29
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41
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Pre-Dental
I would say you should think about how much you really need for an emergency (like your wife loosing her job). 6 mo. of living expenses is the standard I hear. Is 50k necessary for that period of time? Also, how stable is her job?

Also, you should take interest rates into consideration. My husband just graduated Medical School and we're talking now about paying back loans. Interest rates on unsubsidized Stafford loans are 6.8%. Interest rates for home mortgages right now are more like 5%. I'm not sure your entire financial situation but if you NEED a down payment to get a loan that's a different story.

Just something to think about!
 

StirrinIt

10+ Year Member
Feb 15, 2009
149
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Pre-Dental
Many will also point out that 50k put into investments [are supposed to] yield a higher growth rate than the 6.8% interest rate on ur loan.. but that's a risk you have to decide on...

I'm in a similar boat and i plan on just taking out as least as possible in loans.. after making sure to have enough for expenditures like a house or emergency
 

Lethstang

7+ Year Member
Oct 4, 2009
488
14
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Dentist
stirrin nailed it right on the head. if you think you can use that 50k and make more than the interest rate on it, then youre silly not to do it. However, if youre just putting it in the bank without a plan for making it work, do not.

There are very easy ways to do it, Id advise doing some research and making some money.